250 more hospitals just joined in on a plan to make their own drugs and the effort could upend the generic pharma business

  • A group of hospitals have built a nonprofit generic drugmaker called Civica Rx.
  • On Monday, another 12 health systems joined the organization.
  • The hope is to make generic drugs that are in shortage or have artificially high prices based on what hospitals need.

Hospitals have a creative plan to tackle the high price and frequent shortages of generic drugs.

The nonprofit company, dubbed Civica Rx, was first announced in early 2018, and has gained a lot of attention from other hospitals around the US who are interested in being a part of the venture.

On Monday, the organization said that another 12 health systems had joined its ranks, including Illinois and Wisconsin-based Advocate Aurora Health, Michigan’s Spectrum Health, and NYU Langone Health. Together, they make add another 250 hospitals to the venture.

They join a slew of hospitals, including Catholic Health Initiatives, HCA Healthcare, Intermountain Healthcare, Mayo Clinic, and Providence St. Joseph Health that serve as governing members. The Department of Veterans Affairs is also consulting with Civica to make sure the agency is getting what it needs for patients.

Read more: Hospital groups and the VA are trying to upend the generic drug business

In September, Civica Rx named Martin VanTrieste as its CEO. VanTrieste is the former chief quality officer for Amgen who spent most of his career working at large pharma companies like Abbott and Bayer on sterile injectable drugs. He’d been in retirement for two years and had one condition to coming back: no salary. Instead, the funds that may have gone to his compensation will be used for other aspects of the company.

To start, Civica will focus on making 14 drugs that are used in hospitals, typically injectable drugs. Those are expected to come in 2019. The company’s priorities include making essential medicines that have been on the FDA drug shortage list, and taking on decades-old drugs that have artificially higher prices because they don’t face any competition.

In those cases, companies made business choices that led to those shortages. Some drug shortages are related to manufacturing problems. In other cases, some of the companies making the drug simply stop making it, or a drug is only being produced by a single manufacturer, which can lead to price hikes. There’s also been a consolidation of the manufacturers that produce generic drugs.

For years, health systems have been on the hook for skyrocketing drug prices for injections or drugs delivered through IV solutions. And as of Thursday, there were 205 drugs currently facing shortages, according to the American Society of Health-System Pharmacists. Those shortages include everything from bags of saline solution to common antibiotics and a type of epidural used for pregnant women during childbirth.