Too Little, Too Late? KV Lowers Makena Price

Shortly after filing a lawsuit against the state of Illinois for failing to cover their controversial Makena treatment for premature births, KV Pharmaceutical is now willing to bargain over the price. The drugmaker offered to sell its medication to the state for $300 an injection, which is about 40 percent less than the standard rebated price of $530 per injection for Medicaid programs,

The move is a belated concession that KV Pharmaceutical hopes will jumpstart needed revenue to salvage its tattered Makena franchise. In recent weeks, the drugmaker also filed lawsuits against South Carolina and Georgia (see here) to force state Medicaid programs to cover Makena instead of much cheaper compounded versions. Earlier this month, a federal judge ruled that the Georgia Medicaid program must cover the cost of the treatment (back story).

That amounted to a rare victory for KV. As we have reported previously, Makena was projected to become a big moneymaker after the FDA approved the treatment early last year under the Orphan Drug Act. Shortly afterwards, though, both the drugmaker and the agency came under fire because the price was set at $1,500, compared with $10 to $20 a week for compounded versions of a medication that has been used for decades.

In response, the FDA took the unusual step of deciding not to prevent compounders from compounding. Normally, the FDA would have banned the sale of older, unapproved drugs. The agency decision not to pursue enforcement actions against compounders, unless there was a safety issue, signaled White House concern about publicity over cost since a federal agency had allowed a monopoly to develop.

Since then, KV Pharma attempted to convince the FDA that some compounded versions contained unsafe ingredients, but the agency rejected its contentions (look here). The drugmaker, meanwhile, began signaling that its financial situation was deteriorating (see this) and, in fact, recently filed for bankruptcy protection. At the same time, KV Pharma filed a lawsuit against the FDA for failing to take action against compounders (read it here).

In Illinois, the Department of Healthcare and Family Services, which runs the state Medicaid program, approves reimbursement for the compounded version, but requires prior authorization before paying for Makena, according to the lawsuit filed by KV (read it here). KV and state officials had a tense exchange over the policy.

In July 2011, Scott Goedeke, senior vp of marketing, met with Illinois Medicaid officials, including Lisa Arndt, who heads of the bureau of pharmacy services, according to the suit. Goedeke offered to lower the Makena price, but also questioned the state reimbursement policy. As Crain's noted, Arndt offered a blunt response: “You don't like our policy, we don't like your price,” according to the complaint.

Meanwhile, KV is apparently willing to bargain elsewhere. Goedeke tells Crain's that, "although we have not disclosed specifics of negotiations with any individual state system, over the past six months KV has reached agreement on rebates with three states that bring Makena's price well below $300 per injection." A spokesman for the Healthcare and Family Service Department declined to comment about the lower price, Crain's writes.

special sale pic thx to msg on flickr