News | Cost Reduction

Health plans expect to offer generic drugs by 2022

News | Cost Reduction

Health plans expect to offer generic drugs by 2022

  • Eighteen BCBS companies will provide $55 million to help create a partnership to offer generic drug alternatives.
  • The hospital-insurer partnership aims to save consumers “hundreds of millions” of dollars by supplying more generic drug options.
  • The new group would be a subsidiary of Civica, a company started in 2018 by national philanthropies and leading health systems, and would seek to add to the 18 generic medications Civica has produced.

A group of health plans joined a hospital-led drugmaking initiative with the goal of offering its own generic drugs by 2022.

The Blue Cross Blue Shield Association (BCBSA) and 18 Blue Cross and Blue Shield (BCBS) health plans formed a $55 million subsidiary to Civica Rx to manufacture competitor generic drugs and reduce healthcare costs.

"Through this partnership, we will push toward the vital objective of providing greater access to much-needed medications,” Scott P. Serota, president and CEO of BCBSA, said in a release.

Hospitals and three philanthropies joined together in 2018 to form the not-for-profit Civica to offer its own generic drugs that would reduce drug shortages and lower drug costs for hospitals. The health plan subsidiary will aim to provide more generic-drug alternatives outside of hospitals.

The need for Civica and its new subsidiary was underscored by Martin VanTrieste, president and CEO of Civica, who said “studies confirm that medication costs can dictate whether individuals fill or ration their generic prescriptions.”

The new subsidiary’s plans include:

  • Acquiring and developing Abbreviated New Drug Applications (ANDAs) for select generic drugs
  • Partnering with drug manufacturers to bring cheaper generic drugs to uncompetitive markets in exchange for aggregated volume and multiyear purchasing commitments
  • Prioritizing several generic medications identified as having high potential for savings
  • Creating a platform to enhance competition for additional generic drugs

The subsidiary expects to release its first generic medications by early 2022 and to produce “hundreds of millions” in consumer savings, according to its website.

Room for improvement in drug prices

The potential financial benefits of the new subsidiary are seen in BCBSA data, including:

  • A 361% increase in the average cost per script for single-source generics from 2010 to 2017
  • A 7% decrease in the average cost per script of multi-source generics from 2010 to 2017
  • A $412 average cost per script for single-source generics in 2017

Other recent efforts to expand the supply of generic alternatives include a proposal by California Gov. Gavin Newsom to create a state generic drug label to promote competition and bring down prices.

Results of the Civica initiative so far

Civica has 18 medications that either are in production or have been shipped to its more than 1,200 member hospitals.

In late 2019, Civica finalized eight critical injectable medicines for its member hospitals, the partnership said in an announcement.

The injectables, many of which were in short supply, were manufactured by Hikma Pharmaceuticals. The newly available medications include:

  • Heparin (currently in short supply)
  • Naloxone hydrochloride injection
  • Dexamethasone sodium phosphate injection
  • Glycopyrrolate injection
  • Prochlorperazine edisylate injection
  • Ondansetron injection
  • Morphine sulfate injection
  • Metoprolol tartrate

This month, Civica urged generic drugmakers to contact the partnership if they have submitted any of the 250 ANDAs that the Food and Drug Administration is considering withdrawing due to inactivity. The partnership said it is interested in taking over the ANDAs as a way to save time compared with the process of developing its own ANDAs.

 

About the Author

Rich Daly, HFMA senior writer and editor,

is based in the Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

 

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