Health systems launch drug company to fight high costs, shortages

Seven health systems representing roughly 500 hospitals announced the launch of Civica Rx, a nonprofit generic drug company aimed at providing a stable, consistent source of generic drugs for hospitals and providers at an affordable cost. With the goal of becoming an FDA-approved manufacturer of generic drugs, the nonprofit will either directly manufacture prescriptions or sub-contract the manufacturing process.

The health systems involved recognize that drug shortages and increased costs present an ongoing problem for healthcare providers and consumers:

  • Reports from consulting firm Vizient note the industry faced 183 active drug shortages by the close of 2017—a trend that does not appear to be slowing
  • Vizient also predicted a five percent increase in prescription drug rates in 2019; the AHA estimated a 23 percent increase in inpatient drug spending between 2013 and 2015

Civica Rx plans to launch its first products in early 2019, with support from several large philanthropic organizations as well as the Department of Veterans Affairs (VA), which signed on to provide consulting services to the company. Thus far, about one-third of the country’s hospitals expressed an interest in participating in Civic Rx.

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