DOWNEY, Calif. AP - The state of California and a generic drug manufacturer announced a 10 year partnership Saturday to produce affordable state-branded insulin that they hope will rival longtime producers and push down prices for a medication used by millions of Americans.
It was hard to predict what impact it would have on a market already shaken by change, because the product is not expected to be on store shelves until at least next year. Another major insulin maker promised steep price cuts as pressure builds on drugmakers and insurers to slash the cost of the drug.
Democratic Gov. Gavin Newsom said he hoped that California's emergence as an insulin-maker would cause prices to collapse. The drug's prices have more than tripled in the past couple of decades, according to research.
The pact will be made about market disruption, Newsom said at a pharmacy near Los Angeles. He said that it was a gamechanger for 8 million Americans who use insulin to treat diabetes.
The state and its partner, Civica, have yet to locate a California-based manufacturing facility. Regulatory approvals will be needed. Newsom said a 10 milliliter vial of state-branded insulin would sell for $30, but it's possible that competitors could slash their prices and undercut the state product.
Is this perfect? We don't know yet, but Newsom acknowledged at one point.
President Joe Biden said on Friday that his administration is focused on lowering health care costs, including pressure on pharmaceutical companies to lower the costs of insulin. Medicare beneficiaries were capped by a bill last year that capped copayments for insulin at $35 per month. Biden proposed extending that cap to all Americans.
Novo Nordisk said Tuesday it will reduce its U.S. insulin prices by up to 75% next year. The announcement comes less than two weeks after Eli Lilly said it will drop some of its prices by 70% or more later this year.
Anthony Wright, executive director of Health Access California, said that efforts by California and others to develop a competing generic are likely to be a factor in getting insulin manufacturers to cut their prices.
There are obstacles.
Wright said in an email that the work to develop a generic, get FDA approval and set up manufacturing will take real time. There's a chance that there's more time in the effort to get doctors to prescribe the drug, insurers and pharmacy benefit managers to include it on their formularies and patients and the public to accept and ask for it. State analysts have warned that California's entry into the market could cause other manufacturers to reduce the availability of their drugs, a potential unintended consequence.
State lawmakers approved $100 million for the project last year, with $50 million dedicated to developing three types of insulin and the rest set aside to invest in a manufacturing facility.
Newsom said that taxpayers would have very ample protections even though they were faced with the challenges of entering a competitive, established market. If for whatever reason the deal didn't work out to the state's benefit, there are all kinds of provisions that would allow us to pull out, he said.
According to state documents, the proposed program could save many patients between $2,000 and $4,000 a year. Lower costs could result in substantial savings because the state buys the product for millions of people on its publicly funded health plans every year.
The state is looking at the possibility of bringing other drugs to market, including the overdose medication Naloxone. The drug, which is available in a nasal spray and in injectable form, is considered a key tool in the fight against a nationwide overdose crisis.
"We are not stopping here," Newsom said.