Mayo Clinic joins hospital group producing generics

Mayo Clinic is joining six other hospital systems in launching a nonprofit generic drug company called CivicaRx.

It's unusual for hospitals to be in the business of making generic drugs, but pharmaceutical shortages and high drug prices prompted the strategy.

Other members of the group include Catholic Health Initiatives, Hospital Corporation of America, Intermountain Healthcare, Providence Health, SSM Health, and Trinity Health. With Mayo, the consortium represents 500 individual hospitals.

The group is also working with the U.S. Department of Veterans Affairs.

The idea was announced earlier this year, with Utah-based Intermountain Healthcare spearheading the effort.

In a statement, Mayo Clinic CEO Dr. John Noseworthy said the group hopes to "solve the most complex health care challenges of today" and that it serves as a "commitment to improving the health and well-being of millions of patients."

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The challenges Noseworthy is referring to are two-fold. Some essential generic drugs are only made by a handful of companies, which can lead to shortages.

In a statement, Mayo said the newly formed corporation will be approved by the Food and Drug Administration to manufacture or sub-contract the manufacturing of 14 hospital-administered generic drugs. The products are expected to reach market by 2019 and some medications will be available to retail outlets as well.

The new corporation will be headquartered in Utah, and the seven organizations starting the project will provide start-up funding for the outfit.

Martin VanTrieste, former chief quality officer for biotech company Amgen, will serve as CEO and will not be paid for the work.