Civica Rx generic drug company started by hospitals picked Martin VanTrieste as CEO

In
this Monday, Jan. 8, 2018, photo, a nurse administers an I.V.
push of antibiotics to patient Alice McDonald at ProMedica Toledo
Hospital in Toledo, Ohio.
AP

• A group of hospitals have built a nonprofit generic
  drugmaker called Civica Rx. 
• The company will be led by pharma veteran Martin
  VanTrieste who won’t be compensated for his
  work. 
• The hope is to make generic drugs that are in shortage
  or have artificially high prices based on what hospitals
  need. 

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Hospitals have a creative plan to tackle the high price and
frequent shortages of generic drugs. 

The nonprofit company, dubbed Civica Rx, was
first announced in January, and has since gained a lot of
attention from other hospitals around the US who are interested
in being a part of the venture. 

Civica said Thursday that it’s named Martin VanTrieste as its
CEO. VanTrieste is the former chief quality officer for Amgen who
spent most of his career working at large pharma companies like
Abbott and Bayer on sterile injectable drugs. He’d been in
retirement for two years and had one condition to coming back: no
salary. Instead, the funds that may have gone to his compensation
will be used for other aspects of the company.  

A slew of hospitals, including Catholic Health Initiatives, HCA
Healthcare, Intermountain Healthcare, Mayo Clinic, and Providence
St. Joseph Health will be involved in the initiative as governing
members along with nonprofit organizations like the Laura and
John Arnold Foundation. The Department of Veterans Affairs will
also consult with Civica to make sure the agency’s getting what
it needs for patients. 

To start, Civica will focus on making 14 drugs that are used in
hospitals, typically injectable drugs. The company’s priorities
include making essential medicines that have been on the FDA drug
shortage list, and taking on decades-old drugs that have
artificially higher prices because they don’t face any
competition. 

In those cases, companies made business choices that led to those
shortages.

“There was a financial decision
made behind that drug shortage,” VanTrieste told Business
Insider in an interview. By going the nonprofit route, ideally
Civica can avoid the pressure of answering to
investors. 

For 
years
,
health systems have been on the hook for 
skyrocketing
drug prices
 for injections or drugs delivered
through IV solutions. And as of Thursday, there
were 
148
drugs currently facing shortages
, according to the
American Society of Health-System Pharmacists. Those
shortages include everything from bags of saline solution to
common antibiotics and a type of epidural used for
pregnant women during childbirth. 

Why hospitals are facing drug shortages and price hikes

There are a number of explanations for generic drug
shortages. Some are related to manufacturing problems.
In other cases, some of the companies making the drug simply
stop making it, or a drug is only being produced by a
single manufacturer, which can lead to price hikes.

And therein lies the problem: There are not enough
companies making the drug to keep up with demand.

It’s all part of a consolidation
of the manufacturers that produce generic drugs.

US generic companies have had a harder time turning a profit on
generic drugs while competing with companies outside the US that
are able to make the same drugs at a cheaper cost. That’s caused
manufacturers to home in on certain generic drugs and discontinue
others that don’t make as much money.

If a generic manufacturer has a shortage, there’s no
easy solution — you can’t just pass off the job to another
company while the first fixes its problems, since getting
approval to take on a new drug can take years. It also
creates situations in which only one or two companies produce a
certain drug, making it vulnerable to price increases. 

Civica’s first step is to work with manufacturing
partners, VanTrieste said.
The plan is to have some of the first products on the market by
2019. 

As for whether Civica will be a
temporary fix for the generic drug shortage problem or will
continue to exist for the long-term, VanTrieste isn’t sure. The
company’s priority, as for now, is stabilizing the generic drug
market and keeping an eye out for big price increases.

“
If people want to, they know we’ll step in,”
he said. That could make the job of Civica fairly hands-off if
its presence deters others from taking advantage of the system.
But on the other hand, a more stable market could lead to generic
companies to discontinue making certain drugs that they won’t
make much money on. 

“If that happens, we could get
very big,” VanTrieste said. 

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