More than half of its gross sales ultimately went to payers as rebates, Sanofi says
In a new report, Sanofi is adding another data point to one of pharma’s go-to defenses regarding their pricing practices.
As much as 55% of its gross sales in 2019 were given back to payers in the form of rebates, the pharma giant disclosed, including $5.5 billion in mandatory rebates to the government and $8.4 billion in discretionary rebates to insurance companies.
Once that is taken into account, the average aggregate net price of Sanofi’s portfolio of drugs — distinct from the list price, which went up by 2.9% — recorded a 11.1% decrease last year.
It may not apply on a broader scale. A JAMA study published this week, alongside a slate of others detailing the profitability of pharma companies and the cost of bringing a medicine to market, concluded that “although discounts partially offset list price increases of branded products from 2007 to 2018, there was still a substantial increase in net prices over this period.”
But Sanofi is happy to tout it as the biggest drop since the pharma giant began issuing annual reports on pricing three years ago, reflecting a spotlight on drug prices that’s only brightened since.
Insulin, in particular, has become one of the most used talking points in US politics. Democratic presidential candidates from Bernie Sanders to Pete Buttigieg, citing tragic stories of type 1 diabetes patients forced to ration their insulin, often vowed specifically to lower the cost of the life-saving medication.
As patient advocacy groups chastise drugmakers, they in turn pin the blame on the middlemen — pharmaceutical benefit managers, or PBMs, who negotiate and profit from rebates. The issue is with insurance plans forcing patients to pay exorbitant out-of-pocket costs, they imply.
“The failure of declining net prices for four consecutive years, or of list price reductions, to fix patient access and affordability challenges demonstrates that focusing solely on the list price of medicines will not guarantee that patients will be able to access and afford the medicines they need,” it wrote.
Rebate reform, though, is likely not happening any time soon. Having first proposed “historic action” against negotiation for drug discounts early last year, the Trump administration later abandoned the plan. Meanwhile actions targeted at pharma companies, including drug importation and an international price index, are very much still on the table.