Marathon's Drug Pricing Is Playing With Fire
Step back, Martin Shkreli: The pharma industry has a new villain.
Marathon Pharmaceuticals LLC, led by CEO Jeffrey Aronin, got FDA approval on Thursday for a steroid to treat Duchenne Muscular Dystrophy (DMD), a rare and deadly muscle-wasting disease. This approval also got the company a valuable FDA voucher it can use to accelerate the review process for a different future drug, or sell to another company for millions of dollars.
The steroid is available for less than $2,000 a year in other countries. Marathon will charge $89,000 a year for it in the U.S. -- even though it didn't invent the drug and won FDA approval based in part on trial data from the 1990s that others produced.
By pricing the drug so aggressively at a time when President Trump and others are focused on high prices, Marathon is creating substantial political and commercial risk for itself and its peers.
Sarepta Therapeutics Inc., the only other company with an approved drug for DMD, spent millions researching a more-innovative medicine that attempts to address the cause of the disease. Its approval process was a soap opera that created conflict at the FDA. Marathon is now getting many of the same rare-disease-drug benefits Sarepta got and the same review voucher -- a bonus designed to encourage companies to develop drugs for rare diseases -- for repackaging an old steroid.
Marathon is insulated from political pressure to some extent by the fact that it is privately held. And families with insurance won't be exposed to the full price of the drug.
But many patients lack insurance or have high-deductible plans. As a result, Marathon could soon find an effective group of patient advocates on its back: the same mothers of young boys with DMD who helped get members of Congress involved in the FDA's Sarepta decision.
What's more, the extreme pricing may prevent insurers from covering the drug, or encourage the use of cheaper alternatives. Sarepta's drug -- which costs around $300,000 a year -- has already had difficulty getting coverage. But while there are other steroids on the market, Sarepta's drug is unique in that it tries to address the cause of the disease.
This approval also looks like perfect fodder for Donald Trump; drug prices are his "new thing," in case you hadn't heard. The fact that Marathon's drug is priced much higher here than in other countries makes it an easy target, either for Twitter attacks or policy interventions.
Marathon's approach is a variation on buying an old drug and jacking up its price, which has come under withering, bipartisan criticism in the past, whether practiced by Shkreli or by Valeant Pharmaceuticals International Inc. Republican Sen. Chuck Grassley of Iowa recently launched an inquiry into abuses of rare-disease drug laws that result in higher drug prices.
Marathon is also making a compelling case for the FDA to consider pricing in its approval decisions, something that happens in other countries but not in the U.S., or for allowing the importation of drugs that are overpriced in the U.S.
Pharma tends to decry such policies as stifling innovation. Well, there's no innovation on display here, and Marathon has just made the whole industry more vulnerable to such policies.
To contact the author of this story:
Max Nisen in New York at firstname.lastname@example.org
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Mark Gongloff at email@example.com