State aims to make its own insulin brand to lower price
SACRAMENTO — A vial of insulin cost $25, in 1995, back when Chris Noble was five years old and just learning how to manage his Type 1 diabetes with the help of his parents and his doctors.
Nearly three decades later, Noble says that same vial of insulin costs more than $300 — a 12-fold increase for something he and millions like him can’t live without.
“It’s as essential as water,” Noble said.
Health care advocates have bemoaned for years that insulin, while inexpensive to produce, is held hostage by a US health care system stubbornly resistant to reforms as companies monopolize and maximize profits.
Now, with several insulin patents nearing their expiration dates, California is looking to disrupt that market by making its own insulin and selling it for a much cheaper price. Last month, after a few years of study, state lawmakers approved $100 million for the project, with $50 million dedicated to developing three types of insulin and the rest set aside to invest in a manufacturing facility.
Gov. Gavin Newsom and state lawmakers still have many details to work out, including contracting with a private company to do most of the work. But the budget was a put-his-money-where-his-mouth-is moment for Newsom, who has been calling for the state to launch its own brand of generic drugs to lower the overall price of medication.
“Nothing epitomizes market failures more than the cost of insulin,” Newsom said in a video posted to his Twitter account. “California is now taking matters into our own hands.”
This wouldn’t be the first time California has made its own medicine. In 1990, about half of all cases of infant botulism — a rare illness that affects the large intestine — were in California. The California Department of Public Health got a federal grant to develop and test a treatment. The treatment won federal approval, in 2003, and California has been making it ever since.
But the market for infant botulism treatments is small, with about 110 cases reported, each year, according to the US Centers for Disease Control and Prevention. One course of California’s botulism treatment costs more than $57,000, according to a legislative analysis.
Meanwhile, about 7 million people in the United States require insulin to manage their diabetes. The human body converts most of the food we eat into sugar. The pancreas then produces insulin, which converts that sugar into energy. People who have diabetes don’t produce enough insulin. People with Type 1 diabetes must take insulin every day to survive.
Insulin was first discovered, in 1920s, by a team of Canadian scientists. They sold the patent to the University of Toronto for just $1, hoping the school would license the product to multiple companies to prevent a monopoly that would lead to high prices.
But over time, the insulin market was slowly cornered. Today, just three companies produce most of the world’s insulin. In the United States, the line between an insulin manufacturer and a patient is not straight. It zigs and zags between insurance companies and pharmacy benefit managers — third parties that managed prescription drug benefits for health plans.
It’s that system that has kept the cost of insulin much higher in the United States than other countries, as more companies benefit from the higher price tag, said Kasia Lipska, an associate professor at the Yale School of Medicine.
“It creates this really weird incentive,” Lipska said.