How Civica helped under-the-radar Phlow nab a $354M COVID-19 manufacturing deal
Ever since little-known Phlow signed a $354 million contract with the U.S. Biomedical Advanced Research and Development Authority (BARDA) to manufacture COVID-related medications earlier this week, critics have been raising questions about the company’s CEO, Eric Edwards. Prior to this award—which could be worth $812 million over 10 years—Edwards was best known for pricing controversies stemming from Kaléo, a company he cofounded.
So how did Phlow get tapped for such a lucrative opportunity to address the pandemic? The story started more than a year ago, according to Martin VanTrieste, CEO of Civica Rx, one of the companies that will work with Phlow to create a stockpile of active pharmaceutical ingredients (APIs) and generic medications to meet COVID-19 demand and prepare for future pandemics.
Edwards left Kaléo more than a year ago and cofounded Phlow with the intention of manufacturing pediatric drugs using a similar model as Civica’s, so he reached out to VanTrieste for advice. Civica, founded in 2018, manufactures generic drugs with the backing of 1,200 hospitals.
Edwards “wanted to know if I would teach him the Civica model,” VanTrieste told FiercePharma. “So we brought him in to shadow us, and he started learning about the over-reliance in the pharmaceutical supply chain on foreign suppliers.” The two companies started discussing the possibility of creating a national stockpile of APIs, VanTrieste said.
VanTrieste was invited to BARDA to discuss the API stockpile last summer. “And then, of course, the pandemic hit, and it just accelerated these efforts.” Phlow did not respond to interview requests from FiercePharma.
VanTrieste contends that the promise of the BARDA deal has been overshadowed by questions regarding Edwards’ history. The Phlow founder gained notoriety at Kaléo after it launched an EpiPen competitor and later raised its price 700%. Price increases on its naloxone injector Evzio made the company a target of U.S. legislators and pharmacy benefits manager Express Scripts.
But pricing won’t be an issue with the BARDA contract, VanTrieste said. “Phlow is set up as a public benefit corporation. Government documents state they will provide quality medicines at affordable prices. So there is protection for the consumers. They don’t have to worry about prices being artificially raised.”
Perhaps, but the government may already be overstating Phlow’s capabilities when it comes to pandemic readiness. Phlow provided the government with more than a million doses of medicines needed to address the pandemic after signing a $6 million contract with the Department of Health and Human Services in April, Peter Navarro, director of the White House Office of Trade and Manufacturing Policy, told Politico.
In reality, Civica contracts with the facilities where those medicines were made. And in the short term, Civica and Phlow can only provide generic versions of supportive medications used to treat COVID-19 patients, such as pain relievers and sedatives. Civica has made more than 1 million doses of six of its 20 medications for the stockpile so far and has plans to deliver another 20 drugs by the end of the year. AMPAC Fine Chemicals is also contributing to the effort.
When the BARDA contract with Phlow was unveiled, Civica said it planned to build out a new manufacturing facility to supply finished drugs. VanTrieste said the company was already starting to design the 120,000 square-foot facility but that under “normal circumstances” it would take at least four years to get the site up, running and approved by the FDA.
Phlow is also building an advanced API manufacturing facility that “could be online sooner,” VanTrieste said, particularly because of the urgent need to address the pandemic. The first phase of that facility will be in production within a year, he predicted. As for completing the construction, “if the government decides they need to accelerate it, they could easily do that through regulatory relief,” he said. “Then we could compress that timeline to around two years.”