California governor announces plan to make insulin, drive down prices

State budget includes $100 million for new program.

The state of California is jumping into the insulin market with hopes of offering cheaper prices to consumers.

The measure was tucked into the state’s $308 billion budget and the news spread this month when California Gov. Gavin Newsom used text and video on Twitter to announce: “California is going to make its own insulin. It’s simple. People should not go into debt to get life-saving medication.”

Newsom said on his first day in office, he signed an executive order putting the state on the path to creating prescription drugs, “and now it’s happening.”

“Nothing, nothing epitomizes market failures more than the cost of insulin,” with people spending $300 to $500 out of pocket per month for it, Newsom said. “California is now taking matters into our own hands.”

The state budget has set aside $100 million to contract to make insulin at a cheaper price and sell it at close to at-cost and available to all. Of that amount, $50 million will go to low-cost insulin products and $50 million will go toward a California-based insulin manufacturing facility to provide new, high-paying jobs and a stronger supply chain for the drug, the governor said via video.

“Because in California, we know people should not go into debt to receive life-saving medication,” Newsom said.

A week after posting the video, the social media site logged 4.6 million views for the video, with 22,300 retweets, 5,735 quote tweets and 143,900 likes.

Not the only one

Insulin is becoming the poster-drug to illustrate how drug prices are soaring out of reach of many Americans, and there have been numerous calls for government action on insulin, and prescription drug costs generally.

Last month, a group of senators and representatives wrote to U.S. Department of Health and Human Services Secretary Xavier Becerra to use existing authority to lower drug prices. Sen. Elizabeth Warren, D-Massachusetts, and Rep. Lloyd Doggett, D-Texas, with Sen. Angus King, I-Maine, and Rep. Joaquin Castro, D-Texas, and Rep. Sara Jacobs, D-California, led the group in a joint letter.

Prescription drug companies are “using their monopoly power to hike prices and pad their bottom lines,” the letter said. With legal restrictions on government negotiations and pharmaceutical pricing, drug companies make more money in the United States than the rest of the world combined for the 20 top-selling drugs, the lawmakers said in the letter.

The situation “is especially perverse and upsetting” because U.S. taxpayers drive research through $40 billion through the National Institutes of Health, their letter said.

Six days before that letter, U.S. Sen. Susan Collins, R-Maine, and Jeanne Shaheen, D-New Hampshire, co-chairs of the Senate Diabetes Caucus, announced new bipartisan legislation, the Improving Needed Safeguards for Users of Lifesaving Insulin Now (INSULIN) Act. They noted more than 37 million Americans live with diabetes, the most expensive chronic condition in the country, costing an estimated $327 billion a year.

President Joe Biden also has called on Congress to take action on drug prices.

In June, the Federal Trade Commission voted 5-0 to examine how drug companies and pharmacy benefit managers are setting prices that patients can’t afford. In that meeting, Commissioner Alvaro Bedoya cited a lawsuit filed by Arkansas Attorney General Leslie Rutledge alleging Novo Nordisk, Sanofi and Eli Lilly conspired with CVS Caremark, Express Scripts and OptumRx, which “collectively dominate the pricing system” for insulin drugs.

Earlier this year, nonprofit pharmaceutical company Civica Inc. announced a plan to make and sell insulins at prices cheaper than those currently available.

Also in June, researchers reported Medicare Part D would have saved $3.6 billion by purchasing 77 generic prescription drugs at prices charged by the Mark Cuban Cost Plus Drug Company, operated by the billionaire owner of the Dallas Mavericks professional basketball team. That study in the American College of Physicians’ Annals of Internal Medicine made national news for illustrating variations in drug prices.