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The reimbursed price of PTC Therapeutics' (PTCT) - Get PTC Therapeutics, Inc. Report rare disease drug Translarna was reduced by 65% in a ruling on Thursday by a German insurance arbitration board.

If PTC Therapeutics is unable to reverse the German pricing decision, the company's ability to generate revenue in Europe, the only geography where the drug is approved, will be significantly diminished.

The company's efforts to get Translarna approved in the U.S. look dim after the U.S. Food and Drug Administration issued a "refuse to file" letter on Feb. 23, essentially rejecting the drug without a full clinical review. European regulators granted conditional approval to Translarna to treat a form of Duchenne muscular dystrophy.

The Translarna price-cut decision was handed down Feb. 25 in an arbitration proceeding between PTC Therapeutics and Germany's Central Federal Association of Health Insurance. A copy of the decision, filed in a German court, was obtained by TheStreet.

The German arbitration panel decided that the new, lowered price for a 30-pill bottle of Translarna (125 mg dose) would be 1,312 euros, which represents a 65% reduction from the previous price of 3,822 euros.

The new pricing decision is final and retroactive to December 2015, although PTC Therapeutics can try to sue the German government to overturn the ruling.

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PTC Therapeutics issued a statement on the adverse Translarna pricing decision, stating, "As a result, PTC is considering delisting Translarna from the German pharmacy ordering system. Under these circumstances, patients and healthcare professionals may be able to access Translarna through a reimbursed importation pathway possible under German law, thus minimizing any access issues for German patients while maintaining a sustainable price."

PTC Therapeutics launched Translarna in Germany in December 2014. The drug is also sold in several other European countries but a majority of the company's sales come from Germany.

In the first nine months of 2015, Translarna sales totaled $21 million. PTC Therapeutics reports fourth quarter and 2015 earnings on Monday.

RBC Capital analyst Simos Simeonidis is forecasting fourth quarter and 2015 Translarna sales of $12.6 million and $33.6 million, respectively.

Simeonidis expects 2016 Translarna sales to reach $90 million. If the German price cut sticks, the Street's Translarna sales numbers going forward are in for a significant downward revision.

PTC Therapeutics closed Friday down 29% to $7.44.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.