Civica Rx inks first generics deal in bid to fight hospital drug shortages

"Vancomycin was the No. 1 drug in the tier one list," Civica Rx CEO Martin VanTrieste said about one of the first antibiotic drugs to be produced by the generic drug company created last year by a consortium of hospitals. (Civica Rx)

Two commonly used antibiotics will be the first products to be produced through an agreement with Civica Rx, the generic drug company started by a consortium of hospitals last year.

After inking a five-year deal with Copenhagen-based Xellia Pharmaceuticals, Civica Rx officials said they expect to make the broad-spectrum antibiotics vancomycin and daptomycin directly available to Civica Rx's member hospitals by the third quarter of this year.

It has committed to partnering with suppliers to deliver 14 essential generic medications this year.

Vancomycin and daptomycin were among drugs at the top of a list of about 30 different priority drugs identified by member hospitals, Civica Rx's CEO Martin VanTrieste told FierceHealthcare. Knowing they couldn't create all the drugs at once, they organized them into tier one through tier three priorities, he said.

"Vancomycin was the No. 1 drug in the tier one list. Vancomycin is a very broad spectrum antibiotic used to treat very, very aggressive bacterial infections where other antibiotics might not be effective," he said. "The health systems were concerned that 'Vanco' was sporadically available to the patients."

The announcement was cheered by member hospitals such as Providence St. Joseph Health System (PSJH), which has been impacted by intermittent shortages, in particular, of vancomycin, said Amy Compton-Phillips, M.D., who is the system's executive vice president and chief clinical officer.

"It's like not having milk in your fridge," Compton-Phillps said. "You can figure out a workaround. But it's frustrating."

Often the workaround, which is based on the specific patient and the particular infection, requires less effective or more toxic drugs. Other staple drugs PSJH has identified as areas of concern are morphine, IV solution and Methylene blue. "We've been searching for solutions for a long time," Compton-Phillips said. "We're really excited to see this going from ideation to realization."

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Xellia already produces its own active pharmaceutical ingredients as well as finished injectable drug products for serious and often life-threatening bacterial and fungal infections, and is expanding its manufacturing and sales capabilities within the U.S.

“We are honored to work with Civica, an innovator in addressing generic drug shortages,” Carl-Aake Carlsson, CEO of Xellia Pharmaceuticals, said in a statement. “Our collaboration also supports Xellia’s long-term ambition of mitigating anti-infective drug shortages across the U.S."

When Civica Rx identified Xellia as its target partner, Xellia was more than happy to discuss a deal with Civica because they're opening access to the hospital purchasers.

In fact, it was Xellia which suggested expanding the deal to include daptomycin—an antibiotic that was already on Civica's tier two list of priority drugs to pursue, VanTrieste said. Other priorities the hospitals have identified include local anesthetics, pain management medications, cardiac drugs and IV nutritional products.

"What makes this attractive to suppliers like Xellia is that, because of the way contracts are awarded over time, you have one or two manufacturers supplying most of the market," VanTrieste said. "Players like Xellia don't have access to all of the customers just because of the way pharma companies try to negotiate the contracts to get the most volume possible so they can be the most efficient in their operations. Companies like Xellia that are late to the game are locked out a little bit."

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To help ensure competition in the market, VanTrieste said, member health systems were asked to provide Civica Rx with half of their annual volume so they will continue purchasing from other manufacturers. "We believe at the end of the day, the more manufacturers making a product, the better options you have around the quality of the product, you have a more robust supply chain and it usually comes at the most affordable prices."

Because Xellia is already a Food and Drug Administration-approved supplier, Civica Rx will have a shorter approval process to bring the products to market and is already building the products in Civica manufacturing locations.

Simultaneously, other activities are already well underway to build more redundancies and competition in the supply chain, part of the original plan articulated by Civica.

"We are negotiating with a bunch of other suppliers to do the same thing that we did with Xellia in a partnership arrangement. But we are also simultaneously developing our own data sets to file our own abbreviated new drug applications with the FDA to get our own approval to use contract manufacturers," VanTrieste said. "At the same time, we're looking at how to buy or build our own manufacturing facilities. We're already in those discussions with those individuals."

Compton-Phillips said she hopes this triggers a shift in the broader generics market where there is too little competition leading to high prices and unreliable supply.

"We didn't want to be in this industry. But we felt we needed to," she said. "The question remains, how do we go from being health systems to drug manufacturers?"