California To Make Its Own Insulin, Generic Drugs In Effort To Lower Costs

California could make its own insulin and other prescription drugs in an effort to lower costs under a bill Gov. Gavin Newsom announced he signed into law Monday.

Newsom first proposed that California create its own prescription drug label in his January budget proposal. The legislation Newsom signed, Senate Bill 852, attempts to implement that plan by directing California’s Health and Human Services Agency to explore partnerships with drug manufacturers that could make drugs more affordable and accessible.

California wouldn’t develop new drugs under the law, but would instead try to make cheaper versions of generic drugs, or drugs that are no longer protected by patents.

The agency will have to explore whether such an arrangement would be legal and cost effective. The law specifies that any arrangements include production of at least one form of insulin, which about 7.4 million Americans with diabetes take to regulate blood sugar.

Drug market experts say insulin is a particularly difficult drug to manufacture, but if California finds a way to make its own, it could reap significant savings. Between 2002 and 2013, insulin’s list price nearly tripled, prompting some diabetes patients to ration the life-saving drug.

“California is using our market power and our moral power to demand fairer prices for prescription drugs,” Newsom wrote in a statement. “I am proud to sign this legislation affirming our ground-breaking leadership in breaking down market barriers to affordable prescription drugs.”

Despite the potential for savings, it’s unknown how much it might actually cost for California to manufacture its own insulin and other drugs, according to an analysis by the Assembly Appropriations committee. In January, the Legislature’s financial analyst pointed to the plan as one part of the governor’s budget proposal where lawmakers should proceed with caution because of its possibly high price.

That means the COVID-19 induced recession may complicate implementation of the bill, even as lawmakers say the pandemic has underscored its importance.

State Sen. Richard Pan, the Sacramento Democrat who authored the legislation, said the measure could prevent future shortages by making drugs more widely available. He pointed to medicine shortages during the pandemic of drugs needed to intubate people with the disease and of hydroxychloroquine, a drug that was seen as a potential treatment until studies showed otherwise.

“During COVID, we are facing challenges with supply chains, whether it’s testing, PPE and even medication,” Pan said during a committee hearing on the bill last month. “This is going to be a very important step to… ensure we have the expertise and supply chain necessary to meet the needs during crises like COVID-19.”


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