Two years ago, California made a bold announcement that it would manufacture a state-branded, low-cost insulin. Drug manufacturers, insurers, economists and diabetics took notice. It had the potential to disrupt the market, bring down drug costs and save patients’ lives.
Gov. Gavin Newsom promised a “2024 delivery” for the insulin.
It still is not here, and the American Diabetes Association says the lag is hurting diabetics who need a low-cost option for the medicine.
“We are more than a year behind schedule with no end in sight,” said Christine Fallabel, regional director for government affairs for the association, during a recent Senate oversight hearing on the initiative.
During the hearing, representatives for the Newsom administration said they could not provide a timeline for when the state’s insulin would be for sale. Fallabel said Californians could be waiting until 2030.
More than 3.5 million Californians have diabetes, and insulin is a life-saving part of their disease management and treatment.
Civica, Inc., the nonprofit drug manufacturer contracted to develop five types of insulin for the state, has not yet started clinical trials or applied for drug approval from the U.S. Food and Drug Administration, CalMatters reported last month.
The American Diabetes Association expects further delays in the insulin project, known as CalRx, given the length of clinical trials and unforeseen challenges that are typical of the regulatory process. Multiple drug manufacturing experts told CalMatters that the FDA’s drug review process takes a year “if nothing goes wrong.” A clinical trial could also add another year or more.
“Based on the status that CalRx presented (during the hearing), we expect a significant delay in their timeline for when insulin will be available through the program,” Fallabel told CalMatters.
Civica did not participate in the hearing but previously told CalMatters that the company has started manufacturing insulin, which is one of the steps that must be completed before submitting for FDA approval.
“We want to be careful about setting expectations,” said Allan Coukell, chief government affairs officer at Civica. “It’s not unusual in a complicated program that stuff happens and you have to adapt.”
During the oversight hearing, Elizabeth Landsberg, director of the state Department of Health Access and Information, said the pace of the CalRx insulin development has been slower than the state anticipated but “not outside of industry norms.” Landsberg’s department is tasked with leading the insulin initiative.
“I wish I could sit here today and say we have a date certain,” Lansberg said.
Newsom rejected cap on insulin costs
Newsom unveiled the $100-million insulin initiative as a radical way to disrupt the pharmaceutical marketplace, where the price of insulin nearly tripled between 2012 and 2021, according to the Health Care Cost Institute. The goal was to increase competition in an area where three manufacturers — Eli Lilly, Novo Nordisk and Sanofi — have controlled the market for decades.
Half of the state money would go to Civica, Inc. to manufacture both long- and fast-acting insulins for California in its Virginia plant. The other half would be used to help open a manufacturing plant in California. The insulin would be sold for $30 per 10 milliliter vial or $55 for a box of five 3 milliliter pens.
Recent analyses suggest that the average out-of-pocket spending for a month’s supply of insulin is $58, although some people pay far more than that particularly if they are uninsured. Some manufacturers have also independently capped costs at $35 per month.
Landsberg said during the hearing there was no update on the manufacturing facility.
At the same time, Newsom has vetoed bills that would have capped out-of-pocket spending on insulin and regulated pharmacy benefit managers, the mediators between drug manufacturers and insurers that determine which drugs are covered for beneficiaries. Evidence suggests these benefit managers are partially responsible for inflated drug prices.
In veto messages for those bills, Newsom cited CalRx as part of his reasoning for rejecting the health care measures.
“I think it sometimes sends a message that CalRx is like the complete solution to everything when it comes to the cost of health care,” said Sen. Scott Wiener, chair of the Senate budget committee, during the hearing. “That is absolutely not the case.”
Wiener, a San Francisco Democrat, authored the most recent attempts to cap patient spending on insulin at $35 per month and regulate pharmacy benefit managers, both of which passed nearly unanimously but were vetoed by the governor.
Wiener said that he supports the CalRx program but it is not the “only solution to driving down drug costs.” He has reintroduced versions of both bills.
Insulin manufacturers dropping prices
California’s efforts to make insulin more affordable have fallen behind other states and the federal government.
Last year, Eli Lilly, Novo Nordisk and Sanofi dropped their insulin prices between 65% to 80%. Industry experts attribute the drop to a Medicaid rule change linking drug prices to inflation, meaning the drug companies would have owed the federal government hundreds of millions of dollars because of insulin’s high prices.
But those price drops haven’t helped everyone, Fallabel said. An individual’s insurance benefit design as well as high deductibles mean many people still can’t afford their insulin. In a recent survey, the association found that about 16% of insulin using adults ration the medication because of cost.
The American Diabetes Association is advocating for California to institute an out-of-pocket cost cap for insulin in addition to completing the CalRx program.
Twenty-five states and the District of Columbia have implemented monthly price caps for insulin, and some Medicare users have costs capped at $35 monthly.
Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.