Newsom announces $50-million contract to make California’s own brand of insulin

Gov. Gavin Newsom announced a new $50 million deal with nonprofit generic-drug maker Civica to manufacture insulin under the state label during a press conference Saturday in Downey.

Newsom originally announced its intention to make generic drugs three years ago to lower the cost of pharmaceutical products for Californians, who often struggle to afford life-saving drugs. The deal with Civica would deliver the first pharmaceutical product to be manufactured under the CalRX generic brand.

Under the deal, a 10-milliliter vial – which normally costs $300 – would be made available for the same $30 price that the state has charged to manufacture and distribute the drug, it said Governor’s Office. Newsom’s office said patients paying for insulin out of pocket would save between $2,000 and $4,000 annually because of these greatly reduced prices.

“This is a big deal, folks,” Newsom said. “That doesn’t happen anywhere else in the United States.”

The governor and other officials announced it would reduce costs across the board, not just for the consumer who ultimately picks up the drug. That distinguishes it from recent announcements by drug companies to cut their insulin prices, according to Newsom.

“Do not be fooled. These companies suddenly jumping over each other to rush in that direction — they’re just offering discount cards,” he said. “These costs will be borne by the plans. These costs are socialized and passed on to everyone else.”

“What this does,” he said, “is a game changer. This lowers the costs fundamentally. Period. Point.”

Californians could obtain generic CalRx insulin at a local pharmacy or through mail-order pharmacies without a new prescription, state officials said, and it would be available to everyone regardless of their insurance plan. The next step for Civica is to identify a California-based manufacturing facility, according to the governor’s office.

California Secretary of Health and Human Services Dr. Mark Ghaly said as part of the agreement, Civica will commit to supplying as much insulin as California requires under the CalRx label. Civica said it would make the three insulins most commonly used by US citizens.

The governor said the state will next turn to manufacturing its own naloxone — a drug that can save lives by reversing opioid overdoses. The state is exploring ways to manufacture the drug as part of its plan to combat the deadly effects of fentanyl, a particularly potent synthetic opioid, Newsom said.

Newsom said state officials are looking into making both injectable and nasally administered naloxone, and he wants it to be available over the counter.

The governor promoted the contract with Civica on the third day of his state-of-the-state political tour of California.

Newsom, who dislikes reading teleprompters because of his dyslexia, dropped the typical speech outlining his agenda to lawmakers at the state Capitol in exchange for a roadshow of policy announcements in Sacramento, the San Francisco Bay Area, Los Angeles and San Diego to fall Sunday .

He delivered his remarks on Saturday in front of a row of fridges stocked with white boxes of insulin at a no-frills pharmacy facility in Downey that’s part of the Kaiser Permanente scheme.

Before speaking, Niketa Calame-Harris, chair of the Southern California Advocacy Committee of the American Diabetes Association, shared her personal experiences with type 1 diabetes.

As a young adult, “I would often try to shell out $100, $200 for a little vial of insulin that would literally keep me alive,” Calame-Harris said.

“I once went five hours without insulin – and I was in intensive care for two weeks.”

The contract marks a major step forward for Newsom and its quest to deliver on its promises to reduce prescription drug costs, which have been slow to take off.

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 legislation earlier this year that required the state to seek contracts to manufacture or distribute prescription generic drugs, including insulin.

In a video posted to Twitter last summer, Newsom touted a $100 million budget for the plan. He said, “$50 million will go toward the development of low-cost insulin products, and another $50 million will go toward a California insulin manufacturing facility.”

With approval from the U.S. Food and Drug Administration, the contract announced Saturday is expected to ship insulin to California in 2024, Newsom said. Civica will begin manufacturing the drug later this year under a 10-year agreement with the state, terms of which take effect once the first shipment is made, Newsom said.

Ghaly said Saturday the journey to insulin production began with how California could use its power as the nation’s most populous state to disrupt the pharmaceutical market.

The process took some time because “we were trying to get this right,” Ghaly said.

Health Access California executive director Anthony Wright said it could be argued that California’s efforts are already having a significant impact.

Eli Lilly & Co. earlier this month announced plans to reduce the price of its insulin products by up to 70%. Novo Nordisk made a similar announcement this week to limit out-of-pocket costs, and Sanofi followed suit on Thursday.

Last year, Congress also passed the Inflation Reduction Act, which capped insulin co-payments to $35 per month for patients covered by Medicare starting Jan. 1.

“I don’t want to exaggerate that this is the sole factor, but California and other efforts to produce competing insulin products contributed to this decision by incumbent insulin manufacturers to lower their prices,” Wright said.

California also followed other states in January, suing the country’s three largest insulin makers over the high cost of the drug.

At a Thursday news conference announcing the lawsuit against Eli Lilly, Sanofi and Novo Nordisk, California Atty. General Rob Bonta said the companies would find 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 made sense for the state to go ahead because it puts pressure on drugmakers to cut costs.

“If we don’t sell a single vial of insulin, but the price goes down, that means savings for our Medi-Cal program, for CalPERS, and for all the options we buy for millions of Californians,” he said.