California’s $100 Million Low-Cost Insulin Manufacturing Gamble

Governor Gavin Newsom confirmed on Thursday a plan to spend $100 million of state funds to make low-cost insulin in the state, drawing both praise and criticism.

In the last few decades, insulin prices in the US have skyrocketed, with one insulin vial going from costing $21 in 1999 to $332 in 2019. While federal efforts have been made to halt the high climb, including a bill in Congress trying to cap insulin prices per month at $35, California has also quickly made headway into reducing prices. The state tackled the manufacture of generic pharmaceutical drugs in 2020, then swiftly moved on to insulin.

Earlier this year, the Assembly, Senate, and Governor Newsom agreed that California should begin making it’s own low-cost, generic insulin, and set aside $100 million in the new budget for it. Once the over $300 billion budget was passed late last month, so was the insulin program, prompting Governor Newsom’s office to release a press release noting the new program.

“Want insulin? California will be producing our own insulin to make it cheaper and more affordable for everyone,” exclaimed Newsom’s July 1st press release. “The budget invests $100 million to develop and manufacture low-cost biosimilar insulin products to increase insulin availability and affordability in California.”

However, not much else was known about the program until Thursday, when Newsom released a statement on where the $100 million will be allocated, as well as hoping the program will create a better supply chain for the drug in the state, and that new jobs With fair salaries will come out of the program.

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

Specifically, $50 million of the program will be going to developing the generic insulin and surrounding products to best optimize them. The half will go towards building a factory to produce the insulin, with the location still not being known as of Thursday.

Challenges ahead for California’s insulin program

While many healthcare advocates have praised the plan for offering insulin cost relief for Californians, skeptics say that California’s program will meet many non-anticipated challenges.

“There are a ton of federal regulations on everything from construction to storage of insulin, to manufacturing, right down to who can be hired in facilities making this,” explained Carla Chavez, a consultant on manufacturing facilities, to the Globe on Thursday. “Where they choose to make the insulin, for example, can have huge political consequences. These are pretty good paying jobs, even down on the line. Do you build in in a central location, say Modesto, so that drugs will have a more equal route to travel and generally save on salary? Or do you go for LA, where these jobs are very much wanted? Or do you go with the Bay Area and score some brownie points with the local leaders? Or is it closer to rail lines or major trucking hubs or ocean access? You’re going to make lawmakers mad no matter what you do, but something of this magnitude can maybe make people less favorable towards you for being snubbed. While not exactly the same, other states have felt this when recommending for foreign companies to move to, essentially helping one depressed city by ignoring all the others.”

“And that is just one consideration that can take a lot of time to look at. Making your own insulin sounds a lot easier on paper. This is highly regulated, and everything around this has miles of red tape. Jut like with the pharmaceutical drugs, I really hope the state has thought all of this through. $100 million seems like a really lowball estimate here too with what they have on the road ahead of them.”

More details on the insulin program are expected soon.

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