But all the bad press didn't dim his appeal to big-name investors like Fidelity, George Soros and Valor Equity Partners. They're among the backers who have pumped $1 billion into his latest venture, which is plying the same market niche Aronin has worked in the past. Like Marathon, Paragon Biosciences brings to market pricey drugs for rare diseases affecting relatively few people, as well as other novel treatments and technologies.
"(Pharmaceutical investors) are interested in making money," says Ken Kaitin, director of the Tufts Center for the Study of Drug Development. "If you're marking up drugs and you're pricing high, that's just better for them."
Paragon hit a milestone Aug. 19 when narcolepsy drugmaker Harmony Biosciences, one of the Chicago-based biotech incubator’s six portfolio companies, went public in a $148 million stock offering. Such success illustrates the powerful forces driving the lucrative rare-disease business model.
When it comes to life-threatening and debilitating diseases, particularly those affecting children, "there's basically no limit to how much you can charge for the drug," Kaitin says. "Rarely will an insurance company (in the U.S.) say, 'No, we're not going to cover it.' "
Aronin, for his part, stands by the decision to price muscular dystrophy drug Emflaza at $89,000 a year, despite the fact that some patients had been importing the drug from overseas for roughly $1,000.
"Marathon was a great success," he says. "We got a drug approved that helps thousands of patients who need it."
As for lessons learned, Aronin acknowledges the episode taught him the importance of communicating with patient organizations. And a source familiar with Paragon, which funds and nurtures fledgling pharmaceutical and biotechnology companies, says the Marathon experience led Aronin and his team to modify their approach, focusing on acquiring and developing novel compounds rather than just repurposing readily available remedies as expensive "orphan drugs." Still, the emphasis on rare-disease drugs that fetch high prices remains.
Plymouth Meeting, Pa.-based Harmony's narcolepsy drug Wakix sells for nearly $7,000 a month on average at retail, according to GoodRx. Wakix posted net sales of $19.8 million for the three months ended March 31, according to an SEC filing. Sales could increase if Harmony gets FDA approval to treat additional patients, including children with narcolepsy and people with genetic disorders like Prader-Willi syndrome.
"I've been around the industry for long enough to see us go from small molecule to large molecule to antibodies to, now, gene therapies, artificial intelligence," says Aronin, 52. "I've watched this evolution and we're . . . going into new areas where our team has as much experience—maybe more—than other companies throughout the world."
For better or for worse, Aronin's reputation for making money precedes him. Ovation Pharmaceuticals, a Deerfield-based company he founded 20 years ago, came under fire for marking up a drug for premature babies with a life-threatening heart condition. Still, Aronin and backers including former Illinois Gov. Bruce Rauner cashed in when Lundbeck acquired Ovation in 2009 for $900 million.
Years later, in 2017, came the controversy over Marathon's proposed price for Emflaza—approved in the U.S. for patients with Duchenne muscular dystrophy, a fatal disease affecting a relatively small number of males. Lobbying group Pharmaceutical Research and Manufacturers of America, or PhRMA, condemned the $89,000 price tag and announced a review of its membership criteria. Soon after, Marathon dropped out of the group and sold Emflaza to PTC Therapeutics for $140 million.
Contrary to reports at the time, Aronin maintains the sale was in the works prior to the powerful public backlash. He says the drug's lower price overseas reflected approvals to treat a wide range of conditions, including rheumatoid arthritis and anaphylaxis, in European markets. More uses boost production volumes, driving down per-unit manufacturing costs and prices.
But U.S. authorities approved Emflaza only for Duchenne, limiting the market. PTC ultimately priced the drug by weight, launching it at $59,700 a year for a boy weighing about 55 pounds and upping the price to $65,000 for the same weight in January 2018, according to a Wall Street Journal report.