California lawmakers try again to cap insulin costs

Photograph Dima Solomin

By Ana B. Ibarra for CalMatters

As many diabetics across the Golden State struggle with insulin costs, California’s efforts to make the medication more affordable have yet to yield results. This year, lawmakers will revisit legislation that would address at least one piece of the affordability puzzle.

Senate Bill 90, by Sen. Scott Wiener, a San Francisco Democrat, would limit what diabetics pay out of pocket for their insulin — prohibiting state-regulated health insurance plans from imposing a deductible on those prescriptions and capping the copay at $35 for a 30-day supply. The current copay limit is $250.

The bill, advocates say, is meant to provide some immediate relief to consumers as the state   works on a more ambitious plan to develop its own low-cost insulin. That’s expected to take at least two to three years.

California legislators have tried passing cost-sharing caps in the past without success. Last session’s bill, carried by former Republican Sen. Patricia Bates of Laguna Niguel, died in an Assembly committee. Despite bipartisan support, the insurance industry pushed back, arguing that capping costs only on the consumer’s end does little to tackle the underlying issue: the list price of insulin.

“I would never suggest that the only problem is copays; overall cost is also a problem,” Wiener said. “We absolutely need to limit what consumers are paying out of pocket at the same time that we do this other structural work around the cost of insulin.”

Twenty-two states and the District of Columbia have enacted caps on copays, ranging from $25 to $100 a month, said Dr. Francisco Prieto, a family physician and advocacy chair for the American Diabetes Association, which is sponsoring Wiener’s bill. 

“We are the largest state in the union, so we are also the largest target,” for the opposition,  Prieto said. “We have not been able to get this through, but I fully expect that we will, hopefully this year.”

In California, an estimated 3.2 million people are diabetic, and many of them rely on insulin. An analysis for last year’s similar copay cap bill estimated that there are about 118,000 diabetics with insurance plans that would be subject to the state cap.

Last year, Congress passed a cap of $35 a month for diabetics covered by Medicare, the federal insurance program for seniors and people with disabilities, but abandoned a similar effort for people covered by private insurance. That law went into effect on Jan. 1, and in California it is expected to benefit about 108,000 people. Each patient is expected to save about $339 a year, according to the U.S. Department of Health and Human Services.

The burden of insulin costs has a long history  — stories about people rationing their medication and relying on the emergency room for their uncontrolled diabetes are common throughout the country. A recent national survey found that approximately 16.5% of insulin users ration their medication, usually by delaying the purchase of it. Rationing insulin leads to poor control of diabetes and is linked to increased instances of strokes, heart failure and kidney failure.

Compared to other countries, the U.S. is known to have the highest price tags for insulin — an average of $98.70 per vial, compared to $12 a vial in Canada, according to a 2020 analysis by the Rand Corporation, a public policy think tank. People usually need two to three vials a month, and some may need more. What people pay at the counter depends on their insurance coverage. People without insurance are on the hook for the full cost.

One recent drug spending report from California’s Department of Managed Health Care noted that among the 10 costliest brand name drugs insurers paid for in 2021, half were diabetes medications and three of those were insulins. Humulin, a short-acting insulin, was the most prescribed brand name drug after the Pfizer and Moderna COVID-19 vaccines, according to the report.

To address costs on the manufacturing side, the state allocated $100 million in the 2022-23 budget for its CalRx Biosimilar Insulin initiative, which is the state’s plan to develop, manufacture and distribute its own insulin products. Half of that money is reserved for the development of insulins and the other half is reserved for a manufacturing facility in California. That money is available to be used through 2025-26.

The idea is that if the state can produce its own insulin — with the help of a pharmaceutical manufacturing partner — then it can set prices below current market rates.

So far there have been few updates from the state on the progress of  the initiative, and the state hasn’t announced who it will partner with to manufacture its insulin. Experts say that because no other state has attempted this before, a manufacturing partner will be key in guiding the state through the approvals it needs from the U.S. Food and Drug Administration.

How long would this take? In a conversation published in December’s American College of Physicians Journals, Dr. Mark Ghaly, the state’s health secretary, said the plan is for California to have insulin on the shelves in the next 24 to 36 months.

A recent analysis in the Journal of the American Medical Association noted that if California succeeds, CalRx insulin could potentially be sold throughout the country, driving competition beyond state lines.

Among the initiative’s potential challenges:  sufficient funding to go forward. The initiative was launched in a flush budget year, but as California builds up its program, it will need ongoing dollars to sustain it and counter any potential backlash from other insulin makers, the analysis authors wrote.

As part of California’s push against high prescription drug prices, state Attorney General Rob Bonta last month announced  he is suing drugmakers Eli Lilly, Novo Nordisk and Sanofi, along with pharmacy benefit managers CVS Caremark, Express Scripts and OptumRX. The suit cites unfair and deceptive business practices that inflate the price of treatment. Benefit managers serve as middlemen, negotiating prices with drugmakers and pharmacies on behalf of an insurer.

Wiener said he is watching both the attorney general’s case and the administration’s insulin initiative, but in the meantime he hopes this is the year the state passes its own caps on what consumers pay at the counter.

“We want to provide relief now,” he said.

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