KV Pharmaceutical retreats on pricing for Makena, a newly approved formulation of hydroxyprogesterone

Complaints over high drug pricing are nothing new to the bio/pharma industry, but the recent approval of Makena (hydroxyprogesterone caproate) and its subsequent market introduction shows an usually swift action, reaction and revision—and a damaging blow to KV Pharmaceutical (St. Louis), the owners of the brand.

Makena has quite a history: The drug has been around since the 1950s, but was never approved for use to prevent premature delivery. During the past decade, it went from Adeza Biomedical, to Cytyc Corp., to Hologic Inc. (Bedford, MA) which, in anticipation of FDA approval, sold the rights to what was then called Gestiva to KV in 2008. FDA approved the drug in February. In March, KV announced it would begin marketing the drug at $1500 per dose—about 100 times what it generally costs to receive the drug generically from compounding pharmacists, where it is known informally as 17P. KV justified this by saying that it has spent nearly $250 million in clinical trials and setting up specialty pharmaceutical distribution of the drug. It was willing to spend that money because the initial application for the drug was under the Orphan Drug Act, which grants seven-year exclusivity when an application is approved.

By late March, a public outcry was reaching a crescendo. KV had been sending healthcare providers letters warning them to avoid compounded 17P in place of Makena, saying that the compounding pharmacists could be subject to FDA enforcement action. On March 30, however, FDA issued a statement saying that “at this time and under this unique situation” it does not intend to exercise enforcement action against compounding pharmacists.

Compounding pharmacists operate in a gray area between truly individualized drug therapies, and higher-volume, standardized drug production, which would make the pharmacist a manufacturer subject to full FDA oversight. There has been a running battle between compounding pharmacists and the bio/pharma industry for years, most notably over hormone treatment for menopause, where there is both an approved drug and hormonal treatments composed by pharmacists. For Makena, FDA’s stance seems to be a bit of a wink and a nudge to prescribers; the patient insert for the drug (a sterile injectable) lists the progesterone, plus castor oil and preservatives, as a multidose 5-ml vial. The instructions say simply “administer intramuscularly at a dose of 250 mg/l”—not much personalization there.

In a March 31 statement, the Pharmacy Compounding Accreditation Board (Washington, DC) “applauds the FDA’s recent statement” and goes on to say “PCAB standards do recognize those limited situations where a prescriber may recognize and document an individual patient’s specific, unique needs which may require a compounded version of a preparation.”

Meanwhile, KV’s pricing practices have burned a relationship with the March of Dimes charity, which had been supported by KV, and which had been promoting the availability of an FDA-approved version of hydroxyprogesterone. In a statement on April 1, the organization “has decided to exercise our right to terminate our current contract and sever all professional relations with Ther-Rx” (Ther-Rx is the KV subsidiary marketing Makena.) During the preceding month, KV had tried to win acceptance for its pricing by announcing an extensive patient assistance program, but after the FDA statement, threw in the towel and dropped the drug’s price to $690.

Why $690? Press reports of various health economics studies had put the cost of treating a large cohort of pregnant women who are candidates for the treatment as somewhat higher than the cost of taking care of premature infants themselves, at Makena’s original price. The lower price brings that estimate under the cost of care—but it’s still about 40 times the cost of the compounded product.

KV is surviving under a world of trouble. Another subsidiary, Ethex, has been dissolved following findings of poor manufacturing quality of other drugs. According to press reports, its 10K projects that as much as 90% of the company’s net revenue would have been coming from Makena (under its initial pricing) by 2013; the company will owe Hologic as much as $107.5 million over the next 30 months. Coincidentally, the former president of KV was convicted and sent to jail over the Ethex scandal, also during March. In KV’s forward-looking statements disclaimer on its press releases, it lists “our ability to continue as a going concern” as the very first qualifier.