California Governor Gavin Newsom announced Saturday that the state has entered into a 10-year partnership with a drugmaker to produce insulin for its residents at a significantly lower cost.
Country plans to sell insulin at $30 for a 10-milliliter vial, Newsom said at a news conference Saturday near Los Angeles. The insulin will be manufactured by Civica Rx, a non-profit pharmaceutical company. The product is expected on store shelves only next year.
“Thank you for being willing to disrupt the market,” Newsom said. “Thank you for being willing to save lives without fear of failure, but more importantly for not being motivated by money.”
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Back in July 2022, Newsom announced that he had approved a budget that set aside $100 million for California to make its own insulin.
However, many questions remain. The state and Civica have yet to locate a manufacturing facility in California. Regulatory approvals will be required. It is possible that competitors could lower their prices and undercut the government’s product.
This also comes after several major insulin manufacturers recently announced that they too will be cutting prices. Eli Lilly and Novo Nordisk they said this month that they would lower the price of insulin by up to 70% and 75% respectively.
Eli Lilly said it would automatically cap out-of-pocket insulin costs at $35 for insured people and expand its insulin value program.
Anthony Wright, executive director of Health Access California, a state consumer health advocacy group, welcomed Newsom’s announcement, saying efforts by California and others to develop a competing generic drug are likely to be a factor in forcing insulin makers to lower their prices.
However, there are obstacles.
“The work to develop a generic drug, get FDA approval and set up manufacturing will take real time,” Wright said in an email. “It may even take more time to get doctors to prescribe the drug, insurance companies and (pharmacy benefit managers) to include it on their formularies, and patients and the public to accept and demand it.”
There may be other risks. State analysts have warned that California’s entry into the market could prompt other manufacturers to reduce the availability of their drugs, a potential unintended consequence.
Even with the challenges of entering a competitive, established market, Newsom said taxpayers will have “very broad protections.”
If for any reason the deal didn’t work out in the state’s favor, “there are all kinds of provisions that would allow us to … withdraw,” he said.
According to state documents, the proposed program could save many patients between $2,000 and $4,000 a year. In addition, the lower costs could result in significant savings as the state purchases the product each year for millions of people from its publicly funded health plans.
Just days ago, President Biden said his administration was “intensely” focused on reducing health care costs, including pressuring drug companies to reduce insulin costs. Legislation passed last year capped co-pays for insulin at $35 a month for Medicare beneficiaries. Biden proposed expanding that limit to all Americans.
The state of California is also investigating the possibility of marketing other drugs, including the overdose drug Naloxone. The drug, available as a nasal spray and as an injection, is seen as a key tool in the fight against the overdose crisis across the country.
“We’re not going to stop here,” Newsom said.
