Sept. 6 (UPI) -- Hospitals have come together to form a nonprofit company, Civica Rx, to combat generic drug shortages and rising prices, the new venture said Thursday.
Utah-based hospital system Intermountain Healthcare announced in January it planned to form a nonprofit company to make generic medications to address "unwarranted shortages and high costs of lifesaving generic medications."
On Thursday, Intermountain and its partners announced the company was officially established. Civica Rx's venture partners include Mayo Clinic, HCA Healthcare and four other hospital organizations: Catholic Health Initiatives, Providence St. Joseph Health, SSM Health, and Trinity Health. Altogether, the organizations represent about 500 U.S. hospitals.
West Health Policy Center President Tim Lash said the new company has $100 million in funding from the seven healthcare systems and three philanthropies. The goal is to get products on the market by next year.
Civica Rx's statement Thursday said Martin VanTrieste would be the company's chief executive officer. VanTrieste is a former chief quality officer for Amgen who spent most of his career working for large pharmaceutical companies.
"We are creating a public asset with a mission to ensure that essential generic medications are accessible and affordable," VanTrieste said. "The fact that a third of the country's hospitals have either expressed interest or committed to participate with Civica Rx shows a great need for this initiative. This will improve the situation for patients by bringing much needed competition to the generic drug market."
Intermountain CEO Dr. Marc Harrison told NPR there are both principled and unprincipled drug companies currently operating in the market.
"The folks who are gouging people and creating shortages, they know who they are," he said. "And they're the ones who should be very concerned."
Civica Rx plans to market 14 common generic drugs that have risen in price with short supply in recent years. Harrison told CNBC the company would make some of its own generics to replace some of the unreasonably high-priced ones and get other drugs through contracts with other companies. The specific drugs that the new company would make were not named.
"As we decided on the drugs we were really practical," Harrison said. "We looked for drugs that were now in short supply. We looked for drugs that were on the lists of essential medications, and we looked for drugs that have had huge spikes in their prices."
Harrison added that the Utah-based hospital system manages more than 100 drug shortages each day.
"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," he said.
The company is organized as a non-stock, not-for-profit corporation and will be headquartered in Utah, a statement said.