Sick of jacked-up pharma prices, 500 hospitals join to make their own drugs

To combat volatility of drug supplies and prices, a group of hospitals has created its own not-for-profit drug company to make common medicines more accessible.

September 7, 2018

A group of major American hospitals banded together to form a not-for-profit generic drug company called Civica Rx to reduce dependence on inconsistent drug prices.

The creation of the mission-driven enterprise, which has already secured more than $100m in preliminary funding, highlights the urgent need for reform in the drug business. 

The drug-pricing system makes hospitals sick

Arbitrage between drugmakers, pharmacy benefit managers, and doctors leads to price spikes and shortages of common, lifesaving medicines. 

Price changes force hospitals to pay premiums of as much as 50% for common drugs, diverting lifesaving resources toward tracking drug supplies and predicting what the f*ck drugmakers will do next.

So to create a more consistent supply, a consortium of 7 massive health systems encompassing more than 500 hospitals formed a “first-of-its-kind societal asset to make essential generic medicines affordable and available to everyone” with a $100m initial investment.

Taking matters into their own medicine cabinets

Civica Rx has already attracted interest from more than 120 health organizations (⅓ of the country’s hospitals) and tapped Martin VanTrieste, former head of biotech giant Amgen, to serve as pro-bono CEO.

By stripping away the pressures of shareholders and middlemen, Civica plans to produce a stable supply of 14 commonly overpriced drugs and distribute them at consistent prices to the hospitals in its network. The company hopes to bring its first drugs to the market next year.

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