Can California Disrupt the Insulin Market?

November 16, 2022

California’s 2022 – 2023 budget allocates slightly more than $100 million to establish the CalRx Biosimilar Initiative – where California will develop, in partnership with a contract manufacturer, biosimilar insulin products and sell them at very reasonable prices. California intends to be selling insulin products, at a massive scale, within a few short years.

37 million Americans—about 1 in 10—have diabetes.  Almost 6 million take insulin.[i] Insulin pricing has garnered a great deal of attention.  As noted in a 2022 publication of The Lancet, between 2007 and 2018 “the cost of some insulin products [] increased by more than 200%.”[ii] In 2020 the annual out-of-pocket costs incurred by Medicare Part D beneficiaries ranged from approximately $500.00 to almost $1,000.00, with the average being $572.00.[iii]

It’s not just cost, but the social and equity impacts caused by high-priced insulin that are concerning. The California agency with development responsibility for the Insulin Initiative, the Department of Health Care Access and information (“HCAI”), recently explained why its Insulin Initiative is so important.  As HCAI notes, “insulin inaccessibility” impacts more than 10% of Californians diagnosed with diabetes, including 200,000 persons who are uninsured or underinsured, which disproportionately harms Black and Latino residents. HCAI continues that as many as 1 in 4 diabetics nationally cannot afford insulin, and thus must ration needed insulin, or put at risk food and shelter. A study published in the Annals of Internal Medicine in 2022 found that “1.3 million Americans — 16.5% of adults with diabetes that use insulin — rationed doses in the past year.”[iv]

HCAI recently issued a Request for Information (“RFI”) seeking information from potential partners concerning the development, production, procurement, and/or distribution of three biosimilars for insulin drugs. The RFI response time has closed, the RFP has not yet been issued.  The RFI reports that “Utilizing insulin less than prescribed by physicians leads to poorly regulated blood sugars and contributes to severe disease such as diabetic ketoacidosis, renal failure and neuropathies that lead to limb loss.” California hopes to “target failures in the market for generic drugs”[v] with its Insulin Initiative.

California is acutely aware of pharmaceutical pricing issues, given that California is one of the largest purchasers of prescription drugs in the country. California is responsible for a large portion of the pharmaceutical procurement costs for its 15 million member Medi-Cal program and its 1.5 million CALPERS members (its pension program). Through its premium subsidy support, California also bears some cost for its Covered California program, with 1.7 million covered lives.  Finally, California has a substantial uninsured population (approximately 3 million). California’s healthcare regulator, the Department of Managed Health Care, reported that based on 2018 health plan data, 9 of the 25 costliest brand-named drugs sold in California were insulin products.[vi]  Thus, reasons California, it both has the resources and the need to plunge head-first into the insulin market.

Attention paid to insulin pricing contributed to the development of a biosimilar pathway for insulin products. But there is debate about whether biosimilars will provide noticeable cost relief. For example, in July 2021 the FDA approved the first interchangeable biosimilar insulin product, Semglee®.[vii]  The 2022 Budget Proposal that underlies California’s decision to fund the Insulin Initiative states that the list price for Semglee® is only $14.00 less than the price for the reference branded product (others peg the price difference at $20.00).[viii]  Interestingly, Express Scripts, a large PBM, recently announced that it has accorded Semglee® preferred formulary status.  Additionally, CVS recently included various insulin biosimilar products on its preferred formulary.[ix] (While beyond the scope of this discussion, there is debate over whether PBM formulary placement for branded products significantly reduces costs.)

Some experts predict that biosimilar insulins sold through different pathways could result in substantial price decreases. For example, Professor Lou, of the respected Center for Pharmaceutical Policy and Prescribing, University of Pittsburg, notes that the work of the non-profit CivicaRx and the California Insulin Initiative could result effective biosimilar competition.[x] Civica is a non-profit that is supported and funded by many substantial players in the healthcare industry.  Civica is working to manufacture and sell three biosimilar insulin products, in pen and vial form.  Civica expects offer affordable pricing ($30 a vial, or $55 for a box of 5 prefilled pens).  Civica intends to have product for sale by 2024.[xi]

While not deep into this bench, California’s Department of Public Health (“CDPH”) already manufactures and sells a biologic product that treats infant botulism, an orphan disease. This product, BabyBIG®, is manufactured by an international firm that owns the local manufacturing facility. CDPH sells this product nationwide for $57,300.[xii] While the BabyBIG® example lends credence to the notion that a California public bureaucracy can manufacture and sell biologic products, it may not teach much about price impacts given that BabyBIG® treats an orphan disease, justifying substantial pricing.

California’s Insulin Initiative is in its formative stages, but it has big goals. The RFI tells potential contract manufacturers, for example, that California wants the jointly developed insulin product to be branded “CalRx Insulin” or “CalRx Insulin-Brought to you by the State of California.”  Wonder what the partners will think about that?  Mann Legal will watch with great interest to see what California can make of its background in pharma manufacturing and sales, $100 million, and a compelling social and economic need to bring some pricing discipline to this market. Stay tuned!


Elizabeth Mann
Mann Legal Team, Inc.
(310) 726-1800
1145 Artesia Blvd. | Suite 203
Manhattan Beach, CA 90266

[i]There are two types of diabetes, diabetes 1 and diabetes 2. 5% of diabetics have diabetes 1. With diabetes 1 the body does not manufacture insulin; these patients are insulin dependent.  With diabetes 2 the body does not utilize insulin well.  In both cases blood sugar rises. Elevated blood sugar can cause serious diseases.  Diabetes 2 can be prevented or delayed with lifestyle changes. The Facts, Stats, and Impacts of Diabetes | CDC (accessed 11/8/22); fast_facts_12-2015a.pdf (, (accessed 11/8/22).

[ii] Vol 10 October 2022 (accessed 11/3/22).

[iii] The Inflation Reduction Act adopted a $35-per month limit on insulin prices for Medicare beneficiaries, starting in 2023. Fnt.2, above.  A number of states have recently passed insulin caps applying to private insurance, typically capping member copayments at $100 for a 30-day supply. Time will tell as to the effectiveness of these caps to bring down overall member spend, and they likely will not apply to ERISA-governed employer sponsored healthcare.  Eight States Pass Legislation to Place Caps on Insulin Price; Five More Await Ruling | The diaTribe Foundation (accessed 11/8/22); Insulin Out-of-Pocket Costs in Medicare Part D | KFF (accessed 11/8/22).

[iv] Prevalence and Correlates of Patient Rationing of Insulin in the United States: A National Survey | Annals of Internal Medicine ( 11/4/22).

[v] A copy of the RFI can be found here.   The Insulin Initiative is consistent with California law that permits California Health & Human Services to enter into partnerships to develop and market generic and biosimilar drugs.  Cal. Health & Safety Code § 127693 et. seq.  This program also begins to fulfill the dictates of Executive Order N-01-19, which describes California’s spending on prescription drugs as increasing at an “unsustainable rate, constituting a substantial fiscal drain” on government, small businesses, and families.

[vi] SB 17 Prescription Drug Transparency Report for measurement year 2018 ( (accessed 11/7/22).

[vii] On July 28, 2021, the FDA announced its approval of the first interchangeable biologic for an insulin product, stating: “Semglee (insulin glargine-yfgn) is both biosimilar to, and interchangeable with (can be substituted for), its reference product Lantus (insulin glargine), a long-acting insulin analog. Semglee (insulin glargine-yfgn) is the first interchangeable biosimilar product approved in the U.S. for the treatment of diabetes.”   FDA Approves First Interchangeable Biosimilar Insulin Product for Treatment of Diabetes | FDA (accessed 11422)/

[viii] HCAI Budget Proposal, attached; Viatris’ biosimilar insulin Semglee is priced almost the same as Lantus ( (accessed 11/4/22)

[ix] Express Scripts puts insulin biosimilar Semglee on preferred formulary | Fierce Healthcare ; CVS Juggles Biosimilar Options on Its Formulary ( (accessed 11/7/2022).

[x] Biosimilars May Finally Stop the Rocketing Cost of Insulin ( (accessed 11/4/22).

[xi] Civica ( (accessed 11/4/22).

[xii] March 29, 2016, Approval Letter – BabyBIG (; Domestic Invoice and Purchase Agreement for BabyBIG ( (accessed 11/7/22).