Originally published May 2017, updated on May 14, 2018.
The pharmaceutical value chain in the United States is incredibly long and complex. And, it is my belief that every actor in that chain – and there are many – has a part to play in making the system sustainable. Because today, the system lives in tension.
Beyond hindering access for patients to critical innovations, this complexity is undermining the reputation of an entire industry whose purpose is to make a positive change in patients’ lives.
Yet, the contribution of the biopharmaceutical industry to life sciences is immense, starting with the level of funding for R&D, which, at present, is more than triple the level of investment of the public sector in the U.S. Immunization currently prevents an estimated two to three million deaths a year. And new medicines introduced to fight diseases like HIV, hepatitis C, diabetes, heart disease and cancer reduce mortality and increase quality of life.
Despite all of this progress, the value of what we bring to patients and the ability of society to pay for innovation remain much debated topics. Nonetheless, it is vital to maintain the trust of all stakeholders to ensure we are able to continue our patient-focused mission.
Sanofi is therefore taking a step further toward securing its mission by providing greater transparency around how we make our pricing decisions, and committing ourselves to limited price increases in the U.S.
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.
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. Our launch prices are determined after conducting a holistic assessment of value; considering whether similar treatment options are available or anticipated at the time of launch; assessing affordability for patients; and taking further into account any additional unique factors specific to each product. In our view, an objective measure of value considers the benefit to patients, compared to a standard of care; the reduced need – and therefore costs – of other health care interventions; and any increase in quality of life and productivity.
We also believe our industry has to take a stake in the long term balance of resources in the system. To that end, our price increases in the U.S. will be at or below an independent standard measure of health care inflation, the national health expenditures (NHE) growth projection. The NHE is a very tangible measure calculated by the Department of Health and Human Services, which covers spending by all U.S. payors – including individuals. 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 percent. 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.
Finally, we believe that people should understand the complete picture of pricing. To advance further transparency of the process, we are disclosing our aggregate gross and net price increases in the U.S. going forward, starting with the 2016 figures, because we want to help people understand what aspects of the ultimate cost we can control, and where the levers are controlled by others.
In 2016, across our entire U.S. portfolio, Sanofi’s average aggregate list price increase relative to 2015 was 4.0 percent, while our average aggregate net price decreased by 2.1 percent. As our portfolio evolves, these numbers may change over time. Sanofi commits to releasing these aggregate price changes annually in the future.
I believe Sanofi’s pricing principles are another important step in increasing transparency and understanding of the biopharmaceutical ecosystem. I hope they will set a standard for others to follow, to ensure access and affordability for the patients we serve.