CA Governor Looks to Disrupt State’s Generics Market to Promote Affordability

California Gov. Gavin Newsom signed Senate Bill 852 into law on Monday, paving the way for California to manufacture cheaper versions of insulin and other drugs that have been in short supply in recent years. 

The passage of the bill authored by Dr. Richard Pan, a state senator from Sacramento, makes California the first state to embark on manufacturing generic pharmaceutical drugs. Newsom first proposed in his January budget that the state create its own generic prescription label in an effort to lower the cost of essential drugs like insulin, via increased market competition.

“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.”

Under the new law, California’s Health and Human Services Agency (CHHSA) is directed to enter into partnerships with drug manufacturers to make generic drugs more affordable and accessible to patients. Each such arrangement would require production of at least one form of insulin, which market experts say is especially difficult to manufacture.  

 CHHSA is also obliged to prioritize generic drugs for chronic and high cost conditions, while manufacturers will be required to make drugs available to providers, patients, and purchasers at a transparent price.

Senator Pan highlighted how the pandemic has accentuated the need for a reliable supply chain, to bring vital therapeutics such as insulin to people who require them to survive.   

“SB 852 will not only open up access to affordable drugs for millions of Californians, it is more important than ever, as the COVID-19 crisis brought to light glaring gaps in supplies of essential, lifesaving drugs, and medical equipment and supplies,” Pan said in a statement.

As list prices for insulin nearly tripled between 2002 and 2013, some diabetes patients were left with no choice but to ration the essential drug, risking potential adverse side effects and even death.  According to the American Diabetes Association (ADA), there are over 34 million Americans living with diabetes, 7 million of which are undiagnosed. 

Lisa Murdock, the ADA’s Vice President of State Government Affairs & Advocacy, is appreciative of the bill’s intentions to make insulin more affordable and is imploring the state to move swiftly.   

“We appreciate California Governor Gavin Newsom’s support for taking action toward that end. We hope the state will also take quick action to bring economic relief to those paying high out-of-pocket costs for insulin, including those who get their benefits from state-regulated health plans,” Murdock told BioSpace. “This action should be done while the Californian Health and Human Services Agency explores whether or not the state can manufacture generic insulin in a more cost-effective manner.”