Sanofi Promises to Keep Drug Price Increases Below Health Care Inflation

Prices won’t increase more than 5.4% this year, unless there are “exceptional circumstances”

French drug maker Sanofi has pledged to peg U.S. drug price rises to below health care inflation in a move that limits increases for any product this year to 5.4%, unless there are exceptional circumstances, according to a Reuters report. The move puts the company one step ahead of other large pharma firms, which have pledged to keep 2017 price increases below 10%.

Drug makers are under fire worldwide––but especially in the United States––over soaring prices as a wave of new treatments for cancer and other serious conditions reaches the market, with some costing hundreds of thousands of dollars per patient, the report says.

In the U.S., the complex supply chain has led to a blame game among drug makers, health insurers, and pharmacy benefit managers.

“This complexity is undermining the reputation of an entire industry whose purpose is to make a positive change in patients’ lives,” Sanofi Chief Executive Olivier Brandicourt told Reuters.

Sanofi will use as its pricing benchmark the national health expenditures (NHE) growth projection, which is calculated by the Department of Health and Human Services and covers spending by all U.S. payers, including individuals. The NHE is currently projected to increase by an average 5.6% annually between 2017 and 2025. NHE inflation has generally hovered around the mid single-digits level, with the increase hitting a historic low of 2.9% in 2013.

“By limiting our price increases to the NHE growth projection, we ensure that Sanofi is not contributing to further medical inflation,” Brandicourt said.

Sanofi also announced that it would disclose the gross and net prices for its medications in the future, adding that in 2016 its average aggregate list prices increased by 4.0% while its net prices fell by 2.1%.

Other major pharma companies, including Merck and Johnson & Johnson, have also released their gross and net pricing data, but the picture is particularly stark for Sanofi, which is being hit hard by competition in its core diabetes-treatment business, according to the Reuters report. The competition is driving down Sanofi’s prices, notably for its long-acting insulin product Lantus.

Responding to criticism about high drug prices, other firms, such as AbbVie, Allergan, Novo Nordisk, and Takeda, have promised to keep all drug price increases in 2017 in single digits.

Sanofi has been accused by a group of patients of colluding with rivals over diabetes drug prices going back several years. The company denies the charge.

Source: Reuters; May 9, 2017.