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Gov. Gavin Newsom announces $100 million plan for California to make its own low-cost insulin

California Gov. Gavin Newsom speaks at a news conference on June 24, 2022.

Rich Pedroncelli/AP

  • California will invest $100 million to develop its own insulin, Gov. Gavin Newsom said Thursday.
  • The goal is to make a cheaper version of the drug whose price has skyrocketed over the years.
  • More than 3 million Californians have diagnosed diabetes, the American Diabetes Association found.

California will soon produce its own affordable insulin in response to the rising costs of the life-saving medication, Gov. Gavin Newsom announced on Thursday.

“California is now taking matters into our own hands,” he said in an announcement posted on Twitter.

—Gavin Newsom (@GavinNewsom) July 7, 2022

 

The state will set aside $100 million from its $308 billion 2022-23 budget to develop an affordable version of the drug and a manufacturing facility based in California.

“$50 million will go towards the development of low-cost insulin products and an additional $50 million will go towards a California-based insulin manufacturing facility that will provide new, high-paying jobs and a stronger supply chain for the drug,” Newsom said.

The medication will be made available “at a cheaper price, close to at-cost,” he said, though specific numbers have not yet been disclosed. It’s also unclear when production will begin.

A Los Angeles Times report from June said state health officials were in the middle of negotiating a contract with a drug manufacturer to develop and distribute insulin. A spokesperson from the governor’s office told the LA Times that production could begin in the next few years.

However, some officials expressed skepticism about whether savings could be passed down to the patients.

State Assemblymember Blanca Rubio, a Democrat representing the state’s 48th district, said at a legislative hearing in May that “there is no guarantee” that this could occur.

“Hope is not a strategy,” Rubio said at the time. “I’m not hearing any strategies as to how this is going to become available.”

Luke Koushmaro, a senior fiscal and policy analyst for the nonpartisan state Legislative Analyst’s Office, said there were “considerable uncertainties” around the plan.

Koushmaro could not be immediately reached for comment.

Newsom previously signaled his goal for the state to make its own insulin in January, as the price of the drug increases and as many Americans are diagnosed with diabetes.

One study conducted by Yale School of Medicine researchers found that insulin has become an “extreme financial burden” for many in the US.

Among Americans who use insulin, 14.1%, or about 1.2 million people, were found to spend at least 40% of what’s left of their income, after paying for food and housing, on the drug alone, according to the study.

The financial toll coincides with skyrocketing prices of insulin over the past few decades.

One brand of insulin, Humalog, used to cost $21 per vial when it debuted in 1996. It now costs 10 times that, Kasia Lipska, an associate professor at Yale School of Medicine and the lead author of the study, told Yale News. 

On average, insulin prices have more than doubled in the last decade, Lipska said, noting that it’s not an issue of inflation.

Another study from RAND Corporation think tank found that the average price for fast-acting insulin was about $113.39 per vial. The average patient may need two to three vials a month.

“Nothing epitomizes market failures more than the cost of insulin,” Newsom said. “Many Americans experience out-of-pocket costs anywhere from $300 to $500 a month for this life-saving drug.”

Over 34 million people in the US have diabetes, according to the American Diabetes Association, including more than 3.2 million in California. Medical expenses for those with diabetes are 2.3 times higher than for those who do not have the disease the association states.


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