Sanofi tweaks pricing policies, discloses 8.4% net price decline in 2017

Pharma companies have faced years of criticism for their pricing, responding with pledges to limit price increases and "transparency reports" detailing how list price hikes and substantial rebates play into overall costs. Sanofi has implemented both strategies, and recently disclosed new figures showing that its net prices sank 8.4% last year. 

That decline came after an average aggregate price hike of 1.6% across its portfolio, according to updated figures (PDF) by the drugmaker. Sanofi last year pledged to limit its price hikes to the National Health Expenditure growth rate established every February by the Centers for Medicare and Medicaid Services.

Now, it's slightly updating its policy: The company is adopting new standards by April 1 of every year and will provide rationale when it raises drug prices above the NHE metric. 

For one example, Sanofi last year raised the price of recombinant protein-based flu vaccine Flublok Quadrivalent by 12.5%, or $5 a dose to $45 per dose for the 2017-2018 season. Sanofi said the higher price reflects "substantial benefit" seen from the vaccine's efficacy in people 50 and older compared to traditional flu vaccines. 

Flublok was the only price hike out of 29 at Sanofi that came in above the NHE growth rate of 5.4% last year, the drugmaker said. This year, CMS is predicting NHE growth of 5.3%. 

Amid an intense pricing debate in past years, several pharma companies such as Allergan and AbbVie pledged to limit price hikes to single digits. Others have released "transparency reports" showing the cumulative effect of list price hikes and rebates. Johnson & Johnson, for instance, reported that it paid out $15 billion in rebates and discounts last year, resulting in a 4.6% net price decline across its portfolio. 

RELATED: Sanofi vows to limit 2017 price hikes to 5.4% as part of new 'holistic' policy 

Merck also realized a net price loss last year, though its decline was smaller at 1.9%. Eli Lilly's net price increase was 6% for the year.

In addition to providing portfolio-level pricing figures and limiting price hikes, Sanofi says it'll give clear rationale for drug pricing at launch. In 2017, it launched immunology meds Dupixent at $37,000 per year and Kevzara at $39,000 per year. On Dupixent, Sanofi said the price reflects benefit seen for atopic dermatitis patients and savings realized elsewhere in the healthcare system and for employers. 

RELATED: Johnson & Johnson's $15B in 2017 discounts lead to negative price change, but are consumers benefiting? 

Kevzara's price reflects clinical value for patients, the drugmaker said. The figure is 30% lower than the two most widely used TNF-alpha inhibitors in the industry, according to Sanofi.

In 2016, Sanofi raised list prices across its portfolio by 4%, but its net prices fell 2.1% due to rebates and discounts.

After a multiyear pricing firestorm that kicked off with controversies such as Turing's Daraprim and Mylan's EpiPen, President Donald Trump's administration in May rolled out a plan to lower drug costs. It includes proposals to increase negotiations and competition, provide incentives for lower list prices and help patients with lower out-of-pocket costs. 

RELATED: Trump says drugmakers plan to offer 'massive drops' in prices—fact or fantasy? 

It remains to be seen where the administration's plan will take the drug industry in the long run, but a consultant told FiercePharma it will likely be "business as usual" for pharma in the short term.

In response to pricing criticism in 2016, Allergan CEO Brent Saunders said drugmakers should police themselves or risk regulatory overhaul. He wrote about industry's "social contract" and started the pricing pledge trend. More recently, Eli Lilly CEO David Ricks said this year is the "time for action" on pricing because there are key personnel in the Trump administration who understand the "fragile balance between reward for innovation and access."