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Drug Prices

The Case of Marathon Pharmaceuticals

So since drug pricing and FDA regulations are so much in the news, it would seem like the perfect time for a small company to game the system for big profits, right? That’s apparently what Marathon Pharmaceuticals believes. They just got approval for deflazacort, a steroid, as a treatment for Duchenne Muscular Dystrophy. Duchenne is a terrible disease, of course, and for bringing a drug onto the market for a rare pediatric disease, Marathon gets a Priority Review Voucher (as the law calls for – a reward for companies entering these areas). They also get 7 years of market exclusivity for bringing an orphan drug not previously available in the US under FDA approval – that’s provided by law as well, as an incentive.

So what’s not to like? Well, this drug has been around since the early 1990s. Marathon most certainly did not invent it. Nor did they think of applying it to DMD patients – the biggest clinical trial of the drug for that indication was done over twenty years ago, by someone else. DMD patients in the US were already taking the (unapproved) drug by importing it from Canada. Marathon just dug through the data again and ran a trial in 29 patients themselves, from what I can see. I should note that this is not any sort of cure, nor does it address the underlying pathology of the disease. The steroid treatment makes muscle strength in DMD patients stronger – barely. But even for that benefit, US patients will now have to get it from Marathon at something like 50 to 100 times the former price. This is exactly the same business plan as Catalyst Pharmaceuticals and several others, and the only reason that it’s viable is because perverse incentives by the FDA make it completely legal.

Update: for more on Marathon’s costs, see here.

So while I defend the FDA’s function of making it tough on new drugs (making them prove safety and efficacy), I cannot stand how loose they are with old generic compounds. The agency hands out extremely valuable rewards like lollipops in these cases – a priority review voucher can be sold for hundreds of millions of dollars, for example. They are wildly overvaluing the worth of a “Now FDA Approved!” designation in the cases of things that have been used around the world for many years.

And they’re also allowing the likes of Marathon to make the rest of the drug industry look like greedy sociopaths. Marathon, Catalyst, T*ring and all the rest of the people who are pulling these tricks have the word “Pharmaceuticals” in their name, but they are not drug companies. They discover nothing. They do no research. They take virtually no risks. They exist only to play legal games and watch the money roll in.

Marathon, for their part, is a member of PhRMA, which just adds luster to John LaMattina’s call for the large research companies to give up on the trade organization entirely (he’s been critical of them for some time now). No one should be comfortable standing next to something like this. As for the FDA, the agency probably can’t change this on its own, though, even if it wants to – Congress has to act to give them the authority to deny market exclusivity or priority review vouchers under some conditions. Either that, or we should rethink these incentives entirely, because they are (clearly) too easy to exploit for fast bucks.

32 comments on “The Case of Marathon Pharmaceuticals”

  1. Anon says:


  2. Chemiker says:

    Any truth to the recent article by Radio-Canada claiming that the Vertex site in Laval, QC is closing?

    1. Industry Guy says:

      Its true. Vertex Canada is closing. I have ex colleagues there that have confirmed this fact. Best of luck to them and more competition in the job market for me.

  3. Isidore says:

    Since, presumably, DMD patients can probably continue to import the drug from Canada at a fraction of Marathon’s price, it seems to me that the company is likely to make more money from hawking its Priority Review Voucher than from selling its drug. The question is, can this program be reformed to have it do what it was supposed to do, which was to offer incentives (i.e. make it profitable) to companies to go after the unmet medical needs of the few or should it be scrapped altogether?

    1. SedatedFMS says:

      I think the deal with the FDA gives them exclusivity.

    2. Squib says:

      From what I read today, importing from Canada will now be illegal.

      1. Anon says:

        True, but moving to Canada isn’t.

      2. johnnyboy says:

        Well, so is doing 75 mph in a 70 zone.

  4. Mike says:

    As Derek mentions this isn’t new. Do a google search for “guaifenesin” and “Mr. Mucus”. The cough remedy was 100+ years old and had never been approved by the FDA, but hundreds of products contained the ingredient. A VC firm saw the opportunity and through a literature search found data supporting efficacy and safety, got approval then had the FDA force all competitors off the market. As a result, the Mr. Mucus franchise was sold for billions of dollars.

    The challenge is that if you want all drugs to go through a formal FDA approval process, you need to provide some incentive for private companies to pay for it. Otherwise, there is no incentive. You could have the gov’t fund such trials and FDA submissions, but such a program would likely become another bloated gov’t organization.

    1. tangent says:

      Think it would have been this bloated though? That a government contract to run this trial would have cost even more than the $X00 million that Marathon is netting from patients?

      (If the trial even seemed worth running from a medical point of view. Was the new knowledge from this trial actually something you’d pay even $10 million for?)

  5. phil says:

    Why are FDA commissioners doctors and not med chemists / pharmacologists / mol biologists ? Its kind of like if I thought I was qualified, as a mol bio guy, to be the DOE head.

    1. loupgarous says:

      I’d settle for FDA commissioners being vetted to make sure they or their spouses didn’t have a big payday when Drug X wasn’t black-boxed for bad side effects.

      1. phil says:

        Nah, i can handle the payday for one dude–taxpayers put up with much worse. What we need is a system that allows more drugs to be used at the discretion of the doctor. Clinical trial resources will never in the near term be in such high supply that we can rigorously test thousands of interesting compounds in humans all the time. What we can have is med chemists and mol biologists that make lists of compounds that may have clincal potentual and are highly unlikely to have toxic side effects. These compounds should not be marketed, but they are mass produced and available for doctors who have ran out of option.

        1. loupgarous says:

          You could handle the Commissioner of the FDA making millions on pharm stocks depending on what decision she makes or doesn’t make? Regardless of whether that actually happened, it’s an intolerable position for a regulatory agency like FDA, in which the tone set by such appointments can determine morale and how regulators do their jobs, We had that situation for seven years, and no one in the press reported it – I found out in wikinews, when another editor cited a lawsuit which had been filed alleging harms arising from the situation.

          1. phil says:

            All incosequential. Having the FDA commisioner not commit crimes is not a great new idea for a better way to run the drug approval process. There are laws on the books for that. Besides, i actually do not care. I hope he or she enjoys the yacht that he got with his payday.

  6. Mike says:

    Matthew Herper has different information on what Marathon had to do to get approval….

    “This isn’t Shkreli-level malfeasance. Mitigating factors: Marathon says that only 7% to 9% of the patients who could benefit from Emflaza were able get access to it by importing the drug from other countries. In order to get the FDA approval, Marathon conducted 17 clinical and pre-clinical trials, and had to go back and find the data from studies conducted by the drug’s original manufacturer. The FDA is making Marathon conduct post-approval studies, including one in children younger than five.”

    1. skeptic says:

      I think Matthew Herper is a great journalist, but here he seems to be uncritically repeating what Marathon is claiming. Is there any independent evidence that only 7% to 9% of the target population has access to imported deflazacort? What does “17 clinical and pre-clinical trials” mean? In particular, what does a “pre-clinical trial” mean. A laboratory experiment? Big deal. It would be worth knowing how many actual clinical trials were conducted, and how many patients were involved.

      Herper also says that “Marathon says it actually expects to net “only” $54,000 a year from insurers. The company has also said its business will not be profitable for several years.” If they have only 1000 patients, then they’re making $54 million a year. How can that *not* be profitable even if they spent $10-20 million on approval (not counting the value of the voucher). Honestly, I think Herper really dropped the ball in this case. It’s true that Marathon’s tactics are legal. That doesn’t make them defensible, except to a lawyer.

  7. mallam says:

    And those within the industry wonder why drug companies are so disliked?

  8. Thomas Anessi says:

    Trump only needs to let capitalism do its job. Allow the import of FDA-approved drugs from countries meeting certain yet-to-be determined standards, lets say, Canada, EU, Aus/NZ, Japan and Korea as a starting place.
    I live in Poland. When I pay FULL price for my cholesterol medicine – Suvardio (generic produced by Teva) = Rosuvastatin = Crestor (no generic version allowed in US), I pay about $4 for a month’s supply. Canadian pharmacies online charge about $35 for the generic (its sold there), for $40-50 in US, though doctors usually don’t prescribe the generic, so people (or innsurance) forks out $70-80 for Crestor.
    Teva, an Israeli company, sells LOTS of drugs in U.S., so the ban on import is just a way of padding pockets.
    I really (REALLY) do not like Donald Trump. But on healthcare, he may surprise. Allowing Medicare to negotiate prices and opening borders to drug imports will only hurt stock prices, and will greatly benefit many, many people.
    Marathon, a private company, would also be screwed. Good!

    1. Bagnar says:

      Two questions came to my mind.

      – Are the GMp the same in Poland and in Israel ?
      I have no or really little knowledge about manufacturing drugs or bioactive compounds, but I know that standards are really high in France / US / Canada. I have absolutely no idea if they are all the same around the world.

      – So, if you’re charged, in Poland, $4 for your treatment, how much does it represent compared to the minimum wage in your country ?
      In Canada, minimum wage is about $10 / h. The treatment costs 3.5h of work
      In Poland, minimum wage is about $3 / h. It costs then less than 1.5h of work…
      Still less expensive in the end. You’re right.

      1. loupgarous says:

        GMp, supposedly, are monitored by FDA by on-site inspection for overseas manufacturers. Poland and Israel are both relatively high-level economies, and you’d expect GMp compliance to be good in those countries, if only because it costs less to comply than to deal with the consequences of noncompliance. Where GMp fails overseas is in places like India – Ranbaxy had major, major failures of GMp, down to elementary things like no running water in their employee washrooms and as dire are both adulteration and wrong dosage (different than marked) per tablet in product they sold in the US.

      2. Moses says:

        Poland is in the EU, so GMp there should be to EU standards.

      3. Design Monkey says:

        1. GMP probably is better in Israel than in Poland, though Teva may have, ermm, different standards for drugs produced for Israel market and ones for sale around not in in first world countries.
        2. 4$ is cheap, equivalent to approx one dinner in Polish McDonald. For a month’s supply of drug that’s really low, and most likely this drug is subsidized by Polish government in significant degree.

  9. Anon says:

    If Trump appowed negotiation or import into the US, then the entire pharma industry would collapse overnight, since at least 80% of global drug profits come from US drug prices.

    But that would be OK with me, it’s better than subsidizing an industry that is now destroying value.

    1. loupgarous says:

      “Negotiation” isn’t always a panacea. Some of Trump’s own deals were expertly negotiated, but bombed like a big dog in practice. So did ObamaCare, come to think about it – Big Insurance is now jumping that ship after the Federal subsidies for their participation evaporated.

      “Transparent negotiation” might work. It’d have to work better than what saddled us with ObamaCare. When the Speaker of the House says “We have to pass it to find out what’s in it,” alarm bells ought to have gone off throughout the press. Instead, the press joyously announced the inception of a program Hillary Clinton had to promise to modify out of existence last year. God save us from more negotiations like that.

  10. Jane says:

    The compounding manufacturer’s were able to do an end run around Turing by reformulating the drug in a combination form. Does anyone know if they will be able to do the same with Marathon or does the FDA exclusivity affect compounders as well?

  11. Lars Soraas says:

    If what Marathon did was so simple, how come some smart scientists, like you, Dr Lowe, did not do this many years ago? If you, or other clever scientists like you, had done this a long time ago, would not then many thousands of patients have been able to benefit from trying out this drug? And if you, or other charitable scientists, had done this, then you could of course have set the whatever price you would have liked to.

    From reading your blog post, I gather the following:

    -You could have done this many years ago, and if you had done it, thousands of patients who now are dead, would have benefited.
    -For some strange reason you don’t explain, you did not bother to do it.
    -Now that someone else is making sure that at least future patients get a chance to try this drug, you are upset that they are making money on it.

    I think there is a word for this. Jealousy.

    1. Derek Lowe says:

      To take these in order: the drug itself was already available to DMD patients. They were not being deprived of it, and Marathon’s decision did not suddenly make it available to them. You must have missed the part about how patients were already taking the drug – they’re actually furious at Marathon for making it so much more expensive for them. From your reasoning, you’d expect hosts of grateful DMD families praising them, but that’s not what you’ve got. Quite the opposite.

      The reason I (or another company) did not do “it” is that “it” consists of jumping through a few regulatory hoops and raising the price of a drug by 60-fold once completed. I’m actually proud that this did not occur to me, if you want to know the truth. That may be less due to my upright moral character, though, and more to the fact that I am, as you say, a scientist. And this process had nothing to do with science. It’s all regulatory and legal loophole-finding.

    2. MTK says:


      You have completely misinterpreted things. The word is not jealousy. It’s shame.

      Shame that a company that’s gaming the system purely for financial gain is considered a “pharmaceutial” company like those that are doing actual R&D. It’s not the fact that these guys will make money, but how they’re doing it. They’re using a program meant to increase treatments for rare disease patients and perversely twisting it to limit availability of a treatment so that they can jack up the price.

      The anger toward these guys and their ilk isn’t because people here are thinking “Damn it. I should have thought of that” or “I wish I were them”, it’s more like “Crap. Now I’m going to be likened to these folks.”

  12. anonymous says:

    @ Derek: Amen to that! And, you spoke for all. Bravo!

  13. biotechtoreador says:

    It’s certainly a cynical way to do business, and not one I’d be proud of, but that’s capitalism (clearly with some market distortions thanks to FDA rules WE THE VOTERS put in place). Americans like the BMWs, big houses in nice places, and taking the kids to Disney Land, all brought to you by capitalism: no problem if we want to do away with it (given ‘top ten’ lists of happiest countries most of these seem are socialist that the USA), but be careful what doing away with unfettered pricing power does to employment the Biopharma industry…..

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