California wants to reduce the price of insulin by becoming a drug manufacturer. I can do it

Sacramento – California is plunging into the prescription drug business, trying to achieve what no other state has done: making its own brand of generic insulin and selling it to diabetics like Sabrina Cowdillo at low market prices.

Cowdillo said he felt “captive” to the three major pharmaceutical companies that control the price of insulin, which range from $ 300 to $ 400 per bottle without insurance. The value that Cowdillo paid in 2017, when he determined, is engraved in his memory: $ 274

Cowdillo, a 24-year-old college student living in La Puente, Southern California, said, “I turned a blind eye to CVS and realized it was going to be like that for the rest of my life.” She now has insurance that covers the full cost of life-saving drugs but still has trouble paying for her insulin supply and the monthly premium for her plan.

Sabrina Cowdillo is standing outside, smiling at the camera.  He wears a maroon sweatshirt that reads, "Insulin is a human right" In white letters.  Above the text is a floral design from an insulin bottle, also white.
When Sabrina Cowdillo was diagnosed with diabetes in 2017, she had to pay $ 274 out of pocket for insulin. Now, his insurance plan covers the full cost of life-saving drugs, but he saves extra for a rainy day – and to give to other people in need of diabetes patients.(Richard Castellano)

“This disease is really expensive, and I’m just making it every month,” Cowdillo said.

The administration of Governor Gavin News says about 4 million Californians have diabetes, a disease that can destroy limbs, take away sight and, if left unmanaged, can lead to amputation. One in four people who have diabetes and are dependent on insulin cannot afford it, many are forced to give rations or give up medication, the administration added.

Newsom is urging state lawmakers to pump $ 100 million into an ambitious initiative to launch California’s generic drug label, CalRx, and begin insulin production in the next few years, Newscom spokesman Alex Stack said. The state is also working to identify other generic drugs that it may bring to market that target expensive or short supply.

Dr. Mark Ghali, secretary of the California Health and Human Services Agency, says the goal is to dramatically reduce the price of insulin and make it available to “millions of Californians” through pharmacies, retail stores and mail orders.

But state health officials are still negotiating a deal with a pharmaceutical manufacturer to make and distribute insulin and have not answered important questions such as how cheap insulin can be made and what patients will pay. To be successful, California – and the company it partners with – must navigate a complex pharmaceutical distribution system that relies not only on drug manufacturers but also on intermediaries that work hand-in-hand with health insurers. These companies, known as pharmacy benefit managers, negotiate with manufacturers on behalf of insurers for discounts and discounts on medicines – but insurers do not always pass those savings on to customers.

“Insulin has long been identified as a symbol of market failure that has hit the pharmaceutical industry, pushing up the price of insulin,” Bishal Pagani, assistant secretary of the Health and Human Services Agency, told lawmakers in May. He argued that higher prices “directly hurt Californians.”

Newsom said in early May that state intervention was needed to disrupt exclusive drug prices, and that California could withdraw because the state – with 40 million inhabitants – had “market power.”

But the Office of Nonprofit Law Analysts has questioned whether California can make its own drugs and achieve lower insulin prices. Luke Kausmaro, a senior fiscal and policy analyst at the office, warned in a legal hearing in May that the effort could be hampered by “significant uncertainty” – a sentiment echoed by some democratic lawmakers.

The Newsom administration thinks that state-made insulin can reduce some insurers’ spending on drugs by up to 70% – hoping that savings will be reduced for consumers. But there is “no guarantee” that the administration’s predictions of dramatic savings or widespread distribution of insulin will be fulfilled, state legislator Blanca Rubio (D-Baldwin Park) said at the hearing. “Who will write this magic insulin prescription?” He asked. “Hope is not a strategy. I don’t hear any strategy on how it will be available.”

Insulin prices have risen in recent years. A 2021 U.S. Senate investigation found that the price of a long-acting insulin pen made by Novo Nordisk jumped 52% from 2014 to 2019 and the price of a Sanofi quick-acting pen increased by about 70%. The investigation found drug manufacturers and pharmacy facility managers were involved in the rise, saying they had artificially stabilized high insulin prices.

“Insulin manufacturers have fused over skyrocketing prices by competing for price reductions in line with each other’s price increases, while PBMs, acting as intermediaries for insurers, are burning to get secret discounts and a big cut in hidden fees. Negotiations, ”said Sen. Ron Wyden (D-Ore.) Said when the report was released.

KHN has been contacted for comment, with trade associations representing brand-name pharmaceutical manufacturers, pharmacy benefit managers and California health insurers blaming each other for the price rise.

Under Newsom’s plan, generic forms of insulin – known as “biosimilars” because they are made from living cells and mimic brand-name drugs on the market – will be widely available to insured and uninsured Californians.

If Newsom’s $ 100 million initiative is approved by lawmakers this summer, the state will use the money to start supplying CalRx insulin to contract with an established drug manufacturer when the state builds its own production facility in partnership with a drug manufacturer.

The administration is currently negotiating with pharmaceutical companies that could create a reliable supply of insulin under the no-bid agreement, but no partnership has been formally established. Insulin will be branded with state-linked images, such as “California Golden Bear.” And, Pegney says, the packaging could boast that low-cost insulin was brought in for patients by the state government.

“Here is a short list of people who will even compete for it,” Ghali told KHN in May. “We’re going to compete together and find a partner that we think is not only the fastest, but something we think is sustainable.”

The shortlist includes Civica RX, a non-profit drug manufacturer based in Utah. Civica independently announced in March that it was preparing to make biosimilar insulin – exactly what California wanted. The FDA last year approved the first biosimilar, interchangeable insulin product, and plans to develop three types of generic insulin to compete with brand-name versions made by Civica Eli Lilly & Co., Sanofi and Novo Nordisk.

Alan Kukel, senior vice president of public policy at Civic, told KHN that the drug maker has been in talks with the Newsom administration and is in talks with other states.

Civic’s goal, he said, is to take the markup and market insulin closer to the cost of making it instead of making a profit. The company plans to launch biosimilar insulin at around $ 30 per bottle and $ 55 for a box of five pen cartridges, Kukel said.

Kukel acknowledged that Civica may have to work with pharmacy benefit managers to help health insurers determine which drugs they will cover to distribute drugs, but did not expect a major price increase. “Our goal is to make these insulins available to any American who needs them,” Kukel said. “Our goal is market influence, not market share.”

The state has held talks with other companies, including Mark Cuban’s for-profit drug company, Mark Cuban Cost Plus Drug Company, a celebrity investor. It is building its own manufacturing plant like Civica, but currently sells drugs online at wholesale cost and 15% markup. The founder said. Alex Oshmyansky says the company’s negotiations with California were uncomfortable at first but he will remain open for future discussions. The Cuban company’s chief investor, Oshmiansky, said.

“America is the richest country in the history of human civilization, so it is terrible for our citizens not to be able to afford drugs, including insulin, due to market manipulation,” Osmianski said.

For diabetics like Cowdillo, relief may not come fast enough. He stores insulin if he can no longer afford health insurance and donates extra to other people if necessary.

“I know how expensive it can be when you don’t cover, and if you don’t pay, you’ll be in the hospital fighting for your life,” he said. “Your body decays and your organs slowly shut down. It is very painful. No diabetic patient has to go through this. “

KHN senior correspondent Samantha Young contributed to this report.

The story was produced by KHN, which publishes the California Healthline, an editorially independent service of the California Health Care Foundation.

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