Civica Rx trained by hospitals to manufacture drugs at predictable prices: injections

Sometimes IV bags are hard to find for hospitals. Other times, it is injectable folic acid to treat anemia. At present, lidocaine, a tissue numbing agent, is rare.

The shortages of generic drugs have hit hospitals in recent years. And with short supply and fewer suppliers of essential drugs, there have been price increases.

Hospital procurement agents continue to look for new sources for the medications patients need, while clinicians struggle to find alternatives.

"Every day at Intermountain, we manage over 100 drug shortages and most of them are generics," said Dr. Marc Harrison, president and CEO of Intermountain Healthcare, a system of 22 Salt Lake-based hospitals City. "The impact on patient care, in terms of trying to find alternatives and hurry up and trying to find the necessary medications, is incredibly long and disconcerting."

Intermountain, along with several other large hospital systems and philanthropies, is taking charge of the problem. They are launching a non-profit pharmaceutical company to combat rising costs and chronic shortages.

The company, called Civica Rx, will be independent. But the board of directors will include so-called governance members, including Intermountain, the Mayo Clinic and HCA Healthcare for Profit. Companies unveil the name, structure and leadership of the new company on Thursday. The intention to start it was announced in January.

The new company plans to market 14 common generic drugs, which have been rare and whose prices have risen in recent years. Harrison refused to name the drugs.

"As we decided on drugs, we were really practical," Harrison said in an interview. "We looked for drugs that were currently in short supply, we looked for medicines that were on the essential drug lists, and we looked for drugs that had significant price spikes."

Drug shortages have become so widespread that Commissioner Scott Gottlieb of the Food and Drug Administration set up a working group in July to find solutions. Last year, the Ministry of Justice and 45 states accused a group of generic drug manufacturers to set prices.

David Mitchell, founder of the Patients for Affordable Drugs advocacy group, says the non-profit idea is good, but its impact will depend on what the new company decides to do.

"They're taking very expensive drugs for rare diseases and for which there is no competition … it's fine." "If it's to compete where there is already has competition and lower prices, it's not as good. "

Civica Rx will begin applying to the FDA early in 2019 to manufacture and sell the new generics, Harrison said. And the company will probably start by contracting with existing manufacturers to manufacture the drugs under its label. Finally, he could buy his own manufacturing facilities.

The Association for Accessible Medicines, a trade group for generic drug companies, said in a statement that it "welcomes into the community of generic drug companies any entity that shares our commitment to offering drugs." safe, effective and affordable treatment options for patients, providers and payers.

Civica Rx obtains seed money from the founding hospital systems, as well as from three foundations: the Laura and John Arnold Foundation, the Peterson Center for Health Care and the Gary and Mary West Foundation. The CEO of the company will be former Amgen CEO Martin Van Trieste.

The nonprofit generics company was created by Dan Liljenquist, Senior Vice President and Strategy Director at Intermountain. He says that the production of some generic drugs has become so concentrated that companies hold monopoly power over essential drugs. And since they have already covered their manufacturing and development costs, they can use this power to prevent their competitors.

"They can lower their prices until the new competitor goes and then raise it," Liljenquist said at a round table in June.

To fight this power, Civica Rx will require hospitals to sign long-term contracts to buy drugs at fixed prices, even if another generic company lowers its prices. Liljenquist argues that long-term stability will be more attractive than the short-term temptation to reach agreement.

Early indications suggest that he is right.

About 120 health care companies representing about one-third of US hospitals contacted Civica Rx organizers to ask them to participate in the transaction, Harrison said.

He said that manufacturers of unscrupulous generic drugs should be on their guard.

"There are a lot of very serious generic drug companies that sell drugs at reasonable prices and supply them adequately," Harrison said. "They have nothing to fear, they are friends, they are good colleagues.

But less principled companies should take this into account.

"People who dig people and create shortages, they know who they are," he said. "And they are the ones who should be very worried."