French pharmaceutical company Sanofi has announced significant changes to its drug discount policy for U.S. hospitals that serve low-income and uninsured patients under the 340B program.
Sanofi’s new policy introduces a rebate model that requires hospitals to purchase drugs at full price from wholesalers before receiving discounts.
This is a shift away from the current model, in which hospitals receive upfront discounts at the point of purchase.
The move is part of Sanofi’s effort to curb what it sees as "duplicated discounts" and ensure that drugs provided under the 340B program go to eligible patients.
“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,” a Sanofi spokesperson said, according to Reuters.
Sanofi’s rebate model will initially apply to 25 drugs, including some of its top-selling products like Dupixent, an injectable used to treat inflammatory diseases, Kevzara, for rheumatoid arthritis, and Lantus, a long-acting insulin.
The company plans to require hospitals to submit detailed pharmacy and medical claims information, such as drug orders or patient visit records, before receiving federally mandated discounts.
The 340B program, established in 1992, mandates that pharmaceutical companies offer discounts on outpatient drugs to hospitals and health centers that serve a high percentage of low-income patients.
In exchange, these healthcare providers gain access to government health insurance programs like Medicaid and Medicare.
However, as the program has expanded, it has come under increased scrutiny, both from drugmakers and regulators.
Under this system, hospitals would first pay the full price for drugs and then receive a rebate from Sanofi for the difference between the full price and the lower 340B price.
Sanofi's announcement comes amid a broader industry trend, with major drugmakers such as Eli Lilly and Johnson & Johnson also proposing similar rebate models for the 340B program.
Both Eli Lilly and Johnson & Johnson have faced regulatory pushback to their rebate models and have filed lawsuits against federal agencies over their plans.
Eli Lilly sued the Health Resources and Services Administration (HRSA) after the agency blocked its rebate program, while Johnson & Johnson filed suit against the Department of Health and Human Services (HHS) over restrictions on drug rebates for certain treatments.
While Sanofi argues that the changes are necessary to prevent fraud and abuse, many hospitals and healthcare advocates have raised concerns.
They argue that the rebate model could limit access to crucial discounts, potentially raising costs for facilities that rely on the 340B program to serve vulnerable patient populations.
Some hospitals also claim that these changes are an attempt by drugmakers to protect their profits at the expense of low-income patients.
The 340B program, which now includes over one-third of U.S. hospitals, has ballooned in size in recent years.
According to government data, prescription drug purchases through the program reached $66.3 billion in 2023, a 23% increase from the previous year.
