Sanofi’s Pricing Transparency Effort Brings Sunlight to 340B Growth and PBM Fees

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INFLECTION POINT (1) / Novo Goes DTC

I woke up this morning to a light drizzle outside and a newsfeed that was almost completely devoid of anything major. I fed the dog, put on a shirt with buttons, and ran to get a cup of coffee. 

By the time I got back, two hugely interesting items were in my inbox. 

One was Novo Nordisk’s announcement that they were getting into the direct-to-consumer, cash-pay game, following the lead of Lilly (LillyDirect)** and Pfizer (Pfizer for All). 

This deserves more time than I’m going to give it today, so just know that Novo is selling Wegovy directly to the patient for $499 a month. More thoughts to come. 

** Lilly Direct got a deep dive from NPR this morning, which, from NPR’s POV, is both great and terrible timing. 

INFLECTION POINT (2) / Sanofi’s Pricing Report Tells New Stories

I’m a great believer in drug-pricing transparency reports for two reasons. 

The first is that more transparency is almost always better, reputationally, than less transparency. The pharmaceutical industry isn’t so loved that it can afford to pass up low-hanging fruit. 

The second reason is even more compelling to me as a PR guy: These reports are a powerful tool for storytelling. They’re a great illustration of the “show, don’t tell” principle, putting forward statistics that show how drug pricing looks in the real world. 

For the better part of a decade, pricing transparency reports have been used to tell one single story. By highlighting falling net prices and emphasizing growing gross-to-net spreads, they’ve offered a follow-the-money perspective on how dollars get diverted to middlemen. 

The problem is that not every company has data that show that cleanly. Some companies have product mixes that are less oriented around rebates, so the narrative doesn’t quite work. Or, perhaps, companies have a changing product mix, so the story they used to tell doesn’t have the same impact. 

In those cases, there are two choices. Quietly shelve the whole endeavor or find a new story to tell. 

***

All of that is prelude for the second item that dropped between when I fed the dog and when I fired up my laptop: Sanofi released its new Pricing Principles report. 

Sanofi’s annual effort has long been one of the two giants of transparency reporting (J&J’s effort is the other). And this year, Sanofi is using the data to walk through some new narratives. Two, in particular, caught my attention: 

1. Sanofi is providing details on how 340B impacts how money flows through the system. (The report has an accompanying PDF titled “A Closer Look at 340B” that gets into the details.) The nuggets here are fascinating. Sanofi has seen 340B use jump as much as 67% on certain products. One health system tripled the amount of 340B purchases in 2024.
   
   Yet, after Sanofi cut the price of Lantus -- thereby slashing profits associated with 340B arbitrage -- use of the medicine plummeted, even as 340B sales of other insulins increased. “Clearly, 340B, profit margins are influencing hospital formularies and prescribing decisions,” Sanofi said. Ya think? 

2. Sanofi also presented some data on how PBMs are boosting the fees that they charge drugmakers, part of a larger shift to retain profits in a world where the importance of rebates may be shrinking.
   
   Per the report: “In 2024, within our specialty medicines portfolio, we had a 49% increase in fees -- or service charges -- paid on top of negotiated rebates to PBMs and commercial health plans, Medicare Part D, and Managed Medicaid agreements.”
   
   There’s not a lot of data out there on rising fees beyond this seminal Nephron paper, so the Sanofi info does deepen our understanding of what’s going on out there. 

To be sure: Just because there are new stories doesn’t mean Sanofi is pivoting away from the core of its report. 

They’re still presenting list- and net-price changes and still celebrating the importance of transparency. And they’re doing it even though the story in 2024 was radically different from the story told over the past decade. 

Sanofi had been the poster child for rapidly declining net prices, an effect largely driven by insulin. But Sanofi massively cut list prices for insulin, which made the year-over-year net prices go all funny, too. 

That’s not a good thing or a bad thing. It’s a natural consequence of changes in the marketplace, and the numbers Sanofi presented help make sense of those changes. 

And isn’t that what we’re all after? 

QUICK TURNS/ OOPs Revisited, Tariffs, and Trash Transparency

• I don’t know how seriously to take the pharma tariff talk. My assumption is still that branded pharma is probably fine, though Pfizer is apparently ready to onshore manufacturing. Generics companies seem like they’d have to pass prices along through the supply chain, which is what Sandoz’s CEO said yesterday. And I don’t take seriously the idea that Canada might break patents as an act tariff-related vigilantism, but it’s certainly a wild idea to spitball. 

•  My most controversial hot take: The level of discourse on LinkedIn remains higher than any other platform on the web. Today’s evidence: This conversation, pegged to the Magnolia/CAHC report on rising out-of-pocket spending for seniors.

• Adam Fein absolutely dismantled the idea that states are remotely capable of creating useful PBM transparency reports. The general conclusion: The folks running the PBMs are way smarter -- or, at least, way more familiar with the quirks and hidey-holes across the health care system -- than the people trying to regulate them.

• Demanding that other countries raise the prices of medicines has always been one of those attractive-but-probably-undoable solutions to the fact that the United States ends up footing a disproportionate amount of the bill for innovation. But that doesn’t stop people from talking about it, as this STAT op-ed demonstrated.

Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations. 

To learn more about how Reid Strategic can help you, email Brian Reid at [email protected].