Brainstorm Health: Walgreens Kaleo Deal, Nonprofit Hospital Drug Maker, Environment and Public Health

September 6, 2018, 8:01 PM UTC

Good afternoon, readers. This is Sy.

Back in January, a number of leading U.S. health systems announced an ambitious project: They would be banding together to create a non-profit generic drug company in the hopes of combating sky high drug prices and shortages regularly faced by American patients.

On Thursday, that initiative got an official name—Civica Rx—in addition to $30 million in funding from a slew of major investors including the Laura and John Arnold Foundation.

Civica Rx is a joint effort by big names like Catholic Health Initiatives, HCA Healthcare, Intermountain Healthcare, Providence St. Joseph Health, the Mayo Clinic, SSM Health, and Trinity Health. Those seven massive systems encompass about 500 American hospitals and will comprise the initial governing board of the group, which says it has attracted the interest of “more than 120 health organizations representing about a third of the nation’s hospitals.”

Furthermore, the organization has enlisted a pharmaceutical industry vet to serve as chief executive. Martin VanTrieste, the former chief quality officer at biotech giant Amgen, will be Civica’s CEO—and he’ll be doing the job for free. “We are creating a public asset with a mission to ensure that essential generic medications are accessible and affordable,” said VanTrieste in a statement. “The fact that a third of the country’s hospitals have either expressed interest or committed to participate with Civica Rx shows a great need for this initiative. This will improve the situation for patients by bringing much needed competition to the generic drug market.”

Civica’s mission is no mean feat. The firm announced that, to begin with, it will target 14 specific generic drugs administered in hospitals. The thinking goes that as a non-profit, there will be no incentive to artificially inflate or arbitrarily hike prices; the only stakeholder who matters is the patient. (It’s unclear exactly which drugs Civica will home in on, although they reportedly will include generic medicines that have seen exorbitant price increases or experienced national shortages.)

What’s particularly ambitious about the project is its goal of having a generic drug available on the market by as early as next year. While the Food and Drug Administration (FDA) under Commissioner Scott Gottlieb has made expediting the drug approval process a key mission, such a quick turnaround could still prove tricky.

And then there’s the question of how traditional generic drug makers might react to Civica, including the possibility that they may (at least temporarily) slash their own list prices to keep their current customers in line.

Read on for the day’s news.


What does the Amazon-Berkshire-JPM COO pick mean? This week, we got a new snippet of information from the still-nebulous Amazon-Berkshire Hathaway-JPMorgan joint health venture: The outfit now has a chief operating officer. The position will be filled by longtime health care industry veteran Jack Stoddard, who previously was the general manager of digital health and Comcast and was also a top executive at UnitedHealth's sprawling Optum unit. The decision to name Stoddard adds some business-side health care experience to a team that's currently dominated by finance and tech gurus, as well as renowned journalist-physician Atul Gawande, who is its CEO. What's still unclear is how exactly the group will achieve its lofty goal of lowering health costs for some one million employees while improving outcomes. (Bloomberg)


Walgreens, Kaleo team up on allergy shots as EpiPen shortage continues. As a shortage of Mylan's EpiPen and other critical allergy-busting epinephrine devices continues amid the beginning of the school year, Walgreens and Kaleo announced Thursday that the latter company's allergy shots will be made available at its stores—and for free for customers with commercial insurance. Kaleo's Auvi-Q works differently from the popular EpiPen, which has been in short supply because of manufacturing problems at a plant run by Pfizer. (Reuters)


Public goods and public health. I'm happy to say that Sandro Galea, a professor and Dean of Boston University School of Public Health, is launching a series of health care-focused columns on Fortune. Sandro's first essay premiered on the site this morning; it's a sharp, eloquent read on the role of "public goods" such as the environment on population health, and the responsibility that companies have in fostering those public goods. I hope you'll give it a read and follow along on Thursdays when Sandro's latest columns will go live. (Fortune)


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