CHI Health CEO: Hospital-owned drug company is perfect industry disruptor

In response to increasing drug prices, a coalition of seven health systems revealed its intent to launch a nonprofit generic drug company called Civica Rx. The move, according to CHI Health CEO Cliff Robertson, MD, represents the type of disruption the industry needs, the Omaha World-Herald reports.

CHI Health's parent company, Englewood, Colo.-based Catholic Health Initiatives, is among the drug company's founding healthcare systems, along with Rochester, Minn.-based Mayo Clinic; Salt Lake City-based Intermountain Healthcare; Nashville, Tenn.-based HCA Healthcare and others.

Dr. Robertson told the publication he's interested to see if the drug company can successfully lower costs for insurers, employers and ultimately, patients.

"If Civica Rx is successful in delivering on its promise, I suspect there will be very few hospitals and health systems that won't want to participate in some way, shape and form. There's really no reason not to," he said.

For the fiscal year ended in June, CHI Health's drug purchases totaled nearly $63 million — of that, generics accounted for nearly $14 million, or slightly more than 22 percent. Civica Rx will initially focus on 14 hospital administered generic drugs, but has not disclosed which drugs it will focus on, the report states. The company aims to release its first products by early 2019.

The founding health systems will serve as the initial governing members for Civica Rx and provide seed money for the venture. Other health systems are expected to participate in the venture, and will be revealed later this year, CHI said in a statement to the Omaha World-Herald.

To access the full report, click here.

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