Hospitals to start own generics company

Generics/News | Posted 26/01/2018 post-comment0 Post your comment

In an effort to combat regular shortages and the increasing prices of drugs, four of the US’s largest hospital systems have made plans to create a non-profit generics company.

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Intermountain Healthcare is leading the collaboration with Ascension, SSM Health and Trinity Health to form the new, not-for-profit generics company. The associations are carrying out their plan in consultation with the US Department of Veterans Affairs and expect other health systems to join this not-for-profit initiative soon. The five organizations already represent more than 450 hospitals around the US.

The organizations say that many generics ‘have fallen into chronic shortage’ and that the ‘capricious and unfair pricing practices’ of generics companies ‘are damaging the generics market and hurting consumers’.

The new company will provide an affordable alternative and will be a US Food and Drug Administration approved manufacturer that either directly manufactures generics or sub-contracts manufacturing to reputable contract manufacturing organizations. The intention is for the new company to stabilize the supply and lower the costs of essential generics administered in hospitals.

Generics prices have been highlighted in recent years after some old generics experienced dramatic price increases. For example, the price of digoxin, a medication used to treat congestive heart failure, increased from US$0.12 a pill in July 2013 to US$1.06 a pill in June 2014 [1]. Then in August 2015, Turing Pharmaceuticals increased the price of its newly acquired 62-year-old infectious disease drug Daraprim (pyrimethamine) from US$13.50 a tablet to US$750 – a 5,000% price hike [2].

According to the organizations, ‘research into the actual costs of manufacturing and distributing generics suggests that, in many instances, generics prices can be reduced to a fraction of their current costs, saving patients and the healthcare systems that care for them, hundreds of millions of dollars each year’.

It is thought that mergers and acquisitions in the generics sector may be a factor in drug shortages and increasing prices [3]. A US-based retrospective cohort study found that generics prices increase when competition is low or non-existent [4].

Intermountain Healthcare, which is leading the collaboration, did not disclose which generics the forthcoming generics company intends to make. However, Marc Harrison, MD, President and CEO of Intermountain Healthcare, while admitting that it was ‘an ambitious plan’, did say that the company is ‘primarily directed toward the examples where people are cornering the market and creating shortages’.

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1. GaBI Online - Generics and Biosimilars Initiative. Generics makers to be penalized for huge price hikes []. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Jan 26]. Available from:
2. GaBI Online - Generics and Biosimilars Initiative. Senator calls for FTC to investigate drugmakers for antitrust violations []. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Jan 26]. Available from:
3. GaBI Online - Generics and Biosimilars Initiative. Mergers could be causing price increases for generics []. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Jan 26]. Available from:
4. GaBI Online - Generics and Biosimilars Initiative. Generics prices increase when competition decreases []. Mol, Belgium: Pro Pharma Communications International; [cited 2018 Jan 26]. Available from:

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Source: Intermountain Healthcare, StatNews

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