As the debate about rising drug costs heats up between pharmacy benefit managers and drugmakers, Sanofi released a report revealing that it shelled out $12 million in rebates to PBMs and insurers last year. The amount is more than half of Sanofi's gross sales in the U.S., according to a report from website BioPharma Dive.
Seven things to know:
1. Sanofi released an annual report Feb. 21 ahead of a highly anticipated Senate hearing that will grill pharma executives on how they earn a profit.
2. Sanofi CEO Olivier Brandicourt will testify at the hearing. He plans to target the PBM rebate system in justifying price hikes.
3. Mr. Brandicourt will use the report to say that more than half of its sales in the U.S. went to paying rebates, which resulted in net price declines across Sanofi's portfolio of drugs, despite increasing the list price on dozens of its medications.
4. The report reveals that in 2018, Sanofi reported an average list price increase across its drugs in the U.S. of 4.6 percent. This is just below the growth rate for U.S. national health spending.
5. Despite taking those increases, on a net basis prices declined by 8 percent, according to the report. Sanofi gave $4.5 billion in mandated rebates to government payers and $7.3 billion in discretionary rebates to PBMs.
6. While it is unclear what questions Mr. Brandicourt will be asked by the Senate FInance Committee during the Feb 26 hearing, lawmakers will likely target the company's insulin prices.
7. Because they are confidential, rebates, which are the discounts drugmakers pay to PBMs, have long been criticized for their role in raising out of-pocket costs for patients. l. The secrecy around rebates turned into a nationwide controversy, even catching the attention of the Trump administration and Congress. Drugmakers claim that PBMs, who keep a percentage of the rebates, demand higher amounts each year to bolster profits, and as a result they must increase the list price of the drugs. PBMs argue that rebates prevent the price hikes that drugmakers regularly impose to increase their own profits.
Read the full report here.