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He was reluctant to take the CEO job, but VanTrieste has the unique nonprofit drug manufacturer surpassing its goals and possibly branching out into the retail market.
Martin VanTrieste is not your typical CEO.
When the 35-year veteran of the healthcare industry was offered the top role at Civica Rx in 2018, he agreed to come out of retirement on two conditions. First, he wasn’t going to uproot his family from Florida. Second, he would work only pro bono.
“I think it adds a lot of credibility for a nonprofit company, especially when no one has ever heard of a nonprofit pharmaceutical company,” VanTrieste says. “It also put me on equal footing with our board of directors. I wanted them to understand that I was coming to them with the best interest of patients and our members.”
VanTrieste was hired after a phone call from Dan Liljenquist, senior vice president and chief strategy officer for Utah-based Intermountain Healthcare. Liljenquist had asked him a year earlier to come to Salt Lake City to be part of a group of 30 advisers to health systems looking to start their own generic drug company as a way of ending hospital drug shortages. Civica is Liljenquist’s brainchild, and he chairs its board. When he asked VanTrieste to become Civica’s leader, VanTrieste was reluctant. He said no multiple times because he wasn’t really looking for any post-retirement challenges.
“I told him, ‘I really liked retirement, but more importantly, I am a manufacturing guy, not a CEO, and I don’t have those polished CEO skills,’” says VanTrieste. “He called me back and once again said he wanted me to be the CEO.” Eventually, VanTrieste’s wife, Cynthia, who is also a pharmacist, told him the mission was so important and persuaded him to take the job.
VanTrieste himself was impressed with the mission of the company, which is located in Lehi, Utah, just outside Salt Lake City. The company’s goal is to be an FDA-approved manufacturer that will either directly manufacture generic drugs or subcontract manufacturing to reputable contract organizations. American hospitals have been dealing with drug shortages off and on for the better part of two decades. Here at last was a solution. VanTrieste has long cared about the problem, and his resume, despite the lack of CEO sheen, made him a good fit for the top role at Civica.
So many career paths have accidental trailheads in summer jobs and seemingly random influences. “It’s a little bit of serendipity,” says VanTrieste. “When I was in high school, I got to work in a pharmacy as a short-order cook. The older pharmacist took a liking to me and brought me into the back and taught me what pharmacy was all about.” VanTrieste was so interested, he applied to pharmacy school at Temple University in Philadelphia.
“My goal was to own my own drugstore, but the year before I graduated, I was offered a summer internship at Abbott Laboratories to do research and development (R&D),” VanTrieste explains. “That’s where I fell in love with industrial pharmacy.” His impressive resume includes a decade as chief quality officer at Amgen, plus stints as vice president of worldwide quality for Bayer Healthcare’s biological products division and vice president of quality assurance for Abbott Laboratories’ hospital products division.
“A key moment of my career was when I was approached to move out of an R&D role and go into manufacturing,” VanTrieste says. “It was in the hospital products division that I got all the experience and love for what we do at Civica, because many of the drugs that are on drug shortage today I formulated when I was a formulation pharmacist and I manufactured when I was in this division of Abbott.”
VanTrieste is also the founder of Rx-360, an international nonprofit based in Philadelphia that enhances patient safety by increasing security and quality in the biopharmaceutical supply chain. He has also served as chair of the Parenteral Drug Association’s board of directors.
Early days at Civica
Last year was Civica’s first full year in operation, and VanTrieste has helped the nonprofit grow to serve over 45 health systems comprising about 1,200 hospitals across the country. He says the three goals he had for 2019 were to hire a high-performance leadership team (the company now has 28 employees), lay the groundwork for a company culture to serve patients and bring quality products into the market that are available and affordable, and get Civica’s first products launched. “We set a goal to launch 14 products, and we overachieved, with 19 products available to the marketplace by the end of 2019,” VanTrieste says.
VanTrieste says he and others at Civica have studied the drug shortage problem. “We realized that because of how the marketplace evolved and how the entire economics were broken, people awarded single-source contracts to the lowest possible bidder, who then had to cut costs and move supply chains to faraway lands. And when it broke, there was no other manufacturer that had the capacity or was ready to fill in that gap.” They contacted a number of manufacturers who did not get those exclusive contracts and who weren’t actively participating in the marketplace, and presented their unique business model.
Civica promised five-year guaranteed contracts in take-or-pay arrangements at fixed prices, an attractive offer to the manufacturers. Those terms meant the manufacturers Civica were more willing to invest in their operations. So the win-win cliche rang true, in this case a win for the manufacturers with which Civica contracts and another one for the health systems it supplies.
“We’re doing the research and development to get the FDA to approve our own abbreviated new drug applications (ANDAs), and we’re going to use contract manufacturers to make the product for us,” VanTrieste says. At the same, Civica is “actively engaged” in trying to buy a manufacturing facility and conferring with architectural firms about building its own manufacturing facility, he says.
Of course Civica is dealing with the COVID-19 epidemic. VanTrieste says demand has increased for broad-spectrum antibiotics, sedatives, pain management medications, neuromuscular blocking agents, and a variety of medications for comorbidities. “This a defining moment for Civica,” VanTrieste says, “one that demonstrates the model is working as designed to help stabilize the supply of essential generic medicines.”
Civica’s member organizations make a one-time donation, with each of the seven healthcare systems and three philanthropies on the board committing $10 million. The second tier of members, known as founding members, puts up a one-time capital investment of $5 million and is part of the drug selection advisory and medical trends advisory committees. The next tier, known as partnering members, is open to all health systems and is priced at $300 per licensed hospital bed, with a cap of $1 million. “We raised a significant amount of capital, just shy of $200 million,” says VanTrieste.
Money will also come from a new Blue Cross Blue Shield Association partnership, which will put $100 million on the table for Civica to bring seven to 10 drugs to the retail market. The plan for this year is to bring 20 drugs to market and submit a series of products to the FDA for ANDA approval. Civica hopes to have 100 drugs on the market within five years.
Civica was conceived as the answer to hospital drug shortages. But VanTrieste says the organization is eyeing the retail side of the drug market carefully. “Another thing 2020 brings is a partnership with Blue Cross Blue Shield Association, and they want us to explore using Civica in the retail space,” he says. “We are actively studying what’s causing that high price and looking at developing a business model to fix that marketplace.”
Keith Loria is a freelance writer in northern Virginia.