Michigan Association of Healthcare Resource Material ...€¦ · US Generic Market –Leading Drugs...

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MAHRMMMichigan Association of Healthcare

Resource Material Management

A New Approach to Generic Drug Sourcing: Trinity Health Experience with Civica Rx

• Meena Rupani

• Bob Ripley

Medication Shortages and CIVICA Bob Ripley

Learning Objectives

At the conclusion of this activity, the participant will be able to:

• Describe the medication shortages of most recent years and how they lead to the creation of CIVICA.

• Describe the CIVICA business model and how it will be different than other pharmaceutical manufacturers.

• Describe the methodology used by Trinity to forecast their supply chain needs for the CIVICA medications.

The Unseen Cost of Drug Shortages

“High costs plague

American health care,

but so do low costs:

Life-saving generics

can become so cheap

that companies stop

making them.”

- Bloomberg Opinion (April 2019)

Generic Drug Prices Increases - Headlines

Chronic Generic Drug Shortages & Price Spikes

• Shortages in the U.S. impact patient care and safety

• Caregivers spend too much time searching for drugs in shortage or developing alternative therapies

• More than 200 drugs have been on the FDA’s drug shortage list

• Drugs in short supply include generic sterile injectable anesthesia medications, antibiotics, pain medications, nutrition and electrolyte products, and chemotherapy agents

• Price spikes due to shortages disrupt hospital budgets

The Problem

47 Hospitals Slashed Their Use Of 2 Key Heart Drugs After Huge Price Hikes

When Life-saving Drugs Are In Short SupplyA nationwide shortage...raises questions about how critical medicines can go scarce.

A Shortage of Reliable/Affordable Suppliers

• Unsustainably low prices and manufacturers exit market

• Unsustainably low prices also lead to moving suppliers to

places link China, sometimes with little oversight, making it hard

to recover from a disruption

• Departures create a fragile pharmaceutical supply chain and

leave 1-2 remaining producers with monopolistic power, often

dictating price and shorting supply

The Cause

US Congressmen seek

briefing on

contaminated drugs

from India, China

Health System Partner Statements

Injectable morphine is very important for patient care. We would purchase whatever form available (syringe, vial, ampule) but

availability is not always guaranteed! It can be purchased from compounding pharmacies but cost remains an issue!

Succinylcholine has seen a long-term impact on availability

Midazolam is very important for procedural sedation. Its lack of availability can disrupt hospital operations and delay procedures. We cannot not have it!

All electrolyte products are incredibly important for patient care (replacement regimens, TPNs, acid/base balance, renal disease…etc.). Their lack of availability can disrupt hospital operations and impede patient care

Sodium bicarbonate supply issues were significant last fall; we have had to develop 4-6 month stock to ensure no shortage due to lack of alternatives for therapy

What Has Changed Since the Year 2000?

Policy Makers Regulators GenericManufacturers

MiddlemenHealth

SystemsHealthcare

ProfessionalsPayors

All participants in the generic drug ecosystem have played a part in this crisis, leading to a broken economic model. To solve drug

shortages we must address all root causes.

There have been good intentions with unintended consequences, and

the abuse of legislation and regulation to enrich a few.

Weighted Average Retail Price per Day (median)

Generic Drug Cohort (1980-2014)

Trend 1 of 4Price trends in older generic drug cohort (1980-2003)

Trend 2 of 4Price trends in mid generic drug cohort (2004-2009)

Trend 3 of 4Price trends in new generic drug cohort (2010-2014)

Trend 4 of 4Combined price trends across all generic cohorts

*Source: Dr. Steve Schondelmeyer, Professor, Pharmaceutical Economics & College of Pharmacy. Director, PRIME Institute

US Generic Market – Leading Drugs

Central Nervous System, CV & anticoagulants, anti-infectives and endocrine and pain products lead the US generics market

Musculoskeletal

Dermatologics

Pain Contraceptives and Sex

Hormones

$6.1B 31%

Respiratory

$5.2B$5.3B

Anti-infectives

CV and Anticoagulants

$1.8B$1.2B

$6.5B24%

$18.4B

Endocrine

$11.3B

2011 201619%

US Generics Market by therapeutic area (TA)*(US$, 2011 vs 2016)

% Compound Annual Growth Rate (CAGR)

~100 drugs, worth $40B, will go generic in the next 5 years,

Therapeutic Area Annual sales of brands that will

go generic between 2017-2022 ($B)

Sample Products*(not exhaustive)

Central Nervous System $12.6 Namzaric, Exelon patch, Relpax, Lyrica, Namenda XR

Respiratory $6.6 Spiriva, Symbicort, Atrovent, Xolair

Cardiovascular and anticoagulants $5.9 Bystolic, Pradaxa, Eliquis, Xarelto

Anti-infectives $3.4 Atripla, Lexiva, Vigamox

Oncologics $3.3 Sutent, Afinitor, Tykerb, Avastin, Tarceva, Sprycel

Endocrine $2.9 Lantus, Apidra, Januvia, Bydureon

Electrolyte regulator $2.0 Sensipar

Erectile dysfunction $1.5 Viagra, Cialis, Levitra

Gastrointestinal $1.2 Lotronex, Dexilant

Musculoskeletal $1.0 Orencia, Uloric

TOTAL $40.4B

Breakdown of drugs that will face Loss of Exclusivity in the next 5 years by Therapeutic Area

DISCLAIMER: *These products are based on a preliminary analysis of products included the National Pharmaceutical Services list. There may be additional patents listed in the Orange Book, where branded pharma companies have to list patents for their products. Furthermore, when the generic company files an Abbreviated New Drug Application (ANDA), the branded company has 45 days to file a patent infringement action against the generic company and the review process takes a long time, causing delays in the introduction of generics to the market.

Opportunity – Loss of Exclusivity

Fragile Supply Chain – Sterile Injectables

Complex and capital intensive manufacturing processes

✓ Sterile manufacturing requires expensive facilities and equipment✓ Highly regulated; process improvements take a long time to implement✓ Manufacturing plants and lines are multi-product✓ Capacity constraints

Few pharmaceutical suppliers of generic sterile injectables (4 to 7)✓ Mergers and acquisitions✓ Lose one and a cascade begins leading to a crisis

Lack of redundancy✓ Some products might only be made in one manufacturing facility✓ Single source for critical raw materials

Founded in 2018 in the public

interest as a non-profit

corporation to address

shortages of generic drugs

while also focusing on

lowering their cost

What is Civica Rx?

Guided by leading hospital

systems and philanthropies who

are committed to doing what is

in the best interest of patients by

ensuring essential medicines are

accessible and affordable

Sharing a commitment

to transparency, a

one-price-for all

model, and a

membership that is

open to all

39 Health

Systems

1000+ Hospitals

30% of

Licensed

46 States

~200,000

Licensed

Stellar

Advisory

~16 Drugs for

Company Overview

Civica is a pro-competitive, not-for-profit generic drug company that will:

✓ Ensure stable and predictable supply of essential generic drugs, correcting shortages

✓ Bring competition to certain generic drug market segments, focusing on value (price and quality)

✓ Act as the conscience of the generic drug market, serving as a check against monopolistic behavior in the generic drug manufacturing industry

Ensure Stable and Predictable Supply

We will ensure stable and predictable supply by:

✓ Create market stability by applying for ANDAs (manufacturing license) for all products we choose to manufacture to assure we have the uninterrupted ability to supply medication to our partner systems.

✓ Assure that we have guaranteed minimum viable volumes (MVVs) so that we can assure a market size that is large enough for guaranteed volumes

✓ Partner with at least two manufacturing locations or partners for each drug on our prioritization list to assure there is redundant capacity for each of the drugs we chose to manufacture

✓ Establish long-term partnerships with multiple vendors of our drugs to assure patients have appropriately-priced medications, indefinitely.

Bring Competition to the Market

We will bring competition to the market (focusing on value – price & quality) by:

✓ Establishing long-term partnerships with multiple vendors of our drugs that allow us to guarantee our partners with predictable long-term supply and in return expect long-term competitively priced medications

✓ Eliminating monopolies by intentionally applying for ANDAs and manufacturing sole-sourced drugs where there is a perception of predatory pricing

✓ Disrupting the generic business model including not offering rebates, pricing at a single price, cost plus model, delivering directly to health system partners, creating an single digit operating margin budget, eliminating returns*

✓ Creating appropriate partnerships AND developing our own manufacturing capability to assure we have long-term control of generic costs and pricing

Act as a Conscience to the Market

We will serve as a check against monopolistic behavior in the generic drug manufacturing industry by:

✓ Working with our health system partners to identify specific drugs that are inconsistent in supply and/or price that have an impact on our patients

✓ Having the R&D expertise to enter the identified drug markets as identified by our health partner systems and competing where necessary

✓ Partnering with the governmental / regulatory agencies to create new expedient “to market” processes that are compliant and appropriate

Civica’s Membership Momentum

Governing Board Founding Members Partnering Members

How Does Civica Rx Work?

Drug Selection

Prioritization based on presence on hospital priority lists

Estimated significant hospital spend

On shortage list (current or historical)

Minimal vendors capturing majority market share

Significant price increase

Hospital System Generic DrugsSe

Simultaneous Three-legged Product Supply Strategy

Manufacturing Solution #1

Work with ANDA holders to produce Civica Rx labeled generic drugs

Buy or develop ANDAs and use CMOs

Buy or build Civica Rx manufacturing capacity

Next Steps – First Deliveries to Hospitals by October

Vancomycin, a critical antibiotic that has been in short supply, will be the first Civica product to reach hospitals and their patients.

Key Stats (as of June, 2019)

Governing Board: 7 Health Systems and

3 Philanthropies

13 Founding Members

Growing # of Partnering Members +

Veterans Administration

More Than 900Hospitals

~200,000 Licensed Beds

~30% of the Licensed Beds in the

US14 Civica Employees

Civica Will Deliver 14Drugs in 2019

Anticipated Price Savings of up to 35-

Negotiating with 10-12 Potential Suppliers

95 percent of drug shortages attributed

to manufacturing decision-making1

Price increases during shortages cost $400

million per year2

Civica’s Role in the Generic Drug Market

1Bring true competition to the generic market,

focusing on value (price and quality)

2Ensure stable and predictable supply of

essential generic drugs, correcting shortages

3Be a conscience of the market, serving as a check

against aggressive pricing behavior of generic drug

manufacturers

Contact Information

Martin VanTrieste Debbi FordPresident and CEO Comms & Public Affairsmartin@civicarx.org Debbi.Ford@civicarx.org+1 (805) 573-0089 +1 (970) 227-3991

Methodology to forecast supply chain needs for CIVICA medications

Meena Rupani

Strategy for Forecasting our Commitment

• Considerations:• System-wide Utilization of every sku within the route category of the drug

being considered for purchase (i.e. I.V., oral, topical etc.)

• If the drug is on shortage, what is the preferred strength and size?

• Are there any other commitments in place or in process?

• How will we handle our 340B sites, where it is difficult to keep more than one NDC?

• A five year agreement with price protection for term of agreement, what happens if another manufacturer comes out with the same drug, strength and size less expensive then what we committed to?

• If we decide to commit, a 50% or greater commitment is required

Making the Commitment

• Once the analytics are completed and reviewed we must make a decision to commit and we have the option to:• Not commit

• Commit 50% or more

• Manage the commitment

• There is the ability to change our commitment in the event of MAD

Delivery of Product

• Currently, we have a contracted 3PL who has agreed to our terms and conditions

• Price of the Product includes one delivery per week

• Additional deliveries will cost a set fee per unit

• If a hospital or a health-system has their own CSC or self-distribution” model, Civica, will, in the near future have the ability to deliver directly to the health-system’s CSC saving the system additional delivery costs, time and effort in managing the inventory

Challenges

• How do we ensure our 340B ministries will get 100% of their needs met?

• How do we maneuver through the remaining inventory to ensure our non-340B ministries receive product?

• Do our ministries have space to house a weeks or month worth of inventory?

Possible partial solution is too auto-ship from Civica to the ministries

Contact Information

Bob RipleyChief Pharmacy OfficerTrinity Healthripleyb@trinity-health.org

Meena RupaniDirector, Strategic Sourcing, ClinicalTrinity HealthMeena.rupani@trinity-health.org

Michigan Association of Healthcare Resource Material ...€¦ · US Generic Market –Leading Drugs...

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