California To Make Its Own Insulin, Lowering Costs For Diabetics

California Gov. Gavin Newsom (D) announced Thursday that the state will start producing its own insulin, lowering the price of an essential treatment that typically costs people with diabetes thousands of dollars of years to obtain.

The endeavor will make California the first state to produce its own drugs an undertaking long reserved for private pharmaceutical companies that operate under lax government oversight. 

“Nothing epitomizes market failures more than the cost of insulin,” Newsom said in a video announcing the project. “Many Americans experience out-of-pocket costs anywhere from $300 to $500 per month for this lifesaving drug. California is now taking matters into our own hands.”

The endeavor is included in the $308 billion state budget Newsom signed last week. In it, $100 million is set aside for insulin production contracts that will allow people with diabetes to obtain insulin “at a cheaper price, close to at-cost,” the governor said. Half of the funding will be spent on the development of low-cost insulin products and the other half will go toward an insulin manufacturing facility in California.

“In California, we know people should not go into debt to receive lifesaving medication,” Newsom said.

Newsom’s administration previously said that state-made insulin may lower insurer spending on the treatment by 70%, the Los Angeles Times reported last month. If all goes according to plan, those savings would be passed on to consumers. 

For people without diabetes, the pancreas capably creates insulin, an essential hormone that helps the body use or store the glucose it receives from food. But diabetes disrupts that process .

For the 1.6 million Americans with Type 1 diabetes, their pancreas stops making insulin, and they must be injected with a manufactured version of the hormone to stay alive. Type 2 diabetes is far more common, affecting 35.4 million Americans. While their pancreases still make insulin, their bodies don’t always respond well to it, and they may need the hormone injections in some cases. 

The price of the four most commonly prescribed insulins has tripled over the last decade. Experts attribute that rise to the United States’ free-market approach to pharmaceuticals in which drug companies negotiate prices with private insurers. But Medicare, the government-sponsored insurance for people 65 and older, the largest buyer of drugs in the U.S., is not allowed to bargain over costs.

Drug companies have attributed the rising price of insulin to the cost of developing better versions of the treatment, but many medical experts say the improvements the companies make are incremental and out of step with the price hikes. 

Though California will be the first to pursue its own insulin production, it’s not the first to tackle the price issue. Colorado Gov. Jared Polis (D) signed a bill into law last year that caps insulin prices at $100 a month for anyone with a prescription, no matter how much insulin a person needs. Democrats in Congress have also pitched legislation, with the House passing a monthly insulin price cap of $35 in April. However, the proposal would only affect people with insurance, and Democrats will need at least 10 Republican to get on board in order for it to pass in the Senate.