How did we get where we are with Makena?

Well, my still-nascent blog about life, preemies, and everything is continuing to be hijacked by the Makena controversy and analyzing everyone’s actions since the story broke, so I thought that perhaps it’s time to try again to figure out how we got here in the first place. A lot of information has come out since this started—from other bloggers, from comments made by knowledgeable people on those blogs, and by people passing other information to me through other channels.

By the way, since it’ll probably be a while before this goes away, I’ve made a new Makena category to make it easy to follow this in case I manage to find time to make any posts on my usual topics in between the Makena posts.

Now bear in mind that this is all speculation on my part, though I’ve got a pretty solid feeling about all of this.

First, we have to start with a bit of a history lesson.

In 1956, the FDA approved a drug called Delalutin for treatment of habitual and recurrent miscarriage, threatened miscarriage, postpartum after-pains, and advanced uterine cancer. Delalutin was 17-HPC, or 17 alpha-hydroxyprogesterone caproate. Delalutin was withdrawn from the U.S. Market in 1999 for reasons not related to safety or effectiveness. 17-HPC is the active ingredient of 17P, which is the compounded drug that has been used for the same purpose since Delalutin went off the market.

In 2006, Adeza Biomedical submitted a New Drug Application (NDA) to the U.S. Food & Drug Administration (FDA) to get approval to market Gestiva—a particular formulation of 17P—in the U.S. for the prevention of recurrent preterm birth. The application was largely based upon a 2003 study conducted by the National Institute for Child of Child Health and Human Development (NICHD), part of the National Institutes of Health. That October, the Gestiva NDA was granted orphan drug status by the FDA.

Adeza was acquired by Cytic Corporation in April 2007, and Cytic merged with Hologic, Inc. in October 2007. Hologic then sold the rights to Gestiva to KV Pharmaceutical in January 2008, pending approval by the FDA. The complete package, which included multiple payments at specific intervals following the approval of Gestiva (now known as Makena) totaled nearly $200 million, which doubtlessly increased the pressure on KV to generate a profit. In an SEC filing, KV stated that by 2013 Makena could reach net sales of about $420 million, or about 90 percent of KV’s net revenues.

We know the rest of that part of the story. Makena was approved, KV and Hologic completed the rights sale, and KV/Ther-Rx set the price of Makena at $1,500 per dose. So how did the March of Dimes end up supporting the approval and keep quiet for the first couple of weeks after the price was announced?

First of all, while 17P was available through compounding pharmacies, it was still considered an off-label usage of the drug. There were women with at-risk pregnancies whose doctors would not prescribe 17P because it was an off-label use, and the women did not have other doctors available to them. Some did go into premature labor and lose their babies. An on-formulary drug was needed to ensure that all women had access to this therapy. This is why March of Dimes supported the application. It wasn’t possible to go straight to a generic-enabled approval because that’s not how the system works.

The application changed owners several times during the process, so while March of Dimes was initially working with Adeza Biomedical to get the drug’s approval, they then had to work with Cytic, and then Hologic to before finishing the process. It wasn’t until after Makena’s approval that KV took ownership of the drug. And of course, KV’s financial woes probably played a big part in their setting the outrageous price point. March of Dimes would have been supportive of the approval process in order to take the huge step forward of getting the drug approved and on formulary.

How could the March of Dimes have been surprised by the $1,500 price tag if everyone else knew?

Dr. Jennifer Gunter wrote a blog post noting, among other things, that every industry analyst that she spoke to predicted the $1,500 price point. However, a commenter on that post notes that during the approval process, some drug outlook services were indicating that the drug could be marketed in the ~$200 price range. The commenter also indicates that the FDA also expected the price to be in that range, and was as surprised as the March of Dimes likely was. So while many industry analysts were predicting that the price would be in the $1,500 per dose range, March of Dimes was probably thinking that $200 per dose would be the price point.

Once the astronomical price was announced, the March of Dimes may have been restricted from what they said by a sponsorship agreement with KV. It’s not beyond the realm of possibility that they were concerned about losing a major sponsor, and thought that they could have a better chance to resolve the situation collaboratively rather than confrontationally. While initially the March of Dimes put a great deal of faith in Ther-Rx’s patient assistance program, the reality of the implementation proved questionable. The lack of progress led to the wimpy letter of March 14, and it was only after a further lack of progress that they issued a second letter on March 23 that finally got tough.

While many are deriding the March 23 letter as insufficient, the commenter notes that, within the confines of the pharmaceutical industry, that letter is actually “a very, very aggressive slap across the face to Ther-Rx/KV,” and “virtually calling out the bullshit.”

Now that the pressure’s on KV and Ther-Rx, let’s see how the meeting in Washington goes next week.

Some other points have been raised, which I was curious about as well, so I did a little research:

Much has been made of the fact that March of Dimes President Dr. Jennifer Howse’s salary is $641,760. While I will not attempt to justify that figure, I will note that a Forbes Magazine study of the top 200 charities in the U.S. found that the average top salary for the charities was $624,225, which puts Howse’s salary toward the middle of the pack.

That same study shows that March of Dimes’ donor dependency, a measure of “how badly a nonprofit needs your contribution to break even,” is 100%, meaning that it relies heavily on donors to stay afloat. Its fundraising efficiency, a measure of “the percentage of gifts left after subtracting the cost of getting them,” was 84%, putting it in the bottom quarter of the 200, a bit below the average of 90%. March of Dimes’ charitable commitment, or “much of a charity’s total expense went directly to the charitable purpose,” was 75%, which put it in the bottom 10% of charities, well below the average of 86%. So there’s certainly room for improvement in the operations. Still, its organizational efficiency (taking into account program expenses, administrative expenses, fundraising expenses, and fundraising efficiency), as rated by Charity Navigator, earns it three out of four stars. Where it loses out, and brings its overall rating down to one out of four stars, is its organizational capacity (looking at primary revenue growth, program expenses growth, and working capital ratio). So the March of Dimes depends very heavily on private donations, and it needs to work at its overall financial stability and growth, and at trimming administrative and fundraising expenses.

Based on the wording of the March 23 letter, it’s apparent that March of Dimes has had a “longstanding and productive corporate relationship” with Ther-Rx, so it’s not a recent marriage of the two over Makena, as some were wondering.

I learned a lot from this research. How about you?

I’m still holding off on jump-starting my March for Babies campaign for this year pending results from next week’s meeting, but I’m feeling a lot better about March of Dimes than I did last week at this time.

What do you think? Do you still have unanswered questions about March of Dimes? Post them in the comments below!

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6 Responses to How did we get where we are with Makena?

  1. Melissa says:

    You answered some of my nagging questions. Thank you! I am holding off on March for Babies until I know more about the Washington meeting.

  2. Mark says:

    Here’s some more news: two articles from Seeking Alpha.

    Derek Lowe has done amuch more thorough investigation into the history of 17P and the approval process.

    Ed Silverman reports that KV is now under federal scrutiny for price gouging in setting Makena’s list price so high.

  3. Diana says:

    Curious. How did you find the salary of the March of Dimes President? I have been trying to find this information for this person and others but do not know where to look.

    Thanks!

  4. Mark says:

    According to CharityNavigator.org, Howse’s compensation for the fiscal year ending December 2009 was $633,132. I can’t find my notes from the original post right now.

  5. Elizabeth says:

    I found this blog while searching for the current status of Delalutin. I was not aware of the primary ingredient being re-packaged into a current drug. The reason I was seeking the status relates to my rare birth defects which have been diagnosed as Polands Syndrome. My mother has told me since I was early enough to understand that my significantly smaller right hand (before 10+ surgeries; webbed fingers, stumped fingers, frozen knuckles and a fused radial and ulna preventing 180 degree rotation of my lower arm and wrist) and my absent right pectorals, concave chest wall and missing latissimus dorsi was due to the administration of the drug Delalutin while she was pregnant to prevent miscarriage in 1975. After reading just this excerpt I am saddened that my parents did not pursue legal action against the drug company more aggressively. Maybe this horrible mistake known as 17p could’ve been stopped so much earlier. Feel free to contact me if you have any questions or comments. Elizabeth

  6. Mark says:

    Elizabeth, I’m sorry to hear of your struggles with Poland’s Syndrome. However, while your mother is convinced that it was due to Delalutin, every online medical reference that I’ve checked states that there is no known cause of Poland’s Syndrome. While your belief that 17p is a mistake is understandable, for those parents whose child survived because of the drug it is a miracle. Has your mother’s contention that Delalutin was the cause of your difficulties confirmed by any medical source, or is it just her belief?

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