Insulin is displayed at the Pucci Pharmacy in Sacramento, Calif., Friday, July 8, 2022. In hopes of reducing the rising cost of insulin, California plans to manufacture its own brand of insulin.
AP Photo/Rich Pedroncelli
SACRAMENTO, Calif. (AP) — A vial of insulin cost $25 in 1995, when Chris Noble was 5 years old and learning to manage his type 1 diabetes with the help of his parents and doctors.
Nearly three decades later, Noble says the same vial of insulin costs more than $300 — a 12-fold increase for something he and millions like him can’t live without.
“It’s as essential as water,” Noble said.
Health care advocates have for years lamented that insulin, while inexpensive to produce, is being held hostage by a stubbornly reform-resistant American health care system as corporations monopolize and maximize profits.
Now, with several insulin patents approaching their expiration date, California is looking to disrupt that market by making its own insulin and selling it at a much cheaper price. Last month, after a few years of study, state lawmakers approved $100 million for the project, with $50 million earmarked for the development of three types of insulin and the rest set aside to invest in a manufacturing plant.
Gov. Gavin Newsom and state lawmakers still have many details to work out, including contracting a private company to do most of the work. But the budget was a time to put his money where his mouth is for Newsom, who called on the state to launch its own brand of generic drugs to lower overall drug prices.
“Nothing illustrates market failures better than the cost of insulin,” Newsom said in a video posted to his Twitter account. “California is now taking matters into its own hands.”
It wouldn’t be the first time California has made its own drug. In 1990, about half of all cases of infant botulism – a rare disease that affects the large intestine – were in California. The California Department of Public Health has secured a federal grant to develop and test a treatment. The treatment gained federal approval in 2003 and California has since.
But the market for infant botulism treatments is small, with about 110 cases reported each year, according to the US Centers for Disease Control and Prevention. A botulism treatment course in California costs more than $57,000, according to a legislative analysis.
Meanwhile, approximately 7 million people in the United States require insulin to manage their diabetes. The human body converts most of the food we eat into sugar. The pancreas then produces insulin, which converts this sugar into energy. People with diabetes do not produce enough insulin. People with type 1 diabetes need to take insulin every day to survive.
Insulin was first discovered in the 1920s by a team of Canadian scientists. They sold the patent to the University of Toronto for just $1, hoping the school would license the product to multiple companies to prevent a monopoly that would lead to high prices.
But over time, the insulin market was slowly cornered. Today, only three companies produce most of the world’s insulin. In the United States, the line between an insulin manufacturer and a patient is not straight. It zigzags between insurance companies and drug benefit managers — third parties who manage prescription drug benefits for health plans.
It is this system that has kept the cost of insulin much higher in the United States than in other countries, as more companies benefit from the higher price, said Kasia Lipska, associate professor at the Yale School. of Medicine.
“It creates this really weird incentive,” Lipska said.
California will try to break this incentive. The reason more companies haven’t entered the insulin market is that if they did, established manufacturers would undermine them, making it impossible to recoup their investment, said Anthony Wright, executive director of Health Access. California, a consumer advocacy group.
But California is in a different position because in addition to selling insulin, it also purchases the product each year for the millions of people benefiting from its state-funded health plans. This means that if the California product lowered the price of insulin in the market, the state would still benefit.
“That’s why California’s market power matters,” Wright said. “For a Wall Street investor, lowering the cost of insulin means you may not be able to recoup your investment. For California, lowering the price of insulin is a real savings for taxpayers as well as for our residents.
Still, there’s no guarantee that California’s plan will work. For one, insurers and drug benefit managers might not cover California insulin products, making it harder for patients to obtain them.
Sarah Sutton, director of public affairs for Pharmaceutical Research and Manufacturers of America, said a better idea would be for California to focus on “common sense solutions” to address the role pharmacy benefit managers play in pricing. insulin.
“It would bring real relief to patients right now,” she said.
Dr. Mark Ghaly, secretary of the California Health and Human Services Agency, said he hoped a state as large as California making its own insulin would significantly reduce the role of drug benefit managers in insulin pricing .
If successful, Ghaly said he thinks California-brand insulin will be priced so competitively that patients could buy it off-the-shelf for less than going through their insurance plan.
“We expect to save hundreds of millions of dollars for California through this,” Ghaly said. “This gives us the opportunity to create a blueprint for health care affordability that has been so far beyond the reach of states and, frankly, the federal government, and it’s really exciting to see where this can go. .”