California Plans to Lower Insulin Prices by Making Its Own

insulin wrapped in money

Maksim Luzgin / Getty Images

Key Takeaways

  • California Governor Gavin Newsom announced plans for the state to manufacture its own low-cost insulin for diabetics who need it.
  • It’s unclear exactly how much insulin will cost through California’s new program or when the drug will be available for purchase.
  • Experts say it costs less than $10 to manufacture and produce one vial of insulin, but typical out-of-pocket costs for insulin can range anywhere from $40 to $400.

Over the past decade, the cost of insulin has nearly tripled in the United States and out-of-pocket costs for the prescription medication have doubled. With insulin prices being so high, California has decided to make its own.

Last week, California Governor Gavin Newsom announced plans for the state to manufacture its own low-cost insulin to make the drug “available to all” after years of soaring prices. 

“Nothing epitomizes market failures more than the cost of insulin,” Newsom said in a video posted on Twitter. “Many Americans experience out-of-pocket costs anywhere from $300 to $500 per month for this life-saving drug. California is now taking matters into our own hands.”

What Is Insulin?

Insulin is a hormone that is produced in the pancreas that helps people control and regulate the amount of glucose or sugar in the bloodstream. People with type 1 diabetes can’t produce insulin, and those with type 2 diabetes either can’t produce enough insulin or don’t respond well to it.

There are more than 20 different types of insulin sold in the United States and there are multiple ways to take it—including from a syringe, pen, pump, or inhaler.

According to Newsom, $100 million of the state’s $308 million budget will be invested into the effort. While $50 million will be used to develop low-cost insulin products, the rest of the funds will support a California-based insulin manufacturing facility that will provide “new, high-paying jobs and a stronger supply chain for the drugs,” the governor said. 

While the program is expected to provide insulin at a cheaper price, Newsom did not mention a specific price range for how much it will cost or when it would be available. However, a tweet from the Office of the Governor of California states, “with CA’s insulin, that cost would—at a minimum—be cut in HALF.” 

What Impact Will California’s Insulin Program Have on People With Diabetes?

Over 37 million Americans have diabetes, and of those, about 7 million require some form of insulin.

Rajinder Chahal, MD, a board-certified endocrinologist based in Visalia, California, said this initiative would not only bring down the price of insulin for thousands of people, but would also improve the accessibility of the drug and save lives.

“I’m fully supportive of the program. Anything that gets our patients the medications they need would be amazing,” Chahal told Verywell. “If people are in a doughnut hole and medications aren’t covered, it can become enormously expensive and this leads to patients rationing their insulin.” 

A recent study found that one in four adults with diabetes under the age of 65 did not properly take their medication to save money. For patients with diabetes, having affordable access to insulin can help improve their blood sugar levels and allow them to use it safely and consistently, Michael Fang, PhD, assistant scientist in the department of epidemiology at the Johns Hopkins Bloomberg School of Public Health, told Verywell.

Fang added that if people have better sugar management from affordable and consistent access, it may translate into fewer health complications, life-threatening conditions, and hospitalizations in the long run.

“For people with diabetes, high sugar levels are a cause of major problems such as blindness or amputations, so better insulin accessibility has broad implications,” Fang said.

Governor Newsom’s plan may also become a model that other states can follow, especially if it ends up improving patient outcomes and saving costs in the long run, Fang said. It may also lead to drug companies reducing their prices to remain competitive.

Other Initiatives to Reduce Insulin Cost

Beyond the most recent plan coming out of California to reduce the cost of insulin, other initiatives are working to make insulin affordable for all people.

  • The Affordable Insulin Now Act: The House of Representatives passed legislation on March 31, 2022, that would cap the monthly cost of insulin at $35 a month for the millions of diabetic Americans who rely on the drug. It would help Americans with private health insurance and those with Medicare. The bill is expected to take effect in 2023, however, it still has to be reviewed by a group of lawmakers in the Senate.
  • ReliOn NovoLog from Walmart: People who have diabetes can access insulin vials from a private brand called ReliOn NovoLog through Walmart. Vials can cost $72.88 per vial and $85.88 per FlexPen for people who do not have insurance. 

How Much Does Insulin Cost Out-of-Pocket?

According to the Health Care Cost Institute, the average cost of insulin was around $2,864 per patient per year in 2012. In 2016, that price had risen to $5,705 per year, almost double the price four years earlier.

Fang said patients could pay anywhere between $40 to $60 a month out-of-pocket for insulin, but there is no central database that documents the average cost nationally.

Estimates of Monthly Insulin Costs

Based on recent studies from 2017 to 2019, here are estimates of how much people pay for insulin out-of-pocket: 

  1. Medicare part D beneficiaries (65+ years old) in 2019
    Average out-of-pocket cost: $49/month
  2. Privately insured patients in the Optum System in 2017
    Average out-of-pocket cost: $64/month
  3. Privately insured patients in the MarketScan System in 2018
    Average out-of-pocket cost: $41/month
  4. Patients in Medical Expenditure Panel Survey in 2014-2017
    Average out-of-pocket cost: $40/month

Depending on their insurance coverage, patients could pay anywhere between $40 to $400 out-of-pocket for one vial of insulin, Chahal said. Some would need at least two or three vials a month. 

“If you have a high deductible plan, you have to spend hundreds, if not thousands of dollars on medication before the insurance even kicks in,” Chahal said. “A lot of times insurances will even cap how much they’re going to pay for medications.”

He said patients who do not have health insurance plans can get older synthetic insulins at locations like Walmart that can cost anywhere from $35 to $100 per vial. A study published in 2017 found that newer insulin analogs created with genetic engineering cost between $174 to $300 per vial.

The newer insulin has much lower rates of hypoglycemia (low blood sugar), they’re a lot more stable and last longer, but people don’t have access to that sometimes, Chahal added.

“Patients can go to Walmart and buy these antiquated insulins through their $25 program,” he said. “Those aren’t my first choice for insulin, but if the choice is between nothing and that, obviously I want people to take those insulins.”

How Much Does It Cost to Produce Insulin?

A study revealed that it only costs around $2.28 to $3.42 to produce one vial of insulin and a year’s supply could cost $48 to $71 per patient. The study did not include administrative fees, sales, or research development for medications.

“It costs these pharmaceutical companies less than $10 to manufacture a vial of insulin, sometimes even as low as $2, $3, and $4,” Chahal said. “But some of these vials go up to three and four hundred dollars, which is strange. It is disappointing as a provider to have a conversation with patients that tell you, ‘I can’t afford my insulin’.”

Chahal said he hopes California’s new plan to cap insulin prices at around $35 a month for a 30-day supply, but with startup fees and development, it could cost patients a bit more initially.

“If we can get the cost down to $35 a month, that would be fantastic,” he said. “That can even cover a couple of pens or vials. I think we could perhaps look to that as a guide.”

What This Means For You

If you or a loved one needs insulin, check with your health insurance plan to find out the different brands of insulin they cover. If there is a more affordable option, speak with your health care provider to determine if it’s safe to make the switch. You can also check with insulin manufacturers, health care plans or providers to see if you are eligible for any patient assistant programs.

12 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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By Alyssa Hui
Alyssa Hui is a St. Louis-based health and science news writer. She was the 2020 recipient of the Midwest Broadcast Journalists Association Jack Shelley Award.