In her ruling, US District Court Judge Amy Berman Jackson found that the FDA appropriately exercised its discretion in whether to pursue enforcement actions against compounders. She also ruled that the agency clearly conveyed the circumstances under which such actions may be taken and when compounding was permitted without violating the law. In effect, she decided that KV failed to bring any appropriate claims.
"This case is fundamentally an effort to get the court to direct and oversee the FDA’s enforcement activities, and that it cannot do," she wrote in a 38-page decision. "...FDA did not disavow an intention to proceed against compounding pharmacies as a general matter." Instead, a press release noted the “FDA does not intend to take enforcement action against pharmacies that compound... based on a valid prescription for an individually identified patient unless the compounded products are unsafe" (here is the ruling).
KV argued, among other things, that the FDA denied its right to incentives under the law, notably the Orphan Drug Act, and failed to uphold the Food, Drug & Cosmetic Act. In doing so, the drugmaker charged the agency undermined the seven-year market exclusivity that was granted Makena when the drug was approved early last year and, therefore, hurt its ability to compete against compounders and caused "irreparable harm."
KV also claimed the FDA failed to block active pharmaceutical ingredients that were being illegally used by compounders, but the judge noted that the agency would not be able to distinguish upon arrival in the US which batches of ingredients might be destined for large-scale and, therefore, illegal compounding and ingredients that could be appropriately used by a compounder to fill a valid prescription for an individual patient.
The decision comes just weeks after KV filed bankruptcy and blamed FDA inaction against compounders for its financial woes. Since then, the drugmaker has also filed lawsuits against three states - Illinois, South Carolina and Georgia - over the refusal of their state Medicaid programs to cover Makena (read this). In a rare bit of goods news for the drugmaker, a federal judge has since ruled that Georgia should provide coverage (see here).
As we wrote previously, the FDA early last year approved Makena under the Orphan Drug Act, but shortly afterwards, both the drugmaker and the FDA came under fire after KV set the price at $1,500, compared with $10 to $20 a week for compounded versions of a med that has been used for decades. In response, the FDA took the unusual step of deciding not to prevent compounders from compounding, and in doing so, inserted itself into an especially heated controversy.
Normally, the FDA would have banned the sale of older, unapproved drugs, and KV, in fact, had already sent letters to compounders threatening legal action. But the Obama adminstration was concerned about harsh publicity over Makena pricing since a federal agency had allowed a monopoly to develop (read this, this and this). The FDA decision not to pursue enforcement actions against compounders, unless there was a safety issue, was significant because the agency was dragged into a debate over cost.
KV does not have a patent, but the approval, effectively, eliminated competition, because the drugmaker was granted seven years of market exclusivity. KV subsequently lowered its price under mounting criticism (back story). But desperate to generate revenue, the drugmaker last fall provided the FDA with samples of active pharmaceutical ingredients and compounded products that the drugmaker alleged raised concerns about potency and purity.
But in June, the FDA indicated there were no safety problems with the samples and there was little to no change in the agency position (back story). A subsequent Q&A announcement from the FDA, which was issued to clarify any misunderstanding about its posture, seemed to underscore frustration
at the drugmaker had with the agency. A few weeks later, KV filed its lawsuit against the agency.
Meanwhile, KV has been offering Makena to various states for $300 an injection, which is about 40 percent less than the standard rebated price of $530 per injection for Medicaid programs. And while contracts have been signed with health maintenance organizations and pharmacy benefit managers, the drugmaker recently acknowledged that only about 10 percent of clinically eligible patients who are insured are being prescribed the treatment.
As for KV, a spokesman writes that "the central issue for KV Pharmaceutical, in its several court actions regarding Makena has always been to ensure that pregnant women have access to Makena®, the only drug approved by the FDA for their condition. The recent court decision in Georgia requiring that state’s Medicaid agency to honor its legal obligation to cover FDA-approved drugs and reimburse for Makena, together with progress we are making in other jurisdictions and continued growth in prescriptions for Makena, demonstrates that our multi-tiered strategy is advancing our key objective – to ensure that all clinically indicated patients have access to Makena."
For the moment, the ruling leaves KV on the ropes. The KV spokesman writes us that the drugmaker "is reviewing the judge’s decision and will determine next steps,” suggesting an appeal may be pursued. However, KV has alienated so many people - not only physicians and payers complained about the initial pricing, but the March of Dimes ended a relationship (see this) - that the drugmaker may have no choice but to cut the price again. And it may have to be a big cut.