Gov. Gavin Newsom announced a new $50 million contract with nonprofit generics company Civica to produce the state’s own-label insulin during a press conference Saturday in Downey.
Newsom originally announced its intention to produce generic drugs three years ago in an effort to lower the cost of pharmaceuticals for Californians who struggle to afford the often life-saving drugs. Deal with Civic would provide the first pharmaceutical product produced under CalRX generic brand.
Under the agreement, the 10-milliliter vial, which normally costs $300, will be available at the same $30 price it cost the state to manufacture and distribute the drug, according to the governor’s office. Newsom’s office said that as a result of these dramatically reduced prices, patients paying for their insulin out-of-pocket would save between $2,000 and $4,000 annually.
“This is a big deal, folks,” Newsom said. “It doesn’t happen anywhere else in the United States.”
The governor and other officials have touted that it would lower costs across the board, not just for the consumer who ultimately chooses the drug. That makes it different, Newsom said, than recent announcements by pharmaceutical companies to lower insulin prices.
“Don’t be fooled. These companies that are suddenly jumping over each other to rush in this direction — they’re just giving out discount cards,” he said. “These costs are included in the plans. These costs are socialized and passed on to everyone else.”
“This,” he said, “is a game changer. This fundamentally reduces the cost. Point. Full stop.”
Californians can get CalRx generic insulin at a local pharmacy or through mail-order pharmacies without a new prescription, state officials said, and it will be available to everyone regardless of their insurance plan. The next step for Civica is to identify a manufacturing facility in California, according to the governor’s office.
California Health and Human Services Secretary Dr. Mark Galli said the agreement commits Civica to supply as much insulin as California needs under the CalRx brand. Civica said it will produce the three insulins most commonly used by US citizens.
The governor said the state will move to produce its own naloxone, a drug that can save lives by reversing opioid overdoses. The state is exploring the possibility of manufacturing the drug as part of its plan to combat the deadly effects of fentanyl, a particularly powerful synthetic opioid, Newsom said.
Newsom said state officials are considering making both injectable and nasal naloxone available, and he wants to make it available over the counter.
The governor was promoting the Civica contract on the third day of his California political tour.
Newsom, who doesn’t like to read from teleprompters because of his dyslexia, ditched his usual agenda-setting speech to lawmakers at the state Capitol in exchange for a road show with policy announcements in Sacramento, the San Francisco Bay Area, Los- Angeles and San Diego until Sunday.
He made his remarks Saturday in front of a bank of refrigerators stocked with white boxes of insulin at a low-key pharmacy in Downey that is part of the Kaiser Permanente system.
Before he spoke, Niketa Calame-Harris, chair of the American Diabetes Association’s Southern California Advocacy Committee, spoke about her personal experience with type 1 diabetes.
At a young age, “many times I struggled trying to raise $100 to $200 for a vial of insulin that literally gave me life,” Kalam-Harris said.
“I once went without insulin for just five hours — and I was in intensive care for two weeks.”
The contract marks an important step forward for Newsom and his efforts to deliver on his promises to lower the cost of prescription drugs, which slowly rose from the place.
Newsom first unveiled his proposal for California to create its own line of generic drugs in 2020 to increase competition in the generic drug market and lower prices for everyone.
The governor signed the law that year require the state to enter into contracts for the manufacture or distribution of generic prescription drugs, including insulin.
In a video posted on Twitter last summer, Newsom touted the $100 million budget for the plan. He said that “$50 million will go toward the development of low-cost insulin products, and an additional $50 million will go toward the California insulin manufacturing plant.”
With approval from the U.S. Food and Drug Administration, the contract announced Saturday will provide insulin to California in 2024, Newsom said. Civica will begin production of the drug later this year under a 10-year agreement with the state that kicks in after the first shipment, Newsom said.
Galli said Saturday that the journey to insulin production began with the question of how California could use its power as the nation’s most populous state to disrupt the pharmaceutical market.
The process took time because “this is something we were trying to get right,” Galli said.
Anthony Wright, executive director of Health Access California, said it’s arguable that California’s efforts have already had a significant impact.
Eli Lilly & Co. announced the plans earlier this month reduce the price of insulin products by 70%. Novo Nordisk made a similar announcement this week about limiting out-of-pocket costs and Sanofi followed suit on Thursday.
Last year, Congress also passed the Inflation Reduction Act, which capped insulin copayments at $35 a month for Medicare patients starting Jan. 1.
“I don’t want to overstate that it would be the only factor, but California and other efforts to produce competing insulin products were a contributing factor to the decision by the incumbent insulin manufacturers to lower prices,” Wright said.
California also followed other states in January and sued three of the nation’s largest insulin makers over the high cost of the drug.
The lawsuit against Eli Lilly, Sanofi and Novo Nordisk, California, was announced at a news conference Thursday. Gen. Rob Bonto said companies are finding ways to “aggressively raise” the price of insulin at the expense of many patients.
Although the Legislative Analyst’s Office has questioned the feasibility of Newsom’s plan, Wright said it makes sense for the state to continue down that path because it forces drugmakers to cut costs.
“If we don’t sell a single vial of insulin, but the price goes down, that’s a savings for our Medi-Cal program, for CalPERS and for all the ways we buy for millions of Californians,” he said.
