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California has taken a first step to lower pharmaceutical prices in the US state, reaching an agreement with the maker of a drug capable of reversing opioid overdoses to purchase the drug at a deeply discounted price , then distribute it under its own brand.
Under the deal, California will purchase naloxone, a nasal spray that can reduce or reverse the effects of opioids, from generic maker Amneal Pharmaceuticals for 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 lower drug prices through a program it calls CalRx. It is also working with another pharmaceutical company to reduce the price of insulin through this program, and officials said they are looking for ways to reduce the price of other drugs in the state.
“California disrupts the pharmaceutical industry with CalRx [by] get life-saving medications at lower, transparent prices,” Newsom, a Democrat, said in a statement Monday. Efforts to reduce the price of insulin to $30 per vial, as well as the latter program’s attempt to cut the market price of naloxone by nearly half, were intended to “maximize taxpayer dollars and to save more lives with this miracle drug,” Newsom added.
State officials described the project as the first time a U.S. state has worked directly with a drugmaker to create its own, low-cost, over-the-counter drug.
The move is the latest attempt by Democratic politicians to challenge the pharmaceutical industry’s pricing power over key drugs. Thanks to the Biden administration’s Inflation Reduction Act, the federal Medicare retiree health program is entering into negotiations directly with pharmaceutical companies on the bulk purchase price of 10 leading drugs – a measure that the industry had been putting off for years.
Last year, the U.S. Food and Drug Administration approved the over-the-counter sale of Narcan — the brand-name version of naloxone, a nasal spray used to reverse opioid overdoses — in hopes that Better access to the drug would reduce opioid-related deaths. But Narcan’s retail price of nearly $45 for a two-dose package has put the treatment out of reach for many opioid users.
California, where nearly 7,000 state residents died of opioid-related overdoses in 2022, will now be able to buy two doses of naloxone nasal spray for $24, about half the price of the brand-name drug, in the program through an agreement with a generic drug manufacturer. Amneal, the governor’s office said. Amneal launched the first generic version of Narcan last week, following FDA approval.
California has already distributed more than 4.1 million naloxone kits since the start of the U.S. opioid crisis, which state officials say has helped reverse 260,000 opioid overdoses. The Narcan brand spray – made by Emergent BioSolutions – generated $266 million in sales in the 12 months to February this year, according to industry tracker IQVIA.
Another project to work with Civica, a Virginia-based nonprofit pharmaceutical company, to ensure more affordable insulin for diabetics has encountered delays. California officials said that after discussions with the FDA, the Civica insulin plan “has a clear path forward.” California is targeting an insulin dose of $30, less than the $35 cap in place under Medicare for people over 65.
Alex Brill, managing director of Matrix Global Advisors, a health care consulting firm, said California “should be commended for stockpiling [over-the-counter] Narcan,” but added that he was skeptical of Newsom’s role in lowering prices. “As is always the case with large purchasers and due to the arrival of a new generic, California is acquiring this drug at a price lower than the current retail price,” Brill said.
The announcement comes as the Newsom administration grapples with an estimated $58 billion budget deficit, down from a $100 billion surplus in 2022. State officials say the plan to Reducing drug prices is part of a broader effort to reduce health care spending to 3% of their budget. budget by 2029, compared to an expected level of 3.5 percent next year.
