Using the Healthcare Utility Model to Manage Pharmacy Cost for Patients and Payers

Generic medicines are critical to reducing the cost of prescription drugs for patients once brand patents expire. In fact, it is thanks to generics that many people can afford the medicines that treat their illnesses and keep them healthy. However, while most generic medicines continue to be available at significant price reductions, we have seen U.S. prices of some generics skyrocket.

John Mbagwu, Pharm.D., CivicaScript

Payers are overspending on these medications and patients are being forced to make painful trade-offs. Many patients are putting their health at risk by rationing their medicines, or worse, leaving them at the pharmacy counter because they simply cannot afford it.

Nhi Nguyen, Pharm.D., MBA, Blue Shield of California

There is an urgent need for pharmacy manufacturing and distribution models that remove the overinflation of these drug prices to provide cost savings for patients and payers. To be truly sustainable, these models must involve key stakeholders from multiple sectors, working together for the good of our patients. Managed care executives and pharmacy leaders can play a critical role in this type of approach.

A drug manufacturer modeled like a public utility

One recent approach follows the “healthcare utility” model, which is built on the concept of a public utility (think water or electricity) and a utility’s mission to make an essential service available to everyone at the same affordable cost. Launched in 2020, CivicaScript was created by nonprofit organization CivicaRx, the Blue Cross Blue Shield Association and 17 independent and locally operated Blue Cross and Blue Shield companies.

Sharon Faust, Pharm.D., MBA, Lumicera Health Services

CivicaScript manufactures low-cost generic medicines, then works with payers, PBMs and pharmacies across the country that pass along the cost savings to their customers. The model focuses on transparency and collaboration throughout the value chain from manufacturing through dispensing — with every stakeholder along the way knowing the price of the medicine and realizing the savings.

Late last year, CivicaScript launched its first product, abiraterone 250 mg tablets, for sale to pharmacies for $160 per bottle of 120 tablets, which is typically a month’s supply. CivicaScript recommends that pharmacies charge payments no more than $171 per bottle (CivicaScript’s maximum retail price policy, or MaxRP® policy), which is about $3,000 less than the average cost for someone with Medicare Part D.

CivicaScript is targeting a number of other overpriced generic medications. Meanwhile, CivicaRx is gearing up to manufacture its own low-cost insulin. In an encouraging response from drug manufacturers, after the announcement of CivicaRx’s intent to manufacture insulin in 2022, the three largest insulin makers — Eli Lilly, Novo Nordisk, and Sanofi — all cut their prices.

With the key stakeholders involved, health system disruption can work

The participation of multiple stakeholders has been a critical success factor in making CivicaScript’s lower-cost product accessible to patients. To date, Blue Shield of California has transitioned over 60% of its abiraterone utilization to the CivicaScript generic, resulting in an average member savings of $170 per prescription and overall savings to Blue Shield of close to $4 million.

Lumicera Health Services, a specialty pharmacy owned by Navitus Health Solutions, has filled prescriptions for thousands of patients who have switched to CivicaScript’s generic. Given that reducing patient out-of-pocket costs can be a significant factor in improving medication adherence, the company is tracking not only cost savings from the switch, but also any impact on adherence.

Ensuring access to safe, effective medicines at prices people can afford will take a collaborative effort across the healthcare industry. CivicaScript’s take on the healthcare utility model is already demonstrating that collective action can translate to meaningful change.

John Mbagwu, Pharm.D., is vice president, portfolio management & commercial operations at CivicaScript. Nhi Nguyen, Pharm.D., MBA, is director, formulary strategy and P&T, pharmacy services at Blue Shield of California. Sharon Faust, Pharm.D., MBA, is senior vice president, specialty pharmacy at Lumicera Health Services.