Approximately 500 U.S. hospitals facing costly generic drug shortages are banding together to form their own non-profit drug company called Civica Rx, which they hope will start selling drugs as early as 2019.
Civica Rx will be an independent company led by a board consisting of seven health care systems. These board members include the Mayo Clinic, Utah-based hospital system Intermountain Healthcare and several Catholic health systems, reported CNBC. The company will start by manufacturing and purchasing 14 kinds of generic drugs that hospital patients often need.
“Every day at Intermountain we manage more than 100 drug shortages, and most of them are generics,” Intermountain president and CEO Dr. Marc Harrison 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.”
Civica Rx will be led by Martin Van Trieste, a former executive at global biopharmaceutical company Amgen. Van Trieste will not take a salary, according to Axios.
Approximately one-third of U.S. hospitals want in on Civica Rx, reported NPR. The health care companies will have to play by the non-profit’s slightly unorthodox rules: Hospitals purchasing from Civica Rx will sign long-term contracts committing to fixed prices of the generic medications, according to NPR. That means the hospitals cannot exit their deals with Civica Rx if another company sells the same drugs at cheaper prices.
Civica Rx says its system will lead to a more stable market long-term for generic drugs. Generics are designed to be cheaper yet identical alternatives to more expensive brand-name drugs.
However, manipulation by brand-name drugmakers has contributed to a lack of competition in the generics market, according to P&T Community. Some brand-name manufacturers even pay generics companies to delay rolling out generics, costing consumers billions, according to the Harvard Business Review.
The Food and Drug Administration under commissioner Scott Gottlieb has been pushing for more competition in the generic drug market by streamlining the approval process and even incentivizing drugmakers to invest in generics by granting temporary market exclusivity. (RELATED: 10 Percent Of American Kids Are Diagnosed With ADHD. Researchers Say This May Be A Good Thing)
Generic drugs are off-brand copies of drugs that are no longer patented. Drug patents can last for 20 years and be extremely lucrative for drugmakers, according to Truveris. Drugmakers spend billions each year to build up customer bases for their brand drugs so that when their drugs go off-patent, cheaper generics do not steal their market.
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