Governor Gavin Newsom had signed an executive order back in 2019 directing the relevant California agencies to investigate the possibility of the state manufacturing its own prescription drugs. Last week the governor announced that action was being taken to do just that. He said the state budget that was signed last week included $100 million for California to contract and make its own insulin. Part of the funds will be put toward the development of low-cost insulin products while the other part will help to fund a California-based insulin manufacturing facility. In addition to the potential job creation, it could lead to a stronger supply chain. The state has not released any type of pricing information yet, but it is expected to be “close to cost.”

With over four million Californians being diagnosed with diabetes, one in four who have the disease and rely on insulin cannot afford it, forcing many to ration or forgo the drug. The 2019 executive order instructed the Department of General Services and the California Pharmaceutical Collaborative to “develop and implement bulk-purchasing arrangements for high-priority drugs, such as those with high cost and little competition” as well as “develop a framework for enabling private purchases to benefit from the state bulk pharmaceutical purchasing.”

The idea of a government getting into the business of manufacturing drugs is certainly novel and California would be the first state to undertake such a task. Governor Newsom says that insulin is the first prescription product that the state plans to manufacture and, if successful, will pave the way for the state to manufacture other generics that residents struggle to afford.

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