Sanofi Tackles 340B Abuse with Innovative Credit Model

By Adam Gluck, Head, U.S. and Specialty Care Corporate Affairs

Sanofi’s commitment to chase the miracles of science to improve people’s lives only matters if people can access and afford the medicines they need. That is why we are proud to support critical safety net programs and deliver our own patient support programs to help lower costs for patients.

One of the largest safety net programs designed to help some of the most vulnerable people in our communities is the 340B Drug Pricing Program. Created in 1992, 340B was created by Congress to provide better and affordable healthcare to low-income and uninsured patients at hospitals and health clinics that serve a disproportionate number of these vulnerable patients. In exchange for delivering better and affordable care, those 340B covered entities were given the ability to purchase outpatient medicines at significantly reduced prices with the expectation that they use the savings to help those most in need.

Unfortunately, over many years, large hospital systems, chain pharmacies, and Pharmacy Benefit Managers (PBMs) have exploited the lack of oversight, opacity in the system, and massive profit potential of 340B to enrich themselves without consistently delivering meaningful savings or better care to the patients for whom this well-intentioned program was meant to serve.

While there are many examples of how some have manipulated the system for their own financial gain, one of the most concerning issues is duplicate discounts. This occurs when a PBM or state Medicaid agency inappropriately tries to double dip by submitting a claim for a rebate on the backend for a prescription that was purchased and filled at the deeply discounted 340B price on the front end. In some circumstances, this practice is a willful abuse of the system. In other circumstances, it’s illegal.

Another abuse of 340B is illegal diversion. Diversion occurs when a 340B medicine is provided to a person who is not a patient of the 340B covered entity. Many hospitals have capitalized on the government’s failure to adequately enforce its own standards to prevent illegal diversion to further pad their sizable profits.

Based on available evidence, these tactics are used to enrich many entities throughout the health care system at the expense of the people they are entrusted to serve. These actions increase health care costs and premiums without delivering on the promise of 340B for patients.

That is why Sanofi recently announced the launch of our 340B Credit Model to help rein in 340B abuse. Consistent with federal law, this program will provide a badly needed checks-and-balances approach to eliminate the fraud and abuse of duplicate discounts and diversion without disrupting patient care. Under the Credit Model, covered entities simply submit a claim for their 340B-eligible medicines and we, in turn, pay the entity the difference between the 340B price and the list price. To confirm 340B eligibility, Sanofi’s Credit Model only requires entities to provide a portion of the data they already submit to payers and others in the system for reimbursement.

Sanofi continues to support the original intent of the 340B Program to improve healthcare for uninsured and vulnerable patients. Our Credit Model is a needed step to bring transparency to an opaque system, help rein in abuses that drive up costs for the health system overall, and bolster the core mission of the 340B program of delivering quality and affordable care to the most vulnerable people in our communities.