michigan association of healthcare resource material ...€¦ · us generic market –leading drugs...
TRANSCRIPT
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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
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MAHRMMMichigan Association of Healthcare
Resource Material Management
Medication Shortages and CIVICA Bob Ripley
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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.
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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)
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Generic Drug Prices Increases - Headlines
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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.
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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
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Health System Partner Statements
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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
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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.
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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
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US Generic Market – Leading Drugs
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Central Nervous System, CV & anticoagulants, anti-infectives and endocrine and pain products lead the US generics market
$5.8B
$1.8B
19%
Musculoskeletal
$6.1B
Dermatologics
23%
Pain Contraceptives and Sex
Hormones
$6.1B 31%
Respiratory
$6.6B
13%
$5.2B$5.3B
CNS
17%
$2.8B
Anti-infectives
11%
CV and Anticoagulants
$1.8B$1.2B
GI
$6.5B24%
$1.7B
$3.1B
$18.4B
$5.1B
Endocrine
30%
$4.6B
13%
$11.3B
$2.2B
$7.8B
$3.9B
2011 201619%
US Generics Market by therapeutic area (TA)*(US$, 2011 vs 2016)
% Compound Annual Growth Rate (CAGR)
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~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
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Fragile Supply Chain – Sterile Injectables
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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
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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
U.S.
Licensed
Beds
46 States
~200,000
Licensed
Beds
Stellar
BOD &
Advisory
Teams
~16 Drugs for
2019
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Company Overview
15
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
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Ensure Stable and Predictable Supply
16
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.
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Bring Competition to the Market
17
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
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Act as a Conscience to the Market
18
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
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Civica’s Membership Momentum
Governing Board Founding Members Partnering Members
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How Does Civica Rx Work?
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Drug Selection
21
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
lect
ion
Cri
teri
a
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Simultaneous Three-legged Product Supply Strategy
Manufacturing Solution #1
Work with ANDA holders to produce Civica Rx labeled generic drugs
Manufacturing Solution #2
Buy or develop ANDAs and use CMOs
Manufacturing Solution #3
Buy or build Civica Rx manufacturing capacity
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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.
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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-
50%
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
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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
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Contact Information
Contact Information
Martin VanTrieste Debbi FordPresident and CEO Comms & Public [email protected] [email protected]+1 (805) 573-0089 +1 (970) 227-3991
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MAHRMMMichigan Association of Healthcare
Resource Material Management
Methodology to forecast supply chain needs for CIVICA medications
Meena Rupani
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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
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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
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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
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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
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Contact Information
Bob RipleyChief Pharmacy OfficerTrinity [email protected]
Meena RupaniDirector, Strategic Sourcing, ClinicalTrinity [email protected]