Study Shows Proven Cost-Effective Supply of Generic Medications Through Nonprofit Models

A recent study highlights the potential of nonprofit healthcare models to reliably supply essential generic medications at significantly reduced costs. Conducted by researchers from Cambridge Judge Business School affiliated with Intermountain Health, the study focused on the case of CivicaScript, a nonprofit drug manufacturer operating in the United States. The study's findings reveal that CivicaScript can provide generic drugs, such as abiraterone acetate — a treatment for metastatic prostate cancer — at prices that save patients over 60%, while insurers see savings exceeding 90%. This demonstrates that prioritizing patient access over profit in the pharmaceutical industry can be both feasible and highly effective.

Published in NEJM Catalyst, the research assessed pharmacy claims data from September to December 2023, comparing costs for CivicaScript members with those of other suppliers. The results showed a 64% reduction in costs for patients and a 92% reduction for insurers. The success of CivicaScript’s model indicates that reframing business strategies around sustainability and affordability rather than profit maximization can produce substantial economic benefits.

CivicaScript's approach involves transparent, scalable operations rooted in the healthcare utility (HCU) model — a self-sustaining nonprofit organization formed by healthcare institutions. With over 100 million members across more than 20 institutional partners and multiple states, CivicaScript offers medications at wholesale prices, such as abiraterone acetate, which is still expensive despite patent expiration. Their model involves transparent pricing, including a low wholesale cost and a simple retail markup.

Despite its promising results, CivicaScript faces resistance from traditional supply chain players like pharmacy benefit managers (PBMs), which often inflate drug prices significantly. Reports from the Federal Trade Commission have documented such markups, highlighting challenges to implementing cost-saving models industry-wide.

The research underscores the potential for nonprofit and collaborative models to address systemic issues in drug pricing. As industry debates continue over patent laws and market failures, CivicaScript’s success offers a scalable example of how aligning interests around affordability can transform healthcare costs.

Source: https://medicalxpress.com/news/2025-05-generic-drugs-reliably-big.html