Sanofi's net prices keep slipping—despite list price hikes—thanks to billions in rebates

Created in 2017 in the name of transparency, Sanofi's annual drug pricing report lays out the latest info on the company's price hikes, rebates and rationale for the cost of new medicines. In the report's latest iteration, Sanofi reveals its list prices increased by an average of 1.5% last year but that its average net prices fell by 1.3%. 

Among its 81 drugs on the market, Sanofi raised the list prices on 50 last year, the report says (PDF). All hikes were within the U.S. national health expenditure growth rate of 5.1%, according to the company.

But net price was another story. 

On that metric, calculated after factoring rebates and discounts to middlemen, Sanofi's meds have been falling in price over the years. In 2021, the company's average net prices fell 1.3%. That followed average net price drops of 7.8%, 11.1% and 8% in 2020, 2019 and 2018, respectively.

“There’s some perverse incentives in the U.S. system,” Adam Gluck, head of Sanofi U.S. and specialty care corporate affairs, said in an interview. “While the rebate system may have a place in the future, it needs to be redesigned to make sure the rebates on medicines are really benefiting patients.”

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In all, Sanofi says it paid out $5.8 billion last year in mandatory rebates to government insurers and $8.3 billion in discretionary rebates to commercial payors.

"More than half of the list price of a medicine goes back into the system in the form of discounts and rebates," Gluck said. "There’s no reason that a patient who is prescribed insulin should pay more for their insulin than their health plan pays to get that insulin for them."

The report also breaks down all the factors Sanofi considers when setting the initial price upon the launch of a treatment. It includes everything from the clinical benefit it provides to the patient, how well it works compared to standard of care, how the medicine reduces the cost of other healthcare interventions and how the drug increases the quality of a patient’s life.

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In the report, Sanofi provided a breakdown on how it arrived at the price for each of its three drugs that were launched in 2021—Pompe disease treatment Nexviazyme and two vaccines, Vaxelis and MenQuadfi.

For Nexviazyme, the company says its list price of $1,714.90 per 100-mg vial reflects a "careful assessment" of disease burden, unmet need, alternative treatment options and more. The price also reflects the need to prioritize R&D in the rare disease field.

“We look at it through a number of different lenses, a number of different factors,” Gluck said. “We do a lot of research and analysis ourselves. We also speak to payers and patient advocacy organizations and physicians to understand how they value our medicines as well. Take it all together, we then develop a launch price for our medicines.”