A group of major American hospitals established a nonprofit generic drug company, Civica Rx, to battle long-lasting shortages of critical medicines and their high prices. Their goals are providing stable supplies for 14 generic drugs used in hospitals and price transparency. This will allow hospitals to save time and money while providing patients with better health care.
Some American hospitals want to take control over the drug supply and fight back against the pharmaceutical manufacturers who cause price spikes and drug shortages. Since there won’t be any pressure from shareholders to issue dividends or push a stock price higher, they could make it happen. The new venture is backed by seven large health systems and three philanthropic groups.
“We’re trying to do the right thing – create a first of its kind societal asset with one mission: to make sure essential generic medicines are affordable and available to everyone,” Dan Liljenquist, chair of Civica Rx and chief strategy officer at Intermountain Healthcare in Utah, told The Washington Post.
Health systems such as the Mayo Clinic and HCA Healthcare are part of over 500 hospitals included in the consortium. They agreed to purchase a certain amount of their medications from Civica Rx, for a longer time. The initial Civica Rx’s governing members have already committed $100 million to the effort.
For competitive reasons, the exact list of Civica Rx’s drugs is not yet known. According to Elie M. Bahou, chief pharmacy officer of Providence St. Joseph Health and one of the members of the consortium, the criteria include drugs that underwent high price increases between 2014 and 2016 and some essential medicines that were on national shortage lists.
“There’s a whiteboard at every one of our pharmacies, and there are 10 to 20 drugs on the whiteboard and a number – that’s the supply they have on hand. And depending on what that number is, they’ll strategize: What are we going to do,” said Bob Ripley, chief pharmacy officer of Trinity Health, one of the health systems in the consortium.
Several hospital leaders complained about drug prices severely affecting their ability to manage budgets. Maybe an even bigger problem is clinical and staff time spent tracking the supply, looking for alternatives, and changing protocols.
“Every day at Intermountain, we manage more than 100 drug shortages, and most of them are generics,” Marc Harrison, president and CEO of Intermountain Healthcare, told 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.”
Martin VanTrieste, chief executive of Civica Rx, worked in the traditional pharmaceutical industry for decades, including in Amgen. Now, he wants to make sure the company remains focused on patients and will even do so voluntarily for free. According to him, the company has a bright future.
“We want the marketplace to take care of itself and work, so if the entrance of Civica with 14 drugs – and the threat we can do more, pretty quickly, make the marketplace work better, probably we don’t grow much bigger than that,” VanTrieste said. “But if the marketplace is broken and can’t be fixed by adding just 14 drugs,” the company could expand much more.
Still, there are risks. Other companies that make generic drugs could temporarily cut their prices in an effort to maintain market share. However, the model of guaranteeing a steady supply at a fair, transparent price will be attractive to hospitals. Since January, when the effort was first outlined, almost a third of the US hospitals have expressed interest.
“The risk of doing nothing is that we’ll continue with the same price escalations and shortages we’ve had,” said Amy Compton-Phillips, a chief clinical officer of Providence St. Joseph Health. “The risk of doing nothing to me seems higher than actually trying creative solutions to solve the problem.”
The first Civica Rx medication could be on the market as early as in 2019. Although it’s not yet known whether this will make drugs cheaper for patients, they will have better service and hospitals will certainly function more efficiently.
Learn more about drug shortages in the video below:
By Andreja Gregoric, MSc