California wants to make cheap insulin. This is how it could work

Insulin was first discovered in 1921, and the following year a 14-year-old boy suffering from diabetes became the first person to be treated with it. The medical breakthrough won a Nobel Prize in 1923. The hormone was originally derived from the pancreas of cows and pigs, but in 1978 scientists figured out how to make a synthetic human version. It was the first genetically engineered drug. Since then, three companies have dominated the US insulin market: Eli Lilly, Novo Nordisk and Sanofi.

Manufacturing insulin is not an easy task. It is considered a biological drug made from living cells. Biologics are large molecules and complex to manufacture; In contrast, most current drugs are small molecule drugs that are chemically manufactured and can be easily mass-produced.

To make insulin, scientists start with large tanks of yeast or bacterial cells modified with a human gene that contains instructions for making the insulin protein. The yeast or bacterial cells produce the protein, which is then extracted and purified into vials or injectable pens. β€œIt’s not just about combining some ingredients and creating a chemical reaction. There’s a lot more to making a complicated biologic,” said Walid Gellad, director of the University of Pittsburgh’s Center for Pharmaceutical Policy and Prescribing. For example, according to Antoinette Forbes, assistant vice president for public affairs, Eli Lilly employs around 5,000 engineers and other scientists to oversee the insulin manufacturing process.

In the past, manufacturers couldn’t make cheaper versions of insulin even if they wanted to. Since biologics are not traditional medicines, they could not be copied into generics – medicines that are chemically identical to branded products. A 2010 law changed that, creating a process for the Food and Drug Administration to approve biosimilars. The FDA has streamlined the way for insulin in 2020, paving the way for more competition. It approved the first insulin biosimilar, Semglee, in July 2021, which can replace Lantus. According to GoodRx, Semglee costs around $100 per vial, while Lantus can cost $300 or more.

The high cost of insulin has also been blamed on pharmacy benefit managers (PBMs), companies that act as intermediaries in price negotiations between insurers and drugmakers. Manufacturers compete to get their drugs covered by health plans by offering rebates and rebates that critics say allow them to increase their original list prices. PBMs, in turn, receive a portion of these rebates. The practice was the subject of a two-year bipartisan investigation by the Senate Finance Committee, the findings of which were released in January 2021.

“The reason the price increase is this discount game that’s being played, not because the product is improved or it costs more to manufacture,” says Campbell Hutton, vice president of regulatory and health policy at JDRF, a New York-based nonprofit funded by Type- 1 diabetes research. California’s plan does not provide for such rebates.

When contacted by WIRED, representatives from Eli Lilly, Novo Nordisk and Sanofi wrote that they are not making more money as insulin prices for patients are rising. They said the actual revenue they make from their insulins has continued to decline after discounts and rebates in recent years. Adam Gluck, senior vice president and head of US corporate affairs at Sanofi, wrote that the net price of its insulin — what the company earns after paying rebates — has fallen 54 percent since two decades, and they’re a ingrained feature of our healthcare system,” he wrote.

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