Group of hospitals plans to challenge pharma cos by making generic drugs

Jan. 18, 2018

A consortium of several large hospital systems is planning to potentially shake up the market for generic drugs in a big way.

According to a report this week in The New York Times, the hospitals have decided to create a nonprofit company to manufacture and supply certain medications. The group said the idea came from years of frustrations over drug shortages and escalating prices.

So far, about 300 hospitals are slated to be a part of the group including Intermountain Healthcare, SSM Health, Ascension and Trinity Health. The Department of Veterans Affairs will reportedly be consulting the group.

The companies wouldn’t say which drugs exactly they plan to produce due to concerns that generic drug companies might temporarily lower prices to box them out of the market. But hospitals have faced shortages with several key drugs for years, including injectable morphine and saline fluids. The group said that because there is often only one or two manufacturers producing key drugs, the issue of rising prices and shortages has been growing.

“The new company intends to be an FDA approved manufacturer and will either directly manufacture generic drugs or sub-contract manufacturing to reputable contract manufacturing organizations,” the group said in a statement.

Read the full NYTimes report.