March 30, 2011 / 8:29 PM / 6 years ago

K-V shares drop on FDA's decision on Makena

4 Min Read

WASHINGTON (Reuters) - Pharmacies face no regulatory action for producing cheap versions of K-V Pharmaceuticals' pre-term birth drug, U.S. health regulators said, sending the company's shares down more than 20 percent.

The Food and Drug Administration said on Wednesday that it would take no action against pharmacies that formulate treatments similar to K-V's KVa.N newly approved Makena based on a valid prescription.

The news came after complaints earlier this month by two U.S. senators and an industry group about a significant price hike by K-V for Makena, a weekly injection of progesterone meant to prevent pre-term labor.

They were joined by senator Tom Harkin on Wednesday, who said the company had even tried to stop pharmacists compounding the drug, advising them that it would be a violation of law to continue to compound Makena-like products.

The FDA said in its website that any such claims made by K-V were incorrect.

The matter was further pursued by Congresswoman Rosa DeLauro, who wrote to FDA commissioner Margaret Hamburg, urging her to look into the situation and ensure that drugs developed through publicly funded research are accessible to the patients.

"The precedent that may soon be set by K-V Pharmaceutical is unconscionable," DeLauro said in her letter.

"K-V Pharmaceutical did not invest in the initial research in the drug, though the American public did support that research through National Institute of Health funding," she added.

In a statement, the company said it takes the public concerns very seriously and will announce its solutions to the issues by the end of the week.

K-V got approval for Makena, which was already available on the market, in response to the FDA's recent drive to remove all unapproved drugs from the market.

It got the worldwide rights to the drug from Hologic Inc (HOLX.O), who transferred the rights to K-V after the approval as part of an agreement between the companies.

K-V had bought the rights to the drug -- previously known as Gestiva -- from a Hologic unit for $92 million in cash plus delayed payments of $107.5 million.

Makena also has orphan drug status, a designation the FDA grants for treatments of conditions affecting fewer than 200,000 Americans. The status grants the drugmaker a marketing exclusivity of seven years in the United States.

"For many years, a version of the active ingredient of Makena, which is a synthetic progestin, has been available to patients whose physicians requested the drug from a pharmacist who compounded the drug," the FDA said on its website.

The approval helped revive the stock of K-V, which was barred from making and marketing its drugs due to repeated manufacturing problems. In addition, the price of the drug per injection spiked to $1,500 from $10 to $20.

The dramatic price rise raised concerns about patients' access to the drug and burdening state-run Medicaid programs for the poor. U.S. senators and one industry group urged the FDA to ensure that patients can get the drug through specialty pharmacies.

However, the FDA said it might reconsider Wednesday's decision, leaving some room open for future regulatory enforcement against compounding.

Shares of K-V were down 20 percent at $5.69 in late afternoon trade on the New York Stock Exchange after falling as much as 48 percent.

More than 3 million K-V shares changed hands on Wednesday, almost seven times their 10-day moving average volume.

Reporting by Esha Dey and Lisa Richwine; Editing by Lisa Von Ahn, Gary Hill

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