Civica Rx, a provider-led nonprofit generic drug company that's looking to improve access to generic medication and lower drug costs, opened its headquarters in Lehi, Utah, last week. The company hopes to target drug shortages and is partnering with more than 900 U.S. hospitals. Civica Rx plans to supply 14 generic drugs and have its first on the market by the end of the year.
The Utah city was chosen because it is centrally located among the state's universities and "has become a hub for Utah's start-up and tech community, which will enable Civica Rx to draw on local expertise and talent," according to a press release. One of the leading organizations behind Civica Rx, Intermountain Healthcare, is already based in Utah. Plus, Civica Rx has said there is an existing generic drug infrastructure in the state, pointing to Teva's presence there as one example.
The company's governing board and founding members has about two dozen healthcare stakeholders, including Intermountain Healthcare, Mayo Clinic, HCA Healthcare, Providence St. Joseph Health, Trinity Health and Advocate Aurora Health.
Civica Rx CEO Martin VanTrieste said the grand opening Thursday was an opportunity to focus on the reason the company was created — to stabilize the generic drug supply. "Drug shortages strain hospital staff, lead to delayed surgeries and sub-optimal treatments for patients, and can lead to unpredictable price increases that result in budgetary instability in hospitals," he said.
The office will start with about 40 staff members but is expected to increase four- or five-fold withing five years, the company said.
.@Intermountain and our other partner systems have the opportunity through @CivicaRx to do the right thing for patients - providing affordable and available generic medications. @MarcHarrisonMD #StrongerTogether pic.twitter.com/6mkyCr6C71— Intermountain (@Intermountain) April 18, 2019
The opening follows criticism of drugmakers and pharmacy benefit managers for price increases and shortages for generics. There are hundreds of prescription drug shortages.
Also, total drug spend per hospital admission increased 18.5% between fiscal years 2015 and 2017, according to the American Hospital Association, Federation of American Hospitals and American Society of Health-System Pharmacists. The research found that more than 90% of the hospitals had to find alternative therapies in response to cost increases and drug shortages. The issue affected staffing. The report said one in four facilities had to downsize staff.
Civica Rx's headquarter unveiling comes amid a backlash to rising insulin prices. However, the company has said it will focus on producing hospital-administered drugs and has yet to disclose which drugs it will manufacture.
Earlier this month, Cigna and Express Scripts agreed to cap copays on insulin after the PBM received higher discounts from insulin manufacturers Eli Lilly, Novo Nordisk and Sanofi. The move came after patients and advocates spoke out about rising insulin prices that caused patients to ration insulin, which can lead to deadly consequences.
Policymakers have taken aim at both drug makers and PBMs. Earlier this month, PBMs appeared before the Senate Finance Committee to discuss drug pricing. The issue of reducing prescription costs has bipartisan support. HHS created a blueprint last year that looked to curb costs, including list prices and copays.