Highmark joining other Blue plans in making generic drugs

Highmark is among 18 Blue Cross Blue Shield health insurance plans that are investing $55 million to create cheaper versions of expensive generic drugs for consumers. The initiative will begin by producing seven to 10 generic drugs and make them available by early 2022.

The drugs were not identified for competitive reasons.

Downtown-based Highmark is a founding member of a new unnamed subsidiary of Civica Rx, which is designed to preserve member access to affordable retail generic prescription drugs. Civica Rx, a nonprofit generic drugmaker based in Salt Lake City, Utah, was formed in 2018 and has focused on alleviating prescription drug shortages in hospitals.

The new Civica subsidiary — also a nonprofit — will focus on the consumer side, assuring the availability of low-cost generics for Blue members.

“Generics have historically been the low-cost option, but select generics have not been low cost,” said Sarah Marche, senior vice president of pharmacy services at Highmark. “On the consumer side, it’s been more about high cost rather than shortages for all sorts of disease states.”

Members will pick up the prescriptions at participating pharmacies and through the health plan’s mail order service, Ms. Marche said. At first, the Civica subsidiary will contract with drug manufacturers to make the needed generics, but the longterm plan is to bring the drugmaking capability in-house with its own production facility.

Highmark’s Allegheny Health Network was a founding member of Civica Rx’s hospital initiative and the typical drug that hospitals have trouble finding is a generic sterile injectable, according to Civica. Antibiotics, pain and anesthesia medications, and chemotherapy drugs have all experienced shortages, which have cost health systems an estimated $230 million in spending on more expensive substitutes.

Generic drug market dynamics fuel some of the drug shortages. After a prescription drug loses patent protection, intense price competition drives down prices, lowering margins and providing little incentive for manufacturers to enter or stay in the generics market.

In other instances, entrepreneurs and drug companies buy up off-patent drugs that had no competition before sharply raising prices.