Civica Rx partners with Xellia Pharmaceuticals on first generic drugs

Civica Rx teamed up with Xellia Pharmaceuticals to produce the antibiotics vancomycin and daptomycin for Civica's members, the companies announced Wednesday.

The drugs used to treat critically ill patients with serious infections are the first that the hospital-led not-for-profit generic drug company have identified. Civica, bolstered by the support of more than 800 U.S. hospitals, plans to deliver 14 generic medications this year as it aims to reinforce the supply of generics prone to shortage and reduce drug costs.

Vancomycin and daptomycin target bacteria that are resistant to other antibiotics, said Martin VanTrieste, CEO of Civica.

"By helping to stabilize the supply of vancomycin and daptomycin, we will have a direct impact on patient safety and public health by providing consistent access to antibiotics that are important treatment options in the management of difficult-to-treat and life-threatening infections," he said in prepared remarks.

For the initial phase, Civica Rx is working with holders of abbreviated new drug applications, or ANDAs, that have the manufacturing capability and capacity to produce antibiotics, anesthetics, cardiac medications, pain management medications and other essential sterile injectable medicines used in hospitals daily. Next, the organization plans to acquire or develop its own ANDAs and use contract manufacturers. Over the longer-term, Civica Rx plans to buy or build its own manufacturing facilities.

Its member hospitals sign contracts of five to 10 years to facilitate lower prices Civica negotiates with manufacturers, the organization said.

Chronic drug shortages impact nearly every provider, and the effects trickle down to the consumer. Finding new suppliers can lead to errors, safety issues or delayed surgeries as well as inflate costs.

Generic drug competition has declined as companies consolidate. That coupled with manufacturing problems and natural disasters have led to severe shortages of widely used drugs.

Many manufacturers have opted to make higher-margin drugs rather than generics. But those that still do have vast market power and can manipulate prices.

"We've lost balance," Jeff Rosner, senior director of pharmacy contracting and purchasing at the Cleveland Clinic, said in January. "It's a lot more profitable to make a contracted drug for a branded company as opposed to making generic drugs."

Providence St. Joseph Health, a Civica founding member, has been dealing with intermittent shortages of different presentations of vancomycin and daptomycin, said Dr. Amy Compton-Phillips, executive vice president and chief clinical officer. When these drugs aren't available in the right dose, clinicians have to adjust and the process becomes riskier, she said.

"You are setting things up to fail," Compton-Phillips said.

Many intravenous drugs are chronically short at PSJH hospitals, including vasopressors used to treat patients in septic shock and morphine, she said.

While the irrational price hikes and supply-crippling natural disasters illustrate a broken generic drug market, the rationale behind Civica is starting to pay off as more stakeholders band together to fix it, Compton-Phillips said.

"The shot across the bow helped reinvigorate a complacent industry," she said. "The crisis we have at the moment is affordability. We pushed back against these crazy rates of inflation in drug prices. We just cant do it. We have got to change the discussion so we're just not victims of circumstance. We will do it ourselves."

Xellia will make medications for Civica under Xellia's abbreviated new drug application with Civica labeling.

The collaboration supports Xellia's long-term goal of mitigating anti-infective drug shortages, CEO Carl-Aake Carlsson said in prepared remarks.

Copenhagen-based Xellia, which is owned by Novo Holdings, is expanding its manufacturing and sales capacity within the U.S. as it looks to boost transparency on production by making its own raw materials.

The Danish company acquired the old Ben Venue Laboratories complex in Bedford, Ohio in 2015 that it's using as a packaging and distribution hub. Ben Venue closed the facility in 2011 following quality concerns outlined by the U.S. Food and Drug Administration.