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Will PTC lower price on costly drug it just bought?

March 16, 2017

PTC Therapeutics is already facing a big question after buying Marathon Pharmaceuticals’ controversial $89,000-a-year Duchenne muscular-dystrophy drug: is down the only direction for its price from here?

After announcing the purchase early Thursday, PTC Therapeutics PTCT, -18.90%   management said they planned to “re-examine the price” of the drug, Emflaza. They didn’t offer any detail about which direction it might go.

But to observers, it seemed like PTC Therapeutics was backed into a corner, especially after privately held Marathon Pharma’s pricing attracted the attention of lawmakers in mid-February.

“Even though PTC’s strategy around pricing wasn’t disclosed today, it is clear to us that the company has no choice other than dramatically lowering the price,” said RBC Capital Markets analyst Simos Simeonidis. “The question is how low is low enough, especially when patients (and now politicians, given all the noise) know that the drug is available overseas for $1,000/year?”

Emflaza’s launch is thus likely to “have a very difficult time being successful, given the already raised awareness, current pricing environment and existence of alternatives,” he said.

This isn’t the first backlash against the price of a DMD drug. Several health insurers refused to cover Sarepta Therapeutics Inc.’s SRPT, -4.05% Exondys 51 drug after its much-disputed Food and Drug Administration approval.

Nor is it the first drug-pricing controversy ignited around the discrepancy between U.S. prices and those outside the country.

Xtandi, a prostate cancer drug co-licensed by Japan’s Astellas Pharma Inc.4503, -0.46% and Pfizer’s Medivation Inc. PFE, -0.58% aroused lawmaker scrutiny last year over its $129,000-a-year price tag, which is three times the price in Japan and Sweden and four times the cost in Canada.


But PTC Therapeutics is in a rare spot because the controversy around Emflaza began under another company, Marathon Pharma. The backlash was so staggering that just days after the drug’s approval, Marathon paused its launch, noting pushback from the DMD community.

These types of stories have played out before in reverse. Turing Pharmaceuticals, Valeant Pharmaceuticals International Inc. VRX, +1.73% and Mylan MYL, -0.79%  all acquired older drugs and then increased the prices.

The backlash to the about $84,000 price of Gilead Sciences Inc.’s GILD, +0.10% Sovaldi intensified upon the discovery that Pharmasset Inc., which developed the drug, projected it would cost about $36,000 per course of treatment.


Emflaza in particular garnered price tag pushback because it is part of a class of corticosteroid drugs, which have been used for decades in DMD in other parts of the world, although it was the first such drug approved in the U.S.

Patients with DMD experience progressive muscle degeneration, and the steroids are used to improve their muscle strength.

PTC Therapeutics described the drug as a “disease-modifying therapy” on its Thursday earnings call, an argument drugmakers typically employ to justify high prices.

But Simeonidis questioned that assessment as “alternative facts,” noting that Marathon never made such a claim.

“We’re perplexed by this novel claim and are wondering whether PTCT has new experimental or clinical findings about this corticosteroid’s MOA that allows them to make it,” he said, maintaining a sector perform rating on PTC Therapeutics and lowering its price target from $13 to $10.


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