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Analysts Expect Payer Pushback as PTC Sets $35K Price For Duchenne Drug

Xconomy New York — 

[Updated, 5/9/17, 9:11 am. See below.] When Marathon Pharmaceuticals priced deflazacort (Emflaza), a steroid for Duchenne muscular dystrophy, at $89,000 per year, the prohibitive cost sparked such outrage that Marathon never launched the drug, but instead sold its rights to PTC Therapeutics.

Since that time, South Plainfield, NJ-based PTC (NASDAQ: PTCT) has been planning its pricing strategy. And on Monday, it was revealed: the drug, to be launched “in the coming weeks,” will have a net price of at least $35,000 a year. Though that’s lower than the figure Marathon set, Wall Street analysts are expecting pushback from payers nonetheless.

Duchenne is a rare and fatal genetic disorder that leads to the progressive weakening of muscles. There is no cure. In March, PTC acquired deflazacort, a steroid that helps reduce inflammation and slow the disease’s progression, from Chicago-based Marathon Pharmaceuticals for $140 million, plus as much as $50 million more depending on the drug’s sales. That deal came one month after Marathon won FDA approval for deflazacort in Duchenne.

Marathon had planned to sell the drug for $89,000 a year. That price sparked criticism from patient groups and politicians, who noted that Marathon did not do the initial clinical research to discover the drug, which has been available as a Duchenne treatment in Europe and other countries for decades at a fraction of the cost.

In approving deflazacort, the FDA said it hoped that the drug would help a wide range of Duchenne patients. The Sarepta Therapeutics (NASDAQ: SRPT) drug eteplirsen (Exondys 51) last year became the first FDA-approved treatment for the disorder. But Sarepta’s drug, which increases levels of dystrophin, a muscle-protecting protein that Duchenne patients lack, was developed to treat a small subset of Duchenne patients who have a specific genetic mutation. Deflazacort is approved for all Duchenne patients 5 years of age and older.

But the drug will help patients only if patients can get access to it. As Sarepta has seen first-hand, payers have increasingly been putting up barriers for high-priced drugs for rare diseases despite the lack of available alternatives. Analysts are expecting similar problems for PTC. Given the few treatment options for the disorder, patient demand for PTC’s drug will likely be high, RBC Capital Markets analyst Matthew Eckler wrote in a research note. But he expects insurers will push back on deflazacort’s price.

[Paragraph updated to clarify pricing details.] The $35,000 price PTC announced is the net price for a Duchenne patient weighing about 55 pounds, after any discounts have been applied. PTC executives did not disclose the list price of the drug, nor did they say how much less that price was compared to the $89,000 list price Marathon planned to charge. The drug sells for around $1,000 per year outside the U.S., Eckler wrote. And the drug could cost patients more than $35,000 a year. The average weight of patients taking the drug will be between 77 and 88 pounds, Eckler wrote, which will up the net price to $45,000 to $50,000. The Marathon saga had put deflazacort in the public eye; Eckler expects the drug will stay a target.

“Drug pricing has remained in the headlines as a non-partisan political rallying cry, and we don’t anticipate this will change in the near term,” Eckler wrote.

PTC consulted with “stakeholders,” including insurance companies, before deciding deflazacort’s price, chief commercial officer Mark Rothera said on a conference call with analysts, according to transcript by Seeking Alpha. He also said the company has programs that will provide eligible patients access to the drug “irrespective of their insurance status or ability to pay.” Eligible patients who do not have insurance will have receive the drug for free, he said. PTC projects sales of the Duchenne drug this year will fall between $5 million and $10 million.

Photo by Flickr user tr0tt3r via a Creative Commons license.