KV has stirred a hornet's nest among various patient, physician and thrid party payer constituencies with its pricing decision on the its new orphan drug Makena. Now its has the Senate and possibly the FTC to contend with.
Readers will note that KV, upon FDA-approval of its version of the drug last week, chose to raise the price from about $20-$30 per dose received from most pharmacies to a new $1500 per dose price. This has raised hackles amongst almost everyone execept perhaps KV investors.
Two senators - Minnesota Democrat Amy Klobuchar and Ohio Democrat Sherrod Brown - wrote FTC chair Jon Leibowitz that KV may be engaging in anti-competitive behavior. They maintain that a KV patient assistance program is insufficient because it does not cover “certain groups” of women.
Further, the Senaotrs said KV Pharmaceutical is taking advantage of FDA’s approval of Makena and orphan drug status leading to a monopolization of treatments to address preterm labors. The price increase will place a heavy burden on state Medicaid programs and may result in diminished access to appropriate health care for women and in increased preterm births.
"It’s critical that we make sure this company isn’t taking advantage of its orphan-drug determination to monopolize the market and engage in price gouging at the expense of pregnant women,” Klobuchar says.
This would appear to be an example of an unintended consequence of the orphan drug laws which primarily were meant to provide manufacturers incentives to bring new drugs to market for conditions with unmet need -- and for which the economic incentives to do so needed a boost. What's happening here is that KV has identified a drug which has been around for more than 50 years -- but has never gone through an FDA approval process.
KV recognized this and created an approved drug - which may in fact have some enhanced quality aspects. However, KV has errored in my view in raising its price so egregiously - it appears greedy. Maybe this is from need -- as it is trying to recover from a consent decree for distributing adulterated and unapproved drugs -- although that might be viewed as troubling in an of itself in terms of a pattern of corporate behavior. Regardless, the pricing decision will likely encourage the congress in the time of budget crisis -- particularly around healthcare -- to review how it has structured orphan status for long known but unapproved drugs. I would expect some type of redress but we'll see.