It’s a well-known fact that Americans pay a lot for healthcare services and are probably paying the highest prices for drugs globally, sometimes several times more compared to prices in other well-developed countries. The situation with expensive drugs and health services has become much worse in recent years especially in the post-pandemic period when the big pharmaceutical companies increased the drug prices, while some hospitals have risen the prices to nearly double.
Medicaid to the rescue
Medicaid is a joint federal and state program that helps cover medical costs for some people with limited income and resources. The federal government has general rules that all state Medicaid programs must follow, but each state runs its own program. This means eligibility requirements and benefits can vary from state to state. While Medicaid makes health services much more affordable, that doesn’t solve the problem of extremely expensive healthcare services in the United States.
Changes needed
In the absence of a proper legislature that could potentially make healthcare in the United States much more affordable, billionaire Mark Cuban launched a new online pharmacy more than two years ago, with the promise to offer hundreds of prescription drugs at a cheap price. This initiative, however, is not enough to make a huge difference. But California Gov. Gavin Newsom this week made an interesting deal with a New Jersey-based pharmaceutical company that could potentially raise awareness among top-tier politicians. His move could mark the start of a change that millions of Americans want and need.
About the deal
California has teamed up with Amneal Pharmaceuticals from New Jersey to secure a more affordable generic version of Narcan, a drug critical for reversing opioid overdoses. Announced by Governor Gavin Newsom, this partnership will allow the state to buy naloxone, the drug’s active ingredient, at $24 per pack, which is 40% less than its usual price. These packs will be distributed for free to first responders, universities, and community groups as part of California’s Naloxone Distribution Project.
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The benefit
This agreement is particularly notable as it enables California to purchase significantly more naloxone — up to 3.2 million packs over the next year, compared to the previous 2 million, without increasing the overall spending. Furthermore, this arrangement will also facilitate the availability of naloxone under the state’s CalRx label, a program initiated by Newsom in 2019 to promote more affordable medications by introducing cheaper alternatives. This was solidified by legislation passed in 2021, which granted the state the necessary authority.
The bigger picture
In addition to state agencies and non-profits, local governments and businesses in California will also have the option to buy naloxone outside the official distribution project. Plans are also in the works to extend sales to the general public.
“California is disrupting the drug industry with CalRx — securing life-saving drugs at lower and transparent prices. As we continue the effort to bring $30 insulin to the market, the state is now set to purchase life-saving naloxone for almost half of the current market price — maximizing taxpayer dollars and saving more lives with this miracle drug,” Newsom said in a statement provided by his office.
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Since March 2023, after approval from the U.S. Food and Drug Administration, naloxone has been available across the U.S. without a prescription. This includes Narcan, a nasal spray version manufactured by Emergent BioSolutions in Maryland
FDA approved since this month
Amneal Pharmaceuticals has developed a generic version of Narcan, which received approval from the FDA last week. Initially, naloxone packs bought by California will carry the Amneal brand, but they are expected to switch to the CalRx label after further FDA approval, a transition that the Newsom administration anticipates could take a few months. The surge in opioid-related deaths in California and nationwide is alarming, with substances like heroin, fentanyl, and oxycodone leading to significantly increased fatalities. Since 2019, opioid overdose deaths in California have more than doubled, climbing to 7,385 by the end of 2022.
California to save a lot of money with the deal
The state of California is poised to save substantial amounts of money through this deal. Starting in 2018, California has been distributing free naloxone kits through the Naloxone Distribution Project, which has distributed 4.1 million kits and reversed around 260,000 opioid overdoses. Funding for these kits has been sourced from taxpayer money and parts of a national settlement with various pharmaceutical companies.
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In the previous year, California legislators set aside $30 million to collaborate with a pharmaceutical company to produce its own naloxone. However, they discovered that spending that budget was unnecessary for this deal, as Amneal Pharmaceuticals had already advanced significantly in the FDA approval process and did not need initial state funding. California plans to allocate a part of its national opioid settlement funds to purchase these medications instead.
