Jan 23, 2020 - Health

Blues plans invest in new generic drug company

A pharmacist technician stocks drugs.

A new company will sell generic medicines at cost. Photo: George Frey/Getty Images

Eighteen Blue Cross Blue Shield insurers are investing a combined $55 million to build a new generic drug company as a subsidiary of the nonprofit Civica Rx. The firm will focus on manufacturing generics people get at the pharmacy.

Between the lines: Civica and the Blues aren't disclosing which drugs they want to make, so it's unclear how much effect this company will have. But the investment highlights the broad desire to counter generic companies that are accused of price-gouging.

What they're saying: The new company is evaluating a list of 30 to 40 generic drugs that have little or no competition and are deemed to be "high-priced," Civica CEO Martin VanTrieste said.

  • "If you're in the supply chain and you're causing that artificially high price, you should be concerned," VanTrieste said.

Yes, but: Pharmacies have contracts with wholesalers that usually require them to buy a vast majority of their drugs from that wholesaler.

  • Veering outside of that system, even to get cheaper drugs, may not be easy, and may not guarantee quick access to those drugs.
  • However, the Blues plans are now trying to recruit retailers and pharmacies to join and buy the generics that will start rolling out in 2022.

The bottom line: Civica has already started distributing hospital-based drugs. This effort similarly hinges on which drugs are targeted and how cheap Civica's new subsidiary can make them.

Go deeper