State production will bring down high costs of insulin in California

Dr. Mark Ghaly

Many Californians today experience the pain of skyrocketing drug prices while drug companies post record profits, and patients struggle to afford lifesaving medications as their health insurance premiums increase year after year.

The CalRx initiative, a groundbreaking solution to improve affordability, empowers the state of California to develop generic drugs and sell them at low cost. Through state-led manufacturing, CalRx will be the backstop for markets that fail to deliver affordable medications for Californians by promoting increased generic manufacturing to address such market failures as low competition, drug shortages and fragile supply chains.

CalRx’s first drug priority is insulin. The Gov. Gavin Newsom stated in January’s California Blueprint budget announcement, insulin has long epitomized the worst failures of the pharmaceutical industry. Excessively high barriers for new market entrants, hyperconsolidation and industry abuses of the legal/regulatory system have resulted in exorbitant price increases for insulin over the last two decades. Insulin inaccessibility affects the 10.7% of Californians with diabetes — roughly 200,000 of whom are uninsured or underinsured — and disproportionately harms low-income, Black and Latino Californians. For uninsured consumers and insured consumers with high deductibles, a five-pen pack of insulin (roughly a month’s supply) can cost well over $500, crowding out household budgets for other needs, such as housing and food.

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