Hospital Groups Launch Own Generic Drug Company

Seven health systems are stepping up to the plate to tackle two of the healthcare industry's most pressing challenges: drug shortages and rising prescription drug rates.

Other initial governing members of Civica Rx are Catholic Health Initiatives, Hospital Corporation of America (HCA), Intermountain Healthcare, Mayo Clinic, Providence St. Joseph Health, SSM Health, and Trinity Health.

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

U.S. hospitals' initiative to steady the generic drug supply chain has produced a name, a chief executive and some weighty new partners. The industry faced 183 active drug shortages by the end of 2017. But with more drugs on hand, hospitals will certainly have it easier. Civica Rx is collaborating with the American Hospital Association's newly formed Center for Health Innovation to address inquiries about the initiative. Prescription drug rates are slated to see an nearly five percent boost in 2019, Vizient projected.

In an effort to ensure access to certain widely used drugs at affordable prices, a group of leading hospitals and health systems have established a not-for-profit organization to produce therapies in short supply or subject to unusual price increases. The systems announced their plans to form the company back in January 2018. Dan Liljenquist, vice-president of the enterprise initiative office at the Utah-based Intermountain Healthcare, told Vantage that a unanimous vote of its members would be necessary to convert Civica from non-profit to profit-making status. The company also will provide generic medications to the retail market, offering an affordable alternative to products from incumbent generic drug companies.

Since the initiative was announced in early 2018, more than 120 health organizations representing about one-third of the nation's hospitals have contacted Civica Rx and expressed a commitment or interest in participating with the new company. 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.

The Department of Veterans Affairs already signed on to provide consulting services to Civica Rx.

Three large philanthropy organizations also pledged their support for the drug company.

The philanthropic organisations the Laura and John Arnold Foundation, the Peterson Center on Healthcare, and the Gary and Mary West Foundation will sit on the governing board to help ensure that it remains focused on a social welfare mission. The company hopes to bring its first drugs to the market next year.