Health-Care Economics Have Changed

For years, drug companies have enjoyed the freedom to charge high prices for their latest products. But when Sanofi and Amgen Inc. each marketed a powerful new cholesterol-lowering medicine, something surprising happened: High prices hurt sales. Sanofi's experience has been especially painful. The French company spent more than five years developing Praluent with Regeneron Pharmaceuticals Inc. before its launch in 2015. But Praluent never caught on. Now Sanofi is cutting its losses, getting out of the U.S. market for the drug, and halting its heart disease research altogether in favor of more lucrative medicines for cancer and other diseases. “We're proud of our past, but it shouldn't dictate some poor investment decisions,” Paul Hudson, Sanofi's new chief executive officer, told a group of investors last month. “We have to draw a line in the sand.”