The Mercury News
Dropping insulin prices throw kink in state plan
Drugmakers change landscape by lowering cost
California is moving ahead with its plan to produce state-sponsored insulin, but its goal of offering cheaper medicine than brand-name companies may be much harder to achieve now that those major drugmakers have decided to significantly drop sticker prices on some products.
So while some experts welcomed the news last weekend that the state had awarded a $50 million contract to Civica, a nonprofit organization, to manufacture low-cost insulin, others wondered if the initiative remained viable given the changing marketplace. Civica's planned products would still need federal approval, which means it could take at least two years before they become available for sale.
For years, the high costs associated with insulin for people with diabetes have forced some to ration their medicines, jeopardizing their health.
For the estimated 8 million Americans with diabetes who need insulin, including about 1 million Californians, the average price has more than quadrupled in 20 years. There have been wild variations in pricing, however, with Eli Lilly raising the sticker price of its most popular product, Humalog, more than tenfold.
Many people with private health insurance pay nothing or no more than a $20 to $35 copayment for a monthly insulin supply. And since January, the Inflation Reduction Act has imposed a $35 price cap for the nearly 4 million insulin users with Medicare Part D.
But those with high-deductible health plans or the uninsured — an estimated 12% and 7%, respectively, of California's insulin users — often face much higher costs, costing them hundreds of dollars per month.
“This is a space where seemingly everybody seems to be making a quick buck,” Gov. Gavin Newsom said at a news conference March 18 announcing the new pharmaceutical contract in Downey, before a backdrop of insulin-stocked refrigerators. “Time for disruption.”
Newsom, who was on a four-day state tour to promote his policies, also announced plans for California to develop its own naloxone, which reverses opioid overdose.
The insulin contract is the outcome of the state Legislature's appropriation last year of $100 million for the program, called the CalRx Biosimilar Insulin
Initiative. (Competitor versions of so-called biologic treatments like insulin are known as biosimilars.) Under the 10-year deal, Civica said it planned to develop and produce these products at a new plant in Petersburg, Virginia, and would begin filing applications for approval of the biosimilar products with the Food and Drug Administration next year. Half of the $100 million budget would go toward establishing a California plant for further production.
The biosimilar versions are expected to be comparable to Eli Lilly's Humalog, Novo Nordisk's NovoLog and Sanofi's Lantus. These three companies control about 90% of the insulin market.
Eli Lilly, Sanofi and Novo Nordisk have announced sticker-price cuts, mostly in the 70% range, and some caps on out-of-pocket costs