California is diving into the prescription drug business, attempting to achieve what no other state has done: produce its own brand of generic insulin and sell it at below-market prices to people with diabetes like Sabrina Caudillo.
Caudillo said she feels like a “prisoner” to the three major pharmaceutical companies that control the price of insulin, which ranges from $300 to $400 per vial without insurance. The price Caudillo paid in 2017, when she was diagnosed, is etched into her memory: $274.
“I remember crying my eyes out at CVS and realizing it’s going to be like this for the rest of my life,” said Caudillo, 24, a college student who lives in La Puente, in Southern California. She now has insurance that covers the entire cost of the lifesaving drug but still has trouble affording her insulin supplies and paying the monthly premium for her plan.
“This disease is really expensive, and I’m barely making it every month,” Caudillo said.
Gov. Gavin Newsom’s administration said roughly 4 million Californians have been diagnosed with diabetes, a disease that can destroy organs, steal eyesight, and lead to amputations if it’s not controlled. One in 4 people who have diabetes and rely on insulin cannot afford it, forcing many to ration or forgo the drug, the administration added.
Newsom is asking state lawmakers to pump $100 million into an ambitious initiative to launch California’s generic drug label, CalRx, and begin producing insulin in the next few years, said Alex Stack, a Newsom spokesperson. The state is also working to identify other generic drugs it could bring to market, targeting those that are expensive or in short supply.
To start, the goal is to dramatically slash insulin prices and make it available to “millions of Californians” via pharmacies, retail stores, and mail order, said Dr. Mark Ghaly, secretary of the California Health and Human Services Agency.But state health officials are still negotiating a contract with a drug manufacturer to make and distribute insulin and have not answered key questions such as how cheaply insulin could be produced and what patients would pay. To be successful, California — and the company it partners with — must navigate a complicated pharmaceutical distribution system that relies not only on drug manufacturers but also middleman companies that work hand in hand with health insurers. Those companies, known as pharmacy benefit managers, negotiate with manufacturers on behalf of insurers for rebates and discounts on drugs — but insurers don’t always pass those savings on to consumers.