Health Systems Move Forward in Establishing Nonprofit Generic Drug Company

In January, a group of 5 health systems joined together to form their own nonprofit generic drug company to address drug shortages and high generic drug prices. Now, 8 months later, the group has grown to 7 health systems and has named Martin VanTrieste, former chief quality officer of Amgen, its chief operating officer.

First announced as Project Rx, the company will now be known as Civica Rx and will be headquartered in Utah. The company includes Intermountain Healthcare, Catholic Health Initiatives, HCA Healthcare, Mayo Clinic, Providence St. Joseph Health, SSM Health, and Trinity Health, representing over 500 hospitals. The Department of Veterans Affairs will also work in consultation with the company in order to address its particular needs.

“We are creating a public asset with a mission to ensure that essential generic medications are accessible and affordable,” said VanTrieste. “The fact that a third of the country’s hospitals have either expressed interest or committed to participate with Civica Rx shows a great need for this initiative. This will improve the situation for patients by bringing much needed competition to the generic market.”

To read more on Civica Rx, click here.

Initial efforts will be put toward stabilizing the supply of essential generic medications administered in hospitals, which continue to see shortages of medically necessary medications. Civica Rx has identified 14 of these generics that they will focus on.

“Every day at Intermountain, we manage more than 100 drug shortages, and most of them are generics,” said Marc Harrison, MD, president and chief operating officer of Intermountain Healthcare, in an interview with NPR. “The impact on patient care, in terms of trying to find alternatives and scurrying around and trying to find necessary drugs, is incredibly time-consuming and disconcerting.”

Although the number of drug shortages has been declining since its peak in 2011, there continue to be shortages of certain products. In July, the FDA created a task force to come up with long-term solutions to combat these shortages. In addition to low-profit generics, shortages often involve low-profit injections, such as injected painkillers, old cancer drugs, and saline solution.

In addition to addressing drug shortages, Civica Rx also hopes to provide more predictable supplies of generics and bring down costs, as some generics have seen sharp price hikes despite being decades old. The company expects to have its first products on the market as early as 2019.

According to the organizations, research into the actual costs of manufacturing and distributing generic drugs suggests that, in many instances, prices for generic drugs used in hospitals can be reduced to a fraction of their current costs.