California partners with manufacturer to make affordable generic insulin

The state of California has established a $50 million collaboration over a decade with the generic drug manufacturer Civica. The goal of the collaboration is to create affordable state-branded generic insulin.

Qualified individuals may obtain a 10-mL vial of generic insulin for $30 or less. California plans to provide a pack containing five prefilled 3 mL pens for $55 or less.

Governor Gavin Newsom hopes California’s emergence as an insulin-maker will lead insulin prices to collapse.

Echoing these efforts, President Biden has made it clear that his administration is dedicated to bringing down health care expenses. In that vein, Biden has urged pharmaceutical giants to rein in insulin prices.

Major insulin makers respond to pressure for lower prices

In recent weeks, Eli Lilly (NYSE:LLY), Novo Nordisk (NYSE:NVO) and Sanofi (Nasdaq:SNY) announced plans to cut insulin costs and cap out-of-pocket expenses. Lilly was the first to do so, prompting cries from politicians such as Senator Bernie Sanders (I-VT) for other insulin vendors to do the same. Shortly thereafter, Novo Nordisk and Sanofi announced similar programs. Collectively, the three companies are responsible for about 90% of insulin sales in the U.S.

Sanofi made headlines by revealing it would cut the cost of its most popular insulin by a substantial 78% in 2024. It will also cap monthly insulin expenses at $35. Not to be left behind, Novo Nordisk revealed its intentions to slash the prices of several U.S. insulins by up to a generous three-quarters. In the same vein, Eli Lilly pledged to limit out-of-pocket costs for insulin to $35 per month and drop the price of its non-branded insulin to $25 per vial.

Passed last August, the Inflation Reduction Act included a provision keeping out-of-pocket insulin costs to $35 a month for Medicare prescription drug beneficiaries.

As NPR reported, insulin prices have experienced an astonishing 600% increase in the past twenty years. The Lancet notes that from 2007 to 2018, the cost of certain insulin products doubled.

Insulin pricing has received a considerable amount of attention in recent years, making it increasingly difficult for manufacturers to justify. “Once you expose [insulin prices], it is awfully hard to defend them,” said President Biden in a recent interview. “And once one major operator changes it, it changes everything.”

Challenges of California’s generic insulin program

The Associated Press notes that California’s insulin likely won’t be accessible until 2024, at the earliest.

The state would face several obstacles in developing generic insulin. Examples include obtaining FDA approval while keeping costs low while competing against much bigger manufacturers that have the advantage of economies of scale. The American Diabetes Association states that approximately 8.4 million Americans rely on insulin.

Governor Newsom declared that the program could result in annual savings between $2,000 and $4,000 for numerous patients. California may consider introducing other generic drugs to the market as well. Newsom was elected lieutenant governor of California in 2010 and governor in the 2018 election.