Senate Proposal Would Make New York a Manufacturer for Some Generic Drugs, Including Insulin

Democrats in the state Senate approved a measure to allow the state to work directly with manufacturers to make generic — and much cheaper — versions of key prescription drugs.

The bill would make New York only the second state in the nation, after California, to seek contracts with drug companies to make the medications, including insulin, a drug that has sharply risen in price in recent years.

Senate Leader Andrea Stewart-Cousins said the aim is to lower costs and protect against potential drug shortages.

“Accessible and affordable prescription medication is not a luxury,” Stewart-Cousins said. “It is a necessity.”

The legislation would direct the state health department to identify other generic drugs that are costly or are vulnerable to shortages that could also be eligible for a manufacturing partnership.

A second bill would eliminate insurance co-payments for insulin, which is used by 1.6 million New Yorkers to control their diabetes. Gov. Kathy Hochul also included that provision in her state budget proposal this year.

Senate sponsor and Health Committee Chair Gustavo Rivera said once the original investment is made, the changes would save the state’s multibillion-dollar Medicaid program money.

The Medicaid prescription drug program is projected to cost $3.2 billion in fiscal year 2024. Senate Democrats could not estimate exact savings but said it’s not unreasonable to expect to cut costs by a minimum of 10%.

They said in California, where the state has already entered into an agreement to manufacture insulin, a 10-millimeter vial that now costs $300 would cost just $30 to make.

They said it could also save patients hundreds of dollars on each dose, and thousands of dollars annually.

The Democrats’ proposal comes at a time when the governor is asking lawmakers to slash $1.5 billion in public health care spending. Rivera is against the cuts, saying it’s not the time to reduce spending on a health care system already destabilized by the pandemic.

“I certainly scratch my head, because I think that there are other options on the table,” Rivera said. “There's proposed cuts (that) are between a billion and a billion and a half (dollars). I think that this is not the moment to do that.”

Rivera, along with the health care workers union SEIU 1199 and home care advocates, have an alternative proposal for cost savings in the state’s Medicaid program.

They want to decouple home health care from the Medicaid Managed Care program. They say that arrangement, begun in 2011, has resulted in billions of dollars going to insurance companies who manage the programs for administrative costs and profits, instead of paying for home care workers. Rivera said it was a “failed experiment.”

“It has not worked,” Rivera said. “What has happened is that we have a system in which people are more needy, in which people who take care of those folks who are needy, (and) don't get paid the money that they deserve.”

He said the change could save the Medicaid program $2.5 billion a year, more than the amount that Hochul is seeking in savings.

The health insurance industry opposes the idea. In a statement, the New York Health Plan Association, which represents nonprofit insurance plans, said the previous fee-for-service plans was a “dismal failure” and that there are concerns among home health care providers and their clients who are “worried about the impact the bill will have on elderly and disabled New Yorkers.”