Seven Hospitals Launch Generic Drug Company to Prevent Shortages, Reduce Costs

In January 2018, a coalition of 6 hospitals reported that they would launch a generic drug company to address drug shortages and the high cost of lifesaving medications. Recently, the Mayo Clinic said it will join forces with the 6 other hospitals to back the nonprofit company, according to a statement from the health care system.

The company, Civica Rx, is financially supported by the 7 hospitals, as well as 3 philanthropies, and will produce 14 drugs that are frequently in shortage and rising in price. The generic company has already been FDA approved and plans to have products approved and available to both hospitals and the retail market as early as 2019, according to the statement.

Research on the cost of manufacturing generic drugs has determined that generic drug prices in hospitals are significantly higher than they should be because of both a lack of competition and a shortage in the generic market. A nonprofit generic manufacturer like Civica Rx could reduce the cost of generics to a fraction of their price and save both health care systems and patients hundreds of millions each year, according to the Mayo Clinic.

Civica Rx intends to prioritize patients by ensuring that essential generic medications are available in hospitals. By collaborating to create necessary competition and disrupt the generic market, the drug company also hopes to reduce the cost of these critical drugs.

“This endeavor demonstrates the need for collaboration to solve the most complex health care challenges of today,” said John Noseworthy, MD, CEO of the Mayo Clinic. “I am pleased to see our collective commitment to improving the health and well-being of millions of patients come alive through this mission-driven initiative”

The health care systems involved in the initiative are Catholic Health Initiatives, Hospital Corporation of America, Intermountain Healthcare, the Mayo Clinic, Providence St. Joseph Health, SSM Health, and Trinity Health. Each of the 7 hospitals will have a member on the Civica Rx board, representing about 500 US hospitals. Philanthropies, which will allow Civica Rx to maintain a nonprofit status and focus on its mission, include the Gary and Mary West Foundation, the Laura and John Arnold Foundation, and the Peterson Center on Healthcare.

Since the initial announcement, the generic manufacturer has received interest from more than 120 US health systems, or about one-third of the nation’s hospitals, in working with Civica Rx, according to the Mayo Clinic.

“We are creating a public asset whose mission is to ensure that essential generic medications are accessible and affordable,” said Martin Van Trieste, CEO of Civica Rx.

“The fact that a third of the country’s hospitals have either expressed interest or committed to [participating] with Civica Rx shows a great need for this initiative,” he said. “This will improve the situation for patients by bringing much-needed competition to the generic drug market.”

Van Trieste, who previously worked as the chief quality officer of Amgen, will head the company without compensation, according to the statement.

Reference

• Anastasijevic D. Mayo Clinic joins hospitals to launch a not-for-profit generic drug company. Mayo Clinic News Network website. newsnetwork.mayoclinic.org/discussion/mayo-clinic-joins-hospitals-to-launch-a-not-for-profit-generic-drug-company/. Published September 6, 2018. Accessed September 12, 2018.