The drug, a form of progesterone called 17P, was used for years to reduce the risk of preterm birth, but fell out of favor after Bristol Myers Squibb stopped manufacturing the injectable in 2000. An NIH study in 2003 demonstrated its effectiveness which led to renewed popularity. Since no company made 17P, it could only be obtained from pharmacies who compounded it in individual batches.
The drug had no patent protection, so KV Pharmaceutical spent an estimated $200 million to develop 17P and conduct a clinical trial. The drug was branded Makena and the FDA granted it orphan drug status. Makena was given approval on February 4, 2011 to reduce the risk of preterm birth in women with a singleton pregnancy (one baby) who have a history of singleton spontaneous preterm birth. The Orphan Drug Act provides seven years of exclusive sales rights to manufacturers who win FDA approval for drugs that affect fewer than 200,000 people. The purpose of the Orphan Drug Act is to provide incentives to encourage pharmaceutical and biotech manufacturers to invest money and resources on developing treatments for very small patient populations.
KV priced Makena at $1,500 per weekly injection as opposed to the compounding pharmacy price of $10-20. Then KV sent a cease-and-desist letter to compounding pharmacies. Prior to launch, KV worked with the March of Dimes, and donated $1 million to them. According to the March of Dimes medical director they were not informed about the price before approval, and eventually publically broke ties with KV.
Social Media Plays a Role
As we know, social media has changed the playing field. A Facebook page was started entitled “Shame on you, KV Pharmaceutical and CEO Greg Divis” where pregnant moms showed their dissatisfaction. I can’t see who started the Facebook page. It could be a pregnant woman impacted by the increased cost or an industry opponent or even an insurance company representative. It’s important to note that there are a lot of interested players here. On Facebook you can anonymously start a page, spend a few hundred dollars advertising to people who already “Like” similar pages and quickly gain attention. People are using this Facebook page to express their anger, however, if you look at the wall comments there are some nuanced conversations happening around the topic.
The fact that the Facebook page existed and quickly gained fans was picked up by the mainstream media with important consequences for KV. This clearly shows the importance of social media, where everyone is provided an equal voice. It also reinforces the need to have a social media crisis plan ready.
On March 30 the FDA took the unusual step of issuing a press release about the KV letter and announcing that it does not intend to take enforcement action against pharmacies who compound based on a valid prescription. KV stock continued to fall and mainstream media attention continued surrounding the pricing. KV responded on April 1 by reducing the price by nearly 55%, to $690 per injection. This may eventually prove to have longer-term ramifications for the companies who manufacture rare disease therapies and the patients who benefit from them.
A Complex Situation
At first glance this seems like a pretty straightforward story, but the reality is more complicated. Like many pharma companies, to ensure access to the drug KV established a generous patient assistance program. The website notes this includes:
- Insured patients with annual household incomes of up to $100,000 who apply for and are eligible for copay assistance will have a copay of $20 or less per injection for Makena.
- Uninsured patients with annual household incomes of up to $60,000 who apply for and are eligible for patient assistance will receive Makena at no cost. Uninsured patients with annual household incomes between $60,000 and $100,000 will be able to acquire Makena at a cost that is comparable to the average copay assigned by commercial insurance plans.
Issues with Compounding
According to the Washington Post, physicians and regulators had long worried about the purity and consistency of the medication and were pleased when KV provided a well-studied version.
The New York Times reported about an investigation into the deaths of nine Alabama hospital patients who received a nutritional supplement contaminated with bacteria.
“The Alabama supplement was made by a so-called compounding pharmacy… But while the compounds are supposed to be made specially for individuals, some compounding pharmacies operate in a legal gray area, making large batches of medicines and selling them widely. Even though many patients over the years have died after taking these medicines, the F.D.A. does not subject compounding pharmacies to the strict controls that are routine for drug manufacturers.”
Larger Implication for the Rare Disease Community
The concern is that now people are using this case as a reason to re-evaluate the Orphan Drug Act. The Orphan Drug Act was signed into law in 1983 and before that only 38 drugs were approved in the U.S. specifically for orphan diseases. Since its passage, FDA has approved 353 orphan drugs and granted orphan designations to more than 2,116 compounds.
“It is important that any changes to the orphan drug act should not be done in haste. Many people (including me) are outraged at unreasonable pricing, but what is outrageous to us is likely reasonable to others. What we cannot have, however, is a law that is so disagreeable to companies that they turn away from orphan drug development. The treatments that have been developed in the last quarter century for life threatening and crippling rare diseases that were formerly untreatable is extraordinary! The bottom line is the ODA has worked as intended, it has saved millions of lives and eased pain. Each year 1/4 to 1/3 of all new molecular entities that have emerged on the US market have been orphan drugs. Let’s keep it that way.”
What do you think?
For more information on orphan drugs and rare diseases, check out the World Orphan Drug Congress USA. Siren Interactive was a sponsor at the 2011 conference.