Shares of K-V Pharmaceutical Co. (KVA, KVB) dropped after the Food and Drug Administration said it won't take action against pharmacies that create a cheaper alternative for a K-V treatment that prevents preterm labor in pregnant women.

Specifically, the FDA refuted a letter K-V sent to pharmacists warning the agency would take enforcement action against pharmacies that use a compound based on a valid prescription for a patient.

The news comes after two U.S. senators earlier this month requested the Federal Trade Commission investigate anticompetitive behavior after the treatment, which obtained seven years of exclusivity under the Orphan Drug Act last month, saw a dramatic cost increase.

The FDA said it only takes such actions if the products are unsafe, of substandard quality or are not being compounded according to appropriate standards.

K-V's shares slid 28% to $5.17 in recent trading on Wednesday. A company spokeswoman wasn't immediately available to comment on the FDA's statement.

The drug, commonly known as Markena, is a weekly injection of progesterone. K-V was given orphan status for Markena last month, and the cost has risen to $1,500 per injection--much higher than the cost of the treatment that had been given by U.S. pharmacies at a cost of $10 to $20 per injection.

Orphan status in the U.S. typically brings U.S. market exclusivity for an extended period and other incentives if the treatment is approved.

-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com

 
 
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