By Jared S. Hopkins
An industry fight against lucrative drug discounts for hospitals is intensifying as another drugmaker joins the battle: Sanofi.
The pharmaceutical company plans to change its policy on how it gives discounts to certain hospitals. Sanofi will require institutions to provide pharmacy and medical claims information before receiving federally mandated discounts. The company plans to send a letter, which was reviewed by The Wall Street Journal, to hospitals outlining its new model on Friday , according to people familiar with the matter.
The French company's plan, which would take effect early next year, comes as the industry escalates its efforts to rein in the federal program known as 340B. Eli Lilly and Johnson & Johnson this month filed separate lawsuits against the federal government for rejecting the companies' plans to tighten the way they provide the discounts to hospitals in the program.
Congress created the drug-savings program in 1992, requiring drugmakers sell outpatient drugs at a discount to hospitals and clinics that serve low-income and uninsured patients.
Like Lilly and J&J, Sanofi wants to provide the required discounts via a new method. Under its plan, certain hospitals covered by 340B would order drugs at full price from a wholesaler. Only after submitting claims data -- information related to the drug's order, a patient's hospital visit and a drug's dispensing -- to Sanofi demonstrating eligibility under 340B, would the hospitals receive a credit from the company .
Currently, drugmakers typically provide 340B discounts at the time of purchase.
Sanofi will verify that the patient receiving the drug fits within the definition of eligibility written by the Health Resources and Services Administration, the agency that oversees 340B, according to the letter. The company's redesigned approach ensures the hospitals receive the credit before they have to pay a wholesaler for the drug, so they will never be in the red, according to the people familiar with Sanofi's plans.
The HRSA is reviewing inquiries from drugmakers related to revisions on how they will provide 340B drug discounts, said an HRSA spokesman on Friday. The plans would significantly change the administration of the program, he added.
The American Hospital Association is concerned about the actions by drug companies to "undermine the integrity of the 340B program," said Chad Golder, general counsel for the AHA, which represents nearly 5,000 hospitals and healthcare providers. "Sanofi's new policy is yet another instance of drug companies putting profits over people," he said.
The drug-savings program has long been criticized by pharmaceutical companies, which allege it's deviated from its original intent of helping safety-net hospitals by allowing large hospital systems to buy drugs cheaply and then dispense them at a markup.
Manufacturers say they sell medicines to covered hospitals at steep discounts, but some large hospitals mark up the prices charged to both uninsured patients and insurers. Hospitals say they rely on the discounts to defray costs of serving disadvantaged patients.
Write to Jared S. Hopkins at jared.hopkins@wsj.com
(END) Dow Jones Newswires
November 22, 2024 11:34 ET (16:34 GMT)
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