As manufacturing trends have progressed from offshoring to nearshoring to onshoring, California seeks to go a step further with manufacturing low-cost biosimilar insulin with the launch of the in state drug label: "CalRx." California Health and Human Services outlines the details of reducing the cost of insulin in it's May 2022-23 budget summary as:
The downstream impacts of the market failure for affordable insulin impacts California and its residents. National data suggests as many as 1 in 4 diabetics cannot afford their insulin, and thus ration or stop taking insulin altogether. Affordable insulin is critical for Black, Brown, and lower income Americans because they are much more likely to have severe diabetes-related complications, such as renal disease and amputations. The May Revision includes $100 million General Fund one-time for the CalRx Biosimilar Insulin Initiative to implement partnerships for increased generic manufacturing of essential medicines under Chapter 207, Statutes of 2020 (SB 852). Through a contractual partnership, the Department of Health Care Access and Information (HCAI) will invest $50 million towards the development of low-cost interchangeable biosimilar insulin products and an additional $50 million towards a California-based insulin manufacturing facility.
CalRx biosimilar insulin products are expected to be a fraction of the current market price of over $300 per vial and would disrupt market forces that keep insulin products unnecessarily high. Many Californians, such as the uninsured, underinsured, and those with high deductible plans would benefit significantly from low-cost insulin that is broadly available.
While Michigan and Utah are seeking similar initiatives, the knock-on effect arising from the sheer size of California's market power could push insulin prices down across the nation. In AP News' report, California Health and Human Services Agency secretary Dr. Mark Ghaly stated:
he hopes a state as large as California making its own insulin would significantly diminish the role of pharmacy benefit managers in insulin pricing.
If successful, Ghaly said he thinks the price of California-branded insulin would be so competitive that patients could buy it off the shelf cheaper than going through their insurance plan.
"We expect to save hundreds of millions of dollars for California because of this," Ghaly said. "This gives us an opportunity to create a blueprint for healthcare affordability that has been so far out of reach for states and, frankly, the federal government, and it's really exciting to see where it can go."