With a $3.2m grant, rural hospitals may avoid generic drug shortages

Affordable drugs can be a game changer for hospital budgets (see the ongoing fight over 340B). But for rural hospitals, which tend to have less financial wiggle room, saving on drugs can be even more significant.

The Civica Foundation, the nonprofit arm of generic drug company Civica Rx, and family philanthropy organization the Leona M. and Harry B. Helmsley Charitable Trust are teaming up to make medications more affordable for these critical providers. On May 7, with a $3.2 million grant from the trust, they launched the Civica Rural Hospital Program, a pilot that will pool rural hospitals’ purchasing power to connect them with cheaper generics, according to a press release.

“We hope to demonstrate that this works within our nine-state footprint…so hopefully the rest of rural America [has a] viable process to purchase these generic drugs,” Walter Panzirer, a trustee and grandson of Leona Helmsley, told Healthcare Brew.

Shortening shortages. Drug shortages affect providers big and small, costing US hospitals about $900 million and 20 million hours of labor each year, as we’ve previously reported.

But shortages tend to hit smaller rural hospitals harder because they don’t have the same purchasing power, and they end up depending on programs like 340B to provide medication discounts. In other words, when big hospitals need medication that’s hard to get, they can afford to pay more for it. Rural hospitals don’t always have that option, but that doesn’t mean they don’t need the drugs.

To fight this problem, Civica Foundation built its own manufacturing facility in Petersburg, Virginia, and with a one-time $300 membership fee per bed, hospitals can get generic drugs from there, making them less dependent on the larger market. This includes 70 generic medications, like heparin, lidocaine, morphine, and sterile water, according to the foundation’s website.

“That way [rural hospitals] can control the supply chain. They can control the radical price cost and be guaranteed constant supply,” Panzirer said.

Now, with the grant money, hospitals in the pilot program can join in for free. The three-year pilot is launching in Hawaii, Iowa, Minnesota, Montana, Nebraska, Nevada, North Dakota, South Dakota, and Wyoming—nine states the program identified as highly rural and struggling with access. An estimated 225 rural hospitals making up 6,750 beds are to be supported through this effort, per a release.

“Prior to this, only the larger hospitals would be able to join,” Panzirer said. “What we’re doing is making this equitable, so that the smaller hospitals can join and can be part of this purchasing group.”

Throughout the pilot, Civica plans to track results, including how the program impacts patients, according to the release.

“This is like Costco for pharmacies, but instead of having to get a pallet of a generic drug…they can get the right amount of what they use—so it doesn’t expire or go bad—at the Costco prices,” Panzirer said.