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These Hospitals Are Sick of High Drug Prices. So They’re Starting Their Own Nonprofit Drug Company

January 18, 2018, 6:17 PM UTC

Drug makers have largely ignored the public firestorm surrounding high drug prices. Now, a coalition of major U.S. hospitals is taking the matter into its own hands with a unique project: Creating a nonprofit generic drug company run by health systems.

The initiative, spearheaded by Intermountain Healthcare, has already attracted the support of some of the country’s biggest hospital chains and will be done in consultation with the Department of Veterans Affairs (VA). Current participants include Ascension, SSM Health, and Trinity Health, which encompass 450 hospitals across the U.S. (though the groups expect membership to rise as the plan comes to fruition).

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“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 groups said in a press release. Furthermore, the company wants to address issues throughout the generic drug supply chain, including high prices and medicine shortages.

Price hikes in the generic drug market strike critics as particularly arbitrary given that many of them have been around for decades. “It’s an ambitious plan,” said Intermountain CEO Dr. Marc Harrison in a statement. “But health care 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.”