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Sanofi joins growing list of companies making pricing commitments

Published on 10/05/17 at 10:31am

Sanofi has entered an ever-growing list of pharmaceutical companies that are pledging to limit the levels of their price increases or to provide more transparency on pricing. Sanofi’s promise to keep its price increases in line with healthcare inflation will see it limit its price increases to no more than 5.4%, in a move that comes later than its rival but far more aggressively positioned.

This is because other companies have generally fallen in-step with Allergan’s “social contract”, which limited pricing to single digit increases. Novo Nordisk, AbbVie and Takeda followed suit with promises not to raise prices into double-digit figures.

Sanofi’s position could be described as aggressive because it positions itself as providing less dramatic price increases, compared to figures that were in the 9% region for Allergan, and it means its pricing is effectively set by an independent body.

The company will take its pricing guidance from the national health expenditures (NHE) growth projection that is calculated by the US Department of Health and Human Services. For 2017, this projection of inflation was estimated as 5.4%.

In its statement regarding the decision, Sanofi said: “By limiting our price increases to the NHE growth projection, we ensure that Sanofi is not contributing to further medical inflation. In 2017, this would limit our price increases for any given product to 5.4%. Given the breadth of our portfolio, we may at times have a sound reason for a higher increase; in such cases, we will provide information publicly to demonstrate the rationale for any such increase.”

Further than this, Sanofi also released transparency figures that suggests its average aggregate list price increased by 4% from 2015 into 2016, while the average aggregate net price decreased by 2.1%. The transparency move was the option preferred by MSD and Johnson & Johnson, as they opted to make no pricing promises.

It remains to be seen how other players within the pharmaceutical field will react to this pricing position. By including both transparency figures of net prices and effectively undercutting other price pledges, Sanofi emerges as a company that has thought through potential argument that could arise over single-digit pricing promises.

It has been noted that increases of around 9% are still far above medical inflation figures predicted and Sanofi has gained a march on its competitors in pitching its pricing to duck such accusations.

Ben Hargreaves

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