A Utah-based nonprofit drug company plans to introduce generic versions of costly insulin, potentially revolutionizing drug pricing schemes that have long been considered predatory and financially excruciating for diabetics.
“Our goal is to democratize insulin,” said Dan Liljenquist, board chair of Civica Rx and chief strategy officer for Intermountain Healthcare. “These insulin molecules are well past their patented life, and we’re intending to produce these insulins so that these formulas, which are owned by society, enter the public domain within reach of regular people.”
Civica Rx will make generic versions of Humalog, Novolog and Lantus at $30 per vial or $55 per five-pack of injectable pens — a price reduction of 80% to 90% compared to the brand-name drugs, Lilienquist said.
Pending licensure by the Food and Drug Administration, the insulin will be manufactured at a 3.2-acre factory in Petersburg, Va., where Civica expects to be able to produce 80 million vials and 50 million pens each year — about a third of the insulin prescribed in the United States, Liljenquist said.
That’s enough to potentially change how insulin is priced, he said.
“Insulin is so expensive, it’s something I’ve already started to worry about,” said Katherine Stewart, 16, of Highland. Stewart’s family has spent about $500 a month on insulin since she was diagnosed with diabetes at age 5 — and that’s for the months after the family has met its insurance deductible. Until then, the cost is closer to $2,000.
“Having to worry about this seems like growing up too fast,” Stewart said in a news conference Tuesday.
The family’s costs declined after lawmakers capped insulin copays in 2020, but those caps only apply to patients with group insurance plans. Meanwhile, many Utahns are rationing insulin, which can be deadly for diabetics, and begging online for leftover doses.
Social media companies have cracked down on Utah’s not-so-secret underground insulin trade, which is technically illegal, so now desperate patients and their families have begun to encode their pleas with spelling errors and alternate wording to evade bots, said Brandi Stewart, Katherine’s mother.
Meeting other Utah families coping with insulin costs over the years has shown her that $500 a month is not the worst of it, she said.
“Another family that had three diabetic children paid $11,000 in one month out of pocket for their three kids’ insulin because it was the first of the year and their high deductible had not been met yet,” Brandi Stewart said. “That’s a huge financial burden that a lot of Utahns just can’t afford, and it doesn’t need to be that way.”
The lack of transparency in prescription drug prices has made it difficult to know who exactly ends up with all of that money. Insurers point to pharmacy benefit managers — middlemen that negotiate with pharmaceutical companies to decide which drugs an insurer will cover.
When a PBM lists a drug for insurance coverage, they get a “rebate” from the drug company, which the PBMs say they pass along to the insurance company to reduce premiums. But no one knows how much of that rebate gets passed on to the insurer, or whether the insurer actually uses it to reduce premiums — and just three PBMs control about 80% of the U.S. market.
Industry watchdogs have worried that these rebates give PBMs an incentive not to include cheaper drugs on insurance plans, since those capture smaller rebates than expensive drugs do.
That pricing mechanism may also explain why generic insulin has been slow to catch on. Months after Eli Lilly introduced a generic version of Humalog in 2019, only 1 in 5 Americans with commercial insurance were on plans that covered it. In a phone survey conducted by U.S. Senate staffers, 83% of the pharmacies they called didn’t even have the generic version in stock — and 69% said they couldn’t even order it.
And two months after Novo Nordisk introduced a generic version of Novolog in 2020, its uptake was even slower, according to GoodRx.com.
But there are a few reasons Civica’s generics may take off, even where for-profit drug companies’ own generics did not.
First of all, Civica is nonprofit and is not producing generics that will compete with its own, pricier brand-name products, as for-profit companies have. That means it has no incentive to downplay the generic in marketing.
“When you’re making a more-expensive insulin on the same production line as the less-expensive insulin, what’s in your interest to sell?” Liljenquist asked.
Second, Civica has lined up insurers, including SelectHealth, Blue Cross Blue Shield Association, Kaiser Permanente and Anthem, Inc. as partners.
“We don’t think the pharmacy benefit managers or other people could block this,” Liljenquist said.
Third, even if no insurers were willing to cover Civica’s insulin — the prices still are a fraction of the out-of-pocket costs for millions of patients who don’t live in the 20 or so states that have passed insulin caps, or who are either uninsured or covered by self-funded plans, which aren’t subject to state copay caps. (A national insulin cap, while popular, has met with challenges in Congress.)
“How are you going to persuade a family to go and shell out thousands of dollars they can’t afford for insulin, to stay in-benefit when they can go to an online pharmacy and get Civica insulin at a fair price?” Liljenquist said. “It will unstick the rebate game for insulin, and that’s exactly what we intend to do, so that the patients who are the ones paying the cost of those rebates actually get to pay a fair price upfront.”
Civica expects to complete building its Virginia plant by the end of the year and launch its insulin line in 2024, Liljenquist said.
“When there’s a market failure like this, that is exploitive, that takes advantage of people who already desperately trying to manage disease, it’s wrong,” he said.