Hospitals are fed up with drug companies, so they're starting their own

A group of major American hospitals has launched a not-for-profit generic drug company, Civica Rx, to take some control over the drug supply.

A group of major American hospitals has launched a not-for-profit generic drug company, Civica Rx, to take some control over the drug supply. Backed by seven large health systems and three philanthropic groups, the new venture will focus initially on establishing price transparency and stable supplies for 14 generic drugs used in hospitals, without pressure from shareholders to issue dividends or push a stock price higher. "We're trying to do the right thing—create a first-of-its-kind societal asset with one mission: to make sure essential generic medicines are affordable and available to everyone," said Dan Liljenquist, chair of Civica Rx and chief strategy officer at Intermountain Healthcare in Utah. The consortium collectively represents about 500 hospitals. Liljenquist said that the initial governing members have already committed $100 million to the effort. The business model will ultimately rely on the long-term contracts that member health care organizations agree to—a commitment to buy a fixed portion of their drug volume from Civica. Elie Bahou, chief pharmacy officer of Providence St. Joseph Health, a 51-hospital system spread across seven states and one of the members of the consortium, said the criteria include drugs that underwent price increases of 50% or more between 2014 and 2016 and essential medicines that were on national shortage lists.