Healthcare Organizations to Produce Their Own Generic Drugs

Five major US health systems have announced they’ll be jointly establishing a not-for-profit generic drug company to deal with the rising costs and intermittent shortages of prescription medications. Intermountain Healthcare, Ascension, SSM Health, Trinity Health and the US Department of Veteran’s Affairs (VA) represent over 450 hospitals across the US, suggesting that the move could have a massive impact on the pharmaceutical industry.

The goal of the project is to introduce more competition into the drug industry while providing patients with more affordable access to generic medications. The health systems say that more partners will soon be joining the initiative.

“It’s an ambitious plan,” said Dr. Marc Harrison, president and CEO of Intermountain Healthcare, “but healthcare systems are in the best position to fix the problems in the generic drug market.  We witness, on a daily basis, how shortages of essential generic medications or egregious cost increases for those same drugs affect our patients.  We are confident we can improve the situation for our patients by bringing much needed competition to the generic drug market.”

The pioneers of this initiative have yet to decide whether they’ll establish their own pharmaceutical manufacturing facility or outsource the job to contract manufacturing organizations (CMOs). As well as providing more affordable drugs, the team hopes to secure the supply of vital medications to hospitals which are often affected by shortages.

“All Americans deserve access to high-quality, affordable care,” said Laura Kaiser, president and CEO of SSM Health. “The best way to control the rising cost of health care in the US is for payers, providers and pharmaceutical companies to work together and share responsibility in making care affordable.  Until that time, initiatives such as this will foster our ability to protect patients from drug shortages and price increases that limit their ability to access the care they need.”

An advisory committee will be formed in order to provide guidance to the not-for-profit, health system-owned generic drug company. Two retired executive vice presidents of biopharmaceutical company Amgen will be included in the advisory committee, as well as former Nebraska governor, and US senator, Bob Kerrey and others. The VA will be a consulting body on the project, however they have provided no financial support.

“As an organization which must have an affordable and stable supply of generic pharmaceuticals to fulfill its healthcare mission, the Department of Veterans Affairs looks forward to the value this new company will bring to healthcare in the United States and applauds Intermountain Healthcare, Trinity Health, SSM Health, and Ascension for this initiative,” said Dr. Carolyn M. Clancy, executive in charge, Veterans Health Administration. “Increasing generic drug manufacturing capacity will generate a more stable generic drug supply and will reduce the negative clinical impact of chronic drug shortages, including the impact on our nation’s veterans.”