Written by Joanna Hughes

The US healthcare system is plagued by high prices and shortages of lifesaving medications. Now comes news that hospitals will join forces to address the problem through an innovative solution: Developing their own not-for-profit generic drug company. Here’s a closer look at the problem, along with why stakeholders say it’s necessary.

The Generic Drug Market Failure

Led by Intermountain Healthcare in partnership with five organizations representing hundreds of hospitals around the country, the new company will make essential medicines more available and affordable in order to better meet patient needs.

“As has been widely reported, certain generic drug manufacturers have been widely criticized for unwarranted and arbitrary price increases and for creating artificial shortages of vital medications.  These activities have resulted in some generic drugs increasing in cost by more than 1,000 percent in just a few months for seemingly no reason.  Research into the actual costs of manufacturing and distributing generic drugs suggests that, in many instances, generic drug 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,” says an Intermountain Healthcare press release.  

An Innovative Plan

In bringing together healthcare systems to form their own generic drug company, the initiative aims to give patients more and better options by directly challenging the entities currently manipulating the system to their favor at the expense of patients.

Said Intermountain Healthcare president and CEO Marc Harrison, MD, it’s a gamechanger. “It’s an ambitious plan, 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.”

Insiders agree that the plan has promise -- as long as quality control measures are in place. Drug shortage expert Erin Fox told the New York Times, “I think anything that increases the number of suppliers will help.”

Read more about degrees in Pharmaceutical Medicine.

Joanna worked in higher education administration for many years at a leading research institution before becoming a full-time freelance writer. She lives in the beautiful White Mountains region of New Hampshire with her family.
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