In a rare move for any regulatory agency, the Food and Drug Administration on Wednesday announced it would not enforce the monopoly status it recently bestowed on KV Pharmaceutical Co.'s new prenatal drug — a move that could deep-six the company's controversial plans to charge $1,500 a shot.
The agency's action, amid intense pressure from national medical organizations, further imperils an already fragile future for the Bridgeton-based company. KV has counted on the drug, Makena, to rescue it from a spate of legal troubles, plummeting profits and a cash crisis.
The company's stock tumbled by 21 percent Wednesday after the FDA's announcement that it would turn a blind eye if other makers of the same drug continue to sell it for $10 or $15 a shot — as they have for years, under the name 17P.
With its plan to charge 100 times that much, KV had relied on the FDA's approval last month, which came with a grant of market exclusivity that normally would drive competitors out of the market. The company recently sent letters to so-called chemical compounding firms, warning them that continuing to supply the drug would violate KV's legal rights.
Now, KV finds itself ensnared in a political thicket, hoping to escape with its financial health intact. A KV subsidiary issued a lengthy statement Wednesday, emphasizing its intent to provide financial assistance to patients seeking to prevent pre-term births. But the company avoided any direct comment on the FDA's latest announcement.
A growing chorus of KV critics, meanwhile, lauded the FDA action as a fitting response to what they view as the drug marketer's greedy overreach.
KV's markup is "profiteering at its worst," said Dr. George Hubbell, the Missouri chair of the American College of Obstetricians and Gynecologists.
U.S. Sen. Sherrod Brown, D-Ohio, who has castigated KV's pricing as "irresponsible," called the FDA decision "a victory for pregnant women, consumers, and taxpayers. This drug, which was developed with extensive taxpayer support, is too important to fall out of reach for pregnant women."
The curious case of Makena highlights troublesome issues that can emerge in the agency's granting of "orphan status" to drugs — the designation that won Makena market exclusivity for seven years. Typically, a company would have to develop a new and innovative treatment to win the regulators' market protection, and thus recoup often large research investments. But orphan status grants that exclusivity to companies that seek agency approval for drugs that address conditions that occur in fewer than 200,000 patients annually, and thus represent lower profit potential.
In Makena's case, doctors had for years widely prescribed the drug to help prevent pre-term births. KV merely paid another company to push an already existing and widely used drug over the bureaucratic hurdles to win approval, and bought the marketing rights for about $200 million.
But the FDA's announcement calls that investment into question, along with the system of granting orphan status. The agency said it would not enforce KV's market protections unless other drugmakers produced unsafe or substandard versions of the drug.
Asked to quantify the value of the agency's award of market protection — given its explicit statement not to enforce it — FDA spokeswoman Beth Martino declined to comment. She described KV's case as a "unique situation."
"For many years, this compound has been available to patients," she said.
Martino stressed that the FDA's enforcement actions are discretionary and that for now it has chosen not to take action against other suppliers in order to 'support access to this important drug."
Depending on the circumstances, Martino said, "we may revisit our decision not to take enforcement action."
CRITICS CHEER DECISION
The FDA's decision was hailed not only by specialty pharmacies, but also by the March of Dimes and the American College of Obstetricians and Gynecologists, two groups that had met with KV Pharmaceutical executives Tuesday in Washington in hopes of persuading them to reduce Makena's price.
Meanwhile, compounding pharmacies geared up to continue selling the drug cheaply.
"We applaud the FDA for ensuring the availability of this important medication," said Marcy Bliss, executive vice president of business operations for Wedgewood Pharmacy of Sewell, N.J., which has supplied 17P to individual patients and doctors since 2003. "We're pleased to provide it during this period of uncertainty."
She said that KV Pharmaceutical's pricing of Makena had shocked longtime suppliers. "People considered this a very low-cost therapy, so a lot of people have asked for an accounting — a justification for this increase and how they arrived at this price point."
The March of Dimes — which previously had taken the lead in advocating for Makena's FDA approval — has turned on the company. The organization, which has demanded a price reduction, issued a statement Wednesday saying the FDA's decision "lays to rest any ambiguities about whether specialty pharmacies can continue to compound 17P. It would be a tragedy to interrupt access to this important drug."
BILLIONS IN PROFIT?
KV Pharmaceutical officials were unavailable for comment, but its wholly owned subsidiary, Ther-Rx Corp., which is marketing Makena, issued a statement declaring its commitment to make the drug available to all medically eligible women.
KV argued that FDA-approved drugs offer important improvements in quality and consistency over those made by specialty pharmacies operating under less regulation.
KV also stressed its capital investment in Makena, including its purchase of the rights to Makena from Hologic Inc., a Massachusetts firm, for about $200 million. In addition, the company said it will spend more than $50 million for research and clinical trials. As part of Makena's approval, the FDA is requiring KV to conduct two clinical trials in an attempt to confirm earlier findings that the drug prevents pre-term births and its side effects do not outweigh its benefits to mothers and their babies.
Those investments can't justify the company's high price, according to a statement from Sen. Brown's office, which concluded that — at $1,500 a shot — KV could recoup its $200 million investment 18 times in the first year, netting a $3.7 billion profit.