California has entered a 10-year partnership with the nonprofit drugmaker Civica to provide low-priced insulin at cost to Californians with diabetes.
The state’s $50-million contract with Civica provides additional disruption in the pharmaceutical market to reduce the price of insulin. Last year, Civica and a number of healthcare organizations including Blue Shield of California announced they were collaborating to manufacture insulin at drastically lowered prices.
Under the contract terms, the cost of a vial of insulin will be $30, including manufacturing and delivery. That compares to several hundred dollars that the three largest manufacturers – Eli Lilly, Novo Nordisk, and Sanofi – have set for insulin in recent years. Because of the cost, one in four people who need insulin take less than their doctors prescribe, risking their health.
“We’re talking about lowering the cost on an annual basis by 10 times,” said Gov. Gavin Newsom at a press conference on Saturday to announce the partnership. “In the last few years, we’ve seen a tripling of cost because there are only three major players, and they tend to follow each other. It’s time for disruption.”
More than eight million Americans, and three million adults in California, are living with diabetes. Approximately one third of them need regular doses of insulin to survive. The increasing cost for those patients has been an enormous strain on their family budgets and health plans.
The nonprofit Civica was founded in 2018 by a consortium of hospital and healthcare systems that sought to reduce the prices of prescription drugs by making their own generic medicines. Blue Shield of California and 18 other Blue Cross Blue Shield plans across the country joined Civica and its CivicaRx subsidiary last year when the consortium announced it would manufacture and distribute low-cost insulin.
The federal Inflation Reduction Act passed by Congress last year placed a $35 cap on out-of-pocket costs for insulin for Medicare patients. And in January, California Attorney General Rob Bonta sued Eli Lilly, Novo Nordisk, and Sanofi, along with four pharmacy benefit managers, alleging they overcharged California patients for the medication.
These concerted efforts have had a dramatic effect on the price of insulin. Already this month, all three of those insulin producers – who collectively hold about 90% of the market share – announced substantial price reductions for many insulin products for non-Medicare patients with private insurance.
On March 1, Eli Lilly said it would cap out-of-pocket insulin costs at $35 a month. Novo Nordisk followed suit and, on March 14, said it would be lowering its list price for branded and unbranded insulin products by up to 75% beginning next January. Two days later, Sanofi announced a similar plan to cap out-of-pocket costs on its most widely used insulin at $35 for people with private insurance, beginning in January.
Blue Shield of California Chief Medical Officer Susan Fleischman, M.D., also attended the governor’s announcement and called the price cuts “a needed change for so many people with diabetes who already bear an outsized burden when it comes to the cost of health care.”
“It’s also exactly the kind of development we were looking to drive when we invested in Civica Rx’s insulin manufacturing program last year,” she said.
The California-Civica partnership will include both long- and short-acting insulins so that the entire regimen for diabetes patients is covered at a lowered cost. And Newsom said he hopes the partnership will cause prices to drop below even the $30 cap.
“I think it would be spectacular if all these other companies … dropped below this,” he continued. “I hope this does disrupt the entire market, and we see price collapse in this space.”