Dive Brief:
Sanofi is joining its fellow drugmakers in trying to put new restrictions on savings sent to hospitals in a federal drug discount program.
A spokesperson for Sanofi confirmed plans to implement a similar model as those proposed by Johnson & Johnson and Eli Lilly — to give hospitals rebates for eligible drugs in program, called 340B, instead of discounts at the point of purchase — that have faced pushback from federal regulators.
Sanofi plans to phase in its model for different 340B-eligible providers starting early next year. The rebates would apply to 25 drugs, including Dupixent, an injectable used to treat inflammatory diseases like eczema and asthma that’s currently one of the top 10 biggest drugs in global sales; Kevzara, which treats rheumatoid arthritis; and Lantus, a long-lasting insulin product.
Dive Insight:
The fight over 340B is heating up as Sanofi becomes the latest drugmaker to try rolling out a rebate model for select medications in the drug discount program.
With the model, Sanofi is following in the footsteps of J&J and Lilly, both of which sued the federal government this month after the Health Resources and Services Administration, which oversees 340B, moved to block their own rebate plans.
The so-called Sanofi 340B Credit Model would require covered entities to disclose data to Sanofi backing up a medication’s eligibility for 340B discounts. Once verified, those facilities would then receive a credit from Sanofi for the difference between the lower 340B price and the wholesale acquisition cost of the drug.
Covered entities should receive that payment from Sanofi before they have to pay the wholesaler for the drug, which should prevent providers from having to float the higher cost of a medication, according to the drugmaker.
Sanofi plans to roll out the model to most hospitals, including critical access and disproportionate share hospitals, on Jan. 6. Health centers will be folded in on March 1. The model will not apply to other entities like children’s hospitals or Ryan White clinics, which provide HIV care.
In a statement, a spokesperson for Sanofi said that, while the drugmaker supports 340B’s “core objective of increasing access to outpatient medicines,” it has been concerned with “growing evidence of fraud and abuse within the program” in the past few years.
“The changes we are making are consistent with the 340B Program’s mission and statute by helping to eliminate prohibited duplicated discounts and diversion of 340B drugs away from eligible patients,” the spokesperson said.
However, hospitals accuse drugmakers of trying to protect their profits through tightening how discounts are paid. That’s as the 340B program, created in 1992 to make it easier for providers serving large numbers of low-income and vulnerable patients to afford pricey medications, requires drugmakers to divvy out steep discounts on drugs that can be upwards of 50% off their price.
The 25 drugs included in Sanofi’s credit model include some of its top-sellers, like Dupixent, which has brought in $9.6 billion in global sales year to date, and Lantus, which has made almost $1.2 billion.
Regulators have also taken issue with drugmaker plans to apply rebates to 340B. J&J paused implementation of its own rebate model this fall after HRSA threatened sanctions and possible loss of participation in Medicare and Medicaid.
Sanofi has informed HRSA of its plans to roll out the model, and that regulators have not “substantially objected,” according to the Sanofi spokesperson.
However, a spokesperson for HRSA reiterated that the agency considers implementing rebate models without express permission from the Secretary of the HHS unlawful.
“HRSA has recently received inquiries from manufacturers related to different proposed rebate models for the 340B Program. HRSA continues to be in the process of reviewing these varied inquiries, which would significantly and unilaterally alter the administration of the Program,” HRSA spokesperson David Bowman said over email.
Yet some lawmakers have amplified drugmaker concerns about hospitals gaming 340B, especially as the program has grown.
340B has ballooned to include more than one-third of U.S. hospitals, while prescription drugs purchased in 340B reached $66.3 billion in 2023, up more than 23% from 2022, according to government data.
And research is mixed on hospitals’ use of 340B funds, with some studies finding hospitals use revenue from the program to expand healthcare services and subsidize uncompensated care. Others have used it for purposes unrelated to patient care, like acquiring physician practices. Similarly, audits of covered entities have found many providers aren’t complying with 340B requirements like not reselling discounted drugs.
Congress is currently mulling over potential reforms to 340B, including requiring hospitals to be more transparent about what they do with program savings.
Sanofi’s rebate proposal was first reported by the Wall Street Journal.
