Battered by compounders on Makena, KV seeks bankruptcy protection
This article was originally published in Scrip
Blaming the US FDA for some its woes, KV Pharmaceuticals over the weekend revealed it had filed for Chapter 11 bankruptcy protection, hoping to get out from under its debt.
KV has been struggling to make a profit from its preterm birth drug Makena (hydroxyprogesterone caproate injection), which won the FDA's OK in February 2011, but quickly became the center of controversy when the firm initially wanted to charge $1,500 per dose for the medicine – a stark contrast to the $20 per dose available for decades at compounding pharmacies.
Under fire from patient groups and members of Congress, KV quickly backed away from that price tag, but still asked patients to pay a larger sum than what they were used to shelling out, putting the cost at $690 per dose (scripintelligence, 4 April 2011).
But KV defended its latest pricing strategy by insisting patient co-pays are for Makena were averaging about $8 per injection – lower than what someone would pay for the compounded medicine. The company also said it provides Makena at "no out-of-pocket cost" to clinically indicated uninsured women through its financial assistance programs.
The company, nonetheless, has continued to face stiff competition from compounders, with the FDA declaring it would not step in to force the pharmacies to stop making their versions of hydroxyprogesterone caproate, which also is known as 17P (scripintelligence, 31 March 2011).
Regulators provided a spark of hope earlier in the summer when the agency stated that if there is an FDA-approved drug that is medically appropriate for a patient, that product should be prescribed and used (scripintelligence, 4 July 2012).
After testing 16 samples of hydroxyprogesterone caproate collected from compounding pharmacies, doctor's offices, distributors and those offered for importation, the FDA, which revealed its plans last November for conducting the analysis, said that while the samples met the bar for the total purity standard in the Makena new drug application (NDA), they failed the NDA's limit for unidentified impurities (scripintelligence, 9 November 2011).
The FDA said it also isolated and identified four impurities that appeared at levels above those permitted in the Makena NDA,although regulators said those impurities did not raise any safety concerns.
The news sent shares of KV up as high as 62% on 2 July, or 34 cents, before the stock closed at 62 cents, a gain of 8 cents.
But just a few days later, the St Louis, Missouri drug maker filed a lawsuit in the US District Court for the District of Columbia against the FDA, in an attempt to force regulators to take action to get the compounded products off the US market – warning that if the agency failed to act, the firm would go bankrupt within six months (scripintelligence, 9 July 2012).
In a 4 August statement, KV said it has been unable to realize the full value of Makena because of a lack of enforcement of the orphan drug marketing exclusivity granted by the FDA.
The company charged that the FDA's lack of enforcement also has led certain state Medicaid agencies to impose barriers to access to Makena on low-income pregnant women at high risk for recurrent preterm birth, "despite those states' legal obligation to cover FDA-approved drugs."
Also weighing KV down is its past manufacturing problems, with the firm being hit with a consent decree in March 2009, which it said resulted in significant restrictions, having a "major negative impact on its revenues and ability to meet short and long-term obligations," including a milestone payment it owes to Hologic, which sold KV the rights to Makena.
KV said it was unsuccessful before filing for Chapter 11 in obtaining a renegotiation of the milestone payments owed to Hologic on "terms that were acceptable to the company."
KV said it has enough cash on hand to operate its business in the near term and intends to seek new financing and use of cash collateral to provide additional time to enable it to continue operations, as it takes additional steps to restructure its financial obligations.
The company said the Chapter 11 filing is intended to provide the firm with the time needed to continue to conduct its business and restructure its financial obligations as it continues to market Makena.
"It is our intention to emerge from this restructuring as a stable and competitive company, able to continue to provide quality products to support the health of women across the stages of their lives," KV President and CEO Greg Divis said.