CA Gov. Newsom Announces Budget Approval for Biosimilar Insulin Initiative

On Thursday, July 7, 2022, California Governor Gavin Newsom announced that the most recent state budget, signed last week, includes a $100 million allotment for California to “contract to make [its] own insulin at a cheaper price, close to at cost.”  The budget designates $50 million for the development of biosimilar insulin products and the remaining $50 million to build an insulin manufacturing facility in California.  Gov. Newsom explained that the budget allocation is a step toward implementing an executive order he signed in 2019 “to put California on the path towards creating [its] own prescription drugs.”  Executive Order N-01-19 had directed California’s Department of Health Care Services (CalHHS) to investigate ways of reducing the price for costly prescription drugs.


Further details on the initiative appear in a summary of the enacted budget prepared by Gov. Newsom’s office.  The summary describes the “CalRX Biosimilar Insulin Initiative” as a $100.7 million general fund in the 2022-2023 budget, and a $700,000 annual fund in 2023-2024 and 2025-2026.  The summary further explains that California plans to use the funds to develop “interchangeable biosimilar insulin products.”  The budget also includes “$700,000 ($2.8 million over four years) for state operations to fulfill requirements of the contract partnership, including monitoring, oversight, and legal compliance.”


The CalRX Biosimilar Insulin Initiative was the subject of a budget change proposal earlier this year.  The proposal noted that “CalRx would identify a partner” to manufacture “low-cost interchangeable biosimilar insulins.”  For the construction of the manufacturing facility, “CalHHS will partner with the Governor’s Office of Business and Economic Development (GO-Biz).”  The CalRX Biosimilar Insulin Initiative proposal further explained that the “location of the California-based insulin manufacturing facility would be jointly determined by the State and the contract manufacturer.”  Under the proposal, California would have “priority of supply” although there is no “minimum volume commitment.”  Insulin products made pursuant to the initiative “will be labeled with California-related branding.”  Following manufacture, the “contract manufacturer will be responsible for product roll-out and distribution” through channels including “a variety of retailers, pharmacies, and other outlets, as well as mail order pharmacy.”