Insulin makers have been lambasted for raising list prices for years, but now Sanofi is pushing back with some behind-the-scenes details about the world of drug pricing.
While list prices for insulin have climbed, net prices for Sanofi’s insulins have fallen by 41% since 2012, the drugmaker said in its annual pricing report. Net prices for the company’s best-selling insulin, Lantus, fell by 37% over the same period.
List prices are the published price of a medicine while net prices are typically lower. They're the result of a back-and-forth negotiation for access on an insurer's formulary and reflect what a drugmaker yields per prescription after paying rebates and discounts.
As Sanofi's net prices have declined, out-of-pocket costs for patients with commercial insurance and Medicare grew by 62% over the same period, the drugmaker said. Even as insurers and pricing critics spotlight list prices, Sanofi says, average net prices for Lantus are lower than they were in 2006.
"Given that insulin net prices are declining, patient out-of-pocket costs should be declining as well," Sanofi argues in the report. "However, that is not always the case, as benefit designs may result in patient out-of-pocket costs exceeding plans’ net cost."
With that argument, Sanofi is putting at least some of the blame on insurers for charging patients more than what their drugs cost.
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The details are part of Sanofi’s pricing report for 2019. Each year, the drugmaker publishes its rationale behind pricing and discusses its three pricing promises.
Overall, Sanofi’s pricing squeeze got even worse in 2019. The company raised list prices by an average of 2.9%, but net prices—those actually paid by insurers after rebates—declined by 11.1% on average.
The drugmaker paid out $5.5 billion in mandatory rebates to government insurers and $8.4 billion in discretionary rebates.
Aside from list price increases, the company also reduced prices for two drugs—Praluent and Admelog. Those lower prices didn’t guarantee better patient access, Sanofi says.
“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,” Sanofi argues.
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Along with other insulin makers, Sanofi has been under fire for growing list prices. Reports of patients unable to afford their medicines have put increasing pressure on the companies as headlines feature people rationing their meds or foregoing prescriptions altogether.
Last year, the company introduced a $99-per-month insulin program to help patients whose out-of-pocket costs are prohibitive. Eli Lilly and Novo Nordisk have implemented their own affordability measures for patients.
In the bigger picture, pharma’s pricing as a whole has been under scrutiny for years. As part of their response, drugmakers have released information about ballooning rebates. Sanofi’s 11.1% net price decline in 2019 follows an 8% decrease in 2018, an 8.4% decrease in 2017 and a 2.1% decrease in 2016. In each of those years, list prices grew on average, meaning rebates keep growing.