Sanofi takes its own drug pricing pledge, pointing to a decline in their aggregate net price
Sanofi CEO Sanofi Olivier Brandicourt (left), flanked by CFO Jerome Contamine, speaks during the presentation of the group’s 2016 results in Paris on February 8, 2017. ERIC PIERMONT/AFP/Getty
What do you do when your industry is routinely pilloried by the president of the US for being run by a group of white collar price gougers, routinely ripping off the American consumer?
In Big Pharma’s case, you begin to understand that those opaque drug prices you work with are a big part of the problem, and you start to shed a light on the pricing menu, while committing to an ethical approach on pricing that might help cool the white-hot rhetoric.
Brent Saunders at Allergan got the ball rolling with a pledge to hold year-over-year price increases to single digits. Others drove in, like J&J, offering a look at aggregate prices for their whole portfolio. And today Sanofi is joining the bunch after hammering out its own pricing pledge, while staking out a unique role for itself demonstrating that its prices are actually falling in the US.
In a new policy announced today, the French pharma giant has decided to benchmark its drug price increases to the National Health Expenditure growth rate, which is projected to be 5.4% this year, says Cybele Bjorklund, head of global policy at Sanofi. And they’ll reveal what their aggregate pricing changes are — for the list price as well as the lower net price after discounts — each year.
If one drug price increase does break the NHE model, Sanofi will explain why, she adds.
There’s no historical data offered with a look at the track record over, say, the last decade. But Sanofi is starting off with a look at 2016, in which the aggregate list price jumped 4% and the average net price dropped 2.1%.
Sanofi picked a good year to start making these figures available. Its diabetes franchise has been hammered hard, forcing all the big players to step back on pricing and putting Sanofi CEO Olivier Brandicourt in the role of drug discounter, even as he has to explain the revenue impact to investors.
“We wanted to really look for a rational and independent measure” that was better than single-digit price hikes, Bjorklund tells me. This way the company is committed to a policy that no one in the company will find hard to defend, limiting their price hikes to healthcare inflation. And they don’t plan to make too much of it, either.
Says Bjorklund: “We can do what we can do. We’re not going to be running through the hills saying look at us and what we’ve done.”