Civica Rx is using long-term contracts and payment on delivery as a way to keep manufacturers in the market, Civica Rx CEO and president Martin VanTrieste said in an interview with MHE.
First of three parts
Civica Rx put a spotlight on its fledging retail generics business this week with an announced about its name, CivicaScript, and a new partnership with Aetna.
Martin VanTrieste, the CEO and president of Civica Rx since its founding in 2018, spoke with Managed Healthcare Executive® before the announcement about the company’s track record, membership model and foray into the retail market.
VanTrieste said the founding members of Civica — seven hospitals and three philanthropies — intended to the company to be a manufacturer in three ways.
“The first and the quickest way to market is find people who already have the FDA license to make the product, but for some reason, they've decided not to make it. And we've crafted our business model, so that those people are encouraged to get back into the market and make more of the product,” VanTrieste told MHE
Second part of the strategy, he said, was to file its own submissions with the FDA and contract manufacturers to manufacture that product. And that process is ongoing.
The third was to build a manufacturing facility. Civica announced in January it was building a facility in Petersburg, Virginia, to manufacture injectable drugs. “We have broken ground, the entire pad has been laid and Steel's being erected as we speak today,” VanTrieste said.
VanTrieste said Civica has been successful in stabilizing the generic drug market for hospitals because it offer long-term contracts to suppliers that are guaranteed for annual volumes: “If we don't take the product, we pay for it anyway.” Civica also pays on delivery, VanTrieste said, whereas wholesalers , according to VanTrieste, pays suppliers when it sells the product.”
“Manufacturers now have the resources and the security and the certainty that they should be buying all the raw materials for us. But they don't have to worry about the next order being placed,” VanTrieste told MHE.