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Hospitals Launch Non-Profit Drug Company to Fight Shortages, Price Increases

Several major hospital systems and philanthropic organizations have launched a non-profit drug company to solve the problem of chronic shortages and rising costs. The company, called Civica Rx, will be independently run, but its board will include governing members that include Intermountain Healthcare, the Mayo Clinic, and for-profit HCA Healthcare, among others.

“Every day at Intermountain we manage more than 100 drug shortages, and most of them are generics,” said Dr. Marc Harrison, president and CEO of Salt Lake City-based Intermountain Healthcare. “The impact on patient care, in terms of trying to find alternatives and scurrying around and trying to find necessary drugs, is incredibly time-consuming and disconcerting.”

About 120 health care companies that represent about a third of U.S. hospitals have contacted the organizers of Civica Rx to ask about getting in on the deal, Harrison said. The new company plans to market 14 common generic drugs that have been in short supply and whose prices have risen in recent years.

The founding systems will provide seed money for Civica Rx, as well as from three foundations: the Laura and John Arnold Foundation, the Peterson Center on Healthcare, and the Gary and Mary West Foundation. Former Amgen executive Martin Van Trieste will serve as CEO.

Harrison explained that Civica Rx will begin applying to the FDA in early 2019 to make and sell the new generics. Although the company probably will start out by contracting with existing manufacturers to make the medications under its label, it eventually will buy manufacturing facilities of its own.

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