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Data: Q1 2010–Q1 2015 from U.S. Government Accountability Office, Jan. 1, 2016–Nov. 9, 2017 from Elsevier; Chart: Harry Stevens/Axios

Generic erythromycin, an antibiotic, saw price hikes every year from 2010 to 2017, ultimately ending up roughly 50 times more expensive than it started. It's not alone.

The market-based solution to this problem would be for a new company to start manufacturing those drugs. Often, however, there's a market failure, and the drugs remain hard to find or exorbitantly expensive for years.

At any given time, roughly 200 drugs fulfill four criteria:

  • They're available in generic form.
  • Like erythromycin, they're on the World Health Organization's list of essential medicines.
  • Their price has increased by more than 50%, in a way underlying market conditions can't justify.
  • They have suffered shortages that have harmed patients.

Enter Civica Rx, a nonprofit that intends to solve the problem by not making any money at all.

  • Civica is a consortium of seven hospital groups and three philanthropies. They've each already donated $1 million to the nonprofit, and have pledged to make at least $9 million more in loans, if necessary. That's total funding of $100 million.
  • Its hospital members can enter into a multi-year binding contract to buy large quantities of any given drug. That gives Civica, as a drug manufacturer, a lot of certainty when it comes to future demand.
  • Civica then contracts with its own vendors, locking in drug supplies for many years.

"Most generic manufacturers will never even run into us," says Dan Liljenquist, Civica's chairman.

  • Civica is not a danger to the generic drug industry; it will operate only as a manufacturer of last resort in the rare cases where that industry has experienced market failure.
  • "We don’t need to fix the whole market," Liljenquist tells Axios, "because the whole market’s not broken."

Expect to see Civica's first drugs hitting the market as early as the second quarter of 2019.

Go deeper: Read the rest of Axios' Deep Dive on prescription drug prices

Go deeper

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9 p.m. ET: 18,187,396 — Total deaths: 691,352 — Total recoveries — 10,841,436Map.
  2. U.S.: Total confirmed cases as of 9 p.m. ET: 4,711,323 — Total deaths: 155,379 — Total recoveries: 1,513,446 — Total tests: 57,543,852Map.
  3. Politics: White House will require staff to undergo randomized coronavirus testing — Pelosi says Birx "enabled" Trump on misinformation.
  4. Sports: 13 members of St. Louis Cardinals test positive, prompting MLB to cancel Tigers series — Former FDA chief says MLB outbreaks should be warning sign for schools.
  5. 1 🎥 thing: "Tenet" may be the first major film to get a global pandemic release.

In photos: Thousands evacuated as Southern California fire grows

A plane makes a retardant drop on a ridge at the Apple Fire north of Banning in Riverside County, which "doubled in size" Saturday, per KTLA. Robert Gauthier / Los Angeles Times via Getty Images

A massive wildfire that prompted mandatory evacuations in Southern California over the weekend burned 26,450 acres and was 5% contained by Monday afternoon, the California Department of Forestry and Fire Protection said.

The big picture: As California remains an epicenter of the coronavirus pandemic in the U.S., some 15 separate fires are raging across the state. About 7,800 people were under evacuation orders from the Apple Fire, about 75 miles east of Los Angeles, as hundreds of firefighters battled the blaze. CalFire said Monday that a malfunction involving a "diesel-fueled vehicle emitting burning carbon from the exhaust system" started the Apple Fire.

Twitter faces FTC fine of up to $250 million over alleged privacy violations

Photo: Rafael Henrique/SOPA Images/LightRocket

The Federal Trade Commission has accused Twitter of using phone numbers and emails from its users to make targeted ads between 2013 and 2019, Twitter said in an SEC filing published Monday.

Why it matters: Twitter estimates that the FTC's draft complaint, which was sent a few days after its Q2 earnings report, could cost the company between $150 million and $250 million. The complaint is unrelated to the recent Twitter hack involving a bitcoin scam.