Gov. Gavin Newsom announced a new state contract on Saturday morning, March 18, that officials say will leverage the state’s generic drug label to bring $30 insulin to California, cutting costs for the medicine by 90% — while saving patients thousands of dollars annually.
California will use the same model to soon manufacture its own Naloxone, the medicine that rapidly reverses opioid overdoses, Newsom also announced.
The insulin contract, between the the state’s generic drug label CalRx and manufacturer CIVICA, aims to “prevent the egregious cost-shifting that happens in traditional pharmaceutical price games,” according to early details the governor’s office released Saturday morning, hours before Newsom was set to speak publicly about the deal during an event in Los Angeles County.
Because the state can manufacture and distribute the insulin itself, patients will be able to buy the medicine for the same price it costs to make it, according to the announcement.
Under the contract, according to Newsom’s office:
- A 10-milliliter vial will be made available for no more than $30 (normally $300).
- A box of five prefilled 3-milliliter pens will be made available for no more than $55 (normally more than $500).
- No new prescription will be needed. Californians will be able to ask for the CalRx generic at their local pharmacy or via mail order pharmacies.
- CalRx plans to make biosimilar insulins available for Glargine, Aspart and Lispro (expected to be interchangeable with Lantus, Humalog, and Novolog respectively).
“People should not be forced to go into debt to get life saving prescriptions,” Newsom said in a statement included in the morning announcement. “Through CalRx, Californians will have access to some of the most inexpensive insulin available, helping them save thousands each year.”
Lowering the price of insulin, and life-saving medications in general, has become a cause célèbre in recent years, both nationally and in California.
In 2021, the RAND Corporation released a study that compared the insulin prices of nearly three dozen countries. It found prices in the United States were about 10 times higher than everywhere else. The average price of a vial of insulin in the United States was $98 — while in nearby Canada it was $12.
In January, state officials announced they will sue the companies that make and promote most of the nation’s insulin, accusing them of scheming to illegally increase the price of the drug and demanding they return millions of dollars to some diabetics who state officials say were overcharged for the medicine they must have to survive.
The lawsuit, filed in Los Angeles County Superior Court by Attorney General Rob Bonta, was the latest in a parade of legal actions against these companies from states across the political spectrum — all of which have accused the corporate giants of abusing their power to quash competition and boost their profits by keeping the price of insulin high.
Attorneys general in Kansas, Arkansas,Mississippi, Minnesota and Kentucky have all filed similar lawsuits in recent years.
“It is not a partisan issue,” Bonta said in January, adding said state attorneys general from both major political parties “all say the same thing: That the status quo is unacceptable and problematic and awful.”
People with diabetes need insulin because it helps manage blood sugar levels and helps prevent short-term or long-term serious health problems.
The future move to also use the at-cost model to manufacture Naloxone, meanwhile, is vital in the fight to quell the fentanyl crisis, the governor’s announcement said.
CIVICA, which has a business model of partnering with hospitals and health care systems to produce generic drugs, is working with the California Health and Human Services Agency to identify a manufacturing facility in the state, the announcement said.
Nationally, Americans have railed against the cost of health care, primarily the cost of their medicine — with angst rising further amid waves of biting inflation in recent months.
Earlier this week, President Joe Biden said his administration was focused “intensely” on lowering health care costs, including for prescription drugs.
Biden used a speech in Las Vegas this week, where he was wrapping a three-day Western swing, vowed to protect Medicare and Social Security. He also touted his administration’s successful efforts to press pharmaceutical companies to lower the costs of insulin for Americans with diabetes.
Ahead of that speech — which took place in front of a crowd of doctors and nurses at the University of Nevada, Las Vegas — White House officials made the case that the issue is central to Americans’ lives and called on a bipartisan approach to lower prescription costs.
“These kind of savings will give people a little bit more breathing room,” Health and Human Services Secretary Xavier Becerra told reporters on Tuesday as he previewed Biden’s remarks.
They will give them “more comfort,” he added, “as they decide to go to the grocery store to buy their food, more ability to pay their rent, or maybe it’s just to do something decent for their families.”
Biden talked up how his administration is rolling out several parts of a law last year’s Democratic-controlled Congress passed to cap the price of insulin, make most vaccines free and allow the federal government to negotiate deals on a handful of pharmaceutical drugs for Medicare enrollees.
The federal government expects to see significant savings from those negotiations and to make money from a rule that requires drugmakers to send Medicare a check when they raise drug prices higher than inflation.
“Let’s finish the job,” Biden said. “Let’s protect the lower prescription drug costs for everyone.”
Already, the legislation caps the price of insulin at $35 for those with disabilities or are older and rely on Medicare.
Biden has proposed extending that cap to all Americans — but that plan faces an uphill battle. Efforts to pass laws capping the price of insulin for uninsured Americans or those with private insurance failed in the Democratic-controlled Congress last year.
Biden, however, has still championed last year’s bill as a success for the millions of Americans who aren’t on Medicare.
Drug companies, facing public pressure after tripling their prices for the life-saving drug over the last two decades, have started to voluntarily lower the cost of insulin. Drugmaker Novo Nordisk, for example, announced Tuesday it was cutting the cost of insulin to about $72 a vial; before that, rival Eli Lilly announced it would start selling its generic for $25.
Another part of the law that the administration said it hopes will have ripple effects for Americans is the requirement that pharmaceutical companies pay a rebate to Medicare when they raise the cost of drugs faster than inflation.
The Centers for Medicare and Medicaid Services won’t send a bill to drug companies until 2025, but the federal agency has already started tracking drug prices. The agency on Wednesday identified 27 drugs whose prices were increased too fast, a move that will limit the price that Medicare enrollees have to pay for them.
The administration said it hopes that will motivate drugmakers to lower the cost of those medications.
In Californioa, officials touted the market arrangement as making good on Newsom’s pledge to reduce the price of prescription drugs statewide, and increase accountability and transparency in health care.
“To address the affordability crisis in California, we have to address the high cost of prescription drugs,” Dr. Mark Ghaly, secretary of the California Health and Human Services Agency, said in a Saturday statement. “The CalRx Biosimilar Insulin Initiative will benefit Californians who are today paying too much for a medication that we know is life saving and life altering.”
The Associated Press contributed to this report .
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