The Impact of Sanofi’s Price Increases for Aubagio on Pharmaceutical Innovation
The price of multiple sclerosis drug Aubagio increased 78% from 2013 to 2020.
The pharmaceutical industry has long argued that high drug prices are a good thing because the profits from these price hikes allow companies to spend more on research and development to discover and launch the cures of the future.
To test the claim that higher drug prices drive innovation, we gathered data from the industry, individual companies, and the FDA to conduct a counterfactual analysis: what would happen at some of the largest pharmaceutical companies in the world if prices on certain blockbuster drugs had remained constant over the last 10 years?
The following case study examines drug pricing at Sanofi, a large pharmaceutical firm with a diverse portfolio of treatments in cardiology, diabetes, immunology, and neurology. This analysis is part of a larger study on the impact of pharmaceutical price increases on medical innovation. To read the full study, click here.
Sanofi Case Study
- Headquarters: Paris, France
- Drug Analyzed: Aubagio (teriflunomide)
- 2021 Company Revenue: $46.3 billion
- 2021 R&D Spending: $6.7 billion
- Other Key Products: Dupixent (dupilumab), Lantus (insulin glargine), Lovenox (enoxaparin sodium)
Though Sanofi has products in the disease areas of oncology, immunology, and rare blood disorders, the company is known as one of the three large players in the worldwide insulin market. That said, the company is looking to expand in other disease areas as diabetes products decline in sales.
We analyzed Sanofi’s pricing behavior for Aubagio, a treatment for multiple sclerosis. Since 2013, Sanofi consistently raised the net price on Aubagio, with a peak increase of over 78 percent reached in 2020.
During most of Aubagio’s sales history, the drug’s revenue was driven by increases in the number of units sold. However, as sales volume has plateaued, steady price increases made up the difference. Since 2014, more than 41 percent of the drug’s revenue growth came from price increases, totaling $3.2 billion.
If the price of Aubagio remained flat since 2013, the loss of $3.2 billion in revenue would have resulted in $489 million less in R&D spending. We estimate that, based on the drug development scenarios used in our analysis, Sanofi spends $6.0 billion (IQR: $4.2-$7.7 billion) in R&D per new drug developed. Therefore, the impact to new drug development would be negligible, with 0.08 fewer drugs developed.
The results are further evidence that profit growth driven by price hikes on older, branded, monopoly drugs like Aubagio rarely leads to the development of innovative new medicines.
