California is studying first plan to make and sell cheap ‘Cal Rx’ insulin

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Boxes of the insulin pen drug NovoLog, made by Novo Nordisk Pharmaceutical, line a counter at a pharmacy. REUTERS/George Frey

As consumers, advocates and others prioritize their fight to lower the cost of prescription drugs, insulin is usually first in line.

Now the momentum to curb rising insulin costs appears to be building, with policymakers at the state and federal levels rolling out proposals to provide long-awaited financial relief for diabetics. The questions now are: what happens and how quickly?

This week in California, the government of Gavin Newsom said it is moving forward with an initial plan to manufacture and distribute more affordable versions of insulin under the generic label called Cal Rx.

As part of that plan, the government plans to spend $100 million in this year’s budget. $50 million of that to develop low-cost insulin with the help of a drug manufacturer. The other half would be used to set up an insulin production facility in the state, as outlined in a budget proposal from the Department of Health Access and Information.

The initiative is unique to a state, and it comes as Congress discusses its own insulin cost measures, including limiting what people pay out of pocket to $35 a month.

Meanwhile, the state legislature is considering its own bill that would limit what Californians pay at the pharmacy counter. And a California county, looking to provide more immediate help to its residents, is conducting a pilot program for residents who are struggling to pay for their insulin.

In California, 3.2 million people have been diagnosed with diabetes, many of whom rely on insulin to survive. Insulin is a hormone that helps regulate blood sugar levels. Prolonged periods of elevated sugar levels can damage organs. An additional 10.3 million Californians are estimated to be prediabetic.

The stories of people having to ration their insulin because they can’t afford their prescriptions are commonplace. Between 2012 and 2016, the price of insulin doubled, leading to higher out-of-pocket costs for diabetics, according to the Health Care Cost Institute. Today, a 10-milliliter vial of insulin can cost between $170 and $400, depending on the type and brand. A person usually needs two to three vials per month, and some may need more.

Some people’s prescriptions come in the form of insulin pens. A pack of five pens can cost as much as $700. What consumers pay for their insulin depends to a large extent on their health insurance.

For example, Annemarie Gibson of San Diego pays $200 a month for her two sons’ insulin — $100 per child. But first, she must pay an annual deductible of $2,900 per person before coverage kicks in. She said the medication, insulin pumps and glucose meters meet their deductible early in the year. Her sons, 12 and 14, have type 1 diabetes and are on the drug Humalog.

Annemarie Gibson of San Diego pictured with her sons Owen, 12, and Thomas, 14. They both have type 1 diabetes and rely on Humalog insulin. Photo courtesy of Annemarie Gibson

For 10 years, Gibson has seen the cost of insulin rise. She’s also watched lawmakers enthusiastically roll out proposals to cut costs, but those plans were watered down.

Still, she’s optimistic that her sons will never have to worry about priceless insulin prescriptions when they grow up. The projects and proposals currently in play, she said, give her some hope that something can be done in the coming years.

“Dealing with diabetes is already extremely stressful. Giving people some financial help would make a huge difference,” Gibson said.

Able to make its own insulin

In 2020, Newsom signed a law ordering the state to seek partnerships with drug manufacturers to develop generics and biosimilars for a number of drugs, but plans are slow to roll out and it’s unclear which other drugs will be prioritized. Insulin will be tested first.

Insulin is a biologic drug, meaning it is made from living cells. Medicines that copy a biological brand name are called biosimilars. Like generics, they tend to be cheaper.

The state has yet to identify a drug manufacturer to work with, but a Newsom government official said it could happen in the coming months. The state’s insulin would be available to all Californians, both public and private, as well as the uninsured. It’s unclear how quickly this insulin could hit the market, but it would likely take at least a few years, an administration official said.

The goal is “to give Californians access to insulin products that are a fraction of the $300 per vial prices charged by insulin manufacturers in the US,” the administration’s budget request reads.

Whether Newsom’s biosimilar initiative will lead to significant savings for consumers is questionable, some researchers say.

Drug manufacturing isn’t the only source of the problem, says Karen Van Nuys, executive director of the Value of Life Sciences Innovation Project at the Schaeffer Center at the University of Southern California. She said decision-makers looking for solutions should look at all players involved in the supply chain: from drug manufacturers to wholesalers, pharmacies, insurers and benefit administrators of pharmacy, these are companies that negotiate prices with drug manufacturers and pharmacies on behalf of an insurer. . All entities benefit and contribute to the final prize, she said.

In a study published last fall, Van Nuys and her team found that while insulin prices have risen, the pocket of drug companies has decreased over time and what middlemen take has increased.

“A lot of things happen in the middle, between what the patient pays and what the manufacturer gets,” said Van Nuys. “More than half of what we spend on insulin goes to middlemen.”

The state’s plans to produce biosimilar insulin could help consumers to some extent, she said, but work also needs to be done to address costs in other parts of the distribution process.

Insurance companies calling for drug price reforms are also looking for their own ways to get involved in insulin production.

Blue Shield of California, for example, announced last month that it is participating in an initiative led by Civica Rx, a Utah-based nonprofit drug manufacturer, to produce insulin that would cost patients $30 or less per vial. Mark Seeling, a Blue Shield spokesperson, said that of the hundreds of prescription drug classes, insulins are in the top 10 when it comes to what the company spends on pharmacy coverage.

According to Civica Rx, its insulin could be available as of 2024, subject to approval by the US Food and Drug Administration.

Because it could take years for any of these plans to come to fruition, local authorities are also looking for their own ways to provide immediate relief to residents. Santa Clara County recently began a $1 million needs-based grant program for people who use insulin, as well as asthma inhalers and epinephrine injections (EPI pens).

Narinder Singh, pharmacy director for Santa Clara County, said the MedAssist program could lead to fewer people skipping or rationing their medications, and greater adherence means fewer sick days and emergency room visits. The province expects 1,000 people to sign up in the coming months.

“It’s a very small local effort — a million dollars in a community like this is a very small part of it, but it’s a step in the right direction,” Singh said. “If we can all build momentum on this… we can make a huge difference.”

Cost-sharing limits in Play

The affordability of insulin has been the focus of recent discussions at the federal level. The US House recently passed the Affordable Insulin Now Act, which would limit what people with out-of-pocket insurance pay to $35 a month. The Senate has yet to vote on the measure and is working on its own proposals.

The $35 cap was also part of President Joe Biden’s stalled Build Back Better Plan — the president referred to it in this year’s State of the Union address, sharing the story of Joshua Davis, a 13-year-old with type 1 diabetes who was present at the event.

A cost-sharing limit solves the problem on the insurance side; it provides consumers with consistency and relief at the pharmacy counter. But experts say it won’t lower the true price of insulin and wouldn’t benefit people without insurance. The California Department of Health Access and Information also makes this clear in its budget request.

According to the Kaiser Family Foundation, capping costs would provide financial relief for at least 1 in 5 insulin users.

Constraints at your own expense have become popular in recent years. At least 15 states have passed their own laws limiting insulin copays — from $100 for a 30-day supply in Colorado to $25 in New Mexico. New York, Illinois and Washington also have their own copay limits.

Similar attempts have failed in California in the past, but Senate Bill 473 passed by Sen. Pat Bates, a Laguna Niguel Republican who would also limit copays to $35 per prescription per month, is currently under consideration by the Assembly.

Assembly member Adrin Nazarian, a Democrat from North Hollywood, has authored two bills in recent years to limit copays and eliminate deductibles for insulin prescriptions. Last year, his bill on deductibles was held up in the Senate Appropriations Committee.

“It was not held because there is no support for it in the Senate. It was held because games are played” that end up hurting patients, he said.

“If the federal government does something, great, but I’m ashamed that a state like California hasn’t jumped on it,” Nazarian said.

Such bills usually also face strong industry opposition. In pushing back price caps, such as those presented by Nazarian and Bates, health insurers have argued that California-regulated health insurance plans already limit a person’s share of prescription drugs to $250 to $500 for a 30-day supply. They say further reducing the out-of-pocket cost of insulin does nothing to lower the unit price of the drug.

“Tell that to a single mom or dad trying to make ends meet,” Nazarian said.

CalMatters health care coverage is supported by grants from the Blue Shield of California Foundation, the California Health Care Foundation, and the California Wellness Foundation.

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