A New Kind Of Drug Company

All across the United States, medical professionals find themselves in a tight spot. See, critical medications are in short supply, leaving hospitals scrambling to pay exorbitant prices for drugs that they have to painstakingly track down, or identify (possibly inferior) alternatives. Now, a group of major American hospitals is fighting back against the pharmaceutical manufacturers causing many of these issues. They’ve banded together to form Civica Rx, a nonprofit organization that will manufacture its own supply of 14 as-yet-unnamed generic drugs.

Some good news in the medicine industry! Health systems such as the Mayo Clinic and HCA ,collectively represent about 500 hospitals across the US. They have committed over one hundred million so far. Additional philanthropist groups have contributed as well. The criteria for selected drugs were those that had a price increase of 50 percent between 2014-2016 and essential meds that hospitals continually ran short on.

Not only does the pricing affect lives and health, but it can hurt business as well.
One survey revealed that about one third of hospital administrators said higher medicine pricing created a "severe" effect their budgeting efforts.

Martin VanTrieste, chief executive of Civica, worked in the traditional pharmaceutical industry for decades — most recently at biotech giant Amgen — and said that he came out of retirement to take on the role with two requirements: He’d work without pay, and the company had to remain focused on patients. The question of how big the company might grow, he said, depends on how the market reacts.

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Well that is refreshing, a veteran pharma industry person who not only recognizes the issue, but wants to put well being of people before profits. His experience and credibility should serve this initiative well. "Without pay?" How noble...(he prolly has boatloads of money anyway from previous work), but nevertheless.

Civica Rx’s governing members have already pledged $100 million to launch the company. In total, it represents about 500 hospitals, which will each agree to purchase a certain amount of their medications from Civica Rx. Because Civica Rx is a nonprofit (and so not beholden to shareholders), it can sell these medications without worrying about making the most money possible. “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,” Dan Liljenquist

The"right thing" from a pharma insider,hooray!

There are risks to the idea. Civica’s leaders have discussed the possibility that other companies that make the generic drugs will temporarily cut their prices in an effort to maintain market share. But Civica leaders say the model of guaranteeing a steady supply at a fair, transparent price will be attractive to hospitals. Since the effort was first outlined in January, health organizations that represent a third of the nation’s hospitals have expressed interest.

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I think this will become popular, but I do wonder. How will big pharma respond to such a threat, taking a cut of their pie? An additional army of lobbyists? Negative ad campaign? Or will they just settle for less profits, while still making a fortune? They could adopt this approach to some degree and reduce their margins, but that goes against typical business models huh?

It is sad that co's used to strive for simple viability and a healthy increase each year, whereas now, so many shoot for maximum profits at so many costs. I appreciate successful business goals, but I think there is a lot of middle ground to be obtained between Research and Development to final pricing.
How Drug Companies Get Their Prices

According to Marc Harrison, president and CEO of Intermountain Healthcare, one of the companies involved in Civica Rx, the project has the potential to dramatically improve the care patients receive at U.S. hospitals. “Every day at Intermountain, we manage more than 100 drug shortages, and most of them are generics,” he told NPR. “The impact on patient care, in terms of trying to find alternatives and scurrying around and trying to find necessary drugs, is incredibly time-consuming and disconcerting.” It’s not clear yet whether this will actually make things cheaper for patients, especially those without insurance. But with more drugs on hand, hospitals will certainly have it easier. The first Civica Rx medication could be ready to hit the market as soon as 2019.

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We all have seen the absurd margins for drugs, particularly the ones that work and cure some of the most horrific diseases. I understand the costs involved with design and testing new drugs, but I also feel that sheer greed is typically involved with price decisions.
750,000 Dollar Price Tag On Life


I hope that this model catches on and serves to save lives. It is crazy to have a cure available but unobtainable due to cost in these modern times. I know it can't be free, but still...middle ground. I applaud the effort here though.

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I really hope this works out, and wouldn't it be nice if people like Bezos and some other ultra rich threw a few million at it?

Unfortunately, there are humans involved, so I am of course concerned about it being corrupted.

But anything at this point, to "stick it" to the big pharma companies.

Just smoke Mary Jane. Why take any drugs for anything at all? It cures almost anything.

This probably will not lead to cheaper meds for us. It will allow Mayo and other hospitals to recoup some of their costs from owning shares in the companies making the drugs though, so the profit is fed right back into their pocketbooks with no savings necessarily for the patient. This will increase the money they can pay to their management and maybe allow them to upgrade some equipment without raising the price since their reimbursement is set by what insurances allow. The insurances will pay the going rate for meds used by the hospital. Don't plan on your costs going down for meds, they will not compete with the big Pharma companies.

originally posted by: rickymouse
This probably will not lead to cheaper meds for us. It will allow Mayo and other hospitals to recoup some of their costs from owning shares in the companies making the drugs though, so the profit is fed right back into their pocketbooks with no savings necessarily for the patient. This will increase the money they can pay to their management and maybe allow them to upgrade some equipment without raising the price since their reimbursement is set by what insurances allow. The insurances will pay the going rate for meds used by the hospital. Don't plan on your costs going down for meds, they will not compete with the big Pharma companies.

Unfortunately, your probably right.
It is not unlike how partisans cheer when certain government programs or policies or cut, and yet my taxes never decrease, and instead actually increase every year.

They money saved instead is going to some shysters to fatten their wallets.

Let them set prices which if the big pharma companies will match they get x percentage of total sales through the group. I see this as a win-win. God knows big pharma could use some truly positive public relations.

This wont be a big enough operation to have any significant effect, IMHO.
My wife gets a drug for 200 per month, that, if a generic were more widely produced and available, is under 50 w/ insurance and discount. The generic is usually unavailable, due to not enough available.

The problems for this are twofold:

1) IIRC, a generic cannot be made by an outside company for 17 years after a new drug is first made. So any generics of newer drugs are made by the owner of the brand name. Like, say, Crestor generic version, for that amt. of time, is made by, or licensed by, AstraZeneca (AZ). Now, AZ would still have the same production costs, etc. And why would they make a lower priced version, to make less $$$, that cuts into Crestor sales?

2) Likely, those drugs will be specialized, 'in house' drugs, or most of them will. Ones the hospital uses but not widely in use outside of it.
The patient may see a reduction in the surgery/inpatient bill. However, The drug companies will make this up in prescription meds, common ones: Paxil, xanax,tramadol, etc.

The net result to the consumer will be overall higher costs, I would bet.

Unless this company makes regular prescription drugs; then it's anyones guess, but big pharma makes drugs in bulk. This company sounds low-output. Higher production costs, etc.