Premature-birth drug going private, at a cost

A treatment to prevent costly premature births has a new name and a big markup.
A treatment to prevent costly premature births has a new name and a big markup.
Posted: March 28, 2011

Years ago, a major, government-funded study showed that a cheap drug successfully prevented many premature births.

The drug - a synthetic form of the female hormone progesterone, called 17P for short - cost just a few dollars a shot and never threatened to make big profits for a drug company.

Until now.

In a surprising turn, a company is taking this cheap drug private and seeking to make it 100 times more expensive. The change will cost insurers billions of dollars and squander money from already stretched state Medicaid budgets.

Patients, doctors, and insurers may have to choose between a great drug and providing other essential care.

How did a private company grab the rights to a drug that had been kicking around since the 1950s?

17P never received official FDA approval for preventing premature births. Many drugs hit the market and are found to treat other conditions. Sometimes these off-label uses are even more effective than the original ones.

17P spent years on the shelf. Research hinted at its benefit and finally in 2003, a landmark trial - paid for by the National Institutes of Health - showed that the drug reduced premature birth by a third in women with previous early deliveries.

The medication is far from a panacea, but it's standard care for something that is the leading cause of infant death as well as a major risk factor for neurological conditions ranging from cerebral palsy to autism. The study showed that it reduced major medical problems related to prematurity.

Instead of being made by one company, compounding pharmacies make 17P in small batches. So the news last month that Missouri-based KV Pharmaceutical won rights from the FDA to exclusively produce the drug was initially greeted with excitement. Doctors hoped having one company in charge would lead to the drug's being well-made and easy to get.

But enthusiasm turned to rage when the company announced its pricing for Makena, the drug's new brand name. The weekly shots would cost almost $1,500 each, before a markup by pharmacies and distributors. Before, the shots typically ran less than $20.

Treatment shows the most benefit when begun in the first half of pregnancy, so women can get up to 20 weekly shots. The price increase raised the cost of a pregnancy from $300 to $30,000.

Doctors know and appreciate good drugs as well as the resources it takes to discover them. At the same time, the field is used to dubious behavior from the industry. Drug firms push their own products when cheaper options are just as good. They twist research questions so their drugs look better. They charge American consumers many times more than Canadians and Europeans pay.

Even by these standards, the case of 17P stands out.

An editorial in the New England Journal of Medicine estimated that if all eligible women received 17P, 10,000 preterm births could be prevented at an annual cost of about $40 million, saving more than half a billion dollars a year in medical bills.

But with Makena, the treatment cost would balloon to $4 billion, overshadowing any savings, the journal said.

The drug company responded by arguing that cost savings for caring for preterm infants would offset the medication's price tag, a point the medical journal rebuts. KV also pointed to an assistance program to make the drug available to uninsured and lower-income women.

While 17P may be worth $4 billion a year to society, it's anybody's guess why KV is entitled to more than a small slice of the pie - a bite even - for ensuring quality control and distribution.

An interesting side note: KV landed in hot water with the FDA in 2009 for poor quality control after shipping out dangerously oversize morphine tablets. The company's former chief executive officer, Marc Hermelin, pleaded guilty a few weeks ago to federal charges of misbranding drugs and was sentenced to a month in jail and a million-dollar fine.

And the assistance program? It's a good business move. By footing the co-pay, the company will spend a pittance to make sure women have access to the drug, leaving private insurers and Medicaid to cover the balance.

That this price increase comes at a time when beleaguered state Medicaid programs are struggling to cover basic medical care is all the more offensive.

The company is feeling the backlash. Sens. Sherrod Brown (D., Ohio) and Amy Klobuchar (D., Minn.) are urging a federal investigation. Facebook has a popular page called "Shame on you, KV Pharmaceutical and CEO Greg Divis."

The company said in a statement that "concerns have been raised regarding the list price" and promised to meet with insurers and pediatric and obstetric groups.

Here's hoping that Makena stands as the high-water mark for drug firm malfeasance; that KV will be brought into line on pricing; and sanity will be imposed elsewhere in the drug marketplace.

And here's one last commonsense suggestion. The cost of drugs, their drain on society's resources, should match their benefit.


Alex Friedman is a fellow in maternal fetal medicine at the Hospital of the University of Pennsylvania. His e-mail address: alexander.friedman@gmail.com

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