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Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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« Insider Trading at the FDA | Main | What If Those Wonderful Results Are Wrong? »

March 30, 2011

KV Pharmaceuticals and Makena: The FDA's Move

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Posted by Derek

Most interesting - here's the FDA's latest statement on Makena, in response to KV Pharmaceuticals sending letters to compounding pharmacies telling them to stop providing the drug, now that they have regulatory approval and market exclusivity:

. . .Because Makena is a sterile injectable, where there is a risk of contamination, greater assurance of safety is provided by an approved product. However, under certain conditions, a licensed pharmacist may compound a drug product using ingredients that are components of FDA approved drugs if the compounding is for an identified individual patient based on a valid prescription for a compounded product that is necessary for that patient. FDA prioritizes enforcement actions related to compounded drugs using a risk-based approach, giving the highest enforcement priority to pharmacies that compound products that are causing harm or that amount to health fraud.

FDA understands that the manufacturer of Makena, KV Pharmaceuticals, has sent letters to pharmacists indicating that FDA will no longer exercise enforcement discretion with regard to compounded versions of Makena. This is not correct.

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.

The agency does not quite make clear that the "unique situation" might be, although they do mention the amount of work done by NIH-funded researchers that was part of the approval package. The FDA has, of course, no authority on pricing - but they do have other means at their disposal, and this is one of them. KV must be wondering at this point what, exactly, the phrase "market exclusivity" might mean. (The answer, for better or worse, is that it, and other statuatory language, means whatever the regulatory authorities want it to mean, at least until something goes to the courts. Then it means whatever the courts want it to mean).

Overall, I think that this is a good thing, since (as I've said before) I think that the law in this case is providing a bit too much incentive, considering the relatively small risks involved in bringing progesterone caproate into the modern regulatory world. It worries me, though, that the FDA is making it so explicit that they plan to pick and choose which laws to enforce and how strictly they're going to enforce them. But honestly, it's always been this way, and a no-exceptions letter-of-the-law approach leads to craziness of its own. In this case, I think that clarifying the hazards of pushing things as hard as they can possibly be pushed will help make future business plans in this area a bit more realistic.

Comments (28) + TrackBacks (0) | Category: Drug Prices | Regulatory Affairs


1. Me on March 30, 2011 1:42 PM writes...

Glad FDA pushing back. Drug makers digging their own graves with egregious pricing, esp. cancer drugs/orphan drugs

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2. Analytical Scientist on March 30, 2011 1:54 PM writes...

It's probably reasonable to worry about this having a chilling effect on further clinical investigation of old drugs, though. KV did what the statute intended, but charged more than people thought was reasonable. Perhaps at $100 a dose (merely 10X the compounding pharmacist price), the FDA wouldn't have pulled the rug out from under them? This uncertainty increases the business risk to the point I don't know why anyone would want to bother.

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3. Will on March 30, 2011 1:55 PM writes...

I suspect the next move is for KV to sue the FDA to compel them to enforce the rules that they have, not unlike efforts to sue the EPA for failure to act on certain rules (as plaintiffs interpret them)

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4. Mark on March 30, 2011 2:07 PM writes...

I'm sure companies will be lining up to fund clinical studies for unapproved drugs now. (I do understand that KV didn't fund these studies).

Nothing like a healthy dose of regulatory uncertainty to kill any influx of capital.


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5. dvizard on March 30, 2011 2:51 PM writes...

So the FDA basically lied to KV about marketing exclusivity. Great.

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6. Mark on March 30, 2011 3:30 PM writes...


Exactly, this is what pisses me off about the FDA. They set the rules and they enforce them. One can argue what exactly the rules should be, but the problem is, you can't nail the FDA down.

Does getting an NDA approval give KV market exclusivity or not? Companies looking to invest in clinical trials for unapproved drugs don't care whether the answer is "yes" or "no". They'd just like to know which one. Instead they get a "maybe". The result? Companies just run as far away as they can.

The funny thing is that the FDA was pushing for companies to fund clinical trials for unapproved drugs. They are shooting themselves in the foot.

KV stock is down 20% as of market close.


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7. cynical1 on March 30, 2011 3:48 PM writes...

Exactly how many pharmacies formulate sterile injectables? It's not like there's one on every street corner. Liability for the pharmacy? I wouldn't touch it with a ten foot pole myself. Maybe I'm naive but I don't see this as hurting sales. This looks like a pathetic attempt by the FDA to appear as if they're dealing with the issue where, in reality, they've done nothing......which is pretty much how every other government agency addresses problems.

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8. CMCguy on March 30, 2011 3:55 PM writes...

#6 Mark is right on the button. Although I do believe KV pricing was not well considered and extreme I have great problems with reconciling FDA's action. Again I see this has prime basis in Politically motivated interpretation to please certain Congress/Admin critics verses applying consistent standards they are responsible for setting and upholding. Its even further double speak when viewed with the comment below on issue in AL that indicates FDA largely in practice leaves control of compounding Pharmacies up to the states.
"The compounding pharmacy has recalled the products and we are investigating this matter," an FDA spokesperson says. "FDA makes every effort to cooperate with states in investigating compounding pharmacies and typically defers to state authorities for the regulation of traditional pharmacy compounding."

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9. Hap on March 30, 2011 4:05 PM writes...

Is the compounding issue similar to that in the Lucentis/Avastin case? If so, then the FDA might be reasonably consistent.

It would still worry me a lot that the FDA is effectively deciding to not enforce the marketing exclusivity they granted. KV probably should be abused over this, but FDA's response has the potential for a lot of collateral damage. Why would you run studies for an unapproved drug for FDA now if you have no idea if the pricing level that you need to sell it at to make money is going to be unpopular enough that FDA won't defend its exclusivity?

Shouldn't this have been an issue for Congress? I know they have their hands hitting each other, but if the pricing is unpopular enough, and given the number of potential preemie births, you would think that enough parents could work over Congress to consider changing the conditions of exclusivity.

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10. CMCguy on March 30, 2011 4:08 PM writes...

Sorry meant to include additional thought that any such usage through a compounding Pharmacy would automatically fall in Off-label category as anon-approved product and FDA typical reaction is to come down hard on any one caught promoting these activity.

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11. Petros on March 30, 2011 4:19 PM writes...

The marketing exclusivity is conferred by the Orphan Drug designation which would appear questionable in this case for the reasons highlighted in Derek's previous posts on the issue

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12. Bruce Hamilton on March 30, 2011 5:06 PM writes...

This was a problem initially caused by the FDA, and this seems a reasonable solution.

It's still "market exclusivity" from competitors selling product, but provides relief for individual scripted users, should they choose to use a compounding pharmacy.

KV didn't invest much, but obtained exclusivity on the promise of future studies, so hopefully the FDA will review the process of granting exclusively to match effort and investment.

Despite comments above, I believe that many small drug firms will continue to search for such historical treasures, and apply for exclusivity, as the benefits appear to have been only been slightly reduced, and still exceed those from many other pharma investments in drugs.

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13. Anonymous on March 30, 2011 5:47 PM writes...

A hand compounded sterile injectable? Yeah give me some of that. The FDA is being too cleaver by a half. When some pharmacist formulates under or over doses of this drug or some patient dies from an injection contaminated with bacteria, just watch the FDA duck for cover blaming the pharmacist for this lame brain idea. Remember the incident where the pharmacist made money under dosing with dilute chemo drugs and all the accompanying public angst?

The orphan drug act was written for just these cases, so molecules with no IP could be made available for unmet medical needs. Market exclusivity is the price for that and everyone agreed at the time. Don't like the cost too bad don't take the drug, as it is not an entitlement. Without this Faustian bargain these drugs would forever remain on the shelf.

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14. Dr. Demented on March 30, 2011 9:15 PM writes...

Taking the syllogism a bit further, I had an astute and cynical humanities professor in my undergraduate days that asked a simple question: What does the Constitution say?

After we hmmmed and hawwed about it for a while, he told us the answer: The Constitution says whatever the Supreme Court says it says. Depressingly, he was and still is correct.

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15. Not so fast on March 30, 2011 9:45 PM writes...

"The FDA noted that KV's approval for Makena was based on research funded by the federal government."

KV has been on the brink of bankruptcy for almost 2 years. They had a minimal investment.

KV should have thought this one through a little better, maybe gone for a 10x increase instead of 100x. Tough to pull something like this off on the governments dime.

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16. Hap on March 30, 2011 10:28 PM writes...

Except the drugs weren't on the shelf, and the needs were being met - just at $15 a dose, not $1500. KV didn't provide the studies that validated its use after all. Doesn't really seem like a Faustian bargain, unless Faust works for Goldman Sachs now.

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17. pTsOH on March 31, 2011 3:23 AM writes...

Just desserts. If the future incentive to take on "orphan drugs" is diminished, then KV should take the lion's share of the blame. KV should easily have seen this coming, given their extensive use of taxpayer-funded research.

Perhaps we need a new term similar to "patent troll" (orphan troll? exclusivity troll?) for situations like this.

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18. syn007 on March 31, 2011 7:54 AM writes...

This is completely the fault of the decision-makers at KV. When will execs begin to understand that the strongest force in modern markets is internet word-of-mouth and bad press. They should have expected this given their ridiculous 100x price increase on a drug that requires many doses. Anyone with half a brain could have predicted what would happen when KV announced the new price, regardless of what legal rights they had due to the orphan drug status. This whole situation borders on comic book villain absurdity.

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19. anonymous on March 31, 2011 11:04 AM writes...

I read the letter a bit differently.

FDA isn't going to stop the compounders, not because of price or exclusivity, but because FDA generally doesn't stop compounding unless bad stuff is happening. Compounding tends to be handled at the state levels. Its a simple matter of resources, there aren't enough staffers to visit a fraction of compounders, how would you stuop it anyway?

Think speeders and highway patrols. If a cop has someone pulled over, hundreds of cars can speed past if they want.

Essentially the reply is that the FDA isn't going to be the police for KV. Nothing more.

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20. dave w on March 31, 2011 4:52 PM writes...

Where is this so-called "market exclusivity" defined? Did the FDA promise to forbid otherwise-legitimate compounding by individual pharmacists, or does it merely mean that they don't give approval for other labeled brands of the same formulation during the "exclusivity" period?

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21. abdullah on April 1, 2011 4:45 AM writes...

I AM FROM germany...()Seine kraft reicht für Arme()..His powerful enough for the poor..BUT No one interested in selling expensive BMS OR CHIP selling intel ...

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22. Anonymous on April 1, 2011 7:21 AM writes...

KV paid $250M for the right of the drug plus on-going studies - FDA did not approved before a certain number of patients have been enrolled.

KV estimated to be able to collect revenues from 30K patients. expected revenues to be only $92M in FY2012 (check their business plan). So, what should have been the price?

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23. Dan on April 3, 2011 2:50 PM writes...

I don't see what the price of buying the rights to the drug has to do with it, Anon (#22). The price of developing it, sure, but KV didn't really do that.

If they can't sell it for as much as they thought, they probably overpaid. That's their problem, not anyone else's.

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24. doc tore on May 7, 2011 6:09 PM writes...

at 600$ with min 30 000 patients the first year is huge !
I think it is worth the price for a life ....a child to be born healthy from an FDA approved drug....not a compound

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25. doc tore on May 7, 2011 6:10 PM writes...

at 600$ with min 30 000 patients the first year is huge !
I think it is worth the price for a life ....a child to be born healthy from an FDA approved drug....not a compound

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26. jenny on June 19, 2011 6:16 AM writes...

I will no longer donate to The March of Dimes

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27. Cajun Scientist on March 24, 2013 8:55 AM writes...

Real nice of FDA to let KV Pharmaceuticals undertake human effectiveness studies (conservatively, $300,000/day based on numbers I heard at various Big Pharma shops I've helped out at, over periods of a year to a year and a half) on an old drug, promise that they'll be able to get their money on computer time, hire of statisticians, expert analysts, fees to co-investigators and other research overhead back with "market exclusivity" (which is Slim Shady Regulation at its worst, as far as I'm concerned, but they did it anyway), then tell the compounding pharmacies - hey, you know what? We were KIDDING!

Obviously, if you're FDA and you're going to effectively hire Big Pharma to do your new label studies for you on orphan applications, you should set up a schedule of the prices you intend to tolerate on the newly labelled drug. Then, again,
Big Pharma could just have another closed-door meeting with Barack Obama and sort this out, the way they got Medicare forbidden to take bids on medications as part of the run-up to the "Affordable Care Act."

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28. Cajun Scientist on March 24, 2013 9:18 AM writes...

@Dan (#23): The issue with KV Pharmaceuticals appears to be that they were told to submit a new label application documemnting that progesterone caproate was safe and effective in the new proposed application for which it would be labeled. This involves new human safety and efficacy studies, administration of the drug by clinical research associates (physicians who agree to test the drug on their patients or volunteers recruited from the population at large), complete clinical research forms with information needed on how the patients responded to the drug (success/failure as well as ANY adverse event which occurred while the drug was administered), these forms must be entered into a database by the firm filing the application, then statistical analysis performed and the results interpreted by medical experts on the drug company's staff. The information in the database MUST be submitted to FDA in an approved database format (so far, only SAS and Oracle have approved database formats and software for this) and all the records archived permanently.

The figures I heard back in the 1990s when I was involved in this process as a clinical data analyst set the price for a big firm like Eli Lilly and Company for pre-market clinical research at up to $300,000 a day (obviously, that's at the peak of the study with everyone on the clinical research team, up to a year or so if there were issues with clinical data collection (such as an investigator failing to follow study protocols for a large percentage of the data - you can't just discard those data, the clinical data have to be examined and a good faith effort made to report them as accurately as possible).

So the cost of simply finding out if a drug is safe and effective in a new application can get up to ten million dollars over a work year (about 300 days of activity) assuming usual delays.

THAT is why KV Pharmaceuticals was justified in asking for market exclusivity and rather high per dose costs. If FDA and the European Medicines Agency want less expensive drugs on the market, there need to be very strong efforts to reduce the cost of documenting safety and efficacy which don't sacrifice drug safety.

Drug safety's a very hard thing to assure. Paracelsus was the first man to formally determine what shamans have known for thousands of years - the difference between a drug and a poison is the dose and method of application. Finding that out hasn't gotten any easier in all that time; if we want less expensive drugs we either have to settle for innocuous entities which may not be very effective, or to harness computers to make the process of finding out how good and safe a drug is as efficient as possible, so that we can get more orphan drugs out faster.

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