Tackling Drug Shortages, High Prices

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Marcia Macphearson  and  Ned McCoy

3 min read

Seven hospital systems in 2018 launched Civica Rx with the goal of reducing drug shortages and prices. More 55 health systems are now associated with Civica, representing one-third of US hospital beds. Civica delivers more than 60 generic sterile injectable medicines to hospitals.

The non-profit generic drug company is poised to broaden its reach and impact in 2023 with the opening of its first production plant. At first, the plant will make insulin, which Civica will sell for $30 a vial. The company plans further disruption to the drug manufacturing supply chain through CivicaScript, which aims to bring low-cost generics to the direct-to-consumer market.

“We will look for opportunities for other medications where there's a need that we can fix,” Ned McCoy, President and CEO of Civica Rx, tells Oliver Wyman’s Marcia Macphearson in this Oliver Wyman Health podcast.

The two drill down into Civica’s business model, which McCoy likens to a utility; talk about the rationale for building a US-based manufacturing plant; and explore what drugs might be next on Civica’s radar.

Show Highlights:

“We don't sell innovative products. We sell generic medications. But the business model is innovative. It's different. We're more like a utility.”

“In fact, 70% of the active ingredients in medications in the US come from offshore, many of those (from) China. We made a decision very early on at Civica not to buy any active ingredients from China. We buy from regulated markets. Priority number one is US, number two would be regulated markets in Europe or India, nothing from China. And that's very unusual.”

“We won't be able to make everything in the plant. We will still keep partnering. But … it's important to back integrate into manufacturing because we're a not-for-profit, so we're on a cost-plus model. This helps us get to the lowest cost. It also helps us control the quality and the supply and bring it onshore.”

“CivicaScript is a new sister company of Civica to focus on the retail market. The problem there is a little bit different than in the hospitals. It's not so much drug shortages, it's generic drugs that are priced higher than they should be.”

“It's all the stuff in the middle between the manufacturer and the patient. We will be very transparent, and we will charge one price for all.”

To learn more contact Matthew Weinstock, Senior Editor, Health and Life Sciences.