San Francisco Chronicle - (Sunday)
Newsom announces state insulin contract
SACRAMENTO — California will contract with drugmaker Civica Rx to produce its own low-cost insulin, Gov. Gavin Newsom announced Saturday. He also unveiled plans for the state to manufacture naloxone, a drug for reversing opioid overdoses.
Newsom announced the insulin contract at an event near Los Angeles. The partnership will make California the first state to manufacture prescription drugs through its own label, CalRx.
“There’s no state in America, not one, that comes close to doing what the state of California has done on health care,” Newsom said.
Civica Rx had already announced plans to produce $30 vials of insulin, which Newsom’s office says will be the price of the drug produced under the contract.
About 7.4 million Americans with diabetes rely on synthetic insulin to regulate their blood sugar. People with type 1 diabetes, an autoimmune disease that prevents the body from making the blood sugar-regulating hormone, must take insulin daily to survive and can go through multiple vials per month. People with type 2 diabetes still produce some of their own insulin, but also rely on synthetic insulin.
California plans to manufacture insulin products that will be interchangeable with brandname insulin products Lantus, Humalog and Novolog. If the federal Food and Drug Administration approves Civica’s versions of the drugs, Newsom said he anticipates they will be available starting early next year.
Ultimately, Newsom wants to partner with Civica to produce the drugs in California, according to his office.
Newsom first announced his plan to have California manufacture its own prescription drugs in January 2020 as a way to lower health care costs. At the time, he said he was already
in talks to find a company to manufacture the drugs.
Newsom signed the state law authorizing CalRx in September 2020, which directed the state’s Health and Human Services Agency to partner with drugmakers that could produce cheaper generic alternatives to existing drugs that are no longer protected by patents, including insulin. Newsom has approved $100 million in the state budget for the project.
The contract with Civica will use up half of that amount, Newsom said, and will last 10 years. Despite repeated requests from reporters, his office had not yet released a copy of the contract early Saturday afternoon.
Even before the contract was announced, California’s commitment to making its own insulin helped pressure existing insulin makers to lower their prices, said Anthony Wright of Sacramento consumer advocacy group Health Access. Earlier this month, the three pharmaceutical companies that control the U.S. insulin market announced
they would slash prices on their most popular insulin products. The move comes after the federal government capped out-of-pocket insulin costs at $35 per month for patients on Medicare last year.
It’s not clear that the insulin produced through CalRx would be cheaper than other alternatives after the pharmaceutical companies’ price-cutting promises. But at $30 per vial, it will be more affordable than insulin costs have been in recent years, when prices have soared so high that some patients have been forced to ration their insulin.
In the California Legislature, Sen. Scott Wiener, D-San Francisco, has introduced a bill that would generally ban insurance plans from charging a patient more than $35 for insulin. Wiener said he still plans to pursue that legislation to ensure the lifesaving drug is affordable.
California particularly stands to benefit from lower insulin prices as one of the largest drug purchasers in the country through its state-funded health
insurance programs for low-income people and its health care plans for state workers and teachers.
Newsom said his administration is already in discussions about also manufacturing both injectable and nasal spray versions of naloxone to bolster the state’s efforts to combat fentanyl overdoses.
In his budget proposal for the upcoming fiscal year, Newsom has proposed adding $97 million to combat the opioid crisis, most of which would fund distribution of naloxone, also known by the brand name Narcan. His budget plan also includes $3.5 million to provide the overdose drug for middle and high schools. Newsom has promised to send naloxone to all schools that need it.
Assembly Republican leader James Gallagher said he supports lowering the cost of insulin but doesn’t believe government has a good track record of improving on the private sector in an area such as pharmaceuticals. And Newsom, he said, has a history of making big promises and failing to follow through.
“Call me a little bit of a skeptic on his latest proposal here,” the Nicolaus (Sutter County) Assembly member said.
CalRx is one of several steps Newsom has taken to lower health care costs, including working with the Legislature to create an Office of Health Care Affordability within his administration and a related advisory board, which will hold its first meeting Tuesday.
Some advocates, however, want him to go further. He’s faced scrutiny from staunch supporters of creating a government-run universal health care program for endorsing such a system while campaigning for governor but failing to implement one once in office.
Newsom has also been criticized for his efforts to divert money that was scheduled to subsidize insurance costs for California families to use it in the state’s general fund for several years while the federal government provides insurance subsidy money. Wright and other advocates argue that the federal money should be used to supplement the state assistance, not replace it.
Senate Republican Leader Brian Jones criticized Newsom for focusing on prescription drugs instead of sending money to help hospitals stay open, something a bipartisan group of eight senators has been pushing for. The San Diego senator said rural hospitals that cater to low-income populations are particularly at risk of closure because the state’s reimbursement rates for its Medi-Cal insurance program are so low.
“The priority right now should be saving the healthcare system we currently have,” Jones wrote in a statement. “We are racing toward an unavoidable crisis while our governor seems unfocused and has his priorities out of order,” Jones said.