Four nonprofit hospital systems are applying to the FDA for approval to produce and market their own line of generic drugs. The hospitals are looking to produce generics for which there currently isn’t much competition. Melanie Evans writes in The Wall Street Journal:
The hospitals said they would prioritize production of generic drugs for which the market lacks competition, though they declined to specify which drugs they would produce first.
“We have no designs on being a major pharmaceutical power,” Intermountain President and Chief Executive Marc Harrison said. “This is a very specific problem we’re seeking to solve with a very specific solution,” he added.
The new company will “provide an alternative to sole-sourced, overpriced, in-short-supply medications,” Dr. Harrison said.
Prices for some generic drugs have soared where competition is scarce. A lack of manufacturing capacity has also caused shortages of some vital generic drugs in recent years, including painkillers, cancer drugs and saline.
The problem has complicated hospitals’ efforts to control rapidly rising drug spending.
The new nonprofit would set its own prices, a complicated and potentially fraught exercise in an environment where drug pricing is under intense scrutiny. The new nonprofit drug company will “understand our production costs really well” and won’t have to return equity to shareholders, as investor-owned companies do, said Dan Liljenquist, vice president of the enterprise initiative office at Intermountain.
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