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Pharmacy Choice - Pharmaceutical News - Fed up with high prices, drug shortages, Advocate and other hospitals create not-for-profit drug company [Chicago Tribune] - March 23, 2019

Pharmacy News Article

 1/10/19 - Fed up with high prices, drug shortages, Advocate and other hospitals create not-for-profit drug company [Chicago Tribune]

Jan. 10Advocate Aurora Health, one of the largest hospital systems in the Chicago area, has teamed up with a large group of hospitals intent on battling shortages of generic drugs and bringing down the cost of those medications by making their own.

If the venture is successful, the hospitals could pay up to 50 percent less for some drugs savings that potentially could be passed on to patients.

It was announced this week that Advocate Aurora, which operates 27 hospitals in Illinois and Wisconsin, has joined Civica Rx, a not-for-profit generic drug company established last year by philanthropic groups and seven other health systems that were fed up with generic drug shortages in hospitals and high prices.

The parent companies of Loyola Medicine and Franciscan Health Olympia Fields are also members of Civica Rx.

In exchange for investments in Civica Rx, Advocate and the other systems will help decide which drugs the company will produce and will be able to buy those drugs in the future. Neither Advocate nor Civica Rx would disclose Advocate's investment. The idea is that Civica Rx will supply the hospitals with a more reliable stream of generic drugs, at affordable prices, so hospitals can provide quality care to patients at a lower cost.

"If there's a medication shortage or a pharmaceutical company is charging an arm and a leg for a medication, that has a negative impact on our patients," said Rick Klein, Advocate Aurora chief business development officer, in an email. "This creates a manufacturing and distribution infrastructure that will allow us to ensure access to the medications our patients need at a price they can afford."

In recent years, hospitals have struggled with shortages of drugs that have included an intravenous fluid meant to help replenish patients' electrolytes, certain blood thinners, and some forms of the tissue-numbing medication lidocaine, among others. Drug companies often blame increasing demand and manufacturing issues for shortages.

Nearly 90 percent of all prescriptions filled in the U.S. are for generic drugs, according to the U.S. Food and Drug Administration. Generic drugs tend to cost less than brand-name medications, but even prices for generics can skyrocket, especially when they're in short supply.

"A lot of the shortage drugs, because there are so few vendors for these drugs, have prices that are completely inappropriate for our patients," said Heather Wall, chief commercial officer for Civica Rx, which is headquartered in Salt Lake City.

Compounding the issue, many hospitals also have faced financial woes in recent years because reimbursements from government insurance programs have not kept pace with the cost of care. Unpaid medical bills and growing costs associated with information technology and drugs have also posed financial challenges. In 2017, Advocate announced about $200 million in cuts due to some of those pressures.

Civica Rx expects that for some of the drugs it produces, it will be able to lower the prices paid by hospitals by 35 percent to 50 percent.

Civica Rx has already selected 14 hospital-administered generic drugs to focus on this year. Wall declined to identify the drugs, but she said Civica Rx is working to to bring them to market in the second half of the year. Civica Rx is working to gain approval from the U.S. Food and Drug Administration to become a manufacturer, and it plans to either directly manufacture the drugs or contract with other manufacturers.

Across the country, systems representing about 750 hospitals have so far joined the effort.

Initially, only hospitals not individual consumers will be able to purchase Civica Rx's medications, though that could eventually change, Wall said. Only those hospitals that have signed on as members of Civica Rx will be able to buy the drugs.

The Association for Accessible Medicines, a generic drug industry group, welcomes "competition in any form" and looks forward to discussing the issues facing the industry with Civica Rx at the group's annual meeting next month, said Rachel Schwartz, a spokeswoman for the association, in a statement.

At least two other members of Civica Rx also have hospitals in Illinois, including SSM Health, with hospitals in southern Illinois, and UnityPoint Health, with hospitals in Peoria and in the Quad Cities.

Other governing members of Civica Rx include Catholic Health Initiatives, the Gary and Mary West Foundation, HCA Healthcare, Intermountain Healthcare, Laura & John Arnold Foundation, Mayo Clinic, the Peterson Center on Healthcare, Providence St. Joseph Health and Trinity Health. Additional founding members include Allegheny Health Network, Baptist Health South Florida, Franciscan Alliance, Memorial Hermann, NYU Langone Health, Ochsner Health System, Sanford Health and Spectrum Health.


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