Legislation proposed in Congress would cap customers’ monthly out-of-pocket cost for insulin at $35, an idea President Joe Biden supported in his recent State of the Union address.
In Michigan, a bill introduced more than a year ago and passed by the state House by a wide margin would impose a $50 per month price cap on what consumers with health coverage pay for a 30-day insulin supply to treat diabetes. The legislation, which remains stalled in a Senate committee, is similar to bills proposed in other states.
Each of the proposed laws offer what advocates see as a solution to the skyrocketing cost of insulin by capping what consumers pay for a month’s supply.
Now comes another solution from a relatively new competitor in the U.S. drug market that looks to address the issue directly and without new laws imposing caps on prices or out-of-pocket consumer costs.
CivicaRx, a nonprofit generic drug company formed in 2018 by several large health systems in the U.S. and whose investors include Spectrum Health, plans to begin producing three forms of generic insulin by 2024. Importantly, CivicaRx intends to price its insulin at no more than $35 per vial, and no more than $55 for a box of five injectable pens.
That’s a cost far lower than what diabetics generally pay for the insulin they need.
“It’s good news, and good news for diabetics,” said Atheer Kaddis, vice president for pharmacy services at Blue Cross Blue Shield of Michigan, which also invested in CivicaRx along with 18 other Blues plans across the U.S.
In the decade from 2010 to 2021, the cost for what Blue Cross Blue Shield of Michigan pays for a month’s supply of insulin increased from $211 to $511, Kaddis said. About 12 percent of the 3 million people enrolled in pharmacy benefits with Blue Cross Blue Shield of Michigan are diabetics who use insulin to treat their condition, resulting in a cost that’s in the “hundreds of millions of dollars” annually for the insurer, he said.
In a recent conversation, Kaddis didn’t offer a perspective specifically on the proposed legislation at the state and federal levels, but did say that price caps for prescription co-pays generally do not get to the fundamental issue at hand — namely, the high prices that pharmaceutical companies charge for insulin.
Kaddis hopes that when CivicaRx comes to the market in two years with biosimilar brands of insulin and creates new competition, the marketplace will respond accordingly. He particularly hopes it can change the practice where pharmaceutical companies seek to offset their high prices with rebates.
“The only way we’re really going to get to the root cause is by creating more competition in the market with lower cost alternatives, which is exactly what CivicaRx is trying to do here,” Kaddis said. “Bringing lower-cost products to market and creating that competition, hopefully it’ll start impacting those rising list prices on the insulin and cause the manufacturers to rethink that model of high list price supported by more rebates.
“This private sector solution that we’re talking about here really aims to get at the root cause of the problem.”
Working under a co-development and commercial agreement with India-based GeneSys Biologics, CivicaRx intends to produce three versions of insulin at a new 140,000-square-foot production facility in Petersburg, Va. that should begin operating in early 2024.
Between now and then, CivicaRx will need to get regulatory approval and work out a distribution model, which will likely include contracts with retail and mail-order pharmacies, according to Kaddis.
Citing drug shortages and price spikes, philanthropic organizations and several large health systems across the U.S. — a list that includes Livonia-based Trinity Health, the parent company of Mercy Health in West Michigan — created CivicaRx in 2018 to produce lower-cost generic drugs that are used at hospitals. Spectrum Health joined the consortium in 2019 with an investment to become a founding partner, and Blue Cross Blue Shield of Michigan invested in CivicaRx in 2020.
CivicaRx today produces 60 generic injectable medicines that are used at more than 55 hospital systems and 1,500 hospitals nationwide.
Advocates for legislation to cap consumers’ out-of-pocket costs say a growing number of diabetics cannot afford or have trouble paying for insulin.
Meanwhile, in announcing the new venture this month, CivicaRx cited a 2019 study published in the Journal of the American Medical Association that reported as many as one-quarter of the 8 million people in America who rely on insulin either skip doses or take less than what they are prescribed because of the high cost.
Spectrum Health physicians report “all the time” that their diabetic patients have difficulty affording their insulin, said Stephanie Field, director of pharmacy services who manages the health system’s involvement in CivicaRx. Spectrum Health tries to work with patients to help them get what they need, she said.
“That happens pretty regularly,” said Field, who considers CivicaRx as a market disruptor, “which is why we invested in it originally.”
If CivicaRx can indeed bring generic insulin to market for the costs projected, “it would be really significant, it would be a game-changer,” she said. “It is going to be very interesting once they come to market to see what that looks like for us. It will be a big deal.”
CivicaRx’s potential effects on the market and drug costs offer an alternative to capping out-of-pocket costs for consumers through new laws, which can lead to unintended consequences and are not easily amended as market dynamics and conditions change, Field said.
“Private sector solutions tend to be able to be something that are much more nimble and adjust easier,” she said.
Spectrum Health not only procures generic drugs from CivicaRx for use at its hospitals, but also is able to leverage the business relationship when buying from other pharmaceutical companies, according to Field.
“It’s allowed us to say, ‘OK, if a manufacturer doesn’t want to make concessions or work with us from a contracting perspective, we always have CivicaRx as a partnership opportunity,’” she said, “where in the past, we would have been stuck and the manufacturer would have the leverage opportunity.”