Because pharmaceutical research is hitting a wall in many areas, and companies are “catching and killing” generic manufacturers specifically to extract more revenue from long invented products.
Government should absolutely play in this space. Hell, one of the primary anti-fungal creams (NYStatin) was developed by a female researcher and state employee in the 1960s.
But it’s not a new insulin, it’s just some manufacturer. Plenty of generic insulin’s exist already. Why build a new plant just to make something that’s already sold?
Government has no profit motive and the existing sellers are not competing on price efficiently. The CA Government can sell at cost plus and force the other players to lower their price.
You can lock in the costs. Drug prices are increasing faster than inflation. We’ll have a republican congress in the the new year that won’t be lowering drug prices via policy.
California has enough diabetics on Medicaid, etc that they can make a capital investment and lock in a less steep cost curve. They don’t need to pay taxes, can borrow at lower rates, and don’t need to make money.
Big players always do stuff like this when constraints exist. Walmart, Apple, Amazon are buying up ocean and air freight assets to skip the lines, for example.
Because California wants to drive the price down. With this system there will both be more supply in the California market and as an investor and part owner, the state can influence the price much more directly.
Whether or not it works remains to be seen. But driving down the price, both for the end consumers and California state insurance providers is the goal.
Government should absolutely play in this space. Hell, one of the primary anti-fungal creams (NYStatin) was developed by a female researcher and state employee in the 1960s.