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.

Read more about our my birth injury lawyers practice.