The high price of medications is a source of frustration and stress for New Jerseyans who depend on them. It’s also a constant topic for policymakers in Trenton and Washington, D.C. Seemingly everyone wants prescriptions to be more affordable, but it seems like when all is said and done, more is said than done.

But in 2020, Horizon® decided to act. Together with the Blue Cross and Blue Shield Association and 17 other Blue Cross Blue Shield insurers, Horizon partnered with Civica Rx, a non-profit generic drug maker, to create a new subsidiary dedicated to reducing costs by producing generic drugs. The first drug – a commonly used treatment for prostate cancer – hit the market this year with a price of about $171 for a month’s supply – about $3,000 less per month than the average cost of existing options.

“Our members saw dramatic savings literally overnight,” says Hannah Jang, Pharm.D, R.Ph, Horizon’s Manager of Clinical Pharmacy. “This is a major turning point and the Civica partnership is now attracting more investors who are helping them ramp up more quickly.”

Next up:  Insulin 

In March 2022, Civica Rx announced plans to sell insulin with a maximum retail price of $30 per vial, 90% less than the then-current price. The maximum retail price for a box of five pen cartridges would be $55.

The announcement was a bombshell, in the best way. In fact, Civica Rx’s bold stance would amount to a challenge to the three drug companies that make the most widely used insulins - Humalog, Lantus and Novolog – that sell for around $300 per vial.

Insulin is not an expensive drug to make. “Insulin has been out for many, many years,” says Jang. “And it’s a mystery – it's an old drug, yet the price has continued to go up.”  She adds, “It’s a little bit of a game with manufacturers.  They will come out with a very high list price, and we use our buying power to negotiate that down.”

Civica's model:  Collaborating to cut costs

Civica Rx does not offer a discount on a high sticker price – as a nonprofit, its revolutionary approach means it can just charge less than for-profit manufacturers.

“What Civica is doing is a real disruption,” says Jang. “They're being totally transparent in their pricing, offering the drug directly to wholesalers, and setting a publicly available maximum retail price for pharmacies.”

The big pharmacy companies took notice. So did policymakers, including President Biden. In his February 7, 2023 State of the Union address, Biden called for a $35 cap on insulin prices.

The drug companies react  

The dominoes started falling in March 2023.

The first manufacturer to respond to Civica Rx’s challenge announced that in the fall of 2023 it would slash prices by 70%. Then another announced that it would reduce the list price of its insulins by up to 75% in 2024. Days later, the remaining manufacturer announced it would cut the U.S. list price of its most prescribed insulin by 78%, and would cap insulin costs at $35 per vial for all consumers with commercial insurance.

All three of the major insulin manufacturers, whose products account for over 80% of the U.S. insulin market, had made their announcements within a two-week span, radically altering the landscape and economic outlook for Americans with diabetes. But the drama was far from over.

California joins the fight

On March 18, 2023, California Governor Gavin Newsom announced a partnership with Civica Rx, through the CalRX initiative, to manufacture and sell insulin at $30 per vial.

"This is a big deal, folks," Newsom said. "This is not happening anywhere else in the United States." Newsom also clarified that all Americans would be able to buy the CalRX insulin.

Civica Rx now has a $50 million, 10-year contract with the state of California, and is proceeding apace with the construction of its $140 million production facility in Petersburg, Virginia. Jang says that trials will begin in the fourth quarter of this year, with the goal of obtaining FDA approval in 2024. She expects that Civica Rx’s insulin may begin to become available to Horizon subscribers by 2025.

It’s not an exaggeration to say that Civica Rx has revolutionized the insulin market. And the tiny nonprofit, backed by the Blue Cross and Blue Shield Association, Horizon and a coalition of other Blue Cross Blue Shield plans each committed to serving their members, is primed to change the cost Americans pay for many of the drugs they rely on.