As major pharmaceutical companies continue to challenge federal regulations over the 340B drug discount program, French drugmaker Sanofi has announced it will adopt a rebate model for its 340B drugs.
Under Sanofi’s newly announced system, hospitals would pay full price for 340B drugs upfront and later apply for rebates once their purchases are verified. "The changes we are making are consistent with the 340B program's mission ... helping to eliminate prohibited duplicated discounts and diversion of 340B drugs away from eligible patients," a Sanofi spokesman said, according to Reuters.
The 340B program, created in 1992, requires drug manufacturers to provide discounts on outpatient medications to hospitals and health centers that serve a large number of low-income individuals. In return, these healthcare facilities gain eligibility for participation in government health insurance programs such as Medicaid and Medicare.
Originally designed to assist safety-net hospitals in offering affordable medications to underserved populations, the 340B program has since become a contentious issue in the ongoing debate between pharmaceutical companies and healthcare providers.
Under the program, drugmakers are required to offer steep discounts—often 25% to 50%—to qualifying hospitals.
However, drug companies argue that hospitals have exploited the program, buying large quantities of drugs at discounted prices and reselling them at higher rates, often for significant profits.
Sanofi’s move comes as part of a broader industry trend, with Johnson & Johnson and Eli Lilly also pursuing similar strategies regarding rebates, despite facing significant regulatory hurdles.
The announcement marks the latest chapter in what has become an escalating legal battle over the future of the 340B program.
In mid-November both Johnson & Johnson and Eli Lilly filed lawsuits against federal agencies, seeking to overturn decisions blocking their rebate plans, and legal experts expect Sanofi may soon follow suit.
Eli Lilly’s lawsuit, filed in mid-November, challenges the Health Resources and Services Administration (HRSA), which blocked its attempt to switch to a rebate system.
Eli Lilly argues that HRSA lacks the authority to reject its plan, asserting that it would enhance transparency and efficiency within the 340B program.
Eli Lilly’s legal team contends that offering rebates rather than discounts aligns better with the original goals of the 340B program and ensures more effective oversight.
The lawsuit, filed in Washington, D.C., asks the court to rule that the company can proceed with its rebate model, which would apply to all 340B hospitals across the United States.
Lilly’s lawsuit came just days after J&J filed its own legal challenge.
In August, J&J proposed a similar rebate system for two of its most widely prescribed drugs, Stelara and Xarelto, which are commonly used in 340B hospitals.
J&J suspended the implementation of its proposal in September after receiving pushback from HRSA, but is now seeking a court ruling to allow the plan to proceed.
Both J&J and Lilly argue that their rebate models are necessary to curb abuses in the 340B program, including duplicate discounts and inflated drug purchases.
Their legal actions aim to convince the courts that the 340B statute allows for rebates and that such a system would improve program integrity.