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California is the first state to lower drug prices in the U.S. state by signing a deal with the manufacturer of an opioid overdose reversal drug, purchasing the drug at a deep discount, and then distributing it under its own brand. I took a step forward.
Under the agreement, California will buy naloxone, a nasal spray that can reduce or reverse the effects of opioids, from generic drug maker Amneal Pharmaceuticals at about half the price of the brand-name drug.
Gov. Gavin Newsom said California is using its market power as the world’s fifth-largest economy to drive down drug prices through a program called CalRx. It is also working with another pharmaceutical company to lower the price of insulin through the program, and officials said they are looking for ways to lower the price of other drugs in the state.
“California is disrupting the pharmaceutical industry with CalRx” [by] It’s about securing lifesaving medicines at cheaper, more transparent prices,” Newsom, a Democrat, said in a statement Monday. Similar to this latest plan to nearly cut the market price of naloxone in half, the effort to lower the price of insulin to $30 per vial is also aimed at “getting the most out of taxpayer dollars and making more money available for this miracle drug.” The goal is to “save many lives,” Newsom added.
State officials said the plan marks the first time a U.S. state has worked directly with a pharmaceutical company to produce its own branded, over-the-counter drugs at low cost.
The move is the latest attempt by Democratic politicians to challenge drug companies’ pricing power on key drugs. Through the Biden administration’s Inflation Control Act, Medicare, the federal health care program for retirees, is negotiating directly with drug groups over wholesale purchase prices for 10 major drugs, a step the industry has long avoided.
Last year, the U.S. Food and Drug Administration announced that Narcan (naloxone, a nasal spray used to reverse opioid overdoses), in hopes that increased access to the drug would reduce the number of opioid-related deaths. (branded version) has been approved for over-the-counter sales. But a two-dose pack of Narcan retails for nearly $45, putting this treatment out of reach for many opioid users.
In California, where about 7,000 state residents died from opioid-related overdoses in 2022, the program offers two doses of naloxone nasal spray for $24, or about the same price as the brand-name drug, through agreements with generic drug manufacturers. You will be able to purchase it at half price. Amneir said, according to the governor’s office. Amneal last week launched the first generic version of Narcan following FDA approval.
Since the beginning of the U.S. opioid crisis, California has already distributed more than 4.1 million naloxone kits, which state officials estimate have helped eliminate 260,000 opioid overdoses. His Narcan spray, a brand made by Emergent BioSolutions, generated $266 million in sales for him in the 12 months ending in February of this year, according to industry tracker IQVIA.
Another plan to work with Virginia-based nonprofit pharmaceutical company Civica to make insulin more affordable for people with diabetes is also facing delays. California officials said that after discussions with the FDA, the Civica insulin plan has a “clear path forward.” California aims to make a single dose of insulin cost $30, below Medicare’s $35 cap for people 65 and older.
Alex Brill, CEO of medical consultancy Matrix Global Advisors, said California “should be commended for stocking.” [over-the-counter] Narcan,” he said, but added he was skeptical about Newsom’s role in the price cuts. “As is always the case with large purchasers, as a result of the new entry of generic drugs, California is getting this drug for less than the current retail price,” Brill said.
The announcement comes as Newsom’s administration struggles with an estimated $58 billion budget deficit, down from a $100 billion surplus in 2022. State officials say the drug price reduction plan is part of a broader effort to bring health care costs down to 3% of the state budget. He will cut the budget by 2029 from next year’s projected level of 3.5%.
