Newsom announces $50 million contract to make California's own brand of insulin

In a video posted to Twitter last summer, Newsom hyped a $100-million budget allocation for the plan. He said “$50 million will go towards the development of low cost insulin products and an additional $50 million will go towards a California based insulin manufacturing facility.”

With approval by the U.S. Food and Drug Administration, the contract announced Saturday is expected to deliver insulin to California in 2024, Newsom said. Civica will begin manufacturing the drug later this year under a 10-year agreement with the state, the provisions of which go into effect once the first delivery is made, Newsom said.

Ghaly said Saturday that the journey to produce insulin began with the question of how California could harness its power as the most populated state in the nation to disrupt the pharmaceutical market.

The process has taken time because “this has been something we sought to do right,” Ghaly said.

Anthony Wright, executive director of Health Access California, said one could argue California’s effort has already made a significant impact.

Eli Lilly & Co. announced plans earlier this month to reduce the price of its insulin products as much as 70%. Novo Nordisk made a similar announcement to cap out-of-pocket costs this week and Sanofi followed suit Thursday.

Last year Congress also passed the Inflation Reduction Act, which capped insulin copays at $35 per month for patients covered by Medicare as of Jan. 1.

“I don’t want to overstate that this would be the only factor, but California and other efforts to manufacture competing insulin products was a contributing factor to that decision for the incumbent insulin manufacturers to lower their prices,” Wright said.

California also followed other states in January and sued the nation’s three largest insulin makers over the high cost of the drug.

At a news conference Thursday announcing the lawsuit against Eli Lilly, Sanofi and Novo Nordisk, California Attorney General Rob Bonta said the companies are finding ways to “aggressively hike” the price of insulin at the expense of many patients.

Although the Legislative Analyst’s Office has questioned the feasibility of Newsom’s plan, Wright said it makes sense for the state to continue down the path because it pressures drugmakers to reduce costs.

“If we don’t sell a single vial of insulin, but the price drops, that provides a savings for our Medi-Cal program, for CalPERS and for all the ways that we’re buying for millions of Californians,” he said.