This is what's wrong with monopoly.

It's also part of why our system of allocating medical treatments is so screwed up.

Are you pregnant? Is your partner pregnant? Are you planing to be in either of those states?

If either of the above applies to you, is it going to a "high risk" pregnancy, in terms of premature birth?

Are you in the US.

If so have you got an extra $30,000 dollars?

There is a progesterone treatment, recommended for such conditions. In a bit of clever finagling KV Pharmaceuticals got the FDA to give it exclusive permission to manufacture the drug.

It was being made by compounding pharmacies; places with pharmacists who actually make drugs to order. To get shots made up, ran about $10 a pop for 17-hydroxyprogesterone caproate which is a progesterone derived drug.

This is what KV Pharmaceuticals has to say about themselves: "A specialty pharmaceutical company committed to developing, acquiring and licensing innovative and quality products."

And here is what they have to say about their recent acquisition: Ther-Rx Corporation is fully committed to helping ensure that every woman who needs Makena (hydroxyprogesterone caproate injection) will have access to it. We know how important Makena is to the thousands of mothers who are eligible for this therapy. We understand and share the public's interest in ensuring that every mother – whether insured or uninsured – who needs the medication will be able to access it in an affordable manner. That is why we recently announced a patient financial assistance program (PAP) that reduces the total out-of-pocket costs for qualified patients, and that eliminates out-of-pocket costs entirely for patients whose need is greatest. We appreciate the concerns expressed by multiple audiences, and are committed to working collaboratively with all interested parties to make this vital medication even more available and affordable to women across the country.

Background

Makena (hydroxyprogesterone caproate injection) is the first and only treatment approved by the U.S. Food and Drug Administration (FDA) to reduce the risk of preterm birth in women who are pregnant with a single baby and who have delivered a baby too early (preterm) in the past. Makena is not intended for use in women with multiple gestations or other risk factors for preterm birth.

Prior to Makena, to the extent medication was available, physicians and the mothers they treated had to rely on hormonal therapy that was "compounded" in individual pharmacies without FDA review, approval, or oversight. Makena, by contrast, is an FDA-approved drug, which is manufactured in an FDA-regulated and FDA-compliant sterile facility to ensure quality and consistency from dose to dose.

This is what a doctor had to say about it.

"Progesterone is so cheap to make and we never had a problem with the compounding pharmacies making it. There's probably some variation between pharmacies, which nobody likes, but nobody likes $1,500 a shot either. That seems like highway robbery," says Dr. Jacques Moritz, director of gynecology at St. Luke's-Roosevelt Hospital in New York. (from ABC News).

What was the previous risk of this, "non FDA regulated/compliant sterile facility,"?

17-hydroxyprogesterone caproate is safe at least according to a study concluded in 2007, based on uses of the non-"commercially" available drug when Squibb stopped making it in 1999. It's been in use since 1959.

So why the push for reserving it to KV? It might be the 20 doses normally used in treating the women who need it. What's the profit margin on something which a compounding pharmacy could afford to make, and sell at a profit, for $10, when the price is jacked up to $1,500?

The problem is, this is a captive market. Nothing stopped any manufacturer from building a better mousetrap, and making the drug to the specs KV is touting. One assumes that,were it significantly better, physicians would prefer it.

This, however is profiteering. There's no R&D to worry about. No tests, no trials. No worry that some hidden side effect is going to show up in 20-some years and cost them a bundle in unforeseen liability.

The drug was designed on the taxpayer's dime. "All the upfront development of the drug was done by the National Institute of Health. You and I paid for that with our tax dollars, it's not like this pharmaceutical company is trying to recoup its investments in research and development, as is usually the reason for the price of new drugs," says Dr. Kevin Ault, associate professor of gynecology and obstetrics at Emory University School of Medicine."

Lest we forget, the cost of delivering a baby, is somewhere between 5-10,000. That's the whole kit-and-kaboodle. Labor room, drugs, nurse, OB/Gyn. This is 3-6 times what a normal delivery costs (be it C-section, or not).

Why? Because they can.

Once the FDA puts a drug into the category they did, the pharmacies aren't allowed to make them up anymore, and this is the only game in town.

KV says it will subsidize people, but the details are not completely worked out. How long, one wonders, will the evaluation of need take? More to the point, the breakdown they plan to use means that 80 percent of the families in the country will be eligible for their assistance program.

The cost of treatment went from $200, which was affordable, out of pocket, for pretty much everyone, to $30,000. What insurance company is going to be willing to cover that? Who, in the 12 percent who are in the 100,000-149,999 bracket can afford to spend that much of their income, in addition to present costs of having a child.

This is case of a private corporation exploiting a regulation to screw the public. It's what we get from having a "for profit" model of everything.

More on that Drug Company

So, the rationale they made for getting complete control over the drug was that it would, to quote them, "Prior to Makena, to the extent medication was available, physicians and the mothers they treated had to rely on hormonal therapy that was "compounded" in individual pharmacies without FDA review, approval, or oversight. Makena, by contrast, is an FDA-approved drug, which is manufactured in an FDA-regulated and FDA-compliant sterile facility to ensure quality and consistency from dose to dose."

Ok, there is, perhaps, some rationale to that. At Corante (a blog written by a pharmaceutical researcher) there is some discussion about the merit's of that line of reasoning. It's moderately persuasive until one realises he thinks the entire treatment costs $1,500.

He didn't notice the need for roughly 20 injections.

The real gem however shows up in comments (they have some of the problems one finds in comments, but not terribly so; it's not like reading them in an online newspaper), where someone links to the details of this years 10-Q.pdf.

The interesting details are on page 11. It seems there was a bit of a problem with the labeling of some drugs. The CEO fled to Israel, which meant he was spared a felony charge (because of how Israel's extradition works), and he got a sentence of 30 days, but if she reports quickly enough he'll be let out in less than that so he can be with his family for Passover, in Israel, where he'll finish out his probation.

What was the "mislabelling"?

KV Pharmaceutical manufactured generic prescription drugs, including morphine sulfate, a pain relief and opiate drug. Prosecutors said Hermelin decided to increase production of the drug, from an average 4.1 million daily doses in 2006 to 10.6 million in April 2008.

Later in 2008, the company shipped oversized tablets to retailers in California and Canada that were falsely labeled as having the same strength as the regular morphine sulfate tablets -- they actually had more of the active ingredient. KV also received complaints from consumers concerned about oversized and irregularly-shaped drug tablets, the U.S. Attorney's office in St. Louis said.

Prosecutors said the California morphine tablets weighed more than twice the amount they were supposed to, and the Canada morphine tablets were 65 percent stronger than the label claimed. KV's own safety assessment from May 2008 concluded that oversized morphine tablets raised potential safety concerns, including the possibility of an overdose that could cause a coma or death. (Business Week).

Here's the money quote, from page 11, of the 10-Q.

"The Company does not expect to generate any significant revenues until it resumes shipping more of its approved products or until and unless the Company begins to generate significant revenues from the sale of Makena^™"

So, they aren't allowed to make/sell the drugs which were their bread and butter because they 1: made them incorrectly, and 2: lied about it to the FDA.

KV's wholly owned subsidiary, Ethex Corp., pleaded guilty in March 2010 to two felony counts of criminal fraud for failing to report to the Food and Drug Administration that it was making oversize painkillers — and drew $27.6 million in fines and restitution. .

Yes, I said lied. It may have been a lie of omission, but they represented themselves to the FDA as not having screwed up. Not having screwed up on a drug that might have killed people.

This does not make me think well of them. They found a drug with a track record, and a need, and they picked it up; when they knew they were about to have a cash flow problem, of an indefinite period, and they decided to use it to carry them over to the time they could sell other drugs. They did this on the claim they could do precisely what they had failed to do with another drug.

They then chose to take advantage of people who have no other choice, by choosing a drug needed by desperate people, and making it so obscenely expensive no one can afford to pay for it, which means we all will, because you can bet Aetna, Blue Cross, etc., will pass it along, and everyone will pay the bill.