Blue Cross Blue Shield of Michigan joined with 17 other Blues plans across the country to invest in Civica Rx, a company formed in 2018 by a consortium of large health systems to produce generic drugs used in hospitals.
The Blue Cross Blue Shield plans collectively plan to put $55 million into the nonprofit Civica Rx for a subsidiary to develop, produce and bring selective high-cost generic drugs to the consumer market by 2022. The move would save the Blue Cross Blue Shield plans millions in what they pay annually for members’ prescription drugs.
“Our partnership with Civica Rx expands on our continuous efforts to contain the escalating cost of prescription drugs, while ensuring patients have access to the essential medications they need,” said Blue Cross Blue Shield of Michigan President and CEO Daniel Loepp. “Together with the Blue Cross Blue Shield Association and other Blue Cross and Blue Shield companies, we’re committed to taking this important step to help make generic drugs more affordable for consumers.”
Blue Cross Blue Shield of Michigan in 2019 spent $3.26 billion on prescription medications for members.
The partnership with the 18 Blues plans and the umbrella Blue Cross Blue Shield Association adds to the growing roster of investors in Civica Rx, which was formed to address price spikes and shortages of hospital generic drugs.
The company began with investments from three philanthropic groups and 120 health organizations that represent about one-third of the nation’s hospitals. The initial partners included Trinity Health, the Livonia-based parent corporation of Mercy Health in West Michigan.
The Salt Lake City, Utah-based Civica Rx a year ago added 12 more health systems with 250 hospitals — including Grand Rapids-based Spectrum Health, which made a five-year commitment to the consortium — and now has backers that represent more than 1,200 U.S. hospitals.
Civica Rx presently has 18 generic medications in production that it ships to U.S. hospitals.
The U.S. Food and Drug Administration in December reported on an analysis that found increased competition among generic drug makers from 2015 to 2017 generated lower prices.
In instances involving generic drugs with a single producer, the entry of a competitor into the market led to a 39-percent reduction in the average market price reported to the federal Centers for Medicare and Medicaid Services. When there were two competitors, generic prices declined 54 percent, and 79 percent when there were four competitors, according to the FDA analysis.