A new Utah nonprofit says it’s ready to combat drug shortages and price gouging, now that hundreds of hospitals have joined forces to form their own drug company and ensure a steady supply of some needed medications.
Civica Rx — introduced earlier this year as Project Rx — will begin selling 14 generic drugs to hospitals next year, according to the organization's CEO and administrators from Intermountain Healthcare, which helped launch the project.
"It only takes one generic company [to stabilize] a market if they are acting without a profit motive," said Intermountain executive and former Utah state senator Dan Liljenquist at a news conference Thursday.
Intermountain is joining six other health care systems, representing some 500 hospitals, to set up long-term purchase agreements with "trusted manufacturing partners," said Civica CEO Martin VanTrieste, retired chief quality officer for the pharmaceutical giant Amgen.
Civica is starting with 14 generic drugs, but organizers won’t say which ones until they are ready to sell. The drugs were chosen from more than 200 identified by doctors and hospital administrators as crucial for saving lives, but vulnerable to shortages and dramatic price spikes — especially those caused by what VanTrieste described as deliberate ploys by some drugmakers to exploit desperate patients.
"These are the [drugs] that are causing the most distress and the most pain in the hospital system," VanTrieste said.
Civica will be focusing initially on drugs that have been around for a half-century or more, but whose manufacturers haven't made enough to consistently meet demand, VanTrieste said.
"We're chasing these 50- and 60-year-old drugs that the margins aren't sufficient," he said.
Civica has the potential to drastically change markets for the drugs its sells, said Intermountain DEO Marc Harrison. Since the project was announced in January, more than 120 companies, representing a third of the nation’s hospitals, have expressed interest or made commitments to buy drugs from Civica, Harrison said.
"Generic drug manufacturers who are honorable ... have nothing to worry about," Harrison said. "The folks who are perverting the system — they know exactly who they are, and they should be very concerned."
Civica will sell only to hospitals initially because they are treating patients with critical needs, Liljenquist said.
Utah is one of dozens of states that last year joined the U.S. Justice Department in an antitrust case against a group of drug companies accused of fixing prices on 15 generic drugs. The U.S. Food and Drug Administration this summer launched a task force to study drug shortages. The FDA now lists more than 100 drugs as "currently in shortage."
Six health care systems are joining Intermountain Healthcare, the University of Utah and the U.S. Department of Veteran’s Affairs to oversee Civica and provide start-up money. They are Catholic Health Initiatives; HCA Healthcare, which oversees Utah’s Mountainstar hospitals; Mayo Clinic; Providence St. Joseph Health, SSM Health and Trinity Health. Three other nonprofits — the Laura and John Arnold Foundation, the Peterson Center on Healthcare, and the Gary and Mary West Foundation — also are participating.
“We intend to make our prices fully transparent. We’re making these drugs available at the lowest possible price,” Liljenquist said. “We’ve thought of every eventuality to make ... these drugs, which are owned by society — they remain in the public domain — affordable and accessible to everyone.”
Follow @erinalberty