800 hospitals are joining forces to make their own drugs and upend the generic pharma business. They just revealed the 2 treatments they plan to make first.

Hospital IV shortages drug antibiotics flu

  • A group of 800 hospitals created a nonprofit generic
    drugmaker called Civica Rx.
  • The hope is to make generic drugs that are in short
    supply or have artificially high prices, based on what the
    hospitals need. 
  • On Wednesday, the organization picked a supplier and
    two antibiotics to start with in its plan to upend the generic
    pharma business. 
  • Visit Business
    Insider’s homepage for more stories.

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 early 2018
, and has gained a lot of
attention for its promise of a cheaper and more reliable supply of
crucial medicines. In total, 800 hospitals from more than 20 health
systems have joined the effort.

Now, Civica has picked its first supplier: Xellia
Pharmaceuticals. Xellia, based in Copenhagen, will make antibiotics
for the hospitals in Civica’s network, including vancomycin and
daptomycin, according to a statement. Overall, Civica has committed
to making 14 different drugs this year. 

The hospitals that are part of Civica agreed to purchase the
drugs for five years from Xellia, and will receive the drugs by the
third quarter of this year. The antibiotics business can be
difficult for manufacturers if they’re not sure how much of their
products hospitals will want to buy.

“What we offer these manufacturers is certainty,”  Civica CEO
Martin VanTrieste told Business Insider.

Read more:
Hospital groups and the VA are trying to upend the generic drug

Civica’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 there’s no competition
to make them. 

In some cases, companies made business choices that led to
shortages, such as giving up on unprofitable drugs. Other drug
shortages are related to manufacturing problems. In other cases, a
drug is only being produced by a single manufacturer, which can
lead to price hikes. There’s also been a
consolidation of the manufacturers
 that produce generic

For years,
health systems have been on the hook for skyrocketing
drug prices
for injections or drugs delivered through IV
solutions. As of Tuesday, there were
205 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 —
including vancomycin and daptomycin — and a type of epidural used
pregnant women during childbirth

Vancomycin and daptomycin can be given through an IV and are
used to treat potentially deadly infections. Civica has given a
commitment to Xellia that it’ll purchase the antibiotics for its
member hospitals for the next five years. 

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800 hospitals are joining forces to make their own drugs and upend the generic pharma business. They just revealed the 2 treatments they plan to make first.