Sanofi's 340B Credit Proposal Draws Federal Warning For Statutory Violation

The Health Resources and Services Administration (HRSA) has warned Sanofi SA SNY about its proposed credit model for certain outpatient drugs under the 340B program.

HRSA asserts that the credit system, beginning on January 6, 2025, violates Sanofi's legal obligations under the 340B statute.

Also Read: Big Pharma's Pharmacy-Benefit Managers Accuse FTC of Overreach In Effort to Reshape Drug Rebate System

Sanofi announced in a November 22, 2024, notice that it would introduce a credit model for covered outpatient drugs for specific covered entities, including disproportionate share hospitals, critical access hospitals, rural referral centers, and sole community hospitals.

Under this plan, these entities would pay the Wholesale Acquisition Cost (WAC) upfront and later submit purchase and claim data to receive a credit representing the 340B price difference. Starting March 1, 2025, this model would include consolidated health centers.

Additionally, Sanofi's notice requires hospitals to submit healthcare encounter data to verify claims based on HRSA's 1996 patient guidelines, effective March 1, 2025.

The criteria include ensuring the individual receiving the drug is under the covered entity's care and that prescriptions are tied to services provided by the entity.

HRSA emphasized that the 340B statute establishes a ceiling price as the maximum amount covered entities can be charged for outpatient drugs. Any manufacturer must offer drugs at or below this ceiling price without imposing additional conditions. Sanofi's proposed credit model, which mandates payment above this price without prior approval, directly contradicts the statute.

The agency also warned that proceeding with the credit proposal could lead to severe consequences for Sanofi. These include potential termination of its Pharmaceutical Pricing Agreement (PPA) and civil monetary penalties.

The 340B statute allows sanctions for manufacturers that knowingly overcharge covered entities.

HRSA has instructed Sanofi to halt the implementation of this credit model immediately and provide confirmation by December 20, 2024.

Bristol-Myers Squibb Co BMY filed a lawsuit against HRSA and the U.S. Department of Health and Human Services, alleging that HRSA's rejection of its proposed rebate model for the 340B Drug Pricing Program violates federal law.

Price Action: At last check Tuesday, SNY stock was up 4.14% at $47.79 during the premarket session.

Read Next:

• HubSpot To Dominate SMB CRM Space With AI-Driven Platform, Says BofA Analyst

Image by HJBC via Shutterstock