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Four Health Systems Plan to Form Not-for-Profit Generic Drug Company

January 18, 2018
by Heather Landi
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Four health systems, in consultation with the U.S. Department of Veterans Affairs (VA), have announced that they are collaborating to develop a new, not-for-profit generic drug company with the aim of making generic medications more available and more affordable for patients and bringing more competition to the generic drug market.

Salt Lake City-based Intermountain Healthcare is leading a collaboration with St. Louis-based Ascension, the largest non-profit health system in the U.S., SSM Health, a health system also based in St. Louis with facilities in four states, and Trinity Health, a health system based in Livonia, Michigan and serving communities that include more than 30 million people across 22 states with 93 hospitals. The five organizations represent more than 450 hospitals around the U.S.

According to a joint press release about the new initiative, other health systems will soon be joining the not-for-profit initiative.

In the press release, health system officials said 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 health system officials state that the new company will “provide patients an affordable alternative to products from generic drug companies whose capricious and unfair pricing practices are damaging the generic drug market and hurting consumers.”

What’s more, the aim of the new company will be to seek to stabilize the supply of essential generic medications administered in hospitals, many of which have fallen into chronic shortage, the health system officials said. “The new initiative will result in lower costs and more predictable supplies of essential generic medicines, helping ensure that patients and their needs come first in the generic drug marketplace,” according to the press release.

Marc Harrison, M.D., president and CEO of Intermountain Healthcare, says the collaboration will be “game-changing” for the generic drug market. “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,” Harrison said in the press release.

Laura Kaiser, president and CEO of SSM Health, said in an official statement, “The best way to control the rising cost of health care in the U.S. 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.”

Anthony R. Tersigni, president and CEO of Ascension, said in a statement, "This initiative has the potential to greatly expand the availability and affordability of critically needed medications for millions of Americans, especially for people living in poverty and those most vulnerable. Rather than waiting and hoping for generic drug companies to address this need, we are taking this bold step on behalf of those we are privileged to serve. I'm pleased to see our respective systems come together, along with the VA, to ensure affordability and access to these essential medications."

And Richard J. Gilfillan, M.D., CEO of Trinity Health, said in a prepared statement, “For people in the United States, there is a dangerous gap today between the demand and supply of affordable prescription drugs. If the only way to provide our communities with affordable drugs is to produce them ourselves, then that is what we will do. We look forward to more healthcare systems around the country joining this people-centered effort.”

Carolyn M. Clancy, M.D., executive in charge, Veterans Health Administration, said the VA 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. 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,” Clancy stated.

The formation of the generic drug company will be guided by an Advisory Committee that includes a roster of executive leaders from the pharmaceutical industry, business and government.


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