Study Reveals Significant Savings with Generic Drug Supply

A recent study has demonstrated that CivicaScript, a nonprofit pharmaceutical manufacturer based in the United States, can deliver essential generic medications at substantially lower costs. The findings indicate that patients can save more than 60% on their medications, while public and private insurers could see savings exceeding 90%. This research showcases the potential of the nonprofit health care utility (HCU) model to enhance the affordability of generic drugs.

Conducted by researchers from Cambridge Judge Business School in collaboration with Intermountain Health, the study focused on abiraterone acetate, a medication used to treat metastatic prostate cancer, which is the second-leading cause of cancer-related deaths among men in the U.S. This study marks the inaugural assessment of the CivicaScript model, which aims to lower drug costs while also addressing the issue of drug shortages.

The researchers assert that the success of CivicaScript validates the possibility of prioritizing patient accessibility over profit in the generic pharmaceutical sector. By analyzing data from September to December 2023, they found that patients experienced an average cost reduction of 64%, while insurers reported an impressive 92% savings.

The United States stands at the forefront of global prescription drug spending, with expenditures reaching approximately $723 billion in 2023, surpassing the GDP of several countries, including Argentina. Notably, specialty medications account for half of total drug spending, despite constituting only 2% of total prescriptions.

The research team acknowledged the importance of patent protections in fostering the development of vital medications, which are essential for financing the research and development efforts of pharmaceutical and biotech firms. However, they argue that the current market frequently fails to meet the expectations set by these patent laws.

CivicaScript was established in response to this market failure, as the high prices of many generic drugs hinder patient access, undermining the fundamental purpose of the patent system. The ongoing discourse surrounding rising insulin prices further illustrates this challenge. The CivicaScript initiative aims to ensure that generic medications are both accessible and affordable, with aspirations to replicate this model across various healthcare sectors.

Since its launch in 2020, CivicaScript has partnered with over 20 institutions, covering more than 100 million individuals--approximately 30% of the U.S. population. This initiative includes collaboration with prominent partners such as Blue Cross Blue Shield across multiple states, including California, Michigan, Rhode Island, and Kansas.

Operating under the HCU model, CivicaScript functions as a self-sustaining nonprofit organization focused on providing essential products at the lowest sustainable cost through a transparent and scalable business approach. This model is designed to complement direct-to-consumer initiatives, such as the Cost Plus Drug Company, which was launched by entrepreneur Mark Cuban in 2022.

Unlike direct-to-consumer models that bypass traditional insurance frameworks, CivicaScript collaborates with major payers to reformulate drug production and payment systems to tackle systemic issues, including exorbitant generic drug prices.

Abiraterone acetate, marketed under the brand name Zytiga, lost its patent protection in 2018, yet it continues to cost patients thousands of dollars monthly. CivicaScript has set a wholesale price of $160 for a bottle containing 120 tablets, which typically constitutes a month's supply. Patients can verify this pricing through a QR code on the product label, indicating a maximum retail price of $171, which includes pharmacy dispensing fees.

The research team collected and analyzed pharmacy claims data from CivicaScript members, comparing per-patient monthly payments between CivicaScript and other manufacturers during the last quarter of 2023 to derive the reported savings percentages.

The results from CivicaScript's initial endeavor indicate significant opportunities to reduce generic drug costs for both patients and insurers, despite facing resistance from entrenched entities within the drug supply chain. Their success with abiraterone acetate serves as evidence that adjusting business models to emphasize sustainability and affordability can yield substantial cost reductions.

However, the CivicaScript model encounters challenges within the existing drug supply chain, as highlighted by a Federal Trade Commission (FTC) report from July 2024, which scrutinized drug pricing practices by pharmacy benefit managers (PBMs). A subsequent FTC report in January 2025 revealed that the predominant PBMs marked up numerous specialty generic drugs dispensed at their affiliated pharmacies by significantly high percentages.