(Reuters) - A privately held French drug developer is taking a rare approach to pricing its drug intended to treat a rare disease.
Pharnext SAS, whose drug is the only treatment in a late-stage trial for treating a rare inherited disorder called Charcot-Marie-Tooth (CMT), sees potential to earn a healthy profit by selling the yet-to-be approved drug for as little as 20 percent of the prevailing cost of most rare-disease drugs.
Many such drugs cost upwards of $100,000 a year per patient because of the small market.
Drug pricing has become a contentious issue among drugmakers and lawmakers in the United States, with companies like Valeant Pharmaceuticals and Turing Pharmaceuticals facing a backlash for sharply hiking prices of older drugs they have bought cheaply.
Others, including Gilead Sciences Inc, have come under fire for exorbitantly pricing drugs to treat common diseases.
Drug companies say they need to be rewarded for their innovation and risk they take in developing treatments.
Pharnext thinks it can sell its promising drug - a combination of three already-approved drugs - for $20,000-$60,000 per patient, Chief Executive Daniel Cohen told Reuters.
There is no existing treatment for CMT. Pharnext's drug — which is at least three years from hitting the market — is designed to address the most common 1A form of CMT, which affects about 100,000 people in Europe and the United States.
The disorder, caused by the over-expression of a gene, is characterized by progressive muscle atrophy of the hands and legs. Patients currently receive only supportive care, including leg braces, physical therapy or surgery.
About 5 percent of CMT patients with the most common 1A form of the disease end up in a wheelchair.
Cohen, who was one of the researchers involved in the mapping of the human genome, said it could be tempting to charge more for the drug, codenamed PXT-3003.
"But I think it would be a terrible mistake," he said, even though it will cost Pharnext up to $100 million to develop.
"Making some $2 billion from spending $50 million to $100 million on research and development is a good enough reward."
Outside of rare diseases, Cohen said drugmakers should aim to profit from volume, not pricing.
Healthcare systems would be more stable if development was focused on creating combinations of available medicines to fight several targets underlying a particular disease, he said.
This strategy, he said, would also reduce development times as the safety of each drug is already established, thereby cutting costs.
Cohen said he would not be able to provide a definite price for PXT-3003, which consists of mini-doses of baclofen, naltrexone and sorbitol, until it was approved and an agreement is reached with health insurers.
"It will never be in the range of $100,000," he said. "Still, it's a fantastic return on investment. There's no way we won't make money."
Reporting by Natalie Grover in Bengaluru; Editing by Sriraj Kalluvila and Ted Kerr