As drug prices soar, these health insurers are investing $55 million to make their own

Independence and Horizon are joining with 16 other Blue Cross insurers to invest a total of $55 million in a joint venture with the nonprofit generic drug firm Civica Rx, which was founded in 2018 by philanthropists and seven major hospital chains to alleviate shortages and cost of certain generics whose prices have soared in recent years.

The goal of the new venture, announced Thursday, is to expand the reach of Civica Rx, which started shipping generics late last year, from hospitals into the outpatient area.

“The generics we’re targeting are high-cost generics without an alternative. What we’re trying to do is provide an alternative that will enable consumers to have access and have it affordable,” said Maureen Sullivan, the Blue Cross Blue Shield Association’s chief strategy and innovation officer.

The average cost of a generic drug that has only one supplier increased by 371 percent from 2010 to 2017, the Blue Cross Blue Shield Association said. Among the extreme examples cited by the association were digoxin, used to treat heart conditions; albuterol sulfate, for asthma and other lung conditions; and doxycycline hyclate, an antibiotic.

Sullivan said the board of the new Civica subsidiary is being formed now and will consider over the next three to six months what drugs it will produce through Civica’s manufacturing partners or itself if necessary.

Locally, Trinity Health, ChristianaCare Health System, and St. Luke’s University Health Network are among the nearly 50 health systems that are members of Civica.

St. Luke’s, which so far has invested $2.3 million in Civic and has committed a total of $5 million, has placed orders and expects to receive its first shipment in the next couple of weeks, but it has already seen a benefit, said David Herold, senior director of business development and strategic planning.

When word got out that Civica would supply daptomycin, an antibiotic, the market responded with a price cut. “It was about a 10 to 15 % drop in price. With these generic drugs, it doesn’t sound like a ton, but when you’re used to seeing them going up 20 to 30 % every year, any kind of a drop is significant,” Herold said.

Since the fall, Trinity Health Mid-Atlantic, which operates five hospitals in the Philadelphia region, has been receiving vancomycin and daptomycin, which it described as essential antibiotics that have been in short supply for several years.

“When these pharmaceuticals are the best clinical choices, we will have them — and we will not have to purchase these drugs from higher-cost suppliers or use alternative medications,” Trinity said in a statement.

ChristianaCare’s vice president of pharmacy services, Sam Wetherill, said the Delaware system will soon start ordering from Civica.