Gavin Newsom announced a 10-year partnership with nonprofit drug manufacturer Civica Rx to produce affordable state-branded insulin with the intention of rivaling longtime producers and lowering prices for millions of Americans.
Newsom said he hoped the Golden State's emergence as an insulin-maker would cause prices to collapse, as research shows they have more than tripled over the past couple of decades.
Newsom said at a pharmaceutical warehouse near Los Angeles that they are intent to make this about market disruption.
The Democratic governor said that the partnership will be a gamechanger for the 8 million Americans who use insulin to treat diabetes. He also said that a 10 milliliter vial would sell for $30.
The Associated Press reported that regulatory approvals will be needed as California and Civica work to locate a manufacturing facility in the state.
There are concerns over the state entering the market due to concerns that competitors will cut their prices and reduce the availability of their drugs.
Is this perfect? We don't know yet, but Newsom acknowledged at one point.
The announcement came days after major manufacturer Novo Nordisk announced it would cut its insulin prices by up to 75% starting in 2024. Eli Lilly announced less than two weeks ago that it would be immediately capping out-of- pocket costs for its insulin at $35 for patients and plans to cut the price of its most commonly prescribed insulin by 70%.
President Joe Biden has committed to lowering healthcare costs, specifically the price of insulin. Biden proposed extending the cap to all Americans, because of the capped copayment for the drug in 2022, which was capped at $35 per month for Medicare beneficiaries.
Anthony Wright, executive director of the statewide consumer health advocacy group Health Access California, celebrated Newsom's announcement and said efforts to develop a competing generic are likely to influence insulin manufacturers to decrease prices, but he acknowledged there will be obstacles.
Wright said in an email to The AP that the work to develop a generic, get FDA approval and set up manufacturing will take real time. There may be 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 lawmakers approved $100 million for the plan last summer, with $50 million dedicated to developing three types of insulin. The remaining money was set aside to invest in a manufacturing facility.
Newsom said that taxpayers would have very ample protections despite the challenges of entering an existing competitive market. He said that all kinds of provisions would allow the state to pull out of the deal if it didn't prove beneficial.
The product is not expected to be on store shelves until at least next year.
State documents obtained by The AP show that the state-branded insulin could save many patients between $2,000 and $4,000 a year. The state can save money because of the lower costs because it buys the product yearly for the millions of residents of its publicly funded health plans.