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Covis Pharmaceuticals' business model is to acquire distribution rights to low-volume drugs
The ongoing crisis in short-supply drugs, which went from background noise to a top-level problem for many hospital networks over the past year has not been “fixed,” by any means. The current list, available at the Am. Soc. of Health-System Pharmacists,* has 213 entries. But there is some movement, with a new company, Covis Pharmaceuticals (Cary, NC), solidifying supplies for some of the drugs. The company announced in late March that it is now supplying Zantac (ranitidine hydrochloride) for injection, and has aggressive plans to address other short-supply drugs.
“We have a unique business model,” says Bill Collins, CEO of the company, which is the US arm of Covis Pharmaceuticals Sarl, in Zug, Switzerland. “We will acquire the rights to branded drugs that have gone off-patent, but remain critical therapies in acute-care markets.” The company has added Zantac for injection (introduced by GSK) to a list that includes Lanoxin (digoxin), Fortaz (ceftazidime) and Zinacef (cefuroxime), and is on the hunt for other brands.
It is common for branded pharma companies, once a drug has gone off-patent, to continue to manufacture the branded formulation, but usually at a drastically reduced scale (and price) due to the generic competition. Over time, those brands become something of a neglected product, or one whose production gets shunted around as the branded company allocates resources for newer, higher-volume drugs. All this would be ho-hum business variations, except when the generic manufacturers run into their own problems.
In Collins’ view, there are three components to short-supply drugs: a lack of attention by the originator company (when that company retains some market presence, and didn’t leave the market altogether for that drug); manufacturing issues or other supply interruptions at generic manufacturers; and the low prices that GPOs seek for products in contract negotiations. “We’ve been in continuous discussions with GPOs and hospital pharmacy directors, who are spending extraordinary time and resources to secure supply,” he says. “They understand that we have to make these products at a price we can afford.”
No quick fixes
For the drug shortage crisis overall, there is yet to appear any quick fix—or even a “slow fix,” if that can be conceived. Various legislative bills to require advance notification of production changes by manufacturers remain in committee in Congress—but even if that action were taken, it wouldn’t address unforeseen interruptions. FDA has a drug-shortage task force, which was beefed up by executive order in the fall, and they have been successful both in obtaining better notifications from manufacturers, and working to develop alternative sources of supply for some drugs. The Generic Pharmaceutical Assn (GPhA) floated the idea of a third-party information broker consolidating information about drug shortages and supplies, but little has been heard of that since.
Finally, a group of Congressmen (Senators Tom Harkin and John Rockefeller, and Rep. Elijah Cummings) committee has investigated charges of drug hoarding or price gouging by secondary distributors, but aside from finding alleged irregularities such as self-dealing in drugs (which is illegal, depending on the jurisdiction in which the irregularity occurred), no smoking gun has been found.