Aug 3, 2022 - Health

How companies are shaking up how we pay for old drugs

Illustration of many pills and coins falling

Illustration: Annelise Capossela/Axios

Starting today, prostate cancer patients taking a prescription drug called abiraterone will pay what could be thousands of dollars less a month for a generic version from a company called CivicaScript.

Why it matters: It's the first drug to be manufactured and sold by CivicaScript — a subsidiary of the hospital-owned nonprofit Civica Rx that's trying to reshape the economics of drug development.

What they're saying: Abiraterone was selected both because of the high list price and significant patient need, CivicaScript President Gina Guinasso told Axios.

  • A month's supply of abiraterone 250 mg will be sold to pharmacies for about $160 a bottle with a maximum retail price of $171 — about $3,000 less than the average price for someone with Medicare Part D coverage, they said.
  • It's an example of how the public benefit company, which includes insurer and PBM partners, aims to address shortages and soften price spikes for a collection of high-priced generics, as well as insulin.
  • "We hope that our transparent approach, flowing all the way through to the consumer, will translate into there being less opaqueness and fewer people being hurt by pricing on generics," she said.

The big picture: It's part of a larger market-based effort to rein in drug prices — at least in the generics market — rather than leave the job to lawmakers.

Their core promise? Price transparency.

  • The Mark Cuban Cost Plus Drug Company, started by the billionaire entrepreneur, had a splashy start earlier this year with a business model that promises lower cost generic drugs through steps like cutting out pharmacy benefit managers.
  • Last month, online pharmacy platform DiRX launched a subscription model that offers unlimited access to more than 1,000 generic drugs for a flat fee of up to $300 a year. "It was bothering me that the products actually don't cost much," said Satish Srinivasan, founder and CEO of DiRx.
  • CivicaScript — which launched in 2020 — also uses a transparent pricing model, but actually manufactures the drugs. Unlike the others, it works with payers, PBMs, and pharmacies, but says the "like-minded" partners work together to pass savings to customers.
  • Retailers and insurers like Walmart and UnitedHealth Group have rolled out programs to reduce how much patients pay for insulin.

Reality check: While some of these efforts may address cost and access for certain generics, it doesn't impact the prices of newer drugs.

  • Some of this disruption is aimed at the "lowest-hanging fruit" and harks back to efforts like Walmart's $4 generics program launched more than a decade ago, said Alysha Fluno, the national pharmacy practice leader at Mercer.
  • These efforts may also strip away areas where PBMs may be able to make money, which might result in even higher prices for the brand-name medications, Fluno said.

The bottom line: While behemoths still control the U.S. drug market, there are also a growing number of companies looking to disrupt it — but it's a complicated web.

  • "It's not going to take just one company," Guinasso said. "It's going to take a lot of us doing the right thing with pricing and transparency to really make it resonate with laypeople that 'Here's what's been happening and here's how we're trying to change it."
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