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Fed-Up Hospitals are Starting Their Own Drug Company to Lower Generic Drug Prices

The impact of drug shortages is not new within the healthcare system, particularly at the hospital level, nor is the cost of drugs, however Fed Up with Drug Companies, Hospitals Decide to Start Their Own highlights a potential solution. The American Society of Health-System Pharmacists (ASHP) currently lists 139 compounds currently undergoing shortages. Cost and supply challenges are becoming increasingly pronounced as some pharmaceutical companies discontinue manufacturing of products when they go generic, or a product is only made by a single supplier. As a result, ~300 hospitals in the US are teaming up to try to resolve this challenge.

The group of hospitals aims to manufacture key generic products that have been subject to shortages and/or significant price increases. The result of this would help to lessen potential resource strains at times of shortages and lower costs due to cooperative manufacturing. The full details on the hospitals involved and the overall plan are limited, it could signal a new path forward for hospitals to ensure quality and cost-effective care.

As more details are revealed it will be important to assess the feasibility and sustainability for hospital-based manufacturing. It is unknown how or where the product will be manufactured and how it will be distributed among the hospitals, which could have a significant impact on the success of the plan. In addition, hospitals will have to shoulder the burden of getting manufacturing up and running, which may have an impact on time to availability, so it is unknown how long in the future they will be able to alleviate challenges associated with shortages and costs.

Overall, there are more questions than information at this time, however, it seems there is a potential solution in the works.

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Herspiegel is a leading professional services firm helping biotech start-ups and the world’s largest pharmaceutical companies navigate the path from science to brand performance and change patients’ lives. We are committed to using strategic insights from medical to commercial to market access to solve critical problems.