Blue Shield of California aimsto produce 5 to 10 low-cost generic drugs in its initial effort,and the BCBSA/Civica group hopes that the first will be availableby early 2022. (Photo: Shutterstock)

|

It may sound counter-intuitive, but a group of insurers ispartnering with the "public asset" Civica Rx to bring down the cost ofprescription drugs by producing generic versions at lowerprices.

|

The New York Times reports that the insurers—the Blue Cross BlueShield Association and 18 of its member organizations—have pledged$55 million in a partnership agreement with nonprofit Civica Rx "tocreate cheaper versions of expensive generic drugs for which thereis little competition."

|

Related: Civica Rx's plan to reform pharma: Collaborate, notcompete

|

Blue Shield of California, one of the 18, is joining the effortto produce 5 to 10 low-cost generic drugs in its initialeffort, and the BCBSA/Civica group hopes that the first will beavailable by early 2022.

|

"We plan to introduce competitive alternatives to themarketplace to ensure we have affordable drugs available to ourmembers," Paul Markovich, president and CEO of Blue Shieldof California, said in a statement. "This is not happening naturallynow. The only way to do it is to create a strong, competitivealternative, which is what we've done with the Civica Rxpartnership. Anytime a drug is off patent, it's an opportunity forus to create an alternative and ensure that consumers are gettinghigh-quality drugs that are also affordable. This is a first stepfor us, and there is more to come."

|

As drug prices continue to rise—a 5.8 percent increase isexpected this year, after 2018 saw increases ranging from 10 to 50to 100 percent—Civica Rx was formed, says the report, by DanLiljenquist, chairman of Civica's board. In the NYT report,Liljenquist is cited saying that he was "motivated to help createthe nonprofit after reading about struggles by patients to affordold, off-patent drugs like those sold by Mr. Shkreli and ValeantPharmaceuticals International, a company with a similar businessmodel."

|

Shkreli and Valeant made headlines for buying up off-patentmedications and then raising the prices, often till they werepriced out of reach of the patients who needed them.

|

"This will not solve all the problems of the world," Liljenquisttold the NYT, "but we do know that 90 percent of prescriptions aregeneric, and there are certain parts of the generic markets thatare not functioning like competitive markets should. And we intendto compete in those markets."

|

Civica, described as "a public asset whose mission is to ensurethat essential generic medications are accessible and affordable,"is already selling drugs used in hospitals to health systems aroundthe country.

|

The latest move was met with praise from those in the healthindustry. "We appreciate this and other efforts to makeprescription drugs more affordable by disrupting the market andincreasing competition," said Steve Wojcik, vice presidentof public policy at the Business Group on Health (Formerlyknown as the National Business Group on Health). "Recent experiencewith huge price hikes overnight for generics that have been on themarket for a long time, created tremendous challenges for patientswith access and affordability. This initiative also draws attentionto the fact that current pricing and supply chain models forprescription drugs, brand and generic, are broken andunsustainable."

|

This isn't the only drastic effort to bring down drug prices.Gov. Gavin Newsom of California has proposed a similar arrangement, in which thestate would contract with outside manufacturers to produce genericdrugs under the state's own label, and a similar proposal has comefrom Senator Elizabeth Warren, D-MA.

|

Under the new proposal, Civica would create a subsidiary thatwould either make its own drugs or contract with existingmanufacturers. It has said that it hopes others, such aspharmacies, employers or other insurers, would join the effort.

|

Read more: 

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.