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Home » Hospitals Are Fed Up With Drug Companies, So They're Starting Their Own

Hospitals Are Fed Up With Drug Companies, So They're Starting Their Own

A group of major American hospitals, battered by price spikes on old drugs and long-lasting shortages of critical medicines, has launched a not-for-profit generic drug company, Civica Rx, to take some control over the drug supply.

September 7, 2018
Los Angeles Times

Backed by seven large health systems and three philanthropic groups, the new venture will be led by an industry insider who refuses to draw a salary. The company will focus initially on establishing price transparency and stable supplies for 14 generic drugs used in hospitals, without pressure from shareholders to issue dividends or push up a stock price.

"We're trying to do the right thing — create a first-of-its-kind societal asset with one mission: to make sure essential generic medicines are affordable and available to everyone," said Dan Liljenquist, chair of Civica Rx and chief strategy officer at Intermountain Healthcare in Utah.

The consortium, which includes health systems such as the Mayo Clinic and HCA Healthcare, collectively represents about 500 hospitals. Liljenquist said the initial governing members have committed $100m to the effort. The business model will ultimately rely on the long-term contracts that member healthcare organizations agree to — a commitment to buy a fixed portion of their drug volume from Civica.

While Civica did not disclose which drugs it's focusing on for competitive reasons, Elie Bahou, chief pharmacy officer of Providence St. Joseph Health — a 51-hospital system spread across seven states, including California, and one of the members of the consortium — said the criteria include drugs that underwent price increases of 50 percent or more between 2014 and 2016 and essential medicines that were on national shortage lists.

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