California Governor Gavin Newsom says California will begin making its own low-cost insulin

California Governor Gavin Newsom makes an address via Twitter last week.

In a bid to make diabetes treatment more affordable, California Governor Gavin Newsom said in a  recent Twitter video that the state will begin making its own low-cost insulin, using a $100 million budget to kick-start development and manufacturing of the drug.

The move follows up on his 2019 executive order, issued on his first day in office, that tasked the state's Department of Health Care Services to investigate how California would mitigate the high costs of prescription drugs.

Newsom said in his online address that the high cost of insulin epitomizes market failures, and puts the medication out-of-reach for many who need it.

"Many Americans experience out-of-pocket costs anywhere from $300 to $500 per month for this life-saving drug," said Newsom. "California is now taking matters into our own hands."

A budget that Newsom recently signed sets aside $100 million for the effort, and will allow the state to contract and make its own insulin at a lower price, he said. About $50 million will go toward the development of low-cost insulin products, while the other $50 million has been earmarked for a California-based insulin manufacturing facility.

The manufacturing facility, said Newsom, "will provide new, high-paying jobs and a stronger supply chain for the drug, because in California, we know people should not go into debt to receive life-saving medications."

Newsom did not say exactly how much the state-made insulin would cost.

WHAT'S THE IMPACT

President Biden brought up the topic of insulin prices during his State of the Union address earlier this year, saying it costs about $10 a vial to produce but typically costs 30 times that amount. 

Biden highlighted insulin prices while calling on Congress to allow Medicare to negotiate drug prices.

PhRMA countered that insulins are less expensive today than in 2007. Citing data from the Bureau of Labor Statistics, the Pharmaceutical Research and Manufacturers of America said prescription drug prices rose just 1.3% over the last year.

PhRMA President and CEO Stephen J. Ubl said, "We urge President Biden and Congress to work on a holistic solution that fixes what's broken in our healthcare system. Allowing the government to set the price of medicines isn't the answer. We know that story will end with less access to medicines and less future innovation, and we know there's a better way."

This includes solutions that "address abusive practices within the insurance system," Ubl said, referring to out-of-pocket costs for consumers.

THE LARGER TREND

There are several legislative proposals in Congress, some stalled and some nascent, that would propose a $35-per-month cap on what insured Americans would pay out-of-pocket for insulin – and this cap in costs would benefit about 25% of those on individual and small group markets and about 20% of those in larger employer-sponsored plans.

That's according to a March analysis from the Kaiser Family Foundation, which comes as congressional Democrats are renewing the push for a $35 insulin cap that was included in the stalled Build Back Better Act. That legislation passed the House but became mired in the Senate.

The measure would require that insurers, including private plans and Medicare Part D plans, charge no more than $35 per month for insulin products, which can be lifesaving to those with diabetes. Private group or individual plans would have to cover at least one of each dosage form, such as a vial pen, and each type of insulin, from rapid-acting to ultra-long-acting and premixed. Cost-sharing would be limited to no more than $35 per 30-day supply of each type.

Of enrollees in the individual and small group markets taking insulin, more than one in four (26% and 31%, respectively) paid more than an average of $35 per month out-of-pocket for insulin in 2018. Low-income ACA Marketplace enrollees receiving cost-sharing assistance were less likely to have out-of-pocket insulin costs averaging over $35 per month.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com