California’s recently enacted $308 billion state budget included a $100.7 million program for the state to produce low-cost insulin. Of this amount, $50 million is earmarked for product development and $50 million is dedicated to building an in-state manufacturing facility.
While it is very unfortunate that Americans pay high prices for lifesaving insulin, high insulin prices are caused by a maze of regulation, bureaucracy, and pharmacy benefit managers that drive up the costs. While California’s efforts are well-intentioned, high insulin prices would be better addressed by regulatory reform and private initiative rather than a government-run program administered by a state with a dubious track record of competence and efficiency.
One problem in the United States is a lack of competition arising from patent protection for insulin delivery devices and barriers to getting approval for biosimilar products. There is some promise on the latter front as the Food and Drug Administration approved two biosimilars in 2021. Further, Rajkumar recommended limiting the length of initial patents and preventing the use of additional patents on a single drug to extend market exclusivity. Although generous patent protection is defended as a means of encouraging innovation, incremental changes in how insulin is produced or delivered may not merit long exclusivity periods.