California announces partnership with drug manufacturer to create affordable insulin: 'Game changer'

California Gov. Gavin Newsom announced a 10-year partnership Saturday with nonprofit drug manufacturer Civica Rx to produce an affordable, state-branded insulin with the intentions of rivaling longtime producers and lowering prices for millions of Americans.

Newsom said he hoped the Golden State's emergence as an insulin-maker would cause prices to collapse, as research shows they have more than tripled over the past couple of decades.

"We are intent to make this about market disruption," Newsom said during the announcement at a pharmaceutical warehouse near Los Angeles. 

The Democratic governor said the partnership will be "a game changer" for the 8 million Americans who use insulin to treat diabetes, advertising that a 10-milliliter vial would sell for $30.

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Many questions remain as California and Civica work to locate a manufacturing facility in the state, The Associated Press reported, adding that regulatory approvals will be needed.

There are concerns over the state entering the market as some worry competitors will slash their prices and undercut the state-branded insulin or reduce the availability of their drugs.

"Is this perfect? We don't know yet," Newsom acknowledged at one point.

The announcement comes days after major manufacturer Novo Nordisk announced it will cut its insulin prices up to 75% starting in 2024. Less than two weeks ago, rival Eli Lilly also said it would be immediately capping out-of-pocket costs for its insulin at $35 for patients and announced plans to cut the price of its most commonly prescribed insulin by 70%.

President Joe Biden has also committed to focusing on lowering healthcare costs, specifically the price of insulin. Legislation enacted in 2022 capped copayment for the drug at $35 per month for Medicare beneficiaries, and Biden has proposed extending that cap to all Americans.

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Anthony Wright, executive director of statewide consumer health advocacy group Health Access California, celebrated Newsom's announcement and said efforts to develop a competing generic are likely to influence insulin manufacturers to decrease prices – but he acknowledged there will be obstacles.

"The work to develop a generic, get FDA approval and set up manufacturing will take real time," Wright said in an email to The AP. "There may even be more time in the effort to get doctors to prescribe the drug, insurers and (pharmacy benefit managers) to include it on their formularies and patients and the public to accept and ask for it."

State lawmakers approved $100 million for the plan last summer, with $50 million dedicated to developing three types of insulin. The remaining money was set aside to invest in a manufacturing facility.

Newsom said despite the challenges of entering into an existing competitive market, taxpayers would have "very ample protections." He added that "all kinds of provisions" would allow the state to pull out of the deal if it didn't prove beneficial. 

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The product is not expected to be on store shelves until at least next year.

The state-branded insulin could save many patients between $2,000 and $4,000 a year, according to state documents obtained by The AP. Lower costs could also result in savings for the state because it buys the product yearly for the millions of residents of its publicly funded health plans.

The Associated Press contributed to this report.