You may recall Marathon Pharmaceuticals, the small company that announced plans to sell a long-used steroid treatment (Emflaza, deflazacort) in the US to Duchenne muscular dystrophy patients. The price was set to go up steeply, since the company was awarded years of market exclusivity by the FDA (under their program to reward orphan-drug indications like this one).
This business model is the same one followed by a number of other small outfits (see that link above for more), and it’s infuriating. Generic drugs are off patent, by definition, and they’re supposed to be cheap. Taking advantage of regulatory loopholes and perverse incentives to jack their prices up is shameful, unproductive, and expensive. There was quite an outcry when Marathon got this approval, and last month, they abruptly sold the drug to PTC Therapeutics for c. $140 million. PTC has had plenty of trouble trying to develop its own Duchenne drug (the biggest difficulty being that it doesn’t seem to work), so now they can at least say that they have one.
There’s a milestone payment attached to the deal, with details unavailable, and you have to wonder just what will trigger it. PTC is going to have quite a time selling deflazacort after all the publicity, and insurance payers are already making noises about how they’re not going to go along (the proof that it’s better than cheap alternatives like prednisone is not very compelling). The launch will come later this year, and it’ll be interesting to see how it goes off.
Meanwhile Marathon itself appears to be about to disappear. And why not? They’ve turned a quick buck. Endpts, who have been doing a great job on this story, couldn’t find anyone who thought that the company had spent more than $70 million on the drug’s approval, and it was probably a lot less. So $140 million, plus milestones and royalties, is a nice return. But there’s more money coming than just that – the company got a priority review voucher from the FDA for bringing a rare pediatric disease drug to the market, and they can sell that on the open market. I’d guess that it could bring in another $100 million or so, under the right circumstances, so I’m sure that some sort of corporate entity will remain behind to complete that deal.
If the new FDA commissioner is looking for something to reform, he could start with the agency’s incentive structure for deals like this. It’s not easy to configure these things so that people don’t game them, but you’d have to think that we could be doing better than we are. This has been a stupid and shameful exercise all the way around.