Hospitals Back Generic Drug Production Venture

Desiree Burns
September 10, 2018

The shortage of drugs may have recently peaked, according to Vizient's 2018 Drug Price Forecast, but the total number of drug shortages is not trending down.

"We are creating a public asset with a mission to ensure that essential generic medications are accessible and affordable", said Martin VanTrieste, CEO of Civica Rx and former chief quality officer for Amgen, one of the world's largest pharmaceutical companies. Civica Rx will either open their own FDA-approved manufacturing facilities or contract out to existing labs, but either way, they state that their first generics should be available as early as 2019.

And with an enormous guaranteed customer base for its products, Civica Rx will not only stabilize supplies of several key drugs, it could also make a lasting impact on the industry as a whole. "This will improve the situation for patients by bringing much-needed competition to the generic drug market".

Drug shortages have been widespread for more than a decade, particularly for affordable generic drugs, due to manufacturers consolidating, stopping production of low-profit medicines and having to fix manufacturing problems.

The Civica initiative started with five systems: Intermountain Healthcare, Ascension, SSM Health, Trinity Health, and the US Department of Veterans Affairs.

The foundations join seven large US hospital systems as governing members of Civica Rx.

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Three major philanthropies will also join Civica Rx as governing members: the Laura and John Arnold Foundation, the Peterson Center on Healthcare, and the Gary and Mary West Foundation. "They are not hard to manufacture", Liljenquist said. Civica Rx is collaborating with the American Hospital Association's newly formed Center for Health Innovation to address inquiries about the initiative. The drugs will be sold to nonmember hospitals as well, at slightly higher prices, Liljenquist said.

By stripping away the pressures of shareholders and middlemen, Civica plans to produce a stable supply of 14 commonly overpriced drugs and distribute them at consistent prices to the hospitals in its network. "We're not going to do volume discounts for HCA or any arrangement that would mean a critical access hospital in rural Nevada wouldn't get the same price", he says.

Guaranteeing a supply of drugs that have experienced shortages will also help stabilise the market.

Liljenquist and other officials would not say which drugs they'll be making.

An unknown is how current manufacturers will respond to this operation, perhaps by reducing prices or boosting production. If not, this might simply prove that Civica's backers are right and that these products do represent true market failures.

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