Earlier this year, Gov. Gavin Newsom announced a partnership between the state of California and Civica RX to manufacture insulins for the CalRx Biosimilar Insulin Initiative, an effort to lower the cost of insulin for diabetics in California.
“Gov. Newsom came into office focused on doing something about the cost of insulin and talking about public production, and so when Civica set out to make affordable insulin available, it just made sense to determine if there was an alignment,” Allan Coukell, senior VP of public policy at Civica RX, told State of Reform.
Insulin is a hormone that is produced by the pancreas, and regulates glucose levels within the blood. While insulin is a naturally occurring hormone, issues with the pancreas can lead to the lack of production of any or enough insulin, which can result in diabetes. Type 1 diabetics don’t produce any insulin and will require insulin therapy for their remainder of their lives. Individuals with other types of diabetes, such as Type 2, gestational, Type 3c, and others, also rely on insulin therapy.
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For this partnership, California is investing $50 million in the development, manufacturing, and distribution of Civica RX insulins, which include glargine, lispro, and aspart. Each insulin type will be available in vials and prefilled pens under the CalRX label.
“The partnership between Civica and California is a milestone on California’s path to ensuring equitable access to essential medicines through the power of the public sector,” Allison Hardt, advocacy manager for the diabetes advocacy organization T1International, told State of Reform. “What we know is that the Big Three insulin manufacturers (Eli Lilly, Sanofi, and Novo Nordisk) have effectively run an insulin cartel for the past few decades, raising the price of insulin in lockstep.”
Raising the prices of insulin in lockstep has led diabetics to ration insulin, which can rapidly lead to death by diabetic ketoacidosis—and has. Rationing insulin means that diabetics are taking lower doses of insulin than their bodies require, and are delaying picking up insulin prescriptions due to affordability issues. T1International states that one in four Type 1 diabetics have rationed insulin due to price, which can cost some diabetics $1,500 per month out-of-pocket.
On May 10th, the CEOs of the Big Three were called to the US Senate for a hearing to investigate pricing practices, with Sen. Bernie Sanders having led the charge. While the Big Three announced cuts to the list price of some insulins this past March, Hardt said that this did not solve the insulin price crisis in the US.
“They are only for some insulins, not all insulins are accessible at every pharmacy, and perhaps most critically, the system that allowed the price gouging to happen in the first place remains the same,” Hardt said. “There is nothing stopping the Big Three from raising the prices again, which is why we are fighting for a true price cap in Congress and why we want more public sector involvement in the pharmaceutical market.”
This year, President Biden’s administration capped the copay amount at $35 per month for individuals on Medicare for Part-D-covered insulin products. The president supports making insulin affordable and accessible to not only Medicare beneficiaries, but to all people with diabetes.
Hardt is excited for Civica to provide competition in the insulin market, which the Big Three have historically not had. Civica is expected to have manufacturer-suggested retail prices of no more than $30 per 10mL vial, and no more than $55 for a box of five 3mL prefilled pens.
“The pharmacy will buy insulin from Civica or from the wholesaler that’s carrying Civica insulin, or in the case of California, CalRX insulin,” Coukell said. “The pharmacy controls the price to the end customer, with the caveat that if you’re covered by insurance, then your insurance benefit design controls your out-of-pocket cost.”
Coukell believes publishing a maximum recommended price is unprecedented in the pharmaceutical space. He thinks it will allow for the sale of insulin at the lowest sustainable cost, while ensuring that any markup that gets added after the insulin leaves Civica is fair.
“We recognize that a pharmacy needs to make a margin on the product, and we want it to be a fair margin—one that’s good for consumers—and so we’ve set that maximum recommended retail price,” Coukell said. “We’ll do our best to only sell to pharmacies that agree to abide by that pricing policy. We don’t have the ability to dictate what a pharmacy charges, but our goal will be to only sell to pharmacies that agree to sell at that price or lower.”
The insulin vial and prefilled pen packages will have a QR code that will take individuals to a page with the maximum recommended price, and if an individual finds themself in a situation where they’re being charged more than the recommended price, they can report it to Civica RX and locate another pharmacy. Coukell told State of Reform that he is not currently aware of California being allowed to issue fines or penalties for pharmacies charging more than the suggested retail price.
He also said Civica hopes that many or most health plans will cover its insulins for diabetics who are insured; he said Civica has been having positive conversations about this with several health plans.
“By ensuring CalRX insulin is available through a variety of pharmacies and purchase paths in California, this move has the power to disrupt the hold the insulin cartel has on the market,” Hardt said.
“Beyond this initial contract for $50 million to partner with Civica to produce California insulin, there’s still the additional $50 million allocated for the California manufacturing facility. It seems like there’s potential in the future, after the initial ten-year contract is up, for California to really take ownership of the process, start to finish, by investing in their own facility and moving to full public manufacturing.”
Before Civica can get its insulins on the market, they require approval from the FDA. Civica expects to file their first application for its first insulin, glargine, in 2024. To inform the public about a reduced-cost insulin, Civica plans to make an announcement and work with health plans to spread awareness, Coukell said. Civica insulins will be manufactured at a plant in Petersburg, Virginia, and Coukell said that major construction on the facility is complete.
“In the next year, we will do our clinical trials, we’ll do our first manufacturing runs, [and] we will begin working on the FDA submission, so we have many important milestones coming up and a lot of activity,” Coukell said.
Potential conflicts of interest
Civica RX has several initiative partners, and Coukell said 20 organizations have contributed funding towards the initiative, with the Juvenile Diabetes Research Foundation (JDRF) being one of them. JDRF is a nonprofit organization that funds Type 1 diabetes research, with many of their programs funded by corporate sponsors, including Eli Lilly and Novo Nordisk from the Big Three. JDRF’s website says Eli Lilly contributes between $1 million to about $2.5 million annually, while Novo Nordisk contributes between $500,000 to about $1 million annually.
Another Civica initiative partner is Beyond Type 1, another diabetes advocacy organization founded by the youngest Jonas Brother, Nick Jonas. In April of 2021, diabetic advocates pushed for an insulin safety net bill in Maine, known as LD 673. The bill authorizes pharmacies to dispense a 30-day supply of insulin to diabetics who are in urgent need, with an insurance copay cap of $35.
While LD 673 was signed into law that year, Beyond Type 1 wrote a letter in opposition to block the insulin safety net bill. In the letter, Beyond Type 1 stated that they believe high-quality, modern insulin must be available to diabetics regardless of employment or insurance status, without barriers and at affordable price points.
“We would like to share our resource that renders much of this legislation duplicative,” stated Beyond Type 1’s letter. “LD 673 could create not only administrative burdens to the Maine government and pharmacies in the state, but also unintended additional out-of-pocket expenses to people living with diabetes.”
The organization suggested that diabetics use their getinsulin.org website, which diabetes advocates say is problematic because it’s supported by Big Pharma. While the website connects diabetics to resources, it does not address the out-of-pocket costs of insulin that diabetics in the country face.
“I have no knowledge of that,” Coukell said. “All I can say is they are helping us to make insulin affordable for everyone who needs it.”
Plans to expand access to all states
Coukell told State of Reform that Civica’s ultimate goal is for their insulins to be widely available in every state across the country.
“Our goal as a nonprofit is not to have market shares, it’s to have market impact, so we’re confident that by bringing these insulins to market at a low and transparent price, we will help with insulin affordability across the country,” Coukell said.
Hardt thinks the partnership between Civica and California paves the way for more states who are considering public manufacturing—such as Maine and Michigan—to be bold in their next decisions. T1International is heartened to see bipartisan push in Michigan, where Democratic Gov. Gretchen Whitmer is working with Republican State Sen. VanderWall to develop and distribute high-quality and low-cost biologics in Michigan.
“Public manufacturing, like insulin access and affordability, is a bipartisan issue—it’s common sense to want to use the public sector to make the pharmaceutical supply chain more resilient and efficient, and assure equitable access to essential medicines,” Hardt said.
“The National Institute for Health Care Management (NIHCM) recently cited overreliance on other countries and lack of supply chain visibility as two major factors contributing to the current record high drug shortages being experienced in the US, and domestic public manufacturing will help with both of those challenges.”