Insulin prices: Why California, Washington and Maine may produce treatments

Rising insulin prices have created a crisis that’s leading some states to consider drug manufacturing for the public good. Insulin’s price tag has skyrocketed 600% in 20 years, though manufacturing costs haven’t.

At least three states — California, Washington and Maine — have been pushing for public pharma. Each passed legislation signaling intent to tackle issues related to costs and access within their borders by having a hand in the crafting and delivery of insulin.

Nor are they alone. In March, Civica Rx, a consortium made up of health care providers, insurers and philanthropists, among others, announced its intention to manufacture insulin and distribute it without making a profit while driving price transparency industrywide.

The federal government is taking aim at insulin affordability and access, too. The House of Representatives in April passed The Affordable Insulin Act, which would limit the cost of insulin to $35 a month for Americans who have health insurance. The Senate has not yet acted on it.

In mid-May, the Democracy Policy Network held a web conference on what it called publicly owned pharmaceutical enterprises that aim to develop, manufacture and distribute medicines in the public interest, bypassing big drug companies to reduce prices and solve supply chain issues. Insulin is getting the most attention — and action — which isn’t surprising, since 30 million Americans live with diabetes, including 1.6 million adultsover age 20 with Type 1 diabetes who rely on insulin. A lot of them cannot afford a treatment that was first developed more than 100 years ago.

Madison Johnson, chapter leader of Washington state’s Insulin4All, who has lived with Type 1 diabetes for 15 years, said two years ago insulin cost more than $200 a vial. Someone with insulin-dependent diabetes may use one to five vials in a month — and sometimes even more. Prices have not since gone down.

More than 1 in 4 patients skip or ration their insulin because they can’t afford it. But not taking needed insulin could be deadly. She said a person who needs insulin could die within three days without it.

Price increases have far outpaced even many other drug costs and are well above increases for other U.S. goods, she said. “The cost of insulin has just skyrocketed, with no big changes to the formula whatsoever.”

A medication crisis

Insulin makers have made a lot of money off insulin in recent years, according to Johnson:

• Three large companies control 90% of the global insulin market.
• They change the molecules in their insulin product “just ever so slightly and re-patent them to extend patent protection,” a practice called “evergreening.” One brand has held a patent for 37 years, she said.
• Most vulnerable are those who are under- and uninsured.

Civica said people who are Native American, Hispanic or Black are the most apt to suffer debilitating and preventable challenges that result from rationing, because they are more likely to be uninsured and underinsured.

Nor are skyrocketing prices the only significant issue, Dana Brown, director of health and economy for the Democracy Collaborative, said during the online discussion. Rather, that is “intimately intertwined with a decline in clinically meaningful innovation, recurring shortages of essential medicines and increasing regulatory capture.”

She added that’s to be expected in an industry “so singularly organized around the goal of maximizing profit.”

A federal approach?

Twelve Republican members of Congress joined Democrats recently to pass the Affordable Insulin Now Act.

The bill was originally included in Biden’s stalled “Build Back Better” bill, before being plucked out and moved forward on its own. Passing in the Senate will require support from 10 Republicans and every Democrat.

Should that happen, about 20% of Americans who have large-employer insurance coverage would save money on the cost of insulin based on 2018 copayments, according to theKaiser Family Foundation. In small group and individual market insurance plans, 31% and 26% paid more than $35 a month and would save.

The cost of insulin without insurance can be as high as $1,000 a month, depending on brand and other factors including how much one needs to take, according to a 2020 Kaiser Family Foundation report.

For those who are insured, there are many different cost-sharing requirements, so even the insured could pay hundreds each month — or bear little cost.

Brown said public medication enterprises can define their bottom lines differently— perhaps in terms of contributions to public health, how they help local economies and make equitable access integral to their operation. Capping the co-pay isn’t enough because it doesn’t help those who lack insurance. And it lets drug companies continue to charge whatever they want, forcing insurance companies to pay it. That’s what the bill before Congress does, too.

Critics say that’s likely to raise insurance costs, as well, so consumers are actually still burdened.

Freedom to innovate

The United States is not a leader in trying to wrestle medication costs under control. Other countries have done this, said Brown. Brazil supplies more than 100 medicines to low-income populations through public pharmaceutical initiatives.

After studying the issue for years, Brown said she believes there’s a lot that smaller states can do, based on what’s happening around the world. For instance, a public university system in Colombia makes immunotherapy at a patient’s bedside.

“Public pharmaceuticals exist around the world, from Sweden to India, the United Kingdom, Thailand — they engage in research and development, manufacturing and distribution. The state of Massachusetts produces some vaccines in the public sector and other states like Michigan used to,” she said.

She added, “Together, these public pharmaceutical institutions have been used time and again to combat high prices, medicine shortages, corporate influence over politics and as a way to invest back in society.”

Many options exist that don’t include building a state-operated manufacturing plant, Brown said. Public and private entities can partner to make and distribute medications.

That’s very much on the table for the three states that recently passed bills aimed at crafting a version of medications for the public good.

California

California Gov. Gavin Newsom signed SB852 in 2020, creating Cal Rx, through which the state can sell prescription drugs. At the time, he said the bill would help regulate drug costs, increase the accessibility of important drugs like insulin and epinephrine and tackle medication shortages.

Now a California Senate health committee is looking at public medications, something Newsom proposed in his budget two years ago, authorizing California to make generic medication, including insulin.

Public medication pushes the drug manufacturing market to control itself, California Sen. Richard Pan, a physician who represents Sacramento and chairs that health committee, said during the online conference.

But he noted that manufacturing medication is not a simple task. It’s highly regulated and takes sophistication and capital resources. While California is authorized to do it, the state seeks partners with experience. The state has made clear, though, that it will step in when faced with drug profiteering, he said.

Pan is sponsoring another bill, SB838, with the governor’s support to get things going. Newsom supports a $30 million investment to explore partnering and another $50 million to set up a manufacturing plant. They’re considering four other drugs in addition to insulin.

California’s flagship project is creating biosimilar insulin, said David Toppelberg of Cal Rx. That’s the generic label under which California is exploring making and selling low-cost insulin. Toppelberg said it began as an executive order from Newsom and has been codified into law.

When Cal Rx studied which drugs to consider producing, insulin rose to the top because it has large demand, costs a bundle and has very few manufacturers. The state’s best bet, he said, is likely partnering with manufacturers who will produce insulin for California on contract. They don’t really want to make their own insulin, but California also doesn’t want to do a traditional procurement contract.

The state wants a say in which drugs are made and how they’re marketed and distributed.

Cal Rx has teamed with others, including patent experts at Johns Hopkins University and those skilled in saving payers and payees money. Toppelberg said Cal Rx seeks three benefits: great access, California-related branding and low-cost medication.

The other challenge is how to distribute the drug so it reaches the people who need it, he said.

Washington

Collaboration is appealing across state public medication efforts.

Washington state’s Sen. Karen Keiser said the bill she co-sponsored, SB5203, succeeded because states can work together and fold in other partners like AARP, which is a strong supporter of cutting what consumers pay for medication.

Washington was inspired by what California did and created stopgap measures like drug cost transparency and price caps. But Keiser said antitrust is a big issue “so we have to introduce competition to take this on.” SB5203 gives the Washington Health Care Authority some flexibility to partner with California or another state, or take on manufacturing itself or find other partners, she said.

Keiser called insulin a “poster child,” but not the only drug that’s out of reach for many in need because of cost. Drugs to treat multiple sclerosis, for example, fall into that category.

Donna Sullivan, chief pharmacy officer for Washington, said they’ve had a lot of conversations with California about contracting with a manufacturer to create insulin for them; a public manufacturing cooperative is a possibility.

They also have looked at “Utah’s solution,” a discount card for residents. The idea is to negotiate a steep discount with manufacturers who already produce insulin, said Sullivan, but noted that would not cut costs for the Medicaid program, since there are strict federal rules on rebates and Medicaid is funded with a state-federal match.

Maine

Sen. Trey Stewart, of Maine, said his state is very small and geographically distant from other states tackling the issue, which could complicate its efforts.

After a former classmate told him how hard it was to get insulin for his son, Stewart convened a group of stakeholders in an informal commission. Then Maine passed a bill to formalize the commission and offer government support to explore options for creating public medication, he said.

Maine’s efforts include working with a research institute at the University of Maine and with some of the private sector groups interested in competing with big drug manufacturers. They’re also studying interstate compacts. Given Maine’s small size, it may not have a big enough market, so they’re exploring partnerships. Maine is petitioning the federal government to take action, too.

A health care system venture

An effort is underway within the health care industry to lower the cost of insulin, as well. Civica RX recently announced plans to disrupt the generic insulin market within the next two years.

Civica is a nonprofit generic pharmaceutical company created by a consortium of hospital systems and philanthropies in 2018. It describes its purpose as tackling chronic drug shortages and unpredictable price spikes. It began with Intermountain Healthcare, headquartered in Utah. Besides hospitals, the effort is supported by the Blue Cross/Blue Shield Association and independent organizations, insurers and philanthropies.

Civica already provides about 60 generic sterile injectable medicines in various dosage forms to more than 55 hospital systems, according to its press material.

Civica has big plans in the immediate future to make insulin accessible and affordable, by undertaking production at its manufacturing plant in Virginia. In March, Civica said its prices for several generic insulins it will manufacture in 2024, pending Food and Drug Administration approval, would be capped at $30 a vial — that’s price, not a copay — with the cost of a box of five pen cartridges costing no more than $55.

Dan Liljenquist, Civica board chairman and Intermountain Healthcare chief strategy officer, this week told the Deseret News that’s 85%-90% less than the current insulin list price. And he said the company will not make a penny off the sale of insulin.

Liljenquist earlier told the Deseret News that the cost to make insulin hasn’t risen — but the price tag rises about 11% a year, well above typical inflation.

“Diabetes is arguably America’s most expensive chronic condition and it is heartbreaking that millions of people are rationing their care and putting their lives at risk because they can no longer afford insulin,” Liljenquist said in a press release at the time. “Through mission-driven partnerships we are choosing to create a new market reality where no one is forced to ration essential diabetes medications.”

Civica said it will co-develop and manufacture the insulin, complete with clinic trials, and file necessary applications for FDA approval, the patents to be held by its Civica Foundation. It also plans to put a recommended price on the packaging and sell it to everyone for that same transparent price, based on the cost of development, production and distribution. Anyone who needs it should be able to get it, Liljenquist said.

With its development partner, GeneSys Biologics, Civica plans to make three generic insulins: glargine (generic for Lantus), lispro (Humalog) and aspart (Novolog) at its plant in Petersburg, Virginia.

Support for challenging pharma

A September 2019 YouGov poll conducted for Data for Progress and Social Security Works found majority support among registered voters for a number of policy changes referenced in the Democracy Collaborative’s “Medicine for All” report. In particular, about 70% of voters said they would support governments stepping in to produce generic drugs when prices are too high, and an even higher percentage would support allowing companies to produce generic competition.

Experts believe it’s likely that drugs publicly manufactured in one state could be sold in other states, which could expand the possibilities.

Brown said some benefits are obvious, like reducing costs for the health system and avoiding disease complications. Others are more subtle: letting people participate actively in society, stay in the workforce longer and otherwise boost the economy.