Pharmaceutical company Sanofi (SNY) is reportedly planning to change how it gives discounts to hospitals with low-income and uninsured patients. The current system allows these hospitals to buy drugs at discounted prices. The federal government created this system in 1992 as part of the 340B program to reduce drug prices.
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Sanofi’s new plan will allegedly require hospitals to show the details of their pharmacy and medical claims before offering the discount. This method will give hospitals credit for drugs after they submit pharmacy claims. This provides hospitals with the credit before buying the drugs, ensuring they don’t end up suffering losses.
Sanofi Isn’t Alone on Drug Discount Changes
Other drugmakers have also been weighing options to alter how they provide drugs under 340B. Eli Lilly (LLY) and Johnson & Johnson (JNJ) are among them with lawsuits against the federal government over rejecting their discount plan changes.
Sanofi argues that the current 340B structure has changed greatly compared to what it was in 1992. It suggests that the changes it proposes will stop abuse of the program by hospitals. That includes claims that some hospitals buy the drugs for a discount only to mark them up when selling them to patients.
Considering the legal struggles Eli Lilly and Johnson & Johnson are facing, it will be interesting to see if the federal government allows Sanofi’s changes to go unbarred.
Is SNY Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Sanofi is Moderate Buy based on two Buy and one Hold assigned over the last three months. With that comes an average price target of $65, a high of $67, and a low of $63. That’s a potential upside of 33.95% for SNY shares.
