California nonprofit pharmaceutical company Civica to make affordable insulin in 10-year partnership

DOWNY, California. — On Saturday, the state of California and a generics maker announced a 10-year partnership to produce affordable, state-branded insulin that they hope will compete with established manufacturers and drive down the price of a drug used by millions of Americans.

The product is not expected to hit store shelves until at least next year, and it was hard to predict what impact it would have on a market already shaken by change. Earlier this week, another major insulin maker promised drastic price cuts as pressure builds on drug makers and insurance companies to lower the cost of the drug.

Democratic Gov. Gavin Newsom said he hopes California’s transformation into an insulin producer will drive prices down. Studies have shown that prices for this drug have more than tripled over the past couple of decades.

“We’re going to make it about disrupting the market,” Newsom said at a ceremony announcing the agreement at a pharmaceutical warehouse near Los Angeles. He called it a “game changer” for the 8 million Americans who use insulin to treat their diabetes.

Many questions remain. The state and its partner, the nonprofit Civica, have yet to find a manufacturing facility in California. Regulatory approvals required. Newsom said a 10-milliliter vial of the government’s insulin would sell for $30, but it’s possible competitors could cut their prices and undermine the cost of the government’s product.

“It’s perfect? We don’t know yet,” Newsom admitted at one point.

Just a few days ago, President Joe Biden said his administration was “intensely” focused on lowering health care costs, including pressure on pharmaceutical companies to lower the cost of insulin. Legislation passed last year capped co-payments for insulin at $35 per month for Medicare recipients. Biden proposed extending this restriction to all Americans.

On Tuesday, Novo Nordisk said it would cut the price of some insulins in the US by up to 75% starting next year. The announcement comes less than two weeks after rival Eli Lilly said it would cut some of its prices by 70% or more later this year.

Anthony Wright, executive director of Health Access California, a statewide consumer advocacy group, welcomed Newsom’s announcement, saying efforts by California and other countries to develop a competing generic drug are likely a factor in encouraging insulin manufacturers to cut prices.

However, there are obstacles.

“The work of developing a generic, getting FDA approval and getting production up and running will take a very long time,” Wright said in an email. “There may even be more time to get doctors to prescribe a drug, insurers and (pharmacy managers) to put it on their formularies, and patients and the public to accept and ask for it.”

There may be other risks as well. State analysts have warned that California’s entry into the market could encourage other manufacturers to reduce the availability of their drugs, which could lead to unforeseen consequences.

Last year, state legislators approved a $100 million project, of which $50 million was earmarked for the development of three types of insulin and the rest was earmarked for investment in a manufacturing facility.

Even with the difficulty of entering a competitive, established market, taxpayers will have “very ample protection,” Newsom said.

If, for whatever reason, the deal doesn’t work out in the government’s favor, “there are all sorts of provisions that will allow us … to get out of it,” he said.

According to government documents, the proposed program could save many patients between $2,000 and $4,000 a year. In addition, lower costs can translate into significant savings as the government purchases this product each year for the millions of people who use its publicly funded health plans.

The state is also exploring the possibility of bringing other drugs to market, including naloxone overdose drugs. The drug, available as a nasal spray and injectable form, is seen as a key tool in the fight against the nationwide overdose crisis.

“We are not resting on our laurels,” Newsom said.