Generic-Drug Venture Backed by Hospitals Taps CEO From Amgen

(Bloomberg) -- A drugmaking venture backed by major U.S. hospitals has picked a chief executive officer, hastening the arrival of another threat to generic pharmaceutical manufacturers.

Martin VanTrieste, 58 and a former top executive at biotechnology giant Amgen Inc., will run the organization, a not-for-profit called Civica Rx. Dan Liljenquist, 44 and an Intermountain Healthcare executive, will be chairman. Health systems with a total of about 500 hospitals -- including Intermountain, HCA Healthcare Inc., Mayo Clinic and Catholic Health Initiatives -- will help govern the venture, alongside several philanthropies.

Civica Rx will work to combat drug shortages and skyrocketing prices for some treatments given in hospitals by manufacturing generics or contracting with other firms to make them. Generic drugmakers have faced scrutiny for raising the prices of certain older drugs, particularly when hospitals lack alternatives. The supply chain for such treatments has also been vulnerable to disruptions, leading to persistent shortages.

“Civica Rx will first seek to stabilize the supply of essential generic medications administered in hospitals,” the group said in a statement. “The initiative will also result in lower costs and more predictable supplies of essential generic medicines.”

The venture, announced by Intermountain in January, said it plans to have its first products ready by as early as next year. It’s focused on a group of 14 drugs given in hospitals, but a spokesman for the group declined to identify them. Liljenquist said that the drugs are in categories such as pain relief, antipsychotics, antibiotics and cardiovascular treatments, including drugs that are stocked on so-called crash carts used in emergencies.

The number of drug shortages has ticked up recently, according to data compiled by the University of Utah Drug Information Service. About 224 drugs were experiencing shortages at the end of the second quarter, up from 174 a year earlier. Several injectable opioids used to treat pain have been in short supply; a number of those are made by Pfizer Inc.

More Competition

The launch of Civica Rx could pose a challenge to companies such as Endo International Plc, which makes injectable medications given in hospitals. Other big generics makers include Teva Pharmaceutical Industries Ltd. and Mylan NV.

“We expect a competitive response,” Liljenquist said. “We’re going to be entering markets that are not particularly competitive at the moment.”

The U.S. Food and Drug Administration has been working to get more generic drugs to market to help lower prices. FDA Commissioner Scott Gottlieb has said a lack of competition is a key reason for high drug costs.

VanTrieste, who has agreed to run the venture without pay, previously worked at drugmakers including Abbott Laboratories and Bayer AG, according to his LinkedIn profile. At Amgen, his most recent industry post, he was chief quality officer.

Civica Rx needs about $200 million in funding to get started, and the current group of governing hospitals has contributed more than half that amount, Liljenquist said. The three foundations involved in the effort are each contributing $10 million, according to a separate statement. They are the Laura and John Arnold Foundation, the Peterson Center on Healthcare and the Gary and Mary West Foundation.

Other hospitals will contribute funds when they join, based on how many beds they have. The member hospitals will also commit to purchasing drugs from the venture.

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