Experimental drugs for compassionate use to sell only at cost: FDA

[June 03, 2016]  (Reuters) - The U.S. Food and Drug Administration said companies could only charge patients for the cost of manufacturing experimental treatments used under compassionate grounds, and it cannot force government or private health insurers to pay for these drugs.

"Compassionate use" of experimental drugs allows physicians to prescribe unapproved treatments for patients who have no other satisfactory alternatives in the market.

The FDA's move seems to be intended to soften the repercussions of its possible rejection of Sarepta Therapeutics Inc's muscle-wasting drug, analysts said.

Sarepta's shares closed down 26.6 percent at $15.71 on Thursday, wiping out about $260 million from its market value.

The FDA last week deferred its decision on whether to approve Sarepta's drug, eteplirsen, after an advisory panel determined that the treatment was not effective.

The FDA is trying to create a compromise, saying drug companies can charge for a drug even if its not approved, WBB Securities analyst Stephen Brozak told Reuters.

Brozak said investors were focusing on Sarepta erroneously. The FDA guidelines do not specifically talk about the company and affect the whole industry, he added.

Eteplirsen was developed to treat Duchenne muscular dystrophy (DMD), a rare condition that typically emerges in boyhood, causing weakness in the arms and legs, and eventually the lungs and heart. There is no other treatment on the market.

Sarepta's drug has been in the spotlight over the past few months with patient groups and parents arguing passionately in favor of the treatment to pressure the regulator to approve the drug.

While the FDA guidelines is good for patients, we do not see this as favorable for Sarepta.... It is not a profitable venture for Sarepta as the price is effectively cost recovery, JMP Securities analyst Liisa Bayko wrote in a note.

(Reporting by Amrutha Penumudi and Natalie Grover in Bengaluru; Editing by Don Sebastian)

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