Fed up with the exorbitant price tags on old, off-patent medications, 18 Blue Cross and Blue Shield companies are partnering with a nonprofit dedicated to manufacturing and selling affordably-priced generic drugs.
The BCBS companies are providing $55 million in their new partnership with nonprofit Civica Rx, the two organizations announced.
Like the new venture, Civica was born out of frustration with the pharmaceutical industry’s steep price increases as well as perilous shortages of essential drugs. In 2018, numerous health care organizations banded together with three philanthropies to manufacture their own brand of generic drugs, forming Civica and thwarting the generic industry. Their aim was to provide hospitals with injectable generic medications in steady supplies at affordable prices.
The health care organizations involved in Civica now represent over 1,200 hospitals in 46 states. Last October, Civica delivered its first drugs to a hospital in Utah and is now producing and distributing several drugs.
With the new partnership with BCBS companies, Civica will expand out of just hospital medications. Specifically, the deal will create a subsidiary that will either make drugs or partner with manufacturers to offer more affordably priced generic versions of select drugs in exchange for aggregate, multi-year purchasing commitments.
The partners were mum on which drugs they will select but said that they will first focus on ones “identified as having high potential for savings” that currently have little competition. They also encouraged others, including “other health plans, employers, retail partners, and health care innovators” to join their effort.
In an interview with The New York Times, Civica board chairman Dan Liljenquist said that the new venture “will not solve all the problems of the world, but we do know that 90 percent of prescriptions are generic, and there are certain parts of the generic markets that are not functioning like competitive markets should. And we intend to compete in those markets.”
In recent years, generic drug makers have been accused of price gouging, being involved in price-fixing schemes. Additionally, brand-name drug makers have been accused of offering faux-generic drugs—sometimes called “authorized” generics—in order to keep drug prices high and stymie competition.
Civica and the BCBS companies aren’t the only ones looking to get around the generic market. California Gov. Gavin Newsom proposed earlier this month having the state make its own brand of generic drugs to reduce healthcare costs. Sen. Elizabeth Warren (D-Mass.) and Rep. Jan Schakowsky (D-Ill.) have proposed a similar measure at the federal level.