Neurocrine Biosciences Inc. has priced its new medicine on the high end of the spectrum, topping all previous estimates for the drug’s annual cost to patients.
The drug, called Ingrezza, was approved by the U.S. Food and Drug Administration (FDA) last month to treat patients with tardive dyskinesia (TD). The condition is a nervous system disorder that causes uncontrollable stiff, jerky movements in the face and body (often caused by long-term use of psychiatric drugs). Before Ingrezza, there were no treatments for TD patients.
Neurocrine has slapped a $5,275 price tag on a 30-count bottle of once-daily capsules (40 mg), making the yearly cost of the drug $63,300 for patients.
In previous statements, Neurocrine CEO Kevin Gorman discussed a $20,000 to $60,000 range for the drug. In an interview with the San Diego Business Journal last month, Gorman said the range was intentionally loose.
“I made the range broader than I needed to in order to not have people pinch and pull us and try to predict the price,” Gorman said.
He also said that pricing would be wholly dependent on what kind of label the FDA assigned upon approval.
“Virtually no one talks about their price until they have their label,” Gorman said. “What you charge for your medicine is based on the value you’re bringing to patients, physicians and caregivers.”
If the FDA included tons of warning labels on the drug, for example, it wouldn’t be as valuable to physicians and patients.
But the FDA’s label for Ingrezza was attractive. Neurocrine’s leadership decided Ingrezza should be competitively priced with Teva Pharmaceuticals’ drug Austedo, a newly approved drug for Huntington’s disease that’s chasing its own TD approval, Gorman said. Teva priced its Huntington’s drug at $60,000, but biotech analyst Geoff Meacham expects Teva to set its TD price at around $70,000.
What does all this mean for Neurocrine? Revenue should be pretty healthy in the coming years. Meacham and other biotech analysts expect 2017’s sales will be modest at around $14.5 million. Next year, however, sales are expected to be around $105 million.
In a related note, Neurocrine announced last week that it raised $517.5 million in an offering of convertible senior notes.
The proceeds will be used for general corporate purposes, including commercialization expenses, clinical trials and other research and development expenses.
Gorman said Neurocrine intended to take on domestic commercialization of Ingrezza without a pharma partner.
“I’ve been in this business for 30 years now, and my definition of success has never changed: Get into a position where you are a freestanding, independent biotech company that discovers, develops, and commercializes your own drugs,” Gorman said. “That way, you don’t have to depend on anyone else.”