By Jilian Mincer

(Reuters) – A new not-for-profit supplier of generic drugs formed by a consortium of hospitals systems said it expects this year to be able to provide about 20 products to alleviate shortages of medicines used during surgeries and to treat life-threatening conditions, such as septic shock.

Since the start-up of Civica Rx spearheaded by Intermountain Healthcare was announced last January, the Utah-based company has raised more than $160 million from its members, which include HCA Healthcare Inc hospital chain, the Mayo Clinic, the Catholic Health Initiatives and others, which together represent about 800 hospitals.

Civica Rx initially expected to offer 14 drugs in 2019. It now believes it will exceed that number after forging relationships with several companies with licenses to manufacture additional medicines, company officials said in an interview.

Within three-to-five years, it aims to offer up to 100 generic medicines critical to the everyday function of its member hospitals.

Years of consolidation among generic drugmakers, compounded by manufacturing problems, have led to sometimes severe U.S. shortages of hundreds of commonly used treatments, from anesthetics to intravenous saline and chemotherapies. In some cases, that has spurred steep price increases from remaining manufacturers after others stopped making older drugs with minuscule profit margins. In some cases, where there is just one remaining manufacturer, prices have soared.

“These are very, very old drugs that have been used not only for decades, some for almost a century,” Civica Rx Chief Executive Martin VanTrieste told Reuters. “When hospitals can’t have them, they are forced to cancel patient treatments or find alternative treatments. In most cases, that is suboptimal care or no care at all.”

More than 90 percent of U.S. hospitals said they had to “identify alternative therapies to mitigate the impact of drug price increases and shortages,” according to a study conducted at the University of Chicago for three healthcare organizations and released this month.

Members hospitals have agreed to pay fees to Civica based on their size, in addition to the cost of drugs purchased, the company said.

Civica would not identify manufacturers it was working with, but said its first medicines would be made at locations in New Jersey, Pennsylvania and North Carolina that are already licensed to produce generic drugs. Civica said it was negotiating long-term prices with the manufacturers in exchange for commitments from its member hospitals to buy the products for five to 10 years.

VanTrieste said Civica plans to buy or build its own manufacturing facilities over the next four or five years, and hopes to maintain six-month supplies of its products to ensure availability. Its business model also aims to ensure competition to keep prices low.

“We want to be very competitive,” he said. “We want multiple manufacturers to make the products. We want our health systems to buy only half from us.”

(Reporting By Jilian Mincer; Editing by Bill Berkrot)