In 1995, when Chris Noble was 5 years old and learning how to manage his Type 1 diabetes with the help of his parents and doctors, a vial of insulin cost $25.
Noble claims that the same vial of insulin now costs more than $300, a 12-fold increase for something he and millions of others cannot live without.
For years, health-care advocates have bemoaned the fact that insulin, despite being cheap to produce, is held hostage by a health-care system in the United States that is stubbornly resistant to reforms as companies monopolize and maximize profits.
With several insulin patents about to expire, California is looking to disrupt the market by producing its own insulin and selling it at a much lower price. Following several years of research, state lawmakers approved $100 million for the project last month, with $50 million dedicated to the development of three types of insulin and the remainder set aside to invest in a manufacturing facility.
Many details remain to be worked out between Newsom and state lawmakers, including hiring a private company to do the majority of the work. However, the budget was a “put your money where your mouth is” moment for Newsom, who has been advocating for the state to launch its own brand of generic drugs in order to reduce overall medication costs.
This isn’t the first time California has produced its own medicine. In 1990, California accounted for roughly half of all cases of infant botulism, a rare illness that affects the large intestine. A federal grant was awarded to the California Department of Public Health to develop and test a treatment. The treatment received federal approval in 2003, and California has been producing it since then.
However, the market for infant botulism treatments is small, with only about 110 cases reported each year in the United States, according to the Centers for Disease Control and Prevention. According to a legislative analysis, one course of botulism treatment in California costs more than $57,000.
Meanwhile, approximately 7 million Americans require insulin to manage their diabetes. The majority of the food we eat is converted into sugar by the human body. After that, the pancreas produces insulin, which converts the sugar into energy. Diabetes patients do not produce enough insulin. To survive, people with Type 1 diabetes must take insulin every day.
Insulin was discovered in the 1920s by a group of Canadian scientists. They sold the patent to the University of Toronto for $1 in the hopes that the university would license the product to multiple companies, preventing a monopoly and high prices.
However, the insulin market was gradually cornered over time. Today, only three companies manufacture the majority of the world’s insulin. The line between an insulin manufacturer and a patient is not clear in the United States. It zigzags between insurance companies and pharmacy benefit managers, who are third-party administrators of prescription drug benefits for health plans.
According to Kasia Lipska, an associate professor at Yale School of Medicine, it is this system that has kept the price of insulin much higher in the United States than in other countries, as more companies benefit from the higher price tag.
California will attempt to undermine that incentive. According to Anthony Wright, executive director of Health Access California, a consumer advocacy group, the reason more companies haven’t entered the insulin market is that if they do, the established manufacturers will simply undercut them, making it impossible to recoup their investment.
However, there is no guarantee that California’s plan will work. For one thing, insurers and pharmacy benefit managers may refuse to cover California’s insulin products, making access to them more difficult for patients.
The Pharmaceutical Research and Manufacturers of America’s Sarah Sutton, director of public affairs, believes that California should focus on “commonsense solutions” to address the role pharmacy benefit managers play in insulin pricing.
The secretary of the California Health and Human Services Agency, Dr. Mark Ghaly, expressed hope that a state the size of California producing its own insulin would significantly reduce the role of pharmacy benefit managers in insulin pricing.
If successful, Ghaly believes the price of California-branded insulin will be so low that patients will be able to buy it off the shelf rather than through their insurance plan.