Rep. Henry Waxman, Rep. Frank Pallone, Jr., and Rep. Diana DeGette sent a letter on March 24th to Gregory Divis, the CEO of Ther-Rx, regarding the pricing of Makena (see below). Of note, the honorable Mr. Waxman, Mr. Pallone, Jr, and Ms. Degette produced a far more sternly worded letter and asked much better questions than Dr. Howse from the March of Dimes.
The letter gives an April 1, 2011 time line for a response.
What remains to be seen is whether Ther-Rx will cave and drop the price, or are they going to hunker down and ride out the storm? Personally, I think anything over $100 a shot is ridiculous. That kind of price point still gives them an incredible mark up an a drug that is quite litterally pennies to make and essentially going to be litigation-free (after all, it is recommended by the American Congreess of OB/GYN). However, Ther-Rx was near bankruptcy last year (note to March of Dimes, look into a company’s financial history before you start dating). I suspect Ther-Rx will drop the price to $1000 a shot. Still egregious, but they can claim 33% is a significant reduction.
The thing is, compounding pharmacies are still making the drug at a fraction of Makena’s cost (I have heard from many moms who are still getting their 17OP this way). Because Ther-Rx does not have a patent on Makena, Ther-Rx cannot legally go after any compounding pharmacies. That is the purview of the FDA. And remember, the FDA serves under the direction of the government at the leisure of the people (or so I’d like to think, although, then again I believe in things like love at first sight and the inherent decency of mankind).
Getting key members of the House of Representatives on board is crucial. Personally, I don’t think the FDA will go after compounding pharamcies (detailed in this earlier post), and if the pregnant mothers of America have a few heavy hitters on their team, the chance of the FDA wading into this quagmire should drop even more.
This issue affects us all, whether you are trying to have another baby and desperately trying to not deliver prematurely this time around, a concerned health care professional, or a taxpayer pissed off about the fact that Ther-Rx is going to line their pockets to a tune of $4.2 billion/yr on the backs of research funded by the NIH.
Tell your Representatives and Senators to get involved. Tell them this kind of extortion is unacceptable. Make it sticky issue, so the FDA decides to turn the other cheek.
Letter from Rep. Waxman et. al. to Greg Divis, CEO (Chief Extortion Officer), of Ther-Rx
Click here for full post on the subject on the web site of The Committee on Energy and Commerce
March 24, 2011
Mr. Gregory J. Divis
Chief Executive Officer
KV Pharmaceutical Company
One Corporate Woods Drive
Bridgeton, MO 63044
Dear Mr. Divis:
We are writing regarding reports of high prices that Ther-Rx Corporation is charging for Makena, a drug recently approved by FDA to reduce the risk of preterm birth in women with a history of spontaneous preterm birth. News reports indicate that the company will be charging as much as $1,500 per dose, a total cost of as much as $30,000 for women who must take the drug over the course of a pregnancy.
The high cost of this drug is particularly disturbing because it is not a new drug. The drug – a synthetic form of the drug progesterone – was originally approved by FDA decades ago, then later withdrawn because of lack of sales. Prior to Ther-Rx’s marketing an FDA-approved version of Makena, the drug was available from compounding pharmacists for an estimated $20.00 per dose – less than 2% of the price charged by Ther-Rx. Experts have indicated that Ther-Rx could realize as much as $4.2 billion annually in revenues as a result of its new pricing policy. Moreover, because Ther-Rx has received an orphan drug designation for Makena, your company will be able to forestall generic competition, maintaining your exclusivity and control of prices for seven years, and potentially beyond, depending on the status of any patents protecting the product.
Ther-Rx did not invent this drug, or the use of the drug to prevent premature births. But this has not stopped your company from charging extremely high prices. The pharmaceutical industry has traditionally justified its high prices by claiming that such prices are necessary to allow companies to recoup their research costs. In this case, however, Makena was approved under the “505(b)(2)” pathway, which permits an applicant to rely on studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. The two studies cited on the FDA-approved label for Makena appear to be funded by public dollars through the National Institutes of Health (NIH). In addition, Ther-Rx has apparently set its price at the maximum level at which health care plans will still be “motivated to provide coverage” of the drug. It appears that the price of this drug is not being set on the basis of the cost to produce or research the drug, but at the maximum level that providers are willing to pay.
There are undoubtedly important advantages to Ther-Rx’s sale of an FDA-approved version of this drug. But we are concerned about the impact of the high prices for Makena on private insurers as well as Medicare, Medicaid, and other public programs, and we question whether these high prices are justified. In order for us to evaluate these issues, we ask that you provide us with the following information:
- Any fiscal or other contributions made by Ther-Rx to the two NIH studies cited on Makena’s FDA-approved label.6
- Any additional research costs to date incurred by, or studies conducted by Ther-Rx in obtaining FDA approval for Makena, and the expected costs of ongoing research. Please include all registry numbers listed under www.clinicaltrials.gov for any clinical trials that formed the basis for approval, and for any such trial that was published in a peer-reviewed publication, a copy of the publication. Please ensure such information includes the five postmarketing requirements as per FDA’s approval letter.
- Any research or data on the bioequivalence of Makena to the compounded versions or previously FDA-approved versions of the drug.
- Ther-Rx’s promotional expenditures on Makena, and details on how these funds were spent. Please include information on promotional expenditures to date, and anticipated future expenses.
- Ther-Rx’s total cost, and estimated unit costs, to manufacture Makena, and the components of such costs.
- Ther-Rx’s expected revenues and profits from sales of Makena.
- Ther-Rx’s anticipated revenues and profits from sales of Makena to Medicare, Medicaid, and other federal or state health care programs.
We ask that you provide us this information no later than April 1, 2011. Please contact Brian Cohen of the Committee staff or Tiffany Guarascio of Rep. Pallone’s staff if you have any questions about this request.
Henry A. Waxman
Frank Pallone, Jr.
Subcommittee on Health
Subcommittee on Oversight and Investigations