On November 25, 2024, Sanofi became the third manufacturer to announce its intention to implement a rebate model. Its announcement follows similar announcements from Johnson & Johnson (J&J) and Eli Lilly and Company, and four federal lawsuits seeking to defend rebate models. Sanofi’s proposed model, which it calls the “340B Credit Model,” will cover 25 drugs, including several insulin products. Effective January 6, 2025, the model applies to all 340B hospitals except children’s and cancer hospitals. Effective March 1, 2025, Sanofi will also require compliance from Consolidated Health Centers (CHCs). The Sanofi announcement includes variations for covered entities in states that have adopted laws requiring delivery of 340B drugs to contract pharmacies.

Similar to other proposed rebate models, Sanofi will no longer allow covered entities to purchase drugs at the 340B price. Rather, covered entities would purchase drugs at wholesale acquisition cost (WAC) and submit a claim for a rebate, or “340B Credit.” Covered entities must dispense drugs according to Sanofi’s current contract pharmacy policy and submit a claim through the Beacon platform within 30 days of the drug’s dispense date.

Sanofi appears to be adopting a modified version of HRSA’s 1996 patient definition guidance to determine which of its drugs will be 340B eligible. To be eligible for a rebate, covered entities will be required to submit health care encounter data demonstrating that the patient: 1) is currently receiving medical care from the covered entity; and 2) received the prescription in connection with health care services provided by the covered entity. Sanofi will presume that any individual who receives care from the covered entity within 24 months of the drug’s dispense date is a patient. Additionally, Sanofi will presume that a prescription that is written by a health care professional employed, by or “similarly affiliated with,” the covered entity is in connection with health care services provided by the covered entity. This process significantly shifts control from covered entities, who currently make patient eligibility decisions by placing orders under their 340B purchase accounts, to Sanofi and its contractor Beacon.

The covered entity community is hopeful that HHS will respond to Sanofi’s rebate model as it did to J&J’s model, by threatening to terminate Sanofi from the 340B Program, which would deprive Sanofi of Medicaid and Medicare Part B coverage for its drugs. J&J responded by suspending its policy and filing a lawsuit against HHS, but Sanofi could take an alternative route by, for example, seeking a temporary restraining order to prevent the threatened termination from taking effect. We note that, despite HHS’ strong opposition to the rebate model in the past, it is unclear whether the Trump Administration will shift its position.

The Powers 340B team will continue to monitor developments related to 340B rebate models.