UPDATED: Mallinckrodt, Marathon leave industry trade group over drug pricing controversy

Updated to include a statement from Mallinckrodt regarding its membership with PhRMA. 

Marathon Pharmaceuticals reportedly withdrew from the drug industry’s lobbying group yesterday following controversy over its pricey drug, Emflaza.

Pharmaceutical Research and Manufacturers of America (PhRMA) began reconsidering its membership criteria as reports revealed a number of drugmakers hiking the prices of their products. In February, Marathon revealed it planned to charge $89,000 a year for Emflaza, even though generic versions go for around $1,000. The company later sold Emflaza to PTC Therapeutics (NSDQ:PTCT).

Marathon joins drug manufacturer Mallinckrodt Pharmaceuticals (NYSE:MNK), which resigned from the industry trade group in the beginning of April.

PhRMA is slated to vote on changes to its membership criteria at its board meeting in May, according to the Wall Street Journal. The group could move to require that members commit significant portions of their budgets to research and development.

A change like that would likely exclude companies such as Mallinckrodt, since its primary business strategy involves acquiring drugs instead of developing its own products.

Mallinckrodt brought in nearly $3.4 billion in sales in the last fiscal year. The majority of its revenue comes from the U.S. One of its top-selling products is Acthar, a multiple sclerosis treatment that has a price-tag of more than $30,000 per vial.

The company issued a statement recently, standing by its investment and pricing strategies.

“As the company has stated consistently, Mallinckrodt’s goal has been – and continues to be – to acquire under-resourced, under-utilized products like H.P. Acthar Gel that are used in areas of high unmet medical need, typically in narrow patient populations, and then invest significantly in those products.”

PhRMA has been under pressure on capitol hill as lawmakers consider bills that would make drug pricing more transparent or constrain the industry’s pricing powers.

“Mallinckrodt routinely evaluates its engagement in trade associations and policy organizations and has concluded that the significant financial and time commitment required as a full PhRMA member outweighs its direct policy value to us at this time, given our present size and staff footprint,” a spokesperson for the company said. “We continue to follow and certify to the PhRMA Code of Conduct, support many of the group’s positions and initiatives, and look forward to continuing our positive working relationship with PhRMA and its members.”

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