By Katya Tankimovich
LOS ANGELES—Governor Gavin Newsom has announced a new $50 million dollar contract with the nonprofit generic drugmaker Civica to produce insulin. This 10-year partnership with the drugmaker would provide low-priced insulin to Californians living with diabetes.
Civica, a nonprofit, was founded in 2018 and sought to reduce the prices of prescription drugs by making their own generic medicines.
Under the new contract terms, the cost of a vial of the insulin drug will now be $30 dollars when including manufacturing and delivery fees. Newsom originally publicly announced his proposal to produce generic drugs three years ago in his attempt to lower the cost of pharmaceutical drug products for Californians struggling to pay for their life-saving medications. While still waiting for approval by the U.S. Food and Drug Administration, the deal with Civica would provide the first pharmaceutical product made under the CalRX brand of generic drugs.
According to the American Diabetes Association, roughly 8.4 million Americans use insulin. The soaring prices of this medication has caused one in four people to ration this drug and take less than their required dosage. Rationing insulin can be harmful, and potentially fatal. Last year, an estimated 1.3 million adults with diabetes in the United States had to ration their insulin due to this cost.
On March 18th, 2023, Governor Newsom stated “People should not be forced to go into debt to get life saving prescriptions. Through CalRx, Californians will have access to some of the most inexpensive insulin available, helping them save thousands each year. But we’re not stopping there – California will seek to make our own Naloxone as part of our plan to fight the fentanyl crisis.”
With the partnership, insulin prices could be brought down by almost 90%. This would save cash-paying patients between $2000 and $4000 annually. It would also be available to everyone regardless of insurance plans. Officials are hopeful that CalRx will prevent the tremendous cost gauging that occurs in traditional pharmaceutical price games. Such companies, including the three largest manufacturers-Eli Lilly, Novo Nordisk, and Sanofi – have set the price for insulin at hundreds of dollars in recent years.
California Health and Human Services Secretary Dr. Mark Ghaly said that under the new partnership, the Civica company would commit to delivering as much insulin as California needs under the CalRx label. The company later specified that it would be manufacturing the three types of insulin most used by U.S. citizens.
Despite waiting for FDA approval, Newsom said that this contract is expected to deliver insulin to Californians starting in 2024. Under this new 10-year partnership, Civica will begin manufacturing the drug later this year.
Governor Newsom hopes that “this does disrupt the entire market, and we see price collapse in this space.”
It seems that Newsom’s announcement has had an immediate impact. The company Eli Lilly announced plans in Early March to reduce prices by almost 70% and an expansion of its Insulin Value Program which works to cap out-of-pocket costs for patients at $35 per month. Similarly, the company Novo Nordisk announced a similar plan to lower U.S. prices of insulin pens by almost 75% for people living with diabetes starting in January 2024.
Anthony Wright, executive director of Health Access California, has stated that “California and other efforts to manufacture competing insulin products was a contributing factor to that decision for the incumbent insulin manufacturers to lower their prices.” Thus, California can clearly wield its power to impact the pharmaceutical industry.
By manufacturing insulin at lower prices, California is ensuring an essential treatment for millions of Americans currently living with diabetes.
