Civica Rx, the nonprofit generic drug company formed by some of the nation’s leading hospitals, has brought some more big names on board.
Twelve more health systems have joined the company as founding members, bringing the total number of participating hospitals to nearly 750, Civica announced. The new members join the seven health systems and three philanthropies that formally launched the company in September.
Dan Liljenquist, senior vice president and chief strategy officer for Intermountain Healthcare and Civica’s board chair, told FierceHealthcare that the “exciting” additions showcase how hospitals across the country struggle with drug shortages and pricing.
“It’s a universal problem,” he said. “There are hundreds and hundreds of drugs hospitals are struggling to get.”
Civica Rx founding members
Intermountain spearheaded Civica’s founding and is one of the governing members that kick-started the company last fall. The 12 new members will join Intermountain and the nine other governing members as an advisory board to select which medications Civica will produce.
The company is planning to launch 14 products this year.
Martin VanTrieste, Civica CEO and a former executive at Amgen, told FierceHealthcare recently that, although the company’s three member tiers offer different levels of governance, each member pays the same for Civica’s medications.
Each member makes a one-time investment that varies between the three tiers. Governing members, as they have the most operational involvement, pay more upfront to fund the company—Civica raised about $160 million from its early members—while providers on the lowest tier, partners, pay a $300-per-bed fee to participate.
The participating providers also sign long-term contracts, agreeing to purchase 50% of their volume of a drug for between 5 and 10 years. They’re required to purchase the other 50% elsewhere in the contracts, VanTrieste said, as that promotes competition.
Liljenquist said Civica’s founders were also careful to build in as many safeguards against profiteering as possible; the company is nonprofit and none of the members are shareholders.
Civica will also be transparent about where its drugs are produced so that participating hospitals can react more quickly and effectively to avoid any adverse harm, VanTrieste said.
“We’re very open,“ he said. “We tell everybody what we’re doing because we hope more companies adopt these good behaviors and stabilize the marketplace.”
Liljenquist said that the full group of participants convened in December for the first time, and the “camaraderie” in the room was palpable.
“It’s been really fun because this is common ground—all of us are struggling,” he said.