California partners with Civica Rx to produce generic insulin

This week, California Governor Gavin Newsom announced the state has struck a 10-year, $50M partnership with nonprofit drugmaker Civica Rx to produce three versions of generic insulin.

These are intended to be made available nationwide for list prices of no more than $30 a vial.

Production is slated to begin in late 2023 at Civica’s Petersburg, VA plant, and Food and Drug Administration approval will be required. This deal advances California’s CalRx initiative to produce and distribute generic drugs at low costs; according to a Newsom administration official, the low-cost insulin will be available to state residents through mail-order and retail pharmacies. This is the first state-level partnership for Civica, a health system collaborative whose members now cover a third of all US hospital capacity.

The Gist: Since Congress capped insulin copays for Medicare beneficiaries at $35 per month, there’s been a remarkable sea change in the pricing of the drug. Last week, Sanofi joined Eli Lilly and Novo Nordisk, the three of which together control 90 percent of the US insulin market, in dramatically reducing insulin list prices and capping out-of-pocket costs (including for the uninsured), bringing them in line with the costs now paid by Medicare beneficiaries. 

Given that most Americans needing insulin are already covered by these policies, the impact of California’s initiative may be muted. However, it sets an important precedent for state partnership in pharmaceutical production that will surely expand to other drugs (Newsom stated generic naloxone could be next)—and works to position Newsom as an advocate for lower drug costs, should he seek higher office. 

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