FDA Allows De Facto Generic of Pricey Preemie Drug Makena

March 30, 2011— -- The Food and Drug Administration has no intention of enforcing a regulation that one drug company sought to exploit to drive out competitors, an FDA official told ABC News.

The regulation invoked earlier this month by KV Pharmaceuticals would have allowed to company corner the market for a drug used to prevent preterm births, and sell it for 150 times what had been the going price.

KV Pharmaceuticals gained exclusive rights in February to produce a progesterone shot used to prevent preemie birth, previously known as 17P, that it branded Makena. The shot had been offered by compounding pharmacies for between $10 and $20 per dose, but KV planned to sell it for $1,500 per dose.

The company then sent cease-and-desist letters to compounding pharmacies, saying the FDA would take action against them if they continued to synthesize the drug.

The FDA's official statement as of Wednesday is that "this is not correct" -- the FDA will not take action against these companies.

"In order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an individually identified patient unless the compounded products are unsafe, of substandard quality, or are not being compounded in accordance with appropriate standards for compounding sterile products," the FDA told ABC News.

Because the FDA has no control over how companies it grants drug approval set prices, some health care experts said these comments, couched in anonymity, seem like an attempt to lessen the unintended consequences of the decision to grant KV Pharmaceuticals seven years of exclusive rights to the drug under the Orphan Drug Act.

As a result of this official stance, many doctors will be able to bypass KV Pharmaceuticals and continue prescribing this progesterone shot at the affordable compounding pharmacy price women are used to.

"I am hopeful that this statement will give small compounding pharmacies the confidence that they are legally on safe ground to compound and distribute [this drug]. Obstetricians will have the option to prescribe an affordable product. It is important to have this competitive force in the market. I am very encouraged by this news," says Dr. M. Kathryn Menard, director of the Center for Maternal and Infant Health at University of North Carolina School of Medicine.

KV Pharmaceuticals says it will announce their plan for addressing the price concerns later this week, noting that an expansion of the financial assistance program they have in place for low-income mothers may be in the works.

Maternity Advocates Challenge High Cost of Preterm Birth Drug

Even if some doctors will continue to use compounding pharmacies to get 17-P, Medicaid and health insurance providers will have to contend with the high price of Makena.

That leaves maternity care advocates worried about patients' access to a drug whose importance, Menard said, cannot be understated.

"This is the only evidence-based approach we have, medication we have to prevent pre-term birth," she said.

It wasn't always easy to find places that made the medication, however, said Dr. Michael Lindsay, division director of Maternal-Fetal Medicine at Emory University School of Medicine.

"We were excited at first to hear it be FDA-approved," he said. "My mind-set was that now everyone could get it, but no one is going to be able to afford [the price KV Pharma is putting on it]."

Menard agreed, adding that "this financial barrier, we see it as insurmountable."

Several letters have been sent to the company by leading maternity advocates and public officials voicing concerns that the price will prevent many women in need from receiving the drug and put a heavy burden on the health care system as a whole, especially Medicaid.

The March of Dimes, American College of Obstetrics and Gynecology, the American Academy of Pediatrics and the Society for Maternal Fetal Medicine today took their concerns directly to KV.

"[KV] wanted to listen to our concerns. They apologized sincerely for the way this was handled, said they were working with incomplete information. Basically, they're going to take all that listening and go back to the board and make a decision," Menard reported from the meeting.

Company's Financial Assistance Program Questioned

KV Pharmaceutical respond to the price controversy by announcing a Comprehensive Patient Assistance Program for Makena in which households, both insured and uninsured, making less than $100,000 a year will be subsidized.

In a statement to ABC News, KV Pharmaceuticals and partner company Ther-Rx, wrote: "We are committed to taking the appropriate steps to help ensure that all clinically-eligible patients have access to Makena."

This translates into providing the drug for free to households making less than $60,000 annually that "apply for and are eligible for patient assistance." Those making $60,000 to $100,000 will be able to obtain it "at a cost that is comparable to the average copay assigned by commercial insurance," and those who are insured and make less than $100,000 will have a copay of $20 or less guaranteed to them, according to a company statement.

This contingency plan raises concerns for doctors, however. Those households making more than $100,000 a year cannot necessarily afford to devote as much as a third of their income to pay for Makena if their insurance does not cover the procedure, Lindsay said.

In addition, those receiving financial assistance will need to go through an approval process that could delay treatment, possibly resulting in preterm birth for many patients, Menard says.

ABC News' Lisa Stark contributed on this report