Hospital groups create company to make cheap generic drugs

Associated Press

TRENTON, N.J.

Several major not-for-profit hospital groups are trying their own solution to drug shortages and high prices: creating a company to make cheaper generic drugs.

The plan, announced Thursday, follows years of shortages of generic injected medicines that are the workhorses of hospitals, along with some huge price increases for once-cheap generic drugs. Those problems drive up costs for hospitals, require staff time to find scarce drugs or devise alternatives, and sometimes mean patients don’t get the best choice.

The not-for-profit drug company initially will be backed by four hospital groups – Intermountain Health, Ascension and two Catholic health systems, Trinity Health and SSM Health – plus the VA health system.

Together, the five groups include more than 450 hospitals, nearly one-tenth of U.S. hospitals. They also run numerous clinics, nursing homes, doctors’ offices and other medical facilities, along with hospice and home care programs and an insurance plan. More health systems are expected to join soon.

The goal is to counter the consolidation of generic drugmakers that’s caused shortages for more than a decade and allowed some companies to raise prices many times over. Those include antibiotics, morphine, heart drugs and others.

Generic drugs can be manufactured very inexpensively, offering the hospital groups the chance to save hundreds of millions of dollars annually.