(Adds detail on new venture)
By Caroline Humer
NEW YORK, Jan 23 (Reuters) - A group of Blue Cross Blue
Shield insurers is investing $55 million in a venture that aims
to offer cheaper prices to their members on generic drugs that
currently have little or no competition, the companies said on
Thursday.
The Blue Cross Blue Shield Association (BCBSA) and 18 Blue
Cross Blue Shield health insurers are working with Civica Rx, a
non-profit formed two years ago to try to increase competition
for hospital-based generic drugs.
The new subsidiary will focus on drugs that members can
purchase via mail order or in retail pharmacies. Starting in
2022, it plans to begin selling new rivals for about 7 to 10
expensive generic medicines that currently have just one
manufacturer, Civica Chairman Dan Liljenquist said. An advisory
board will select the drugs.
Civica will be able to sell the drugs at a lower price than
a current manufacturer by leveraging the volume of prescriptions
among its Blues plans members to guarantee discounts,
Liljenquist said. The company may also manufacture drugs itself.
Members will benefit from those lower prices based on their
plan design, BCBSA strategy head Maureen Sullivan said. The
lower cost to the Blues plans could translate into lower
out-of-pocket spending, savings on the overall premium or
potentially a lower co-pay or a co-pay waiver for patients, she
said.
About 78% of the $335 billion in annual U.S. drug spending
goes to generic versions of branded drugs that have lost patent
protection, according to generic industry trade group, the
Association for Accessible Medicines.
Large generic drug manufacturers say price competition has
severely crimped profits for many of their drugs, leading to
industry consolidation. That has increased the number of drugs
with only one manufacturer, which can result in significant
price spikes on lifesaving medicines.
Some particularly egregious recent examples of price gouging
or drug shortages led the U.S. Food & Drug Administration to
enact new policies to try to ease the process for approving new
rival generic drugs where there are only one or two existing
versions available.
A Civica spokeswoman said that as of the beginning of this
year, it was either supplying or producing a total of 18
hospital-based medicines including commonly used medicines like
bacitracin, lidocaine and morphine. Generic manufacturers that
currently produce them include Hikma Pharmaceuticals,
Xellia Pharmaceuticals and Exela Pharma Sciences, she said.
Participating Blues plans include Independence Blue Cross,
Blue Shield of California and Highmark Blue Cross Blue Shield
among others.
(Reporting by Caroline Humer; Editing by David Gregorio and
Bill Berkrot)