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California Selects Generic Drug Company Civica for Low-Cost Insulin Production

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California Selects Generic Drug Company Civica for Low-Cost Insulin Production

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SACRAMENTO, Calif. — Gov. Gavin Newsom announced Saturday that Utah-based generic drug maker Civica was selected to produce low-cost insulin in California. This is a remarkable move that fulfills his promise to place state government directly in competition with the big-name drug companies.

Newsom stated that no one should be forced to take out debt in order to receive lifesaving prescriptions. “Californians will be able to access the most affordable insulin, which will help them save thousands each year.”

Newsom and his fellow Democratic lawmakers approved the contract last year at a cost of $50 million. It allows Civica to produce insulin under the state’s brand and make it available to anyone in California who needs it. This will be done via mail order or at local pharmacies. But insulin is only the beginning. Newsom stated that the state will also be looking to produce the opioid overdose reversal medication naloxone.

KHN was told by Allan Coukell (Civica’s senior vice-president of public policy), that the non-profit drugmaker is also in talks to produce generic medications. However, he declined to elaborate and said that the company is primarily focused on making insulin affordable.

Coukell stated that the partnership with California is very exciting. “We don’t want to be 100% of the market but we do want to make sure that everyone has access to fair insulin prices.”

Democratic lawmakers and activists have urged the industry to lower insulin prices as insulin costs have risen. Just weeks after President Joe Biden criticized Big Pharma for raising insulin prices, the three insulin market drugmakers — Eli Lilly and Co. and Novo Nordisk and Sanofi — announced that they would reduce the list prices of certain products.

Newsom, who previously accused the California pharmaceutical industry of extorting Californians with “sky high prices,” claimed that CalRx, the state’s generic drug brand, will increase competition and put pressure on the industry. Although officials from the administration declined to give a time frame for California’s insulin products, experts believe it could be as soon 2025. Coukell stated that the FDA approval for state-branded medication can take around 10 months.

The Pharmaceutical Research and Manufacturers of America, an organization that lobby for brand-name companies, condemned California’s move. Reid Porter, PhRMA’s senior director of state public affairs, stated that Newsom only “wants political points.”

Porter stated that if the governor wants to make a difference in how patients pay for insulins or other medicines, he should focus on others in the system. He blamed pharmacy benefit managers, which negotiate with manufacturers for discounts and rebates on drugs.

The Pharmaceutical Care Management Association, which represents pharmacist benefit managers, argued that high prices are due to pharmaceutical companies.

Experts in drug pricing say that the problem is shared by pharmacy benefit managers and drugmakers.

Officials from the Newsom administration claim that insulin costs have risen to $300 per vial and $500 per box of injectable pen. They also claim that many Californians with diabetes are forced to forgo or reduce their medication due to high insulin prices. This can lead to blindness, amputations, heart disease, kidney failure, and other life-threatening conditions like heart disease and kidney disease. Nearly 10% of California adults have diabetes.

Civica is currently developing three types generic insulin, also known as a Biosimilar. They will be available in vials or injectable pens. They will be interchangeable with brand-name insulins such as Humalog, Lantus, and NovoLog. Coukell stated that the company would make the drug affordable for as little as $30 per vial or $55 for five injectable pen.

Newsom stated that insulin from the state will save many patients $2,000-$4,000 per year. However, critical questions remain about how California would get the products to consumers, including how it would convince pharmacies, insurers and retailers to distribute them.

Coukell stated that Civica is looking at building a plant in California. Newsom also secured $50 Million in seed money last year.

Although California’s move was not previously attempted by a state government it could be thwarted by recent industry decisions to lower insulin costs. Lilly, Novo Nordisk and Sanofi pledged to lower prices in March. Lilly offered a vial for $25 per month, while Novo Nordisk promised major price reductions that would bring a generic vial to $48, while Sanofi set a $64 per vial.

According to the governor’s office, it will cost $30 per vial for the state to produce and distribute insulin. It will then be sold at that price. The administration claims that this will prevent “egregious cost shifting” like what happens in traditional price games for pharmaceuticals.

Experts in drug pricing said that generic production in California could lower insulin costs and benefit those with high-deductible insurance plans or no insurance.

Robin Feldman, a professor at the University of California College of the Law in San Francisco, said that this is an extraordinary move by the pharmaceutical industry. Not only for insulin, but potentially for all drugs. It’s a difficult industry to disrupt but California is well-positioned to do so.

This story was produced and published by KHN, which is the California Health Care Foundation’s independent publication California Healthline.

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