Two weeks after California’s governor announced plans to produce generic drugs, 18 national Blue Cross Blue Shield plans said they will join with the non-profit Civica Rx to produce lower-cost generic drugs.
As summarized in the National Academy for State Health Policy’s Jan. 13, 2020, blog Can States Really Produce Generic Drugs? The Civica Rx Model May Show the Way, Civica Rx offers states a working model to purchase less-costly generic drugs directly from overseas manufacturers, and it has plans to manufacture them directly.
Civica’s model was originally designed by hospital systems to make sure they had needed generic drugs to provide directly to patients. A state model that follows the Civica Rx template is expected to take into consideration costs, distribution channels, and other logistics to assure these generics can be provided safely and at lower costs to payers and consumers.
Insurers have been increasingly active in the prescription drug cost arena – some own pharmacy benefit managers. Aetna is owned by CVS Health and now these Blue Cross Blue Shield plans, which insure 40 million consumers, are linking with Civica Rx to produce lower-cost generic drugs.
For states, this holds the promise of lower costs for consumers, but it also invites oversight to make sure the savings insurance plans achieve on lower-cost generic drugs are passed on to consumers.
The Civica Rx business model currently contracts with foreign drug manufacturers and takes advantage of a US Food and Drug Administration (FDA) provision – Abbreviated New Drug Applications – that expedites the approval process for certain drugs. Civica Rx has its own National Drug Code and through this process can assure that foreign-manufactured drugs meet FDA standards for safety.
Civica Rx now has 18 drugs in production, including naloxone, steroids, drugs to prevent side effects from chemotherapy, and the beta blocker metoprolol tartrate, used to treat high blood pressure.
Along with 18 other plans in the Blue Cross Blue Shield Association, Blue Shield of California is joining with Civica Rx to initially produce cheaper versions of five to ten costly generic drugs by 2022.
Paul Markovich, president and CEO of Blue Shield of California, said in a press release that his company wants to provide “competitive alternatives” to its members. “The only way to do it is to create a strong, competitive alternative, which is what we’ve done with the Civica Rx partnership,” Markovich explained. “Anytime a drug is off-patent, it’s an opportunity for us to create an alternative and ensure that consumers are getting high-quality drugs that are also affordable. This is a first step for us, and there is more to come.”
Markovich indicated he supports California Gov. Gavin Newsom’s initiative to lower health care costs and produce generic drugs. “We look forward to working with the governor and his team on how this could potentially contribute to that effort. Our partnership with Civica Rx could serve the purposes that he and his team have in mind and could be a launching pad for his effort.”
NASHP’s Prescription Drug Pricing Center is following this initiative closely and is developing additional approaches that states could pursue to lower costs for consumers and directly address the high price of drugs.