Shares of PTC Therapeutics jumped 15% on Jan. 8 to $20.65, after the maker of Duchenne muscular dystrophy drug Emflaza told investors it expected its revenues to rise 135% year over year for 2017 and another 33% this year. But then the company found itself facing questions about an issue that has been dogging PTC since it bought Emflaza from Marathon last March: the drug’s rising price.
PTC raised the list price of Emflaza this month by 9% to about $65,000 a year for a common dosage, according to statistics from IBM’s Truven Health Analytics that were cited by the Wall Street Journal.
A PTC spokeswoman confirmed the price increase in an email to Fierce Pharma, though she noted that it is the list price and that it doesn't take into account variations in dosing patterns. The increase, she said "was determined in order to assist our ability to provide access to clinically differentiated therapies to the Duchenne muscular dystrophy community including funding pediatric and other studies, formulation enhancements and supporting broad access for all Duchenne patients." Pricing decisions, she added, take into account many factors, including cost of goods, discounts and the amount of drug given at no charge to patients. PTC has several programs to help uninsured and low-income patients afford the drug, she said.
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Emflaza has faced heavy scrutiny primarily because it’s an old steroid that sells in other countries for as little as $1,000 a year. Its previous owner, Marathon, sparked an outcry after it priced the drug at $89,000 a year. Congress launched an investigation, then PTC took possession of Emflaza and announced a net price after discounts of $35,000. But some analysts questioned whether that cost still might be too high for the company to escape criticism.
This week’s resurgence of pricing questions is likely related to PTC’s sunny financial forecasts for 2018. Emflaza brought in about $29 million in sales last year. The company said last week it’s expecting sales this year of at least $90 million—far surpassing the average analyst estimate of $58 million, according to figures cited by the WSJ. But PTC failed to mention the price increase on Emflaza.
Furthermore, PTC’s recent financial disclosures suggest that Emflaza’s net price may never have been as low as $35,000. Late last year, PTC’s chief financial officer, Marcio Souza, estimated in conversations with analysts that the company was discounting Emflaza by 15% to 20%. That would have brought the net price down to $47,800 at best, the paper notes. The PTC spokeswoman says one reason for the discrepancy may be that the company provides guidance based on the expected net price. But in real-world practice, dosages can vary widely depending on factors such as the weight of the child being prescribed the drug. "We have found that on average, patients are prescribed one-third lower than the recommended dose," she said.
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Regardless of the reason for the discrepancies, PTC could very well find itself under continuous pressure to lower Emflaza’s price. That pressure has hit companies both large and small in recent months. As politicians vowed to crack down on the industry last year, Merck released a transparency report revealing it was granting 41% rebates on its products—a huge change from 2010, when the average rebate was 27%. At last week’s J.P. Morgan Healthcare Conference, the most optimistic thing Merck CEO Ken Frazier was able to say about the demand for lower drug prices was that it’s not likely to get worse.
PTC is planning an investor conference in the coming months to “provide an update on its growing pipeline,” it said in a statement previewing its expected financial results. But with Emflaza already on the market, no doubt investors will be more focused on how the company goes about expanding the audience for the drug while simultaneously fending off criticism from pricing watchdogs.