A health system-led nonprofit that intends to address rising prescription drug prices and shortages, expects it will be able to supply a total of about 20 different drug products in 2019.

About the nonprofit

In January 2018, four of the nation's biggest hospital systems—Intermountain Healthcare, Ascension, SSM Health, and Trinity Health—announced plans to form a nonprofit company, called Civica Rx, that would supply certain generic drugs. The systems said they hope to challenge the pricing practices of drugmakers that have hiked the prices of older, off-patent medicines, as well as to stave off drug shortages, which have become increasingly common in recent years.

Since the announcement, the four hospital systems have raised more than $160 million for Civica Rx by requiring hospitals that want to purchase generic drugs from Civica Rx to pay a membership fee based on the hospital's size. The hospitals in addition to the membership fee will have to pay for any drugs they purchase. About 800 hospitals have become members, including the Catholic Health Initiatives, HCA Healthcare, and the Mayo Clinic.

Intermountain Healthcare, Ascension, SSM Health, and Trinity Health said Civica RX initially will work with third-party manufacturers to produce the generic drugs, but Civica Rx CEO Martin VanTrieste said the nonprofit over four or five years will either buy or build its own manufacturing facilities to produce generic drugs with FDA approval.

Civica Rx expects to offer 20 generic drugs in 2019

Civica Rx officials told Reuters they expect the nonprofit will offer members access to about 20 different generic drugs, including generic septic shock treatments, in 2019—up from an initial estimate of 14 generic drug products. The officials said they revised their projections after Civica Rx began developing new relationships with manufacturers licensed to produce additional generic drugs.

The officials said Civica Rx had been negotiating with the manufacturers to set long-term prices for the generic drug products in exchange for member hospitals committing to purchase the products for five to 10 years. The officials would not specify which manufacturers are collaborating with the nonprofit, but they said the generic drugs would be produced in New Jersey, North Carolina, and Pennsylvania.

VanTrieste said Civica Rx aims to ensure the nonprofit's generic products are continuously available by always maintaining a six-month supply of products. Company officials said they hope Civica Rx will offer members up to 100 generic drug products within three to five years.

VanTrieste said, "These are very, very old drugs that have been used not only for decades, some for almost a century. When hospitals can't have them, they are forced to cancel patient treatments or find alternative treatments. In most cases, that is suboptimal care or no care at all" (Mincer, Reuters, 1/24; Baker, "Vitals," Axios, 1/25).