A New Drug & The High Cost Of Premature Births
23 CommentsBy Ed Silverman // March 10th, 2011 // 9:52 am
This week, the cost of an injection to prevent a premature birth is roughly $10 to $20. Next week, it will cost $1,500. Why? That is when KV Pharmaceutical starts marketing its newly approved Makena, a form of progesterone that, for many years, was offered by compounding pharmacies. Now, though, KV has an exclusive lock on the market and is threatening compounders who dare to encroach.
“I’ve never seen anything as outrageous as this,” Arnold Cohen, an obstetrician at Albert Einstein Medical Center, tells the Associated Press. “That’s a huge increase for something that can’t be costing them that much to make,” says Roger Snow, deputy medical director for Massachusetts Medicaid. And Joanne Armstrong, who heads women’s health at Aetna, says: “I’m breathless.”
Indeed, insurers and government healthcare programs must now contend with the soaring cost, despite a patient assistance program (see this). KV Pharma ceo Greg Divis says the price is justified because caring for a premature baby can run $51,000 in just the first year after birth. “Makena can help offset some of those costs,” he tells the AP. “These moms deserve the opportunity to have the benefits of an FDA-approved Makena.”
With $1,500 injections given to patients between 16 and 20 weeks of gestation, Makena can run $27,000 to $33,000, according to an investor note by Imperial Capital analyst Doug Dieter, who pointed out KV is tripling its sales force to 150 reps. He forecasts Makena revenue reaching nearly $1.1 billion by 2015, if there are no hiccups. This would amount to a remarkable turnaround for a drugmaker that, not long ago, was something of a train wreck.
Two years ago, the FDA announced KV and two subsidiaries, including the Ther-Rx unit offering the patient assistance program, entered into a consent decree for making and distributing adulterated and unapproved drugs (read this). Last year, the Ethex unit pleaded guilty to two felony counts of criminal fraud for failing to report to the FDA that it was making oversize tablets that could be harmful to patients. The drugmaker began running low on cash and began laying off workers (see here), and then Marc Hermelin, the former KV chairman, was banned from participating in federal health care programs, such as Medicare and Medicaid (back story).
Now, though, KV appears to have convinced investors that its troubles are very much in the past. Since the February 4 approval of Makena by the FDA (read this), KV stock has climbed from about $1.50 to nearly $13. The drugmaker has raised money in a private placement and amended the terms of its loan agreement, notes Imperial Capital analyst Doug Dieter. And he adds that KV is getting tough with compounders who, last month, received cease-and-desist letters (read the letter here).
“I’ve spoken with several compounders,” Dieter tells us, “and it looks like they’re going to stop making this drug. It’s not worth the risk. It’s an orphan drug market, so why would a compounder take the risk on a small market, anyway? It’s not worth the reward to break a law.”
However, David Miller, executive director of the International Academy of Compounding Pharmacists, writes us that, “we have informed our members that the letter from KV Pharmaceuticals is clearly part of a marketing strategy to dissuade the compounding of hydroxyprogesterone caproate for injection and thereby minimize any competition to Makena…It’s important to note many of the letter’s assertions that the compounding of an FDA approved product is prohibited are not supported by the legal citations it references.”
Elmore
This is simply repulsive.
in-house
Ed,
Did KV conduct clinical trials?
industry insider
As one of the pharma apologists on these boards, consider that fact that the cost of a single day’s stay in a neonatal ICU for a prematurely born infant dwarfs the cost of this drug. Any OB-GYN knows this, and their feigned outrage is laughable. I’m sure that the pediatricians who have to care for these premies would support my position virtually 100%.
Bring it on.
gyges
Are compounding pharmacies to the US what specials pharmacies are to the UK?
In the UK, if there is a formulation that needs to made fresh, it is done by a specials lab.
(Very lucrative / poor oversight regime by the MHRA).
Ed Silverman
Hi In House,
Thanks for the question and it’s a good one. The short answer is, no. If you look at the link taking you to the FDA approval on Feb. 4 you’ll see that Makena is sponsored by Hologic, which originally submitted the research to the agency.
KV helped finance the approval and is paying Hologic for exclusive rights to sell Makena. Here is a citation for a study from 2003 in the NEJM that I believe helped the approval along. Note that the authors were from all over, including Wake Forest and the NIH.
http://www.ncbi.nlm.nih.gov/pubmed/12802023
Hope this helps,
ed
Doc
This is a perfect opportunity for physicians to impact healthcare by not going with the “new” drug and continue with compounding.
Very select, easily targeted practitioner group, very select indication.
If the compounding was working fine, why not keep with the local pharmacist and let KV sit on their inventory.
harpy
yes, industry insider, I think we can all see it’s extortion
Insider
The compounding will not be legal any longer once the drug is approved. THat is the way the laws are written. THe pharmacist would be infringing on the patent for one.
vince
This is the most flagrant example of what is wrong with the FDA and drug companies .It’s been done with other drugs . Perhaps some bright exec can corner the market on fish oil or vitamin d . The FDA will provide cover. Unfortunately many infants may not be able to …..
Tom Kaye
This agent is also known as “17p” or 17 hydroxyprogesterone, the metabolite of medroxyprogesterone or Provera. Makerna is the metabolite of progesterone. For years progesterone vaginal inserts have been compounded and prepared for the same purpose. This has been compounded for years and has had some following mostly by Medicaid’s due to the high neonate cases that gravitate to this population. In the last 5 years the injectable form became available form many supplicated compounding pharmacies. Both the vaginal inserts and injectable compound costs less than $50 per injection or 10 vaginal inserts. Thus the entire sequence of injections as given every two weeks amounts to less than $1000 for the entire term. Although the commercial Makerna is available, this does not preclude the continued compounding of this drug based on some modifications of the dose strengths to make it custom.
Several paper and peer reviewed articles have been written on this and several companies have reviewed the potential. It is yet to be seen if this drug gains any traction at this price point. The only claim to fame is that it is approved by the FDA for the indication of preterm maintenance.
This price point may be justified based on the long term liability that derailed others from pursuit of this approval. KV is not the originator of this, but the one who purchased the rights for marketing.
Many may remember the DES (diethylstilbesterol) issue of the 50-60’s with the resultant liability. Will prescribers use this, likely based on risk abatement, but with this type of price jousting, federal payments may be withheld given the new awareness of NO BUDGETS for most states.
KV may be banking upon the issue of forced compliance, but the member will have a cost burden also. As this is a medically administered medication (Not self-administered) , not pharmacy in most plans the aspect of co-insurance may be a consideration. Medicaid patients won’t pay.
A Former Industry Insider
As a ‘former” industry insider who once worked for a small company who made a prescription drug that was commonly compounded, threatening legal action is one thing, following thru is quite another. The FDA has no say over the compounding of a prescription persuant to a specific MD’s order (that’s a state board of pharmacy function). State Boards of pharmacy have better things to do that worry about KV’s bottom line. If they REALLY want to be on firm ground, the MD will modify the prescription to be materially different than the marketed product, at which point the pharmacy and MD are virtually unassailable.
No…if KV wants to quit whining and actually sell this product, then will need to convince physicians that the marketed product provides some kind of value that justifies the higher price. You know…they have to do their JOBS!
vince
Does this remind anyone else of the story of the FDA and Armour Thyroid’
Kim
It reminds me of the thalidomide/Thalomid situation of a few years ago. There are also at least a few points of similarity to ongoing Lucentis/Avastin AMD treatment controversy.
Christopher
@AFII - good points but I haven not seen KV whining - some of the comments might make it seem that way perhaps, but they are silent on this. I suppose they will argue that their drug is FDA approved, manufactured to cGMP, and is of consistent quality etc. We’ll see if any of these clever suggestions bite into their sales, but I haven’t seen any moaning or defensive posture from them on this.
Nathan
All, if you are interested at all in this story, I would strongly suggest reading today’s blog from Derek Lowe:
http://pipeline.corante.com/archives/2011/03/11/makenas_price_what_to_do.php
KV took a big risk an ponied up the money for the clinical trial. Up till this point, there was not enough evidence for the drug to be FDA approved. How much is that worth? Who decides?
Everybody on this website constantly complains about “off label” use of drugs. That’s what this was: Up until this week, the drug was used off-label. There was not enough evidence to support the intended benifit. Now there is. That’s exactly the way the FDA set the orphan drug program up. Don’t complain to KV — complain to the FDA. (but if you do complain, please be aware that drug approval for many other orphan diseases may be impacted negatively)
Bill Cooney
Hologic took a risk: it invested in a clinical trial of a compound with many unknowns. KV took a risk: it paid Hologic and spent more of its own funds on Makena. Their bet was to gain FDA approval, which has become even more of a long shot in recent years.
If the resulting payoff is such an unfair windfall to KV, why aren’t other opportunists flooding the medical world with such gambits? Because it’s hard and it’s risky!
If you think the entire process is wrong, then come up with a better one. But much like Churchill said of democracy, free enterprise is the worst economic system, except for all the other ones.
Prego
Wrong! TAXPAYERS paid for the clinical trials. They were subsidized. KV nor Hologic have done anything special. And their logic for the high price is the same rationalization a pimp gives to his prostitutes. The same that a massa tells his slaves. It’s sick. Period.
Instead of blaming poor people for breaking the Medicaid system, we need to blame Corporate bandits, like this.
Christopher
Prego - that’s interesting. How can I see where taxpayers subsidized the trials? Thanks
harpy
hi Nathan - I think you should read Derek Lowe’s assessment again. Lowe credits a study done by Wake Forest that proved the efficacy and safety of the drug but, unfortunately for them, did not have the orphan drug deal from FDA to capitalize on it. Lowe also says that what KV, and previously URL Pharma for colchicine, has done damages the drug industry by reaffirming its reputation for “walk[ing] up to situations where other people have done a lot of the work, a good amount of it with public/NIH money, and step right in and profit.”
and I think you’re confusing off-label use of drugs with off-label promotion of drugs. I haven’t seen too many complaints here that I can recall over off-label use, unless it stemmed from off-label promotion and was hurting patients. and, again, off-label use by physicians is legal, but off-label promotion by corporations is not. it’s a simple matter of following the law, if you’re into such things.
Nicholas Fogelson, MD
The efficacy of 17OHP was demonstrated in a NIH supported trial at Wake Forest - KV didn’t pay a dime towards this research.
Apologist’s ideas are assinine. Sure the care of preterm birth is expensive, but the idea that this justifies the cost of Makena is absurd. we already have 17 OHP. KV is not bringing anything new to the table. They are just trying to squeeze billions of dollars from the system without providing any benefit.
another clarification - KV does not have a patent on 17OHP. The compound has been around a long time. They have a license to exclusively distriubute it, which is far harder to enforce, given very little has to be changed before ‘it’ isn’t ‘it’ anymore.
As a physician, I will not write a single dose of Makena. I will write compounded product or vaginal prometrium. I encourage all other obgyns to do the same.
KV and Makena’s fate lie in the hands of every Obgyn in this country. We are outraged, and many have committed to a boycott. The drug will fail, as will KV.
Leo Yang
Right on Dr Fogelson, I am with you. Will not write a single dose of Makena. It’s highway robbery to charge this high a price!
mari
have any studies been done to see how many babies born from mothers who received this medication were born with CAH (Congenital Adrenal Hyperplasia)?
RPH
I applaud the MDs comments. KV has a long history of unethical business tranactions. Various Progesterone dosage forms have been compunded by pharmacists for decades at far lest cost