KVA K V Pharma CL A

K-V Pharmaceutical Co. (KVA, KVB) said Friday that it would slash the list price of its new premature-birth prevention drug Makena by 55% after a public outcry over the treatment's original price tag of $1,500 per shot.

The St. Louis-based company also said it would offer supplemental rebates and noted that a majority of patients would pay significantly less for each shot. The response came after K-V became the latest U.S. healthcare company to face scrutiny over medical prices perceived to be too high.

K-V's Ther-Rx unit had initially charged $1,500 per injection of the drug, given weekly to prevent preterm labor. This sparked a backlash among consumers and lawmakers because versions of the active ingredient of Makena, hydroxyprogesterone, have been available since 1956 and were sold for as little as $10 to $15 per shot.

While the latest price tag--$690 per shot--is still much higher than the alternate versions, it is lower than the drug's initial price. One lawmaker Friday called the action positive; however, K-V's moves didn't satisfy all of its critics.

The March of Dimes, a nonprofit organization that works to reduce premature births, acknowledged that the price cut was a step in the right direction, but the organization also announced plans to terminate a partnership in which K-V had provided financial support for fund-raising efforts.

"The company's handling of the launch of Makena, and the initial list price, were highly unsatisfactory and unacceptable to the March of Dimes and the families we represent," it said in a statement. The organization will continue to explore all options for ensuring access to the drug's active ingredient for all medically eligible women.

"After such a long and positive partnership, Ther-Rx is disappointed to hear of their decision," a K-V spokeswoman said of the March of Dimes action. The company had defended its initial price for Makena, saying it was the first preterm labor drug approved by the Food and Drug Administration.

K-V had expected to be the exclusive supplier of hydroxyprogesterone, used to reduce the risk of preterm delivery before 37 weeks of pregnancy in pregnant women with a history of at least one spontaneous preterm birth. Previously, so-called compounding pharmacies have made less expensive versions of hydroxyprogesterone, also known as 17-P.

K-V recently sent letters to those pharmacies saying FDA would no longer use enforcement discretion, meaning they would have to stop making their cheaper versions of the drug. The company has said unapproved compounded versions of the active ingredient have risks.

But this week the FDA said it would not take enforcement action on pharmacies that compound hydroxyprogesterone, citing the need to support access to the drug in a "unique situation."

KV's Class A shares fell 9.52% to $5.42 in recent trading and are off more than 40% this week. The price cut and FDA stance are likely to reduce the commercial potential for Makena, a drug that K-V has banked on to return to profitability following various legal and regulatory troubles in recent years.

K-V's Ther-Rx unit, which makes Makena, said Friday that in addition to the list price cut, it would offer supplemental rebates that would further lower the price for Medicaid programs, the government's health program for the poor.

"This will help ensure that every woman who is prescribed Makena -- regardless of her ability to pay -- has the comfort of knowing a medication that has been rigorously reviewed by FDA for safety and efficacy is available to her," K-V said in a press release.

Also, K-V will cap the costs for a full course of therapy to a maximum of 15 injections for contracted health insurance plans and state Medicaid agencies, and remove caps to qualify for financial assistance from the company.

K-V said 85% of patients will pay $20 or less per injection for Makena, and patients whose financial need is greatest would receive Makena at no out-of-pocket cost.

U.S. Rep. Henry A. Waxman (D-Calif.), one of the lawmakers who had criticized K-V for the initial price tag, said the price cut "is a step in the right direction." He still plans to review information he has requested from the company to determine if the new price is appropriate, according to a statement.

Two Democratic Senators had sent a letter to the Federal Trade Commission last month urging the agency to launch an investigation into potentially anticompetitive behavior because of the increase in the cost of Makena compared with compounded products.

Makena was given seven years of market exclusivity when it was approved under an FDA program that grants incentives to companies developing treatments for rare ailments.

-Peter Loftus, Dow Jones Newswires; +1-215-982-5581; peter.loftus@dowjones.com

(Matt Jarzemsky contributed to this article.)

K V Pharma CL A (NYSE:KVA)
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K V Pharma CL A (NYSE:KVA)
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