Home>Articles>California’s $100 Million Low-Cost Insulin Manufacturing Gamble

California Governor Gavin Newsom speaking at the State of the State address in Sacramento, CA, Mar 8, 2022. (Photo: Sheila Fitzgerald/Shutterstock)

California’s $100 Million Low-Cost Insulin Manufacturing Gamble

‘There are a ton of federal regulations on everything from construction to storage of insulin, to manufacturing, to hiring’

By Evan Symon, July 7, 2022 6:17 pm

Governor Gavin Newsom confirmed on Thursday a plan to spend $100 million of state funds to make low-cost insulin in the state, drawing both praise and criticism.

In the last few decades, insulin prices in the U.S. have skyrocketed, with one insulin vial going from costing $21 in 1999 to $332 in 2019. While federal efforts have been made to halt the high climb, including a bill in Congress trying to cap insulin prices per month at $35, California has also quickly made headway into reducing prices. The state tackled the manufacture of generic pharmaceutical drugs in 2020, then swiftly moved on to insulin.

Earlier this year, the Assembly, Senate, and Governor Newsom agreed that California should begin making it’s own low-cost, generic insulin, and set aside $100 million in the new budget for it. Once the over $300 billion budget was passed late last month, so was the insulin program, prompting Governor Newsom’s office to release a press release noting the new program.

“Want insulin? California will be producing our own insulin to make it cheaper and more affordable for everyone,” exclaimed Newsom’s July 1st press release. “The budget invests $100 million to develop and manufacture low-cost biosimilar insulin products to increase insulin availability and affordability in California.”

However, not much else was known about the program until Thursday, when Newsom released a statement on where the $100 million will be allocated, as well as hoping the program will create a better supply chain for the drug in the state, and that new jobs with fair salaries will come out of the program.

“Nothing epitomizes market failure more than the cost of insulin,” said Newsom on Thursday. “Many Americans experience out-of-pocket costs anywhere from $300 to $500 per month for this life-saving drug.”

Specifically, $50 million of the program will be going to developing the generic insulin and surrounding products to best optimize them. The half  will go towards building a factory to produce the insulin, with the location still not being known as of Thursday.

Challenges ahead for California’s insulin program

While many healthcare advocates have praised the plan for offering insulin cost relief for Californians, skeptics say that California’s program will meet many non-anticipated challenges.

“There are a ton of federal regulations on everything from construction to storage of insulin, to manufacturing, right down to who can be hired in facilities making this,” explained Carla Chavez, a consultant on manufacturing facilities, to the Globe on Thursday. “Where they choose to make the insulin, for example, can have huge political consequences. These are pretty good paying jobs, even down on the line. Do you build in in a central location, say Modesto, so that drugs will have a more equal route to travel and generally save on salary? Or do you go for LA, where these jobs are very much wanted? Or do you go with the Bay Area and score some brownie points with the local leaders? Or is it closer to rail lines or major trucking hubs or ocean access? You’re going to make lawmakers mad no matter what you do, but something of this magnitude can maybe make people less favorable towards you for being snubbed. While not exactly the same, other states have felt this when recommending facilities for foreign companies to move to, essentially helping one depressed city by ignoring all the others.”

“And that is just one consideration that can take a lot of time to look at. Making your own insulin sounds a lot easier on paper. This is highly regulated, and everything around this has miles of red tape. Jut like with the pharmaceutical drugs, I really hope the state has thought all of this through. $100 million seems like a really lowball estimate here too with what they have on the road ahead of them.”

More details on the insulin program are expected soon.

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134 thoughts on “California’s $100 Million Low-Cost Insulin Manufacturing Gamble

  1. “You’re going to make lawmakers mad no matter what you do…”
    So…. it’s not health care, it’s all just political?
    And this “life saving” project won’t be realized any quicker than the promised “water storage” projects have been. But, gosh, it all sounds awesome as a campaign promise!

    1. All the more to get himself reelected. Odd that for all this he doesn’t cite WHY prices are high and why he can do it cheaper.

  2. This sounds good, but you’ll have to excuse me for thinking it’s just another taxpayer funded slush fund for Gruesome’s donors.

    1. I agree. This is lunacy. A friend in the pharma industry told me about how strict the quality control needs to be to satisfy regulators. One incident of contamination, deliberate or accidental, and the program will go up in smoke. The liability will fall on the shoulders of taxpayers, of course.

  3. Calif’s gov & staff will most likely do the same job they have done at the DOJ, DMV, and the EDD. Trust me, you don’t want to of hear the countless thousands of horror-stories, including the recent illegal/dangerous/mind-boggling release en masse of sensitive data at DOJ.

  4. This from the guy who is “building” the 100 BILLION dollar choo choo from no where to no where? Rots of ruck with that.

  5. This idea of Newsoms’ is much like his COVID testing lab he opened in LA area, FAIL. Politics do not belong in healthcare, PERIOD. Oh wait, let’s appoint a study group or a committee to research this idea, pay them for two years and then cancel the idea. That’s right, Democrats funding Democrats.

  6. It can only be done if California ignores the thicket of interlaced laws designed to stop everything. That is the only way the state can, and why the private sector can’t. The state would be smarter to but the insulin from India and act as a distributor.
    BTW, California’s stem cell “industry” is leaking money like a sieve as science has moved on.

  7. It’s just another way of helping big pharma make more money and corner the market. If they make it here than,than can have power totally.he only helps pharma,unions and illegals.very fishy.

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