K-V Pharmaceutical said it would do it and now it has filed for Chapter 11 bankruptcy protection.
The St. Louis-based company says it will continue to do business, pay its bills, employees and such, as it restructures. It doesn't, however, say how it will deal with the fact that few payers want to cover the $695 cost of its premature birth drug Makena, when compounders will whip up a version for $10 to $20 a pop. Reuters reports the New York bankruptcy filing for K-V ($KV.A) lists $728.3 million in debt and $236.6 million in assets.
In a lawsuit against the FDA a month ago, K-V warned that if it was not allowed exclusivity to Makena, and could not charge 15 times more per injection than compounders, the company would be unsustainable. Between patients' inablity to realize "the full value" of Makena and previous legal and manufacturing problems that keep it from making other drugs, K-V says it had no choice but to file.
K-V and the FDA have been in a long-running dance over Makena, a hormone that is injected to lower the risk of premature birth in women who have had babies prematurely in the past. Women have traditionally gotten it for $10 to $20 per injection in compounded form, compared with the $1,500 K-V initially wanted to charge when the FDA approved its version in February 2011. It dropped the price to $695, a 55% cut, after charges that it was price-gouging. But K-V says it has been been unable to get the FDA to enforce "the orphan drug marketing exclusivity granted to K-V for Makena. That has kept some state Medicaid agencies from buying the drug "despite those states' legal obligation to cover FDA-approved drugs," a K-V release says. The troubles also have kept K-V from earning a milestone payment from Hologic, from which it licensed Makena.
K-V's financial problems have been building for some time and it acknowledges that the Makena mess is not its only issue. Because of a previous consent decree, it has little to fall back on. The company has been in trouble since 2009 when regulators discovered it had covered up manufacturing problems, seized its drugs, halted its manufacturing and fined it $25.8 million. Its former CEO was sent to jail and the company is facing a $1.5 billion lawsuit claiming that it hid problems from shareholders as well.
But in its release, K-V says with the benefit of the reorganization its intends to "emerge from this restructuring as a stable and competitive company, able to continue to provide quality products to support the health of women across the stages of their lives."
- read the Reuters story
- K-V press release