California Gov. 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.
State plans sell insulin for $30 per 10-milliliter vial, Newsom said at a press conference Saturday near Los Angeles. The insulin will be manufactured by the non-profit pharmaceutical company Civica Rx. The product is not expected on store shelves for at least the next year.
“Thank you for wanting to disrupt the market,” Newsom said. “Thank you for wanting to save lives without fear of failure, but more importantly, money is not a motivator.”
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Back in July 2022, Newsom announced that he had approved a budget that allocated $100 million to California will produce 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 will affect prices and reduce the state product.
It also comes after several major insulin manufacturers recently announced that they would also be cutting prices. Eli Lilly and Nova Nordisk said that this month they will reduce the cost of insulin by 70% and 75%, respectively.
Eli Lilly said it would automatically limit out-of-pocket insulin costs for insured individuals and expand its insulin program.
Anthony Wright, executive director of Health Access California, a statewide consumer health advocacy group, welcomed Newsom’s announcement, saying efforts by California and others to develop competing generics are likely to be a factor in forcing insulin makers to lower prices.
Still there are obstacles.
“The work to develop a generic, obtain FDA approval and set up manufacturing will take real time,” Wright said in an email. “It may take longer to get doctors to prescribe the drug, insurers and (pharmacy managers) to include it in their formularies, and patients and the public to accept and ask for it.”
There may be other risks. State analysts warn that California’s entry into the market could force other manufacturers to cut the availability of their drugs, which could be an unintended consequence.
Even with the challenges of entering a competitive, established market, Newsom said taxpayers will have “very broad protections.”
If, for whatever reason, the deal doesn’t go in the state’s favor, “there are all kinds of provisions that will allow us to … get out,” he said.
The proposed program could save many patients between $2,000 and $4,000 a year, according to state documents. In addition, lower costs can result in significant savings because the state purchases this product each year for millions of people enrolled in public health plans.
Just a few days ago, President Biden said his administration is “intensely” focused on reducing health care costs, including pressuring pharmaceutical companies to lower the cost of insulin. Legislation that passed last year caps insulin copayments at $35 a month for Medicare beneficiaries. Biden proposed extending this limit to all Americans.
The state of California is also exploring the possibility of bringing other drugs to market, including the overdose drug naloxone. The drug, available as a nasal spray and as an injection, is considered a key tool in the fight against the nationwide overdose crisis.
“We’re not resting on our laurels,” Newsom said.