California will budget $100 million to begin producing its own insulin, said Gov. Gavin Newsom in an announcement Thursday.

Newsom began his announcement with a reference to his inaugural executive order, which created the framework for California to produce prescription drugs. Now, the state will begin making its own insulin to combat the high price of the essential medication.

“Nothing epitomizes market failures more than the cost of insulin,” Newsom said in the announcement. “California is now taking matters into our own hands.”

According to Newsom, many Americans pay out-of-pocket costs of between $300 and $500 per month for insulin. Alex Stack, Newsom’s deputy communications director, added that costs vary between individuals depending on their insurance status, whether that be federal, private or no insurance.

The amount that consumers will save also depends on their level of insurance, Stack noted. Expected costs could be reduced by between 47% and 95% of current costs. Stack said the exact prices are uncertain and could change by the time California insulin arrives on the market, but that the intent is to bring the medication to consumers “pretty much at cost.”

“(Insulin) is really one of the most egregious examples of pharmaceutical companies making a profit,” Stack said. “It’s a market failure. They are making money off of it at such egregious levels.”

Funding for the $100 million project will be taken from the state’s general fund, according to Stack. California is currently at a $98 billion budget surplus, a record high, and prescription drugs have always been a priority for Newsom, Stack noted.

Stack explained that the $100 million budget will be split into two halves. The first half will be used to provide short-term stock by partnering with a contractor further along in the process of manufacturing and distribution. The second half will be spent on either building or purchasing a facility for more long-term production with another contractor.

“The idea is that this is going to pay for itself,” Stack said. “This is going to be significantly beneficial for folks who are on insulin and it’ll make prices cheaper for insurance companies.”

Newsom noted that in addition to a cheaper and stronger supply chain of insulin, the project will provide new high-paying jobs. These employees will staff the new California-based insulin manufacturing facility for long-term production.

While contractors for this project have not yet been found, Stack said the goal is to have cheaper Californian insulin available in the next two to three years.

“Because in California, we know people should not go into debt to receive life-saving medication,” Newsom said in the announcement.