DOWNEY, CA. — DOWNEY, Calif. (AP) — The state of California and a generic drug maker on Saturday announced a 10-year partnership to produce affordable state-brand insulin that they hope will compete with producers of long standing and will bring down the price of a drug used by millions of people. Americans.
The product isn’t expected to hit store shelves until at least next year, and it was hard to predict what effect it would have in a market already rocked by change. Earlier this week, another major insulin maker promised steep price cuts as pressure mounts on drugmakers and insurers to lower the cost of the drug.
Democratic Gov. Gavin Newsom said he hoped California’s emergence as an insulin maker would cause prices to crash. Research has shown that prices for the drug have more than tripled over the past two decades.
“We intend to talk about market disruption,” Newsom said at a ceremony announcing the pact at a pharmaceutical warehouse near Los Angeles. He called it “a game changer” for the 8 million Americans who use insulin to treat diabetes.
Many questions remain. The state and its partner, the nonprofit organization Civica, have yet to locate a California-based manufacturing plant. Regulatory approvals will be required. Newsom said a 10-milliliter bottle of state-brand insulin would sell for $30, but competitors may cut prices and undermine the state product.
“Is it perfect? We don’t know yet,” Newsom admitted at one point.
Just days ago, President Joe Biden said his administration was “intensely” focused on cutting health care costs, including pressuring pharmaceutical companies to cut drug costs. insulin. Legislation enacted last year capped copayments for insulin at $35 per month for Medicare beneficiaries. Biden has proposed extending that cap to all Americans.
Novo Nordisk said on Tuesday it would cut some of its U.S. insulin prices by up to 75% starting next year. The announcement comes less than two weeks after rival Eli Lilly said it would cut some of its prices by 70% or more later this year.
Anthony Wright, executive director of Health Access California, a statewide consumer health care advocacy group, welcomed Newsom’s announcement, saying the efforts of California and others to develop a competing generic are likely a factor in causing insulin manufacturers to lower their prices.
Yet there are obstacles.
“The work to develop a generic, get FDA approval and set up manufacturing will take real time,” Wright said in an email. “There may even be more time in the effort to get doctors to prescribe the drug, insurers and (drug benefit managers) to include it on their formularies and patients and the public to accept it and to ask.”
There could be other risks. State analysts have warned that California’s entry into the market could prompt other manufacturers to reduce the availability of their drugs, a potential unintended consequence.
State lawmakers approved $100 million for the project last year, with $50 million earmarked for the development of three types of insulin and the rest set aside to invest in a manufacturing plant.
Even with the challenges of entering a competitive and established market, Newsom said taxpayers would have “very broad protections.”
If for some reason the deal doesn’t work to the benefit of the state, “there are all sorts of provisions that would allow us to … walk away,” he said.
According to state documents, the proposed program could save many patients between $2,000 and $4,000 a year. Additionally, the lower costs could result in substantial savings, as the state purchases the product each year for the millions of people benefiting from its publicly funded health plans.
The state is also exploring the possibility of bringing other drugs to market, including the overdose drug Naloxone. The drug, available as a nasal spray and as an injection, is seen as a key tool in tackling a nationwide overdose crisis.
“We don’t stop here,” Newsom said.