- Why were insulin prices in the US so much higher just a few years ago?

Can you describe the situation before, say 2023?

- Well, one of the characteristics of our healthcare system in the US and our pharmaceutical market is that drug manufacturers, they can set the price of the drugs that they produce, and they can change this price at any point in time.

So in whereas in other countries, there are mechanisms to change the price, for example, tie it to inflation or renegotiate over time, making sure the price goes down.

In the US the price can fluctuate as much as the drug manufacturers want.

In what we have observed with insulin prices has, has been that prices have gone up even in the absence of significant changes to the drug, any improvements to the drug or any significant market changes.

- Welcome to Forum, I'm Mina Kim.

California will offer insulin for just $11 a pen starting next year.

It's the fulfillment of a promise Governor Gavin Newsom made three years ago that the state would contract directly with drug manufacturers to dramatically reduce the cost of the diabetes medication.

In a statement announcing the release, Newsom said "No Californian should ever have to ration insulin or go into debt to stay alive."

For more on this and other medications that could become available under the state run program known as CalRx, we're joined by April Dembosky, KQED'S Health Correspondent.

Hi, April.

- Hello.

Good morning.

- So help me understand how dramatic a reduction in cost $11 per insulin pen is.

- That's right.

And the pens are gonna be sold in a pack of five.

And so they'll be sold to pharmacies for $45.

And the suggested retail price is 55, which is how you get to $11 per pen.

And to compare to, you know, what is already on the market, the range for these pens is $88, up to 400, $411.

And the brand of pen that is most aligned with the, the insulin that the state is gonna be producing is about $92 for, for the list price.

So you're looking at almost half the price - And you report that three and a half million or so Californians have diabetes.

In broad strokes, what could this mean for them?

- It's a really big deal.

I mean, especially when you look at the broader healthcare landscape right now, you know, people are looking at increasing premiums for their health insurance.

People who get coverage through Medicaid are potentially looking at really big cuts to their coverage there.

So to have, you know, a medication that people rely on every day and for the rest of their lives, to have a supply that is, you know, more consistent, more affordable, more transparent, that's a really big deal.

So you're gonna see both, you know, savings in terms of people's, you know, in their wallets, but you're also potentially gonna see better health as well.

- And let me invite listeners to answer that question.

Have you had trouble paying for insulin?

How could cheaper insulin affect your life?

What are your questions about CalRx insulin and how to get it?

You can email forum@KQED.org, find us on our social channels, discord, blue sky, Facebook, Instagram, or threads at KQED forum, or you can call us at (866) 733-6786.

(866) 733-6786.

April, you were talking about $92 for this type of insulin typically, and it could go up to $411.

So how is California able to offer the insulin at this price at $55 or $11 a pen?

- Yeah, so this is Governor Gavin Newsom's brainchild.

He announced it back in 2020 that he wanted to do this.

And so CalRX is basically a state run drug label and it's basically an end run around the pharmaceutical companies and the, the middlemen who negotiate and control drug prices.

So instead of, you know, the state buying from those sellers, the state is basically sidestepping the whole thing, contracting directly with a generic drug manufacturer to produce and sell and set the price for insulin.

So it's just kind of getting into the, the drug business on its own.

- Yeah, I remember we actually covered when CalRx first contracted with Civica Rx, I guess the nonprofit drug manufacturer to start to figure out how to produce insulin.

And I think there were some challenges along the way.

They had predicted it would come out a little sooner than it has now.

- They did, you know, perhaps Governor Newsom overpromised.

I mean, getting into the drug business, that's a, it's a really bold move.

It's a really tricky move.

So I think the fact that they encountered delays is, is not a huge surprise.

- Yeah.

So what has Big Pharma had to say about this?

What's been their reaction to this, given the fact that it has been called a challenge to big pharma?

- I mean, I think they've been playing it kind of neutral, trying to redirect attention to some of the ways that they, some of the efforts that they have to help people, you know, save.

So some of the drug companies have rebate programs, but I think what sort of distinguishes CalRx is there's no hoops to jump through.

There's no red tape that you have to cross.

This is a direct to consumer product, and you don't have to play any games to, you know, get past what the, the sticker price is for, for insulin to, to get to something that's more affordable for you.

- Yeah.

When we reached out to Big Pharma, this is the comment they gave us.

Reed Porter, a pharma spokesperson, said, "For years, insulin manufacturers have offered patient assistance programs to help patients access and afford their insulin.

These efforts combined with California's new nation leading PBM reform law will help patients save at the pharmacy counter quickly."

PBM is what, again, April - PBM that refers to pharmacy benefit managers.

And those are, those are sort of the middlemen in the pharmaceutical supply chain.

So what they do is they will, you know, sort of pull together a bunch of buyers, health insurance companies, pharmacies, hospitals, and then they'll use that buying power to negotiate discounts from the drug manufacturers.

But what has emerged over the years is that these deals tend to be shrouded in secrecy.

Nobody knows exactly what the deals are.

And then, you know, once the, the, the middlemen, the phar, the pharmacy benefit managers get these discounts, they then decide how much of the discount they're going to pass on to the health insurance company.

And then the health insurance company decides how much of the discount it's going to pass on to the consumer.

So you can see with all those steps that are in there, you know, nobody knows exactly what that original discount was and how much each person along each, you know, organization along the way is keeping for itself.

So you can kind of hear in the tone of that statement that the drug manufacturers are not particularly fond of pharmacy benefit managers either.

And you know, for the record, pharmacy benefit managers have been sued by the federal government for contributing to the cost increase in insulin.

- And as you said earlier, it sounds like, you know, part of what Cal Rx is trying to do or is doing is cutting that part of it out.

Let me go to caller Noelle in Berkeley, who's on the line.

Hi Noelle, join us.

You're on.

- Hello calling as a 35 year survivor of Type 1 diabetes who still carries medical debt from the decades of having to pay $400 a month for one bottle of insulin.

And just a shout out to the wonderful doctor in Canada who discovered insulin, do a little research, fellow Type 1 people out there, because he had no intention for anybody to make money off of insulin.

It's lifesaving.

- Noelle, thanks for that.

And that really is the point, right, April?

It just in terms of affordability of something that essentially you need to have to live.

- And something that has been produced at a relatively low cost for a really long time.

You know, again, as the caller pointed out, this was discovered a hundred years ago, it's been generic for a really long time.

Companies managed to make it for, you know, $25 for a a month monthly prescription for a really, really long time.

And then, you know, suddenly in 'round 2016, 2017, you know, we saw that price just start to creep up and up and up and up.

And so there was no explanation given that the producers had been able to produce it at this stable price for such a long time.

- Yeah.

And partly why Governor Newsom made it a focus, but insulin isn't the only drug that CalRx is doing.

I understand the CalRx label already released Naloxone for reversing opioid overdoses.

Of course.

Talk about that and how that price compares.

- Yeah, so I think that price is also about CalRx is offering that for about half of the price that it's otherwise available.

And that is using another lever through CalRx.

So the state isn't actually manufacturing Naloxone as I understand it, but it's using, you know, it's the, the leverage of California's size and scale to negotiate a cheaper price by, you know, buying in bulk.

And so that's how it's able to, to get that supply and then offer it back to consumers for a much lower price.

- And April, what are you hearing is next for CalRx?

Where are they focused in terms of its future offerings?

- Governor Gavin Newsom name checked a couple different things.

He talked about albuterol inhalers for asthma.

He talked about GLP-1s for weight loss.

He talked about vaccines.

The state using a similar lever that it did for Naloxone has actually stockpiled one of the abortion medications.

Misoprostol.

So, so it's it's an ambitious program.

- Yeah.

And they're, they're gonna try to expand their insulin offerings too, right?

- That's right.

So they're starting out with this one kind of insulin pen, glargine, and I believe they plan to produce a couple other different kinds of biosimilars as well.

- And so how much did it cost?

What was California's initial investment in this, right?

Because I think, if I remember when we did the show a couple years ago, it was about 50 million, but at that time there were big question marks as to whether or not lawmakers would continue to support this investment.

So can you give me a sense of where, where they are now on all of this?

- I, you know what, I am not sure.

I imagine the spending perhaps has increased, but I haven't been up to date on that.

- Yeah, certainly though it sounds like this I guess I wanna ask you, to what extent do you think this is a game changer and what would need to be in place to continue to let it have the kind of impact that Governor Newsom is suggesting it could have on, you know, drug prices generally, or disruptions to the pharmaceutical industry?

- I think it's a really big game changer.

I think it's very disruptive, A state getting into making its own drugs, that's such a big deal.

And I think if you look back at some of the history around insulin, you know, when politicians started paying a lot of attention to the massive price spikes in insulin, there was public outrage, there was a lot of political pressure.

You know, lawmakers at the federal level started, you know, altering the levers on, you know, policy levers started changing things that really pressured drug manufacturers to address this.

And you saw even just from that, the price of insulin come down 65%, 80%, you know, CalRx wants to offer its own insulin across the nation.

You could definitely see drug companies taking note of that.

- April Dembosky, health correspondent for KQED.

We'll talk more about the impacts of CalRx offering affordable insulin after the break.

You're listening to Forum.

I'm Mina Kim.

Welcome back to Forum.

I'm Mina Kim.

We're talking this hour about the impacts of CalRx insulin.

Starting in January, Californians will be able to buy insulin from the state at deeply reduced prices.

And listeners, we want your reactions to this.

Have you had trouble paying for insulin?

How could cheaper insulin affect your life?

What are your questions about CalRx insulin and how to get it?

And what other medications are you hoping CalRx releases?

You can tell us by calling (866) 733-6786.

Emailing your comments and questions to forum@kqed.org or finding us on Discord, Bluesky, Facebook, Instagram, or threads @KQED Forum.

Before the break, we were joined by KQED Health correspondent April Dembosky.

And joining me now for a closer look at the impact this could have for people with diabetes is Chris Noble, organizing director at Health Access California and member of the CalRx Insulin Patient Advisory Council.

Chris, thanks so much for being with us.

- Thanks for having me.

- So Chris, I understand you have type one diabetes.

So tell me what your insulin routine is.

- Yeah, happy to.

So this was actually my 30th year living with type one diabetes.

Shout out to Noelle.

You have five years on me for your 35th anniversary.

But yeah, a normal daily regimen.

So I use an an insulin infusion pump, which is just a little device that kind of gives me insulin whenever I need it at a regular rate.

But then also in times when I am either exercising or, you know, having a large meal or, or a meal with carbohydrates in it, I take additional insulin to basically try to balance out the sugars into my bloodstream and how I can get those into my cells via insulin.

So you can think of insulin as kind of a, a key that unlocks your cells to get the sugar into the cells so that they can actually operate and function normally.

So on an average day, I'd take maybe anywhere from 80 to a hundred units of insulin.

I have to refill my insulin pump every about two or three days.

And yeah, it's a, it's a constant balancing act, but because of, you know, modern technology and because I have very good health insurance, I, I am able to keep in relatively good control.

But that hasn't always been in the case in my life.

So very grateful for the, you know, insurance that I have now.

But it's certainly is a challenge and it's an ever present challenge.

This is a chronic condition that folks live with, with their entire life.

- Right.

So then about how long, I think I have a sense, would a five pack generally last somebody a $55 five pack?

- Yeah, so I do use a different form of insulin, which we can get into then the one that is going to be offered January 1st of this coming year.

But if I were to use that insulin at the current rate that I use, one that I use now, it would last around two weeks.

You could say about two weeks.

- And you were mentioning earlier that you haven't always had insurance.

So what was it like when you didn't, what lengths would you go to to be able to access insulin?

- Yeah, so I think it's a, it's a common experience for anyone that's insulin dependent, to have an acute awareness of just how much insulin you have available to you at any one time.

I know right now in my little refrigerator where I keep my medicine, I have three vials of 10 mL NovoLog insulin I will need to reorder to.

Once I get down to one vial, I get three month packages sent directly to my home through Kaiser Permanente.

And so I'm fairly insulin secure right now, but everyone is, you know, the, the clock is always ticking and everyone is always very acutely aware of just how much insulin you have and, you know, what are you going to need to do when you start running low.

When I was much younger, I was in between jobs.

I was a camp counselor actually at a camp for kids with type one diabetes up in Big Bear, California.

And I was a counselor there.

So I was working with kids with type one diabetes and as being a camper there, the insulin and supplies were donated, I believe, either by a local hospital or a local charity.

I don't know exactly where the medicine came from, but that would be what the camp would use and the doctors on staff to treat all the kids there throughout the time that they're in the camp.

At the end of the summer, all of the campers coun, or I'm sorry, all the counselors and staff that had type one diabetes that didn't have insurance or weren't very insulin secure would basically circle up around the medical cabin and get all of the leftover insulin and just kind of like fill up their backpacks full of any medicine that they could take as a form of, that was basically their health insurance, right?

Like if you were insulin insecure and you didn't have health insurance and you weren't sure where you were going to be in the next couple of months, which is fairly common for young 20 somethings, just trying to figure out their life, you were filling up that backpack and you know, you talk to each other like, how much do you need?

How much is there?

And you would just kind of, you know, take as much as you could and, and get about your life and hopefully find your alternative in a couple of months.

So I can't say that's an effective healthcare system, but that just shows, you know, what you have to do when without insulin, the clock is ticking.

You could, you could be in the hospital in a matter of matter of hours without it.

- So then what kind of trade-offs or sacrifices would you have to make or calculations would you have to make when you're actually rationing insulin?

- Yeah, so rationing is a very terrifying experience.

Let's say one day you take 30 units of glargine insulin, the long-acting insulin to get through your day.

You know, maybe you take it once in the morning, once at night, if you're rationing and you're saying, okay, well I only have 60 units left, which can last me about a day and a half, you know, maybe I, I try to stretch that and just take 20 units in the morning and 20 units in the evening.

By reducing the amount of insulin that you're taking, you're also, that's gonna impact your health.

You're going to have to reduce the amount of carbohydrates that you eat.

You might need to exercise more or drink more water throughout the day.

And you are going to start to feel sick if you get down to 15, 10 units where you're half or a third of what you're rationing with your day, you know, normal daily regimen.

Now you're starting to get, you're starting to develop what's called ketones.

Ketones are an alternative fuel source that your body creates out of desperation.

Your body basically thinks that it's starving.

Your cells are starving 'cause they're not getting the sugars that they need.

And so in a, in a way to survive, your body adapts to develop ketones as a, as an alternative fuel source.

Ketones are neurotoxic, they are an alternative fuel source.

That's a way to protect your brain.

But they will in time result in a condition called diabetic ketoacidosis, which is basically a toxicity of your body and your cells, which can result in organ failure.

You'll need to quickly get to an emergency room and will inevitably result in death.

So, you know, the more that you ration, the closer you're walking that line towards one of those more acute emergencies, which can be life ending and has been for many, for many, too many folks.

- It, it sounds to me like there are a lot of people who ration or, or basically Chris, that you certainly were not alone in this practice in terms of trying to, you know, do whatever you could to keep a certain, you know, regularity of, of insulin.

So, so this is a fairly, or was a fairly common practice, especially a few years ago when the prices were so high as April was saying?

- Yeah, so I think some, some partners at Type 1 International, which is a wonderful patient led advocacy organization, did a, a study a couple years ago or months ago that showed about one in four people in the United States ration their insulin.

That's in the United States.

If you look global globally, that's closer to one in two people are actually rationing their insulin because of insulin insecurity.

But even here in the United States where there's insulin in pharmacies, there's insulin in hospitals, but people just can't afford it or their insurance doesn't offer it in a way that is accessible to the patient.

It's like water, water everywhere without a drop to drink, right?

Like the, the supply is not an issue, it's the ability to access an affordable option that doesn't result in medical bankruptcy.

Like, like Noelle mentioned, I mean, she's still juggling medical debt.

That's a very common experience for people that are dependent upon a medicine that I say it's like injecting gold into your veins.

Like imagine having to do that to stay alive is, you know, is is the battles that that folks just have to deal with.

That's why this development of, of the CalRx insulin is so important, which, you know, happy to get into what that means for folks like that are insulin dependent.

- Yeah, we're talking with Chris Noble, organizing Director of Health Access California and member of the CalRx Insulin Patient Advisory Council.

And listeners, you're joining the conversation with your questions and comments about CalRx insulin - how to get it, Have you had trouble paying for insulin?

And how could cheaper insulin affect your life?

And what other medications are you hoping CalRx releases?

Post on our social channels at KQED Forum, email forum@kqed.org or call us at (866) 733-6786.

And Michael on Bluesky writes, my wife's cousin has had type one diabetes for 60 years.

Her husband has always had to work for big corporations that provide comprehensive health coverage in order for her to survive.

Only now in his early seventies does he feel able to downshift.

Wow.

I wanna bring in now Dr.

Mariana SoCal, associate professor of Health Policy and Management at John Hopkins Bloomberg School of- Johns Hopkins, Bloomberg School of Public Health.

Mariana, thanks so much for being with us.

- Thank you so much for having me.

- So, so Dr.

SoCal, Chris has type one diabetes.

Can you remind us of the difference between type one and type two?

'cause we're getting some questions about that as well.

- It's an excellent question.

Type one diabetes is really characterized by the lack or very strongly reduced ability of the body to produce insulin.

Type two diabetes in the other hand, is more of a metabolic disruption in the body and the way it responds to insulin.

Each one of these two conditions tends to manifest in different stages of life with type one diabetes, more commonly affecting children, adolescents, young adults.

In its beginning, of course it goes with you for the rest of your life.

And type two diabetes typically affecting starting at older ages like adulthood or older adulthood.

From a clinical perspective, type one diabetes management will almost always requires insulin therapy, whereas type two diabetes management may or may not require insulin therapy.

- So we have, you know, this listener saying, Ron asks, what caused these high insulin prices?

Was there a monopoly?

You know, for a chronic illness, so prevalent and insulin so essential, Dr.

Socal, why were insulin prices in the US so much higher just a few years ago?

Can you describe the situation before, say 2023?

- Well, one of the characteristics of our healthcare system in the US and our pharmaceutical market is that drug manufacturers, they can set the price of the drugs that they produce and they can change this price at any point in time.

So in whereas in other countries, there are mechanisms to change the price, for example, tie it to inflation or renegotiate over time, making sure the price goes down., in the US the price can fluctuate as much as the drug manufacturers want.

In what we have observed with insulin prices has, has been that prices have gone up even in the absence of significant changes to the drug, any improvements to the drug or any significant market changes.

In fact, even after the entry of competition, biosimilars in the market, which is something that we highly depend on to bring prices down, our studies have shown that manufacturers kept raising prices even after these biosimilar drugs have entered.

However, manufacturers are free to change as much as they want.

And in 20, late 2023, the big three manufacturers actually announced steep reductions in the price.

So there have been fluctuations very significantly in our market and primarily because manufacturers can do that.

- What made them do steep reductions around that time.

Dr.

SoCal?

- Well I don't think I can speak for the drug manufacturers.

Of course these are business decisions.

What we do know is that beforehand congressional investigations had set drug manufacturers in front of public testimony and the drug manufacturers, the largest drug manufacturers have and publicly testified that they couldn't lower their prices out of fear that their drugs would not be covered by key health insurance plans.

However, in 2023, their behavior simply went against that type of narrative.

It's really difficult to pinpoint without having an insight into their business decisions.

However, the timing really coincided with the way that the Medicaid program pricing calculation changed.

Until 2023 Medicaid prices, they manufacturers selling to the Medicaid program, which is a public insurance program that highly covers exactly children, adolescents who are most likely population to have type one diabetes.

This program until 2023 penalized drug manufacturers for raising prices faster than inflation.

And after 20, 24, January 1st, 2024, those penalties didn't have a cap.

So they could be as high as the manufacturer's pricing behavior.

And it really coincided with that timing, the announcement of the price reductions.

So it's just the evidence we have is just the timing of these announcements and the timing of the change in policy.

- Yes.

And so with that timing, they did reduce them pretty significantly, but it sounds like from what April was saying that CalRx has still been able to go below their dramatically reduced prices.

- Yes, and I think the question here is who, who do we depend on to change affordability, right?

Because in the US you know, we have covered today how difficult it is for patients to afford insulin, but I should mention and highlight that it is difficult even for individuals who have full insurance coverage, insulin and affordability, and broadly speaking on affordability of prescription drugs in general, it is not a problem reserved for individuals who are uninsured or who are underinsured in our country.

Unfortunately, it's a widespread problem and it every year, you know, it's a service indicate that about one in four, one in five Americans have trouble affording the drugs they need.

And part of it is because when patients pay, they pay over these prices that are not transparent.

So it really penalizes patients for the system of, of really, you know, confidential rebate and not a discounts transactions that don't really favor patients.

- Chris, did you ever think California would take such an aggressive stand on this to be able to bring it down even past what pharmaceutical companies were reducing costs too or their, their charges to, - I mean this was, this was a wild dream for patient advocates to be honest.

I mean, to see a state that is basically removing the for-profit incentive from the drug manufacturing process is, is a best case scenario.

I mean, I think if it's safe to say that, that I believe that healthcare is a human right and in the same way that water and clean air is a human right and that water is provided as a public utility, I believe that essential medicine should be provided in that same way.

And so the for-profit incentive to be removed from getting access to essential medicines like insulin means that, you know, there is, we're not, it's not a commodified good, it's something that people just have access to that the the state is providing in a sustainable and safe way.

There was a recent study that showed that there was a BMJ study that showed it costs around six to $10 to manufacture one vial of insulin.

And for that vial of insulin to then be marked up and sold into the 300 plus dollar range is not right.

I mean that is a, that is, that is people making money off of my disease that I had no control over.

And so to see that, you know, the state is now purchasing at the cost of manufacturing distribute and that's what the price is based off of is very reassuring.

Yeah, I mean that, that gives me confidence that California is, is investing through our state budget and our tax dollars in my wellbeing and my ability to thrive and that that means the world.

- We're talking with Chris Noble.

Chris Noble is organizing director of Health Access California and also Dr.

Mariana SoCal, associate Professor of Health Policy and Management at John Hopkins Bloomberg School of Public Health.

And we're talking with you, our listeners, your questions about CalRx insulin, your experiences with paying for or accessing insulin and the effect that cheaper insulin could have on your life.

Also, your thoughts on what other medications you're hoping CalRx releases.

There's reporting that they're looking into asthma inhalers as well as having already released Naloxone email forum@kqeed.org.

Call us at (866) 733-6786 or post @KQEDForum on our social channels.

More after the break.

I'm Mina Kim.

Welcome back to Forum.

I'm Mina Kim, Could Cal Rx ease the prescription drug affordability crisis in some ways and bolster the supply of crucial medications?

It's releasing CalRx insulin starting in January at cost and we're talking about it with Dr.

Mariana Socal, associate Professor of Health Policy and Management at Johns Hopkins and also Chris Noble, organizing Director of Health Access California and a member of the CalRx Insulin Patient Advisory Council.

And we're talking about it with you, our listeners, this listener Mulzajo on Discord writes, why aren't the pharmaceutical companies capped at how much they can charge?

We do this for construction and retail, why not drugs?

It seems like problems with affordability could be avoided or do we want the problems so that we can justify the politicians and the jobs it creates?

You have any thoughts on that Dr.

Socal?

- Well that's the system that we live in.

We, our healthcare system in the US is characterized by a free market structure in which pharmaceutical manufacturers, as much as other service providers, they can charge what they want and the market can respond.

However, we did have serious problems with supply of insulin, primarily because it has been historically concentrated on three large manufacturers.

And that is part of the disruption that CalRx is helping bring to the market by breaking that concentration as part of, of its disruption that is bringing today.

- So how does the math work for California to do this?

If, as Chris was saying, this is at cost, right?

Like what is the investment?

What is making this a cost effective investment?

- Well, I think when people talk about insulin affordability, part of the conversation that we all forget is that it's not only unaffordable to patients when the patient cannot afford to acquire insulin and use insulin indirectly, or rather said directly, this can raise cost to the system by having the patient now get into immediate complications and require additional services like a doctor's appointment, an emergency room visit, any more severe cases, even a hospitalization.

So from a big picture perspective, we have to remember that we as a healthcare system, everybody benefits from having patients afford insulin, keep managing it, you know, in an outpatient setting and keep avoiding both hospitalizations and long-term complications and even death.

It's another part of what can happen when you don't have insulin.

- It benefits insurers as well, your research shows?

- Absolutely.

Our research has shown that at CalRx prices, insurers could offer the drug at $0 out of pocket cost to patients and still save money as compared to the products they were buying previously.

- So this listener writes, I want to hear more about personal accountability in terms of glucose intake for people with type two diabetes.

I know not everyone is mismanaging their diet, but I think there could be more work done by the individual to prevent diabetes.

I work in care coordination with many people with chronic conditions and I have family members with type one.

So this is an insulin that would benefit both and is used by both type one people with type one diabetes and people with type two diabetes.

One of the things that I was struck by Dr.

Socal was the constant refrain from Governor Newsom that this is not subsidized insulin, that this is not socialized insulin, that he's not spreading the cost.

Can you talk about why he really wanted to emphasize that?

- I think it's very important that we recognize this whole idea of how the production costs of a product in our market today are really disconnected to the final price, to the consumer, to insurers.

And a big portion of it, you know, we alluded to at the beginning of this hour, a big portion of it is the impact that we have of a financial system and a financial transactions price negotiations that go through the hands of intermediaries.

So we just discussed how lack of affordability of a prescription drug, it could be easily, it could be something else, how that can raise costs to insurers.

Imagine you're a self-insured employer, you wanna keep your overall healthcare costs down.

Now if you hire a pharmacy benefit manager to implement a drug formulary to negotiate prices with drug manufacturers, that company doesn't have skin in the game.

And so making medications that are less affordable can actually increase costs to the insurer as well.

And in relying on that system brings so much lack of transparency that I think that's the kind of of historical trajectory that CalRx is also trying to illuminate and disrupt by having a transparent price, it really brings to light how little actually these drugs can cost.

And brings the question of why do we all accept the system that we have today when it could be actually much different.

- Well this listener on discord writes, I'd love to see CalRx offer medications that have to do with other chronic illnesses.

There are lots of other diseases that have costly medications and procedural costs associated with them.

So I did wanna ask you, Dr.

Socal, you know, how you are feeling about the fact that they, the state is talking about going into say asthma inhalers for example.

Do you think that's where they should be focusing their energies on, on other chronic illnesses too?

- Well, I'm not only gonna voice my own opinion, I'm gonna talk about work that we did a couple years ago where we surveyed both providers, health insurers, patients, state policy makers.

We ran a survey trying to identify what were the most important criteria for CalRx to focus on, what kinds of drugs should be the priority.

You know, because we could argue it's clinical need or we could argue it is just the cost, the total cost and the frequency of one affordability.

So in a general result, what we found was the priority was large populations affected by lack of affordability.

And that is both a characteristic of diabetes medications and asthma medications.

We have an enormous amount of patients who need those prescription drugs and this very immediate clinical need that with immediate consequences that if you don't have the medication, you are gonna go to the hospital because of, because of complications of not having your drug.

- And you have also said that CalRx getting into Naloxone was also very disruptive.

Can you just talk about the effect that has had the Naloxone focus for CalRx?

- That's a great question.

I would just add that it's a slightly different structure when we talk about Naloxone.

Yes.

- Because - It's not the individual patient that goes to the pharmacy with a prescription.

Naloxone is the drug to reverse opioids overdoses and prevent death.

And so it is really important that this drug is available at the community level, at a fire department, at a school, or at a community partner organization.

And so state governments, including California, typically buy this drug and help supply to distribute to these community partner organizations.

And in the case of Naloxone, what CalRx did, it was a twofold disruption.

On the one hand, it really accomplished getting lower and transparent pricing.

But on the other hand, it also accomplished the ability to buy and distribute many more units as com with the same budget that they used to have before.

In the first five months, I think the, the estimate that we published was over a hundred thousand additional units under the same budget as compared to what, what California was providing to the community partners before.

- Hmm.

And similarly with inhalers, Chris, you know, this will be something that will be distributed broadly so that there is broad accessibility in places like what it, what Dr.

SoCal is describing with regard to Naloxone.

- Yeah, I mean Governor Newsom announced during the press conference a couple weeks ago that the albuterol program that is also where CalRx seems to be investing, will ensure that there are albuterol inhalers offered through public school systems across California.

So as a, as a young patient, I was diagnosed at five years old, one of my best friends was the school nurse.

I always came in there if I needed food or an insulin injection or water and just to know that there'll be inhalers there for people having an asthmatic attack is, is lifesaving.

I mean that's public health in action.

- So with this model that CalRx is offering with regard to insulin and also with things like inhalers or naloxone, are you hearing about other states Chris being interested in doing this or?

- Yeah, so this is, first of all, I wanna say that public manufacturing isn't a new idea.

There's been many examples of states manufacturing medicines.

So Michigan produced a vaccine for the residents until the mid nineties.

Massachusetts actually still produces a child vaccine regimen for their to protect, you know, access for, for those childhood vaccines.

And even here in California we produced a drug for infant botulism that was done through a public manufacturing scheme early in the 20th century.

So this isn't a new idea and actually it's even a growing idea.

I know the state of New York is, is look is actually actively running legislation to try to emulate what we've done here with our CalRx program.

The state of Michigan has state legislatures that's also looking into a public manufacturing program, Connecticut as well.

And I think Pennsylvania is just getting started too.

So this is a growing idea.

You know, in our conversations with Civica Rx, the, the biosimilar that we're in contract with for insulin, you know, their dream is is to not only produce the insulin for California consumption but also have that same at cost insulin available anywhere across the United States.

So, you know, this is a, this is a growing cause and I, I should also say federally Senator Warren in Massachusetts has been running a bill to launch a nationwide public manufacturing facility for many years now.

It just needs the legislative support to get going there.

- Well listener Steve on Discord writes, the explanation, puts that in quotes, that I've always heard for high drug prices is that so many drugs never make it to market, but their costs, basic research, early trials, human trials, et cetera, still need to be offset.

I think there's no genuine comprehensive cost review to check that account of things.

Yes, Dr.

Socal we're certainly hearing about the opacity of this whole system, but you're right, the, you know, companies also do need some security in terms of the drugs that they're going to invest in, that there's gonna be a market for them, right?

- Well that's true.

I absolutely agree that we all want to reward innovation.

We want to allow the drug manufacturers to be rewarded for all the uncertainty that it is the process of developing a new drug, the long timelines that it take to develop a new drug.

However, the problem is that some drugs remain in our market for the longest periods of time, way after they could have had recouped all that investments getting rewarded for everything and they're still raising the price and they're still preventing competition from enter the market.

This is one of the reasons behind the new Medicare drug negotiation program that just started, was enacted as part of the 2022 Inflation Reduction Act.

It really focuses on drugs that have been in the US market for a long period of time, have had had the chance to recoup the investment to be rewarded and they still lack competition and they still represent a big affordability problem for Americans.

And unfortunately that was the case of insulin and all these other drugs than we are discussing.

- We're talking with Dr.

Marianna Socal and also Chris Noble.

And let me remind listeners, you're listening to Forum, I'm Mina Kim.

Michael on Bluesky writes, I know a number of people who wish they could afford GLP-1 drugs.

I would suggest that California take those on as a next step.

Dr.

Socal, I wanna ask you about Trump Rx, I think one of the things that it said it was gonna do was try to lower the monthly out-of-pocket costs for GLP-1, you know, weight loss drugs and, and so can you tell me where this is at in terms of its ability to lower prescription drug prices?

How far along is Trump Rx?

- So like I mentioned before where we have this market-based system, right?

Where drug manufacturers, they're usually willing to lower the cost or the price if they know they are gonna have a large market to focus on, right?

If they can anticipate a lot of sales, that's an incentive to lower the cost.

I mean that's why we have in Walmart and these other, you know, retailers that sell large quantities.

A drug manufacturer is willing perhaps to, to lower the price.

Medicare drug price negotiation is taking advantage of that and negotiating for all 40 million Medicare beneficiaries at once.

In some ways that's what CalRx is also doing with Naloxone giving or even with the new insulin program, giving manufacturing anticipation of a very large market to get the lower price.

And I think that's what Trump RX is doing as well is considering this ability to open up to the manufacturer, direct to consumer market, you know, getting rid of middlemen, getting rid of intermediaries and demonstrating to the drug manufacturer that there is a possibility of a large market there in exchange to the lower prices.

Now to what extent it will be realized or not we, we need to see the implementation of it, but that is the mechanics that are behind the rationale to implement that kind of price negotiation.

- Well here's how Governor Newsom characterized it when he was announcing Cal Rx insulin last month - [Voice of Gov.

Gavin Newsom] In the absence of the kind of leadership at the federal level, though there are some interesting announcements coming from the current administration, but they amount to press releases right now, not fundamental policy yet.

In the absence of that, proud of California, our state leading in this area, - Dr.

Socal, is he essentially right?

That right now it is pretty much press releases and there'll be a lot that we need to watch for with this?

- Well I think what we really need to watch is to what extent patients will really be able to afford drugs out of pocket.

I mean, in our country about 90 plus percent of individuals do have health insurance and more than half of these are in a, in a private insurance market.

So these individuals are paying for health insurance.

So the question is, will patients be able and willing to pay twice, you know, pay for their health insurance premium and then go pay for drugs in the private market fully out of pocket as well.

So generic drugs or for drugs with very steep price reductions like the ones we are just discussing, that's likely because it really can be cheaper than the copay.

Right.

But for other drugs that are more expensive, like GLP-1 drugs, Ozempic, weight loss drugs, that's a question mark.

- Yeah, the president does wanna increase the essentially domestic production of prescription drugs.

You say that making prescription drugs more affordable is definitely an important issue to address, but it sounds like you are also concerned around the supply.

- Yes, we have a big problem with supply, particularly of cheaper low cost generics that are coming from foreign countries and sometimes have quality problems that preclude them from being widely available to the, to the extent that we need to protect our public's health.

- Well I'm gonna read Suvi's comment.

I shudder when I hear about folks getting by through cutting their dosages and getting so close to running out of their insulin or of any crucial medication.

So many of us are skating too close to the edge supply-wise.

So in the meantime, Chris, what would you like to see the state do with regard to the insulin that it's making available now?

Like do you feel like enough people know about it, you know, it's accessible in most places in the state?

- Yeah, so I, that's a great question.

I mean there, there's certainly a concern around what's called insulin deserts or pharmacy deserts.

So areas of California, particularly rural areas where there just isn't that many pharmacies that either supply insulin on a regular basis or even just are available in the first place.

And so something that we've been working on as a part of the patient advisory council is how can we ensure that the CalRx program is thinking creatively about actually distributing to that last mile of getting the insulin to the folks that need it most.

And so obviously insulin has to be stored under a cold chain distribution system, so it has to stay cool refrigerated.

But there are ways to do that.

You can either deliver in a box that has, you know, ice packs in it, that's how I get my insulin.

Or in harder areas, maybe you can use like an Amazon delivery service that that uses cold chain storage or an Amazon pickup box.

So, you know, we've, we've been trying to think creatively and, and you know, there's many places around the world that also struggle with these same challenges.

And so there's, we don't have to recreate the wheel, but we do have to ensure that that last mile, especially in regions where there's rural insulin deserts, is, is the main focus of the CalRx program.

'cause that's where you'd have the most need.

- This listener says, I take insulin in a blood thinner insulin costs me $105 for three months, but the blood thinner is three times that.

Are there any plans for CalRx to cover blood thinners?

Do you know, Chris?

- I mean, I just wanna say, you know, as a patient advocate myself, the reason why insulin was the first drug included in the program is because of patient advocacy, is because people were rising up and calling on their representatives to do something about their inability to access an affordable option.

And so for people that use their medication and they're similarly struggling with access and affordability, call your legislator next - Year.

Chris Noble.

Yeah, - Next term.

The governor election.

Let's make sure this champion of CalRx continues in the future too.

- Chris Noble of Health Access, California.

Mariana SoCal of Johns Hopkins, Bloomberg School of Public Health.

Thank you both.

Thank you listeners and thank you Caroline Smith for this segment.

This is Forum.