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Sanofi ties drug price increases to healthcare inflation

May 9, 2017 By Sarah Faulkner

SanofiInsulin makers have faced questioning this year for their drug pricing practices – a class-action lawsuit filed in the U.S. District Court of Massachusetts in January alleges that Sanofi (NYSE:SNY), Novo Nordisk (NYSE:NVO) and Eli Lilly (NYSE:LLY) conspired to raise their list prices to get access to pharmacy benefit managers’ preferred lists, instead of competing with each other based on real market prices.

Some of the lawsuits’ plaintiffs pay almost $900 each month for their diabetes medications, according to the lawsuit. In an apparent attempt to combat the criticism, Sanofi yesterday established the industry’s strictest price-hike cap by pledging to limit increases according to healthcare inflation, except for extreme cases.

The company said it will keep price increases in the U.S. for 2017 at or below the national health expenditures growth projection of 5.4%.

“We want everyone – including patients, providers, payers, PBMs, policy makers, regulators and our shareholders – to understand why we set prices as we do, and to reaffirm to them our commitment to the principles of access, affordability and innovation,” CEO Olivier Brandicourt said in prepared remarks. “We continue to believe our industry has a key role to play in delivering better outcomes for patients with innovative medicines that are cost-effective for the overall system.”

Sanofi added that it will disclose aggregate gross and net price increases in the future, saying that the company wants “to help people understand what aspects of the ultimate cost we can control, and where the levers are controlled by others.”

In 2016, Sanofi’s average list price relative to last year increased 4% across its U.S. portfolio, but net prices fell 2.1%.

Nordisk took a similar approach in December, when it committed to limiting annual price hikes to single-digit percentages.

Filed Under: Diabetes, Featured, Pharmaceuticals, Policy, Wall Street Beat Tagged With: Eli Lilly & Co., Novo Nordisk, Sanofi-Aventis

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