“Hospital Drug-Discount Program Faces New Direction from Sanofi”

Sanofi’s New Policy on 340B Discounts: A Battle Over Costs and Access

The pharmaceutical industry is intensifying its pushback against the federally mandated 340B drug-discount program, with Sanofi joining the fray in a bold move to restructure how discounts are provided to hospitals. Starting early next year, the French pharmaceutical giant plans to require hospitals to submit detailed pharmacy and medical claims data before receiving these discounts. Sanofi’s announcement follows similar actions by industry peers Eli Lilly and Johnson & Johnson, who recently filed lawsuits challenging federal oversight of their proposed changes to the program.

This growing opposition underscores a larger battle over the 340B program, a federal initiative designed in 1992 to help safety-net hospitals and clinics serving low-income and uninsured patients. Under 340B, drugmakers are required to provide discounted outpatient medications, aiming to offset the financial strain on these institutions. However, pharmaceutical companies argue that the program has deviated significantly from its original purpose, allowing large hospital systems to profit from discounted drugs at the expense of transparency and accountability.

Sanofi’s Proposal: A New Way to Administer Discounts

Sanofi’s revised approach to the 340B program introduces a significant change: eligible hospitals must purchase medications at full price initially, then submit claims data—including information on drug orders, patient visits, and dispensing details—to demonstrate eligibility under 340B guidelines. After verifying the data, Sanofi will issue credits, ensuring hospitals receive discounts retroactively.

Unlike current practices where discounts are applied at the point of purchase, this system would create additional administrative layers for hospitals. Sanofi asserts that this new model ensures compliance with program rules while preventing misuse. “The redesigned approach guarantees hospitals receive the credit before they must pay wholesalers, so they are never financially overextended,” Sanofi explained in a letter to hospitals.

The plan will affect more than 20 of Sanofi’s drugs, including the blockbuster anti-inflammatory medication Dupixent and arthritis treatment Kevzara. However, the changes exclude some 340B participants, such as children’s hospitals and hemophilia treatment centers, which won’t be subject to these new requirements.

Industry Concerns Over 340B’s Growth and Use

The 340B program has expanded dramatically since its inception, with drug spending under the program exceeding $66 billion in 2023. Pharmaceutical companies, including Sanofi, contend that the program has become a costly and inefficient mechanism, alleging that many hospitals abuse the system by profiting from drug markups rather than passing savings on to patients.

In its letter, Sanofi described the program as “bearing little resemblance” to Congress’s original intent. “The growth of the program hasn’t come with any meaningful increase in patient benefit,” the company argued, asserting that its new model is designed to curb waste and abuse.

For manufacturers, the lack of transparency within the 340B program is a pressing concern. One major issue lies in preventing duplicate discounts—instances where drugmakers unknowingly provide both a 340B discount and a Medicaid rebate for the same prescription. Sanofi believes that requiring claims data will help address this issue and ensure compliance with federal laws prohibiting duplicate payments.

Pushback From Hospitals and Advocacy Groups

Sanofi’s proposal has drawn sharp criticism from hospital associations and advocacy groups, who argue that these changes will undermine the 340B program’s integrity and make it harder for safety-net hospitals to serve vulnerable populations.

Chad Golder, general counsel for the American Hospital Association (AHA), expressed concern over drugmakers’ efforts to “put profits over people.” He warned that requiring claims data adds unnecessary administrative burdens on hospitals already stretched thin by rising costs and demand for care.

Hospitals participating in 340B say they rely on these discounts to offset the high costs of providing care to uninsured and underinsured patients. Critics of Sanofi’s policy fear that delayed access to discounts could hinder hospitals’ ability to procure essential medications promptly, potentially jeopardizing patient care.

A Call for Reevaluation

The escalating conflict between pharmaceutical companies and hospitals highlights the need to reevaluate the 340B program’s structure and effectiveness. While hospitals argue that the program is a vital lifeline for underserved communities, drugmakers insist that unchecked growth has led to inefficiencies and misuse.

Community health centers, which represent a smaller proportion of 340B participants compared to large hospital systems, face a slightly different reality under Sanofi’s plan. Although they will receive credits more quickly than hospitals, they are still required to submit claims data. For these centers, which operate on razor-thin margins, even minor delays in receiving discounts could pose significant challenges.

At its core, the debate reflects a clash of priorities: pharmaceutical companies seek to control costs and ensure compliance, while hospitals aim to maximize resources to meet the needs of disadvantaged patients. Striking a balance between these interests will be crucial for the program’s future.

What’s Next for 340B?

As Sanofi’s policy takes effect and lawsuits from Eli Lilly and Johnson & Johnson progress, the federal government’s role in regulating the 340B program will come under increasing scrutiny. The Health Resources and Services Administration (HRSA), which oversees 340B, has begun reviewing drugmakers’ proposed changes. Any decision made by the agency could have far-reaching implications for how the program operates moving forward.

The pharmaceutical industry’s push for transparency and reform may lead to greater accountability within 340B, but hospitals worry these changes could erode the program’s ability to support vulnerable populations. As both sides dig in, the future of 340B hangs in the balance, raising pressing questions about how to best serve patients in need without compromising efficiency or fairness.

The resolution of this battle will shape the healthcare landscape for years to come, affecting millions of patients who rely on affordable access to medications and the institutions that provide them. For now, the fight over 340B continues, with both hospitals and drugmakers standing firm in their positions.