Generic drugs can be reliably supplied at big savings, study finds

A new study finds that CivicaScript, a not-for-profit drug manufacturer in the US, can reliably supply essential generic medicines at a price that saves patients over 60%, and public and private insurers over 90%, demonstrating the potential of the nonprofit health care utility (HCU) model to deliver a scalable solution to generic drug affordability.

The study, by researchers from Cambridge Judge Business School of Intermountain Health, focused on abiraterone acetate, a treatment for metastatic prostate cancer, the second-leading cause of cancer deaths in US men, as the proof-of-concept drug for CivicaScript’s HCU model.

The study, published in the journal NEJM Catalyst, was the first evaluation of the price effect of the CivicaScript model that focuses both on lowering the price of generic drugs and tackling the problem of drug shortages.

The researchers say that CivicaScript’s success proves that prioritizing patient access over investor profit in the generic pharmaceutical industry is not only possible, but also could be highly productive and cost efficient. The study focused on the period between September and December 2023, and found cost savings for patients of 64% and savings for insurers of 92%.

The US leads the world in prescription drug spending, reaching about $723 billion in 2023 (surpassing the gross domestic product of Argentina). Specialty medications — those providing ‘high-cost, high-touch’ therapies for complex conditions – account for 50% of total drug expenditures even though they account for only 2% of total prescriptions.

The researchers acknowledge the crucial role that patent protection plays in the marketplace development of important drugs, in order to pay for the risk-taking research and development of pharmaceutical and biotech companies, but say the market system now often fails to deliver on patent laws’ underlying assumptions.

“CivicaScript was launched to counter this market failure. The fact that many generic drugs remain prohibitively expensive for many patients defeats the purpose of the patent system, and the US debate over the sharp rise in insulin prices highlights this problem,” said co-author Carter Dredge, and executive at Intermountain Health and a Fellow at Cambridge Judge. “The CivicaScript model aims to make generic drugs accessible and affordable for all, and we believe we can replicate this model in more healthcare industries.”

Launched in 2020, Utah-based CivicaScript membership now covers over 100 million people, about 30% of the US population, through more than 20 institutional partners including Blue Cross Blue Shield in more than a dozen states including California, Michigan, Rhode Island and Kansas.

CivicaScript is based on the HCU model, a self-sustaining nonstock corporation with a social mission, formed by health care institutions to provide essential products at the lowest sustainable cost through a transparent and scalable business model. The CivicaScript model complements the direct-to-consumer model of the Cost Plus Drug Company, launched by well-known US businessman Mark Cuban in 2022.

“In contrast to the direct-to-consumer model, which bypasses the traditional insurance market, CivicaScript takes an inside-out approach,” said co-author Stefan Scholtes from Cambridge Judge. “The idea behind the CivicaScript model is collaboration with large payers to restructure the drug production and payment systems to address systemic problems, including high generic drug prices, through transparent market correctors.”

The branded version of abiraterone acetate, Zytiga, lost patent protection in 2018, but the drug still costs thousands of dollars per month for each patient. CivicaScript set the wholesale price of a bottle of 120 250-mg tablets, typically a month’s supply, at $160. Through a QR code on the bottle’s label, patients can see that the maximum retail price they could expect to pay was $171, or slightly above the wholesale price to cover pharmacy dispensing fees.

The researchers collected and analysed pharmacy claims data from CivicaScript members, and compared payments per patient-month between CivicaScript and other manufacturers for the period September to December 2023 to arrive at the cost saving percentages.

CivicaScript’s proof of concept showed that there are substantial opportunities for reducing generic drug costs for both patients and insurers, despite resistance from entrenched players in the drug supply chain. Its success with abiraterone acetate is evidence that reframing business models around sustainability and affordability, rather than profit maximisation, can generate meaningful cost savings.

The researchers say that CivicaScript faces obstacles from the current drug supply chain in getting its product to patients, citing a Federal Trade Commission staff July 2024 interim report on drug pricing control by pharmacy benefit managers (PBMs), or middlemen. A subsequent FTC staff interim report in January 2025 found that “the ‘Big 3 PBMs’—Caremark Rx, LLC (CVS), Express Scripts, Inc. (ESI), and OptumRx, Inc. (OptumRx)— marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by thousands of percent, and many others by hundreds of percent.