US senators question Marathon Pharma’s pricing policy for Emflaza

Pharmaceutical CommercePharmaceutical Commerce - March/April 2017

Rare-disease drug also garnered a valuable pediatric review voucher

Eight senators (all Democrats, except Angus King of Maine, who is independent) have sent a letter to the president of Marathon Pharma, seeking answers to how the company justifies charging $89,000 for a newly approved drug, Emflaza (deflazacort). Emflaza was approved by FDA in February for Duchenne muscular dystrophy (DMD), a fatal disease, mostly of young boys. Deflazacort had been available, on an off-label basis, from non-US providers as a generic product, priced at around $1,000, according to a Wall St. Journal article. Under Orphan Drug Act authorization, a newly approved drug receives seven years of market exclusivity.

Marathon’s case is especially thin for justifying the price, according to publicly available information. The company didn’t invent the product and didn’t even conduct clinical trials; rather, it purchased clinical trial data conducted in Europe in the 1990s and made the FDA application. The latest letter was preceded by a similar query from Senator Bernie Sanders (I, VT) and Rep. Elijah Cummings (D, MD). After that query, Marathon said that it would “pause” its commercialization plans while formulating the “best path forward.” It has also claimed that the drug’s price was justified to recover the costs of gaining FDA approval.

Another element of the Marathon situation is that it also received a pediatric drug voucher, a sort-of “get out of jail free” ticket that entitles the holder to an accelerated review of another drug before FDA; this voucher can be used by Marathon or can be sold to another company. As the time savings can have considerable value (Sanofi paid $65 million to obtain such a voucher when it expedited review and approval of its PCSK9 drug in 2015), the voucher is meant to provide additional compensation to a drug company pursuing the uncertain economic return of a rare-disease drug for pediatric populations. (The voucher program was renewed and extended when the 21st Century Cures Act was passed in December.)

The effect of either the Sanders-Cummings letter, or the more recent one, is up in the air. Both queries are informal ones asking only voluntary reply; neither has the force of a Congressional committee, or subpoena powers, attached to it. Members of Congress can hope for a jawboning effect that talks down high drug prices—which worked to a degree when Mylan Pharma was called out last summer for its pricing of the EpiPen product. But as Martin Shkreli, president of another pharma company with another high-priced, single-source generic said to Congress in 2015, he charged the prices that he did “because I can.” Republicans in Congress, as well as Democrats, have been critical of pharma pricing practices, but whether this translates into some mechanism of lowering or constraining drug prices is anyone’s guess. On March 7, President Trump offered up another of his oracular tweets, saying “I am working on a new system where there will be competition in the Drug Industry,” and prompting a slump in drug stocks during the day.

The Emflaza case is strongly reminiscent of that of KV Pharmaceuticals, which obtained FDA approval for a previously available generic product back in 2011. The product, Makena (hydroxyprogesterone), was approved for treating potential premature births—another rare disease instance. When KV commercialized the product, it was offered at what amounted to a $25,000 cost for a treatment; however, pharmacists had been compounding the drug for a cost of a few hundred dollars per treatment. FDA made a “unique” (its word) decision to allow the generic to continue to be compounded by pharmacists; subsequently, KV lost significant value of its stock and after a series of unrelated business complications, the Makena business was sold to what is now AMAG Pharmaceuticals.

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