17P & Makena: Exploiting Premature Birth For Billions In Profit

Update, September 7, 2012: More than a year ago, I wrote “It’s possible KV will sue the FDA over [the decision not to go after compounding pharmacies] — arguing, in essence, that the FDA is disobeying its own statutes and regulations, and thus in violation of the Administrative Procedures Act …” That happened in July, but the case was just dismissed. Next step is inevitably an appeal. I hope, for the sake of patients, they do not succeed, but quite frankly they have a valid argument. 17-P should never have been given orphan drug status in the first place.

 

Preemies have a special place in my heart, not least because I happen to have two of them. More than a half million premature babies are born each year in the United States. Most turn out fine after a brief stay in the Neonatal Intensive Care Unit (NICU), monitoring, modest oxygen support, and treatment for hyperbilirubinemia. The earlier the baby is born, though, the worst the complications become. Babies born before 32 weeks gestation have much higher rates of intraventricular hemorrhage (IVH) and retinopathy of prematurity (ROP), which can translate into, respectively, a lifetime of cerebral palsy and development disabilities, or vision loss or blindness.

Preterm birth is a serious issue with serious consequences, both for the babies and families involved, and for society at large; the United States spends over $25 billion annually caring for premature children.

There’s hope, and plenty of it. The past two generations have produced extraordinary medical advances, particularly with the use of surfactant to treat respiratory distress syndrome (RDS) and the new, gentler approach to mechanical ventilation and oxygen supplementation. Had Stevie Wonder, a preemie, been born today, he might not have developed ROP from the oxygen treatments given to him.

But for some, where there’s hope, there’s money to be made.

Last October I posted about the outrageous efforts to rip off preemies by overcharging for Neoprofen, a drug used to treat patent ductus arteriosus, a condition primarily affecting very premature babies in which the shunt that connects a baby’s pulmonary artery to his or her aortic arch fails to close after birth:

Ever seen a two pound preemie that can’t get enough oxygen hold out for a better deal? The vice president at Lundbeck hadn’t either, so Lundbeck came up with a plan: once they had the rights to Indocin IV, they would increase the price of each treatment course from $78 to $1,500.

Lundbeck didn’t actually do anything to earn themselves a twenty-fold raise, they just bought themselves a monopoly on the unmet medical need of certain people with a severe disease for which few other effective treatments were available. That’s their “commitment.”

It gets better.

Lundbeck learned that two other companies, Farmacon-IL and Abbott Laboratories, had developed a competitor to Indocin IV, called NeoProfen, which could also treat PDA. Abbott Laboratories forecast NeoProfen could be sold for $450-500 per treatment course.

So Lundbeck bought the rights to NeoProfen, too. Once the FDA approved it, Lundbeck sold NeoProfen for $1450 per treatment course.

It was a disgrace; Lundbeck did nothing to research or develop either drug, and instead created an artificial “market” in which they controlled all of the available options to treat PDA. As one of the vice president at Lundbeck realized (and committed to email), “we can price these almost anywhere we want given the product profiles.” So they did.

It seems we have a new contender for “worst effort to rip off preemies and their parents” in the form of Makena:

A drug for high-risk pregnant women has cost about $10 to $20 per injection. Next week, the price shoots up to $1,500 a dose, meaning the total cost during a pregnancy could be as much as $30,000.

That’s because the drug, a form of progesterone given as a weekly shot, has been made cheaply for years, mixed in special pharmacies that custom-compound treatments that are not federally approved.

But recently, KV Pharmaceutical of suburban St.Louis won government approval to exclusively sell the drug, known as Makena (Mah-KEE’-Nah). The March of Dimes and many obstetricians supported that because it means quality will be more consistent and it will be easier to get.

None of them anticipated the dramatic price hike, though — especially since most of the cost for development and research was shouldered by others in the past.

It’s more than just “most” of the cost for development and research. 17 alpha hydroxyprogesterone caproate (“17P” or “17HP”) was first researched and developed decades ago, then approved in 1956 and sold as Delalutin to treat uterine cancer and hormonal abnormalities. Delalutin was voluntarily pulled from the market in 2000 because of superior treatments for both conditions.

Various medical researchers suspected that 17P treatment could be used to prevent preterm labor, and so in 2003 the National Institutes of Health — which, as a reminder, is a government entity funded by taxpayers — financed a study into using 17P for that purpose. It worked.

Ever since then, a number of health insurance companies have covered “off-label” use of the drug by expectant mothers to prevent preterm labor, because the modest cost of administering an old drug outside of its patent was but a tiny fraction of the potential cost of premature birth followed by weeks or months in the NICU (which, as an intensive care facility, isn’t cheap), years in developmental therapy, and potentially a lifetime of support services for cerebral palsy or other neurological or cognitive conditions.

And that’s when the vampires at KV swept in:

KV has acted mostly as a behind-the-scenes player in Makena’s FDA approval. The agency actually granted the approval to Massachusetts-based Hologic Inc., which presented the application and argued for the drug based on research by others. KV helped finance the approval process and is paying Hologic nearly $200 million for exclusive legal rights to sell Makena.

How quaint. KV “help finance the approval process.” They didn’t develop the drug in the first place, and taxpayers shouldered all of the cost for researching its current use to prevent preterm labor, but KV is entitled to a windfall because it paid some lawyers to shuffle the approval process along.

Here’s an example of that supposed work. Last year, the FDA — also paid for entirely by your tax dollars — determined that Delalutin was not pulled for safety or effectiveness reasons, and so put it in the list of “Approved Drug Products With Therapeutic Equivalence Evaluations,” commonly called the “Orange Book,” and thereby allowing future drug company applicants to rely on the prior testing of the drug. 17HP — which has been used cheaply and effectively over the past few years to prevent preterm labor — thus became an “orphan drug,” and KV was entitled to a monopoly over its distribution.

And what will KV get for doing nothing more than paying some lawyers to grease the wheels at the FDA? Even KV estimates that 150,000 mothers annually could qualify for the treatment (like if they previously had a preterm birth), for a nice $25,000 to $30,000 each, or over $4 billion a year in revenue for an old, easy-to-make drug that can be made for under $200 per treatment course.

The two likely effects of that price gouging are obvious: KV will make a ton of money for doing nothing, and not as many mothers who need the drug will get it because insurance companies and Medicaid won’t approve it as broadly as they did in the past. KV will thus make a ton of money for increasing the number of premature babies. Some people might think that’s a bad thing, but KV’s stock price is up 400% over the past month, so I’m sure they’re popping the champagne over there.

There’s no doubt about it: “our pharmaceutical approval system is completely screwed up.”

Update I: March of Dimes is taking a lot of heat for their role in the process and the naive (or greedy) way in which they extended their credibility to the Makena approval process. MOD says they’ve been assured that all “eligible” patients, whatever that means, will have subsidized access to the drug through the Makena Care Connection run by KV, and that they shouldn’t be blamed for KV’s decisions.

I’m glad they’ve recognized the problem, but it’s a bit tough to swallow MOD’s claims of non-involvement when the March of Dimes’ logo is on the Makena.com homepage. There’s also considerable legal uncertainty going forward; as this TIME.com article notes, some compounding pharmacists believe they can get around the Makena by making similar, but distinct, compounds.

Update II: March of Dimes has criticized the price structure for Makena, recognizes they messed up, and has started to demand changes. A welcome development, but it’s upsetting they were so naive throughout the process, that it had to come this far before they realized that KV cared only about money.]

Update III: the American Academy of Pediatrics, American College of Obstetricians and Gynecologists, and Society for Maternal-Fetal Medicine have written a letter to Ther-Rx, sharply criticizing the pricing point for Makena and noting that “the financial assistance that Ther-Rx is offering … is not sufficient and does not extend to certain groups of women.” Like me, AAP/ACOG/SMFM also question what was meant by “eligible” in the financial support. Bear in mind, “eligible” is not a medical term, it’s an insurance industry term.

Update IV: There’s still considerable confusion about whether or not compounding pharmacies can continue to make 17P for their patients. Here’s one of the cease and desist letters KV sent out; KV certainly believes that compounding pharmacies can’t continue to make injectable 17P solutions, though I’ve heard of a few pharmacies that say they’ll fight KV in court on the issue. I wish those pharmacies the best, but I doubt they’ll succeed. A similar fight happened two years ago when URL Pharma was granted a monopoly over colchicine, a historic gout medication used by, among many others, Benjamin Franklin. Other producers tried to keep making versions but were shut down by the FDA.]

Update V: Thankfully, the compounding pharmacies won’t even need to fight the battle, since the FDA is exercising its discretion not to enforce the marketing exclusivity. It’s possible KV will sue the FDA over that — arguing, in essence, that the FDA is disobeying its own statutes and regulations, and thus in violation of the Administrative Procedures Act — or the price drop might encourage the FDA to go back to enforcing market exclusivity against compounding pharmacies.

Update VI, March 30, 2011: The FDA formally announced:

In order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an individually identified patient unless the compounded products are unsafe, of substandard quality, or are not being compounded in accordance with appropriate standards for compounding sterile products. As always, FDA may at any time revisit a decision to exercise enforcement discretion.

In short, although the FDA by law could order compounding pharmacies to stop making 17P (excepting where it’s a necessary substitute for Makena for a particular patient), they’ve decided not to do so except where the 17P is unsafe or otherwise improperly made. That’s a big win for patients out there and a big loss for KV Pharmaceuticals, but it might not be the end of it. As discussed a bit more at the end of this post, KV has set a lower price for Makena (though not lower enough, according to ACOG), likely to help win back FDA favor, and, if that fails, they might sue the FDA to compel it to enforce its regulations. I doubt this story is over.

Update VII, July 5, 2012: As noted in the edit to the beginning of my post, K-V has indeed sued the FDA over its handling of Makena.

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  • macarissa

    as a mother of a preemie and potential candidate for 17p shots in future pregnancies, i am EXTREMELY upset about this development. another of the ironies is that while KV says they will provide assistance for low-income or uninsured mothers, there are MANY MANY women (like me) who are middle-class and whose insurance will not pay for 17p… who will continue to have preterm births that devastate families financially and emotionally.
    is there anything that can be done? i feel like there are so many outrageous things out there that i feel hopeless against, and this is just one of them that really hits close to home.

  • http://www.litigationandtrial.com Max Kennerly

    The shortest path to fixing this problem is through your representatives in Congress. The “orphan drug” rules are too generous towards pharmaceutical companies, since they let companies claim “orphan drug” status for all sorts of already-available drugs, like 17P. Further, 17P should never have been designated an “orphan drug” under FDA rules in the first place because prematurity affects more than 250,000 people — as noted in my post, a half million preemies are born every year.
    Here’s a link to the FDA rules on “orphan drugs”: http://1.usa.gov/e4KmHl
    It’s hard for the FDA to undo its prior findings, but Congress could, in an instant, pass a law exempting 17P from “orphan drug” status. Even if that fails, political pressure might encourage KV to come up with a more realistic price point.
    In short: call / write to your Representative and Senator and tell them that you’re upset about 17P, which was already on the market, getting “orphan drug” status and that you expect them to introduce legislation fixing that.

  • Katie m

    I had a baby at 24 weeks that passed away, I’m pregnant again and have more than 10 injections to get. My insurance doesn’t cover 17p let alone the new drug. How can they do this?

  • Karen

    I’ve lost a pregnancy at 23 weeks. I am currently pregnant again and taking this injection for $13.76 per bottle, which includes 4 injections…so 4 weeks worth of medication. Now I’m holding my breath to see if my insurance, BlueCross, is going to continue to cover it! I am not a low-income, uninsured woman, but I can promise you that my family can not afford $1,500 per week for this injection if my insurance company decides to decline coverage of this medication. Shame on KV and the FDA.

  • http://www.facebook.com/#!/pages/Shame-on-you-KV-Pharmaceutical-and-CEO-Greg-Divis/205462536133171 Christine

    Excellent article that lays out all the facts. I’ve been concerned that my outrage is not justified, but I think it really is.
    I’ve created a page to try to harness the power social media. Perhaps if enough people “like” this page, it’ll get some notice.
    http://www.facebook.com/#!/pages/Shame-on-you-KV-Pharmaceutical-and-CEO-Greg-Divis/205462536133171

  • Jillian

    Thank you for this information. I am a mother to a preemie baby and watched him struggle for life during his first few days of life. I am a prime candidate for 17P shots for future pregnancies, in fact had just discussed this with a maternal fetal medicine doctor during a preconception appt a week ago. Anyway, I have contacted my representatives, the Pittsburgh Post gazette and anyone else that will listen to me rant on facebook. Please keep updating us. I believe we have a strong voice as preemie parents that we had to develop in being a part of their care early on. Thank you again.

  • Melissa

    I just heard back from the FDA…they passed along the following information:
    “You may wish to contact the Federal Trade Commission (FTC) to voice your concerns. The FTC enforces a variety of federal antitrust and consumer protection laws. The FTC seeks to ensure that the nation’s markets function competitively, and are vigorous, efficient, and free of undue restrictions. You can contact them at the following:
    Federal Trade Commission
    Bureau of Competition
    Office of Policy and Evaluation
    Room 383
    Washington, D.C. 20580
    Phone: 202-326-3300
    Internet: http://www.ftc.gov (they have an online complaint form)”
    They also passed along the following info for Ther-Rx, which I found interesting:
    Scott Goedeke
    Sr. Vice President, Marketing
    Ther-Rx Corporation
    314-646-3700; extension 3640
    sgoedeke@ther-rx.com
    Audrey Hsieh
    Director, Marketing
    Ther-Rx Corporation
    314-646-3700; extension 3605
    ahsieh@ther-rx.com

  • http://www.litigationandtrial.com Max Kennerly

    Thanks for the information, Melissa, but I’m dismayed to see the FDA wash their hands of the subject, and even more disappointed to see them falsely claim the FTC has responsibility for the situation. There’s nothing the FTC can do — KV has a legal monopoly over 17P because the FDA granted it orphan drug status. There’s no “federal antitrust” or “consumer protection” violation at issue here, because everything KV is doing with 17P, including their monopoly, was expressly approved by the FDA.
    The unfortunate truth is that neither the FDA nor the FTC feel much accountability to anyone, since they’re not elected. Your representatives in Congress, however, are elected, as is the President. They should hear your thoughts, as should KV and the March of Dimes.

  • Mike Schultz

    What’s the flip side to this debate…
    I have no problem with a pharmaceutical company charging a large amount for a drug and here is why….
    It is impossible to launch a cheap drug into the US Pharmaceutical Market….the FDA, Federal Goverment and Insurance company have all made sure of that. Let me explain…Before you even sell on vial of this drug the manufacturer had to sign a CMS agreement guarenteeing discounts to Medicaid of 23.1%, DoD/FSS of 26.4%. To get a commercial insurance company?PBm to cover your drug requires paying them an administration fee of 3-5% and a hefty discount of 9 – 15%. Then Medicaid can now require you pay a supplemental rebate of up to an additional 50% just to get the drug covered. None of this includes the regulatory burden of a Phase IV trial, pharmacovigilence and copay assistance, and yes someone to sell the product to the doctors….at the end of the day Ther-Rx had to charge a large amount just to keep the lights on, and god forbid maybe some ROI to work on new products!!!!

  • http://www.litigationandtrial.com Max Kennerly

    Mike,
    You’re missing the context of this drug. 17P is not a new drug that KV developed and researched at great expensive. 17P is an old drug — more than fifty years old — that’s gone through dozens of studies funded by other companies and by taxpayers. Most recently, taxpayers, via the NIH, funded yet another study to determine efficacy and safety of this exact purpose.
    KV did nothing to develop or to research this drug. All they’ve done is promise the FDA that they’ll run two more trials in the future that will essentially replicate the 2003 trial funded by taxpayers. That’s worth billions dollars in guaranteed profit by way of a government-granted monopoly?
    Of course not. As Kesselheim and Solomon convincingly argued last year in the New England Journal of Medicine with regard to colchicine:
    “Incentive programs like those enacted by the Waxman–Hatch Act and the Orphan Drug Act offer market exclusivity to encourage drug research, but these rewards are not calibrated to the quality or value of the information produced. Although the goals underlying the development of Colcrys were sound — few would argue against the need to comply with FDA requirements and the need to ensure the safety and efficacy of all prescription drugs — and the manufacturer seems to have followed FDA guidance, the reward appears to be out of proportion to the level of investment. More important, there is no evidence of any meaningful improvement to the public health.”
    http://www.nejm.org/doi/full/10.1056/NEJMp1003126
    If the FDA really had doubts about 17P following the 2003 trial, it could have simply done another trial, or could have approved Makena with price restrictions. Instead, it let KV use publicly-funded research to walk into billions of dollars of profit without risking a dime.

  • Valerie

    I am the mother of a child who was born at 29 weeks (11 weeks early, 2 lbs, 12 oz and in the NICU for 2 months after birth) and has cerebral palsy as a result. I am now pregnant with my second child. I started on the 17P shots 5 weeks ago and then learned about all of this mess AFTER the first 4 weeks of shots! My husband and I met with a MFM specialist prior to even trying to conceive because we were very concerned about the possibility of another preterm birth. We were given so much hope by the fact that these shots could possibly help prevent another preterm birth for us and that was actually one of the major deciding factors for us to try again. My insurance paid about $30 for the first month of shots made by a compounding pharmacy and I had a small copay. Then I found out about the switch to Makena. Fortunately, my health insurance DID cover the Makena (at the highest level of co-pay for my plan) but I did see that my insurance paid $7600 for a one month supply compared to the $30 for previous version from the compounding pharmacy. I still have 4+ months to go….I feel like I am going to be the cause of the health insurance premiums going up for my entire company and all of my co-workers next year!!! No wonder health care is such a huge problem in our country…situations like this based on the greed of others rather than actually trying to CARE for peoples HEALTH! My heart just breaks for all the moms who may not be able to get the shots at all because of the cost. And, to even think about the possiblity that a mom might already be getting the shots but then have to stop for some reason because of this astronomical increase in price makes me ill!

  • http://www.beanies4babies.org/ Evea

    This is horrile. Drug companies do charge a lot for drugs in order to pay research costs and the like… but to charge so much just because you know that worried parents will pay it is … there’s not really a word to describe how vile that is.
    My family runs a project that collects beanie babies for premature infants and we’ve heard stories from those whose preemie was in and out of the hospital, to those who went weeks with their baby in a critical state and little hope, to even those poor souls who lost their babies. Their words always touch my heart, I can’t imagine taking advantage of these people. I know a couple who had to wait for a week to bring their baby home, and wre given a toy rhino that the nurse had dropped out of the incubator while carign for their son. The mother carried that around with her EVERYWHERE because it was the one thing her son had cuddled with while she was unable to touch him. He survived and was allowed to go home, but she still carries around the rhino beanie baby and says she’ll probably do so until her son grows up and she won’t have to worry so much about losing her baby.
    That’s pure desperation. She was so horrified she grasped the one thing she could and it proved her son was never out of her thoughts. Only monsters would look at that and see a profit to be made.