Mad Money

BioMarin CEO says 'the system will have to determine' the worth of its new $702,000 drug

BioMarin CEO: System will determine the worth of new drug
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BioMarin CEO: System will determine the worth of new drug

Upon the release of BioMarin's orphan drug Brineura, which made headlines for its $702,000-per-year price tag, chairman and CEO JJ Bienaimé said the system will have the final say on whether the sky-high price is fair.

"Obviously, the system will have to determine that," he told "Mad Money" host Jim Cramer on Friday. But I would say that CLN2, the disease that Brineura is being used for, is an absolutely devastating neurodegenerative disorder for which, unfortunately, the patients will lose their life, most of the time by [age] 12."

CLN2, also known as Batten disease, affects between 1,200 and 1,500 patients worldwide, with 20 new patients a year in the United States.

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BioMarin CEO says 'the system will have to determine' the worth of its new $486,000 drug
VIDEO7:3307:33
BioMarin CEO says 'the system will have to determine' the worth of its new $486,000 drug

Because the disease starts with unexplained seizures, many patients are misdiagnosed as being epileptic. By the age of 7 or 8, most lose their ability to walk, talk and see, and Brineura is currently the only approved drug for treating the disorder.

As most affected patients are on federally funded programs like Medicaid, mandatory government discounts brings the drug's price down to $486,000.

The discounts do not take the drug's cost out of the stratosphere, but Bienaimé said that the rarity of the disease makes medication extremely costly and complicated to produce.

"The cost of manufacturing Brineura per year is north of $100,000 per year per patient," he told Cramer, adding that efforts are underway at BioMarin to offer free genetic tests for young patients with unexplained seizures.

The CEO added that all of the drugs BioMarin produces, most of which are for diseases that are genetic and have no available treatments, are highly risky to develop.

"Nine out of 10 drugs that get into clinical development, that means being tried in humans, never make it to the market, so the failure rate is extremely high," he told Cramer.

That drives up operational costs, which end up being reflected in drug pricing. And although Washington lawmakers have knocked pharmaceutical companies for high drug costs, Bienaimé said most policymakers understand the industry's inevitable trial-and-error aspects.

"I think, hopefully, ... if there is any kind of regulations coming around health care, that they will make sure that those regulations protect innovation and protect innovative biotech companies," Bienaimé said. "And biotechnology is one of the only left industries where the U.S. is a leader in the world and we hope it will stay that way."

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