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Intermountain Healthcare is taking the lead on starting a new generic drug company. Photo: Intermountain Healthcare

Four not-for-profit hospital systems that own 10% of U.S. hospitals — Intermountain Healthcare, Ascension, SSM Health and Trinity Health — are banding together to create a new generic drug company. The Department of Veterans Affairs also is helping and has expressed interest as a purchaser.

Why it matters: Generic drug makers will have a new competitive threat with this first-of-its-kind hospital venture. Marc Harrison, a doctor and the CEO of Intermountain, said drug shortages and high drug prices spurred this action.

Key quote: "It’s hard to make people better if they don’t have access to the medicines they need," Harrison said in an interview. "To add insult to injury, those medicines are being priced in a way that’s nonsensical."

The details:

  • Executives said for now they aren't disclosing what drugs they will make, fearing generic drug companies would respond by lowering prices now and jacking them up again later.
  • The move is in response to generic drug makers that have raised prices significantly after buying older drugs that lost their patents. Martin Shkreli's price hikes on Daraprim are one of the more infamous examples.
  • "We are not anti-pharma. We only care about the bad guys," Harrison said.
  • The company will be structured as a not-of-profit and still needs FDA and other regulatory approvals.
  • Don't expect the company to build large manufacturing plants. Instead, it likely will contract with existing facilities.
  • A handful of people are advising the new entity, including former Obama administration Medicare and Medicaid chief Don Berwick and Nebraska's former Democratic senator and pharmacist Bob Kerrey.
  • Intermountain was already getting phone calls today from other interested systems.

Context: Generic drug prices have caused a lot of stress for hospitals and patients. But most drug spending is heavily concentrated in branded drugs, not generics. Brand-name drugs account for 72% of drug spending, but only 10% of filled prescriptions.

Go deeper

Updated 35 mins ago - Politics & Policy

Prosecutors charge parents of Michigan school shooting suspect

Photo: Scott Olson/Getty Images

The parents of a 15-year-old accused of killing four students and wounding seven other people at a Michigan high school have been charged with four counts of involuntary manslaughter, according to court documents.

The latest: Lawyers for James and Jennifer Crumbley told the Detroit News they are "returning to the area to be arraigned," after law enforcement officials announced a search for the Crumbleys had been initiated.

Updated 5 hours ago - Politics & Policy

Omicron dashboard

Illustration: Shoshana Gordon/Axios

  1. Health: Coronavirus variant surveillance varies widely by state — Omicron cases confirmed in 5 U.S. states America probably won't lead the effort to understand Omicron.
  2. Vaccines: Omicron adds urgency to vaccinating world — Omicron fuels the case for COVID boosters — Moderna loses patent battles tied to COVID vaccine.
  3. Politics: Nevada to impose insurance surcharge on unvaccinated state workers — New Jersey GOP lawmakers defy statehouse COVID policy — Oklahoma sues Biden administration over Pentagon vaccine mandate — Omicron travel bans are sign of what's to come.
  4. World: WHO: Delta health measures help fight Omicron — COVID cases surge in South Africa in sign Omicron wave is coming — Germany approves new restrictions for unvaccinated people.
  5. Variant tracker: Where different strains are spreading.
5 hours ago - World

Putin to demand legal guarantee against NATO expansion in call with Biden

Biden and Putin meeting in Geneva in June. Photo: Mikhail Metzel\TASS via Getty Images

Russian President Vladimir Putin is demanding a legally binding guarantee that NATO will not expand east — including to Ukraine — and plans to raise the issue in an upcoming phone call with President Biden, according to the Kremlin.

Why it matters: Russia has massed more than 94,000 troops on the border with Ukraine and could be preparing for a large-scale invasion at the end of January, Ukraine's defense minister said Friday.