California will invest $100 million to develop its owninsulin , Gov.Gavin Newsom said Thursday.- The goal is to make a cheaper version of the drug whose price has skyrocketed over the years.
California will soon produce its own affordable insulin in response to the rising costs of the life-saving medication, Gov. Gavin Newsom announced on Thursday.
"California is now taking matters into our own hands," he said in an announcement posted on Twitter.
—Gavin Newsom (@GavinNewsom) July 7, 2022
The state will set aside $100 million from its $308 billion 2022-23 budget to develop an affordable version of the drug and a manufacturing facility based in California.
"$50 million will go towards the development of low-cost insulin products and an additional $50 million will go towards a California-based insulin manufacturing facility that will provide new, high-paying jobs and a stronger supply chain for the drug," Newsom said.
The medication will be made available "at a cheaper price, close to at-cost," he said, though specific numbers have not yet been disclosed. It's also unclear when production will begin.
A Los Angeles Times report from June said state health officials were in the middle of negotiating a contract with a drug manufacturer to develop and distribute insulin. A spokesperson from the governor's office told the LA Times that production could begin in the next few years.
However, some officials expressed skepticism about whether savings could be passed down to the patients.
State Assemblymember Blanca Rubio, a Democrat representing the state's 48th district, said at a legislative hearing in May that "there is no guarantee" that this could occur.
"Hope is not a strategy," Rubio said at the time. "I'm not hearing any strategies as to how this is going to become available."
Luke Koushmaro, a senior fiscal and policy analyst for the nonpartisan state Legislative Analyst's Office, said there were "considerable uncertainties" around the plan.
"This is an area that hasn't really been tested too far," Koushmaro told Insider.
There are several implementation obstacles that the state would have to hurdle over, including getting approval from the Food and Drug Administration, he said.
In addition, only a few manufacturers have been able to lower the price of the drug. Koushmaro pointed to one generic version of insulin that was brought to market, Semglee, that only "marginally reduced" the price. It was $20 cheaper than its competitor at $269.38 per vial, according to Axios.
Civica Rx, a nonprofit that produces generic drugs, has said that it plans to bring to market generic versions of insulin at no more than $30 per vial. The organization said in a press release that it expects to start selling its version of the drug in 2024 once it gets FDA approval.
Once a drug is brought to market, Kousmaro said the state has to ensure that California's interests will be protected in the long run and the price of the drug will be kept down.
He also added concerns that the state has full discretion with how to utilize the $100 million, which could waive a lot of safeguards for transparency and oversight. He said the state has signaled that it will implement safeguards but it's at complete discretion to determine what those are.
Newsom previously signaled his goal for the state to make its own insulin in January, as the price of the drug increases and as many Americans are diagnosed with diabetes.
One study conducted by Yale School of Medicine researchers found that insulin has become an "extreme financial burden" for many in the US.
Among Americans who use insulin, 14.1%, or about 1.2 million people, were found to spend at least 40% of what's left of their income, after paying for food and housing, on the drug alone, according to the study.
The financial toll coincides with skyrocketing prices of insulin over the past few decades.
One brand of insulin, Humalog, used to cost $21 per vial when it debuted in 1996. It now costs 10 times that, Kasia Lipska, an associate professor at Yale School of Medicine and the lead author of the study, told Yale News.
On average, insulin prices have more than doubled in the last decade, Lipska said, noting that it's not an issue of inflation.
Another study from RAND Corporation think tank found that the average price for fast-acting insulin was about $113.39 per vial. The average patient may need two to three vials a month.
"Nothing epitomizes market failures more than the cost of insulin," Newsom said. "Many Americans experience out-of-pocket costs anywhere from $300 to $500 a month for this life-saving drug."
Over 34 million people in the US have diabetes, according to the American Diabetes Association, including more than 3.2 million in California. Medical expenses for those with diabetes are 2.3 times higher than for those who do not have the disease the association states.