Nowhere Special

No, I haven’t suddenly fallen off the face of the earth. I am far behind in posting due to family and work stuff. I know that I’ve missed posting stuff like Rep. Henry Waxman spanking Ther-Rx over Makena pricing, as well as sharing info updates that I’ve gotten from March of Dimes like the fact that they’re trying to verify with the FDA whether or not the prohibition on compounding 17P only applies to interstate commerce (no further info yet).

I also have some info to post on March of Dimes’ contract with Ther-Rx (not as much to it as you’d think), as well as some more history of KV/Ther-Rx, Gestiva/Makena, and the March of Dimes. Not only that, but today (OK, yesterday. I wanted to get this written earlier, but it’s already tomorrow) was the day that KV/Ther-Rx sat down with March of Dimes, the American College Obstetricians and Gynecologists, the American Academy of Pediatrics, and the Society for Maternal and Fetal Medicine to discuss the pricing of Makena. Look for press releases on that later tomorrow (OK, today).

The insanity around here seems to be slowing down. I hope to be able to have enough time to write a full post or two after I get home from work. Look for more information coming in the evening or overnight.

Thanks for your patience.

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 Delalutin was withdrawn from the U.S. Market in 1999 for reasons not related to safety or effectiveness. 17-HPC is the active ingredient of 17P, which is the compounded drug that has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!

Last night I posted that I was contacted by, and had a productive discussion with, Doug Staples, SVP of Marketing for the March of Dimes. Today, I let him know that a comment under that post showed that although he had indicated that expectant mothers who were already on compounded 17P would be allowed to continue to do so, one mother had already posted that she had been informed that she would have to switch to Makena, and that she had been told that her monthly copayment would be near $2,000. I suggested that she might make a good test case for the patient assistance program.

Doug thanked me, said that he’d have someone look into the case, and told me to look out for a new letter to be posted to the website later today. Doug later forwarded the letter to me. I haven’t seen it on the March of Dimes site yet, so I’ll post it here for you to read:

March 23, 2011

Greg Divis, President
Ther-Rx Corporation
One Corporate Woods
Bridgeton, MO 63044

Dear Mr. Divis:

Thank you for your letter of March 17^th. I am pleased to learn that you are ‘listening carefully to stakeholder concerns about list price, patient access, and cost to payers’. Thank you for considering additional steps tp ensure that Makena is available to all eligible women, and for convening stakeholders from the March of Dimes, the American College of Obstetricians and Gynecologists, the American Academy of Pediatrics, and the Society for Maternal Fetal Medicine next week.

In advance of that meeting, I want to go on record that March of Dimes expects Ther-Rx to come to the table with substantive commitments including:

1)      A significant reduction in the list price of Makena.
2)      Adjustments to the patient assistance program to ensure adequate coverage of all patients, insured, uninsured and underinsured.
3)      A method for reporting on a regular basis to stakeholders on the patient assistance program to ensure that it is meeting needs in a timely and adequate way.
4)      A justification or rationale for your pricing based on your investment in the product, savings to the health care system, or other appropriate methodology, which you are prepared to make public.

Without these elements, I do not believe that Makena can succeed in the current marketplace environment, and as a result, at-risk women will be denied access to a safe and effective treatment to reduce preterm delivery. Therefore if you are unable to make a clear commitment to significantly address the above issues at the meeting, the March of Dimes will need to pursue alternative strategies for ensuring that this proven intervention to prevent preterm birth is made available to all medically eligible pregnant women, and we will step away from our longstanding and productive corporate relationship with Ther-Rx. Thank you for your consideration of this critical matter.

Sincerely,

Jennifer L. Howse, PhD
President

I think that this letter that should have been sent two weeks ago, when the pricing for Makena was first announced, but it’s still a move in the right direction. It’s much stronger than the limp first letter to Ther-Rx, it lists specific changes and information that it is looking for, and it includes the threat of stronger action.

Is it enough? Not in itself, no. But it’s a good move in the right direction.

Words are good, but they’re just words. Everything starts with words, so I’m glad to see the letter, but the next step is following with concrete action. There has to be significant movement.

While some may be looking for the home run on the first swing, I view this as more of an iterative process. Unfortunately, we’re starting far from an optimal situation, with a lot of ground to make up. Will we eventually get to a point where Makena Is not only affordable for all expectant mothers, but for the insurers and other payers? Maybe. Will that be accomplished this month? No way. Will it be this year? Possibly.

This will be a long slog through the mud, I have a feeling. But by continuing to make strides in the right direction and never letting up, we keep moving toward our goal. If it takes until the drug loses its orphan status and becomes available as a generic, that will be a failure. It will cost far too much and put far too much money in the pockets of the deceitful and greedy well before then (it will hit that point in mere weeks, to be honest). We were sold out in this process, but the game is not over. As long as we persist, there is hope.

What can you do? Contact your local March of Dimes office. Let them know that you are upset about the price of Makena. Tell them that your continued support of the organization hinges on their ability to fix the pricing debacle. Tell them that you’ll be watching. And follow up. If progress slows down, let them know that you’re not happy about it. But also let them know that you’re willing to help if there’s something that you can do. March of Dimes is an advocacy organization, and it does rely on us to provide support. If they set up a day for action on Makena, be sure to participate. While I expect a lot of the heavy lifting will have to be done by the organization itself, we also can’t turn our back on them if they’re making an effort and need grassroots support. And if the grassroots support is putting enough pressure on them, they’ll listen.

Also, if there’s anyone out there that has any pull with the American College of Obstetricians and Gynecologists, the American Academy of Pediatrics, or the Society for Maternal Fetal Medicine, talk to them, as well. The more organizations that we have putting pressure on K-V and Ther-Rx, the better.

Now, does all of this mean that I’m starting up my March for Babies campaign and that I’m back in the fold? Not just yet. Words are important, but that’s all we have so far. I will wait to see what kind of response comes from K-V/Ther-Rx, and what comes from the meeting next week. If Ther-Rx offers a “significant reduction” of Makena’s price from $1,500 to $750 per dose, that’s still a $3,750%-7,500% price increase. That’s relatively closer to realistic, but still absolutely far away. If the definition of “adequate coverage” for the patient assistance program doesn’t cover enough, there’s still work to be done. As long as the March of Dimes shows continued diligence in righting this wrong, I will work to help them achieve the goal. But the money won’t follow if there aren’t solid results. My decision on participation will be made by April 3, as that is 6 weeks before my walk. I’ll decide at that time whether I’ve regained sufficient trust to continue financial support or if I’ll take my dollars elsewhere while I continue to spend time working to get March of Dimes in a position to be successful in addressing the Makena situation.

I’ve got more thoughts on the issues behind this whole situation, and how things may have gone wrong, but I’ll save that for another post. In the meantime, what do you think about this letter to Ther-Rx? Is it a good start? Are you looking for a home run right from the start? Do you have any other concrete suggestions on how March of Dimes can address the Makena situation? Comments are open below. Please share your thoughts.

After my last blog post on the subject of the Makena controversy, I got an email from Doug Staples, SVP of Strategic Marketing & Communications for March of Dimes, asking if he could try to answer some of my outstanding questions about the organization, its role in the controversy, and its response thus far.

I called Doug this afternoon and we had a nice chat. He put forth the premise that getting FDA approval of the drug to make it an official use, allow it to be mass-produced for all patients, and allow it to get on formulary with all plans is a good thing. I agree, as I have since heard of women who were not able to get doctors to prescribe 17P because it was not an approved use of the drug, or were unable to get it because it was not on formulary (and had no choice in changing doctors because there were no other doctors in their rural areas). March of Dimes figured that there would be a price increase, but they didn’t realize that it would be as astronomical as it was.  Doug also admitted that they had put too much stock in K-V’s assurances that its Patient Assistance Program would ensure that all women who received prescriptions for Makena would be able to afford it.

Regardless of whether or not I think that this indicates a realistic worldview by the March of Dimes analysts, it at least provides a window into what their thought process was.

Now that I had determined what the purported reasons for their participation in the debacle were (which, in my last post, I labeled as “poor strategic insight” and “naïveté”), I turned to their limp, delayed reaction after the price became known. Doug told me that March of Dimes had still been going on the assumption that the Patient Assistance Program would take care of the cost for mothers who needed coverage, and that they had tried working behind the scenes to address the problem, but had not been successful.

I suggested that this was not the fiercely advocating March of Dimes I had come to expect, and that I was extremely concerned with the lack of public response.

Doug was also surprised that women were being told about high copayments when, to his knowledge, nobody should have been prescribed Makena yet. He said that expectant mothers already on 17P should be able to continue their existing course of treatment, and that only new patients would be getting Makena. He also said that no negotiations had taken place yet with insurers and other payers over the price that they would pay. He likened the $1,500 cost per dose of Makena to the list price of a car, and said that it was likely that none of the insurers or other payers would actually end paying that price.

I suggested that one course of action for the March of Dimes should be to take a number of test cases of mothers who had been given high copayments by their insurers and help them through the process to see if they would get assistance with the copayments. I also suggested that more forceful action may still be necessary.

Doug agreed that working with test cases was a good idea, and said that March of Dimes will be meeting next week with K-V to discuss the pricing issues and will see if they can resolve the issues in a collaborative fashion. He also indicated that, as I had suggested in the comments to my first post on this topic, if necessary March of Dimes might decide that they have no choice but to break their contract with K-V and return their donations in order to be able to take a more adversarial approach to resolving the situation.

I do believe that often collaborative problem solving provides better outcomes than confrontational problem solving, but that sometimes confrontation is the only way to break a logjam. I’m glad that the March of Dimes is showing a willingness to throw down with K-V if necessary.

Of course, this is good talk, but we haven’t seen action yet. Doug seemed very anxious to hear my opinions, and responded positively to my suggestions. (It sounded like he was taking notes while we talked, as well.) I told him that I was going to continue to sit on the sidelines for another week or two before deciding whether to start fundraising in earnest for this year’s March for Babies or give up on the organization, and he thanked me for my commitment and for taking a collaborative approach.

But that’s words. Let’s see some action.

I know that some would have wanted me to take a more confrontational approach. I did call the March of Dimes out for its ineffective and limp actions to date, and Doug largely agreed with me. I also think that Jen Gunter has some good questions for the March of Dimes. It’s probably a good thing that we’re working from opposite ends on this. By having some confrontation and some collaboration, we can work both inside and outside the box. Perhaps the March of Dimes, ACOG, AAP and SMFM need to do the same thing. Pick sides, and have some attack strongly from the outside, while others work fervently from the inside. Perhaps a coordinated inside/outside approach will help K-V to change their pricing and stand by their PR for the Patient Assistance Program.

For now, confronters please keep confronting. I plan to continue collaborating. If I don’t see movement, I will be calling Doug back. Let’s see if together we can get some movement going in the right direction, and then build momentum. Let’s bring the March of Dimes back onto firm advocacy grounds from the helpless, limp position that they have put themselves in through this contract with K-V.

Since they appeared to be open to opinions and advice, I’m going to give them the benefit of the doubt for the next week or so. But that’s it.

What do you think? Confront? Collaborate? Both? Will the March of Dimes do what it needs to do, or will it continue to take the money and run?

I’ve already written about the Makena controversy and why it has made me question my support of the March of Dimes. I’m still not convinced that I should trust them again. They effectively supported a process that got FDA approval for the 7,500%-15,000% increase in the cost of a drug that prevents premature birth in 1-of-5 predisposed women. Why? What could possibly be behind their support of this?

Previously available through compounding pharmacies (pharmacies that mix “custom” drugs that are not manufactured by large drug-makers) and known then as 17P or 17OP, this synthetic progesterone has helped to prevent one in five women who had previously gone into premature labor from doing so again, allowing them to carry subsequent babies to full term. The drug carried a cost of $10-$20 per shot, which—at the standard course of 18-20 weekly injections—cost up to $400 per pregnancy.

March of Dimes supported the efforts of K-V Pharmaceutical to get approval to manufacture the drug as an “orphan drug” under the name Makena, giving them a monopoly on its production for seven years. With the monopoly assured, K-V and its affiliate Ther-Rx (which will distribute the drug) raised the price to $1,500 per dose. At-risk pregnant women will typically receive 18-20 weekly doses of the drug, meaning that the cost increase took it from a maximum of $200-$400 per pregnancy to as much as $30,000 per pregnancy.

When K-V was criticized for pricing it so high, the only reason that they gave was that it’s cheaper than what it costs to bring a premature baby home from the hospital. That’s not a financial argument, that’s an excuse. K-V investor briefing documents show that Makena has a gross profit margin of 97.5%, according to a post by Dr. Jennifer Gunther. It’s obviously their plan to get out of their current financial hole.

I’ve been trying to come up with reasons why they did this, and most of them don’t give me any confidence in the organization. Here’s what I’ve come up with, expanding a bit upon the ideas I put forth in the comments to my post:

Greed

Did the March of Dimes sell out? They receive hundreds of thousands of dollars in donations each year from K-V Pharmaceutical. It doesn’t take much of a leap to hypothesize that either K-V offered the March of Dimes more money to support their application for approval of Makena as an ”orphan drug,” or threatened to cut their financial support if March of Dimes didn’t support their application. That’s a bit simplistic and implies that the March of Dimes would sell out their mission for financial gain, so I’m going to largely discount this.

Poor strategic insight

Did the March of Dimes not have a clue that, upon receiving a monopoly on the drug, K-V/Ther-Rx would keep the price of Makena reasonable, despite the fact that K-V was having serious financial issues? Industry analysts reportedly knew that the astronomical price was coming. Were the March of Dimes’ own industry analysts completely unaware? This implies a level of incompetence that, again, is difficult to consider. The March of Dimes has done a very good job at getting legislation passed and making changes in medical and industry practices, so how could they have been so blind to this?

Naïveté

Did March of Dimes blindly trust a company in financial trouble to provide sufficient financial assistance to all? K-V and Ther-Rx announced a patient assistance program that they said would help to lower copayments for eligible women to either $20 (for insured women) or zero (for the poorest, uninsured women). We’ve already had a report of a woman being told by her insurance company that she would have to pay $385 per week for her doses. Even if K-V/Ther-Rx does come through with lowering the woman’s copayment, what about the insurance company? Their cost wouldn’t be lowered, causing them to increase their premiums, and hence the cost to us. Women who are on Medicaid or other similar coverage would cost the government those higher payments, likely requiring higher taxes or fees to pay for it.

Incompetence and lack of concern

Could the March of Dimes really believe that the high price might not cause resistance? Again, this is a bit much to consider. If the March of Dimes knew how high the cost for Makena would be, how would they be true to their mission in thinking that a higher cost for the same, baby-saving drug would be accepted?

Another possibility?

I spent some time trying to come up with another possible reason that didn’t reflect so badly on the March of Dimes, because remedying any of those four reasons in the March of Dimes organization would probably be a long and painful process. I have the feeling that there’s some information that’s missing from this whole picture, and nobody seems to want to make it public. With the available information so one-sided and the parties under fire making no effort to clear it up, I find myself asking “why?” Why would they support this drug company’s heinous profiteering? If there is a good reason, why would they not bring to light anything that would help to clear up this public relations nightmare? Is it really that they don’t have anything valid to counter the arguments?

I think that I may have an idea, but it’s a bit convoluted, involves a bit of intrigue, and requires quite a bit of a leap of faith. Stay with me on this.

While 17P was being prescribed for at-risk pregnant women through compounding pharmacies, it was not an FDA-approved use of the drug. In fact, there was no FDA-approved drug for reducing the likelihood of premature birth. Even though it has been used for quite a long time for this purpose, the drug could not get approval as a generic without first being approved for that use. By getting approval of Makena, the March of Dimes now has a drug that will be recognized by all insurance plans as an approved medical treatment for fighting prematurity. That, in a way, is a huge victory for the March of Dimes. The victory, however, is being overshadowed by the cost issue.

But apparently, while K-V has sent letters to compounding pharmacies warning them that they must cease making the 17P doses, there is a way for the pharmacies to keep distributing the drug. Perhaps K-V knew this and raised the price of Makena because they know that many pregnant women will still be able to use the compounded 17P, thus reducing the demand for Makena? If doctors keep prescribing compounded 17P for their patients for the next seven years, Makena will lose its orphan drug status and generic manufacturers can then begin making it at a reasonable price. That would then have mass-produced, generic 17P available to all women, approved by the FDA and cheap enough to be on formulary through all insurance companies.

Could the March of Dimes, after playing a key role in getting Makena approved by the FDA, possibly be letting doctors know, unofficially and behind the scenes, that they can still order the compounded 17P for their patients? This would imply a significant level of subterfuge on the part of the March of Dimes, which has always been (to my knowledge) a straightforward organization which would not turn to a shady process such as that.

It’s a long shot, but it’s the only possibility that would not indicate an inability by the March of Dimes to do an adequate job of protecting the health and well-being of at-risk mothers and their babies.

So here are my questions for you:

Which, if any, of these options do you believe is the case? Why did the March of Dimes support the approval of Makena as an orphan drug? Also, why have they not said anything other than the fact that they believe that an FDA-approved drug is a good thing, and that they have “respectfully requested” that K-V/Ther-Rx “reconsider the market price” of Makena?

More importantly, now that there is a rising cry against the part of the March of Dimes in this whole debacle, what can the March of Dimes do to earn back the trust of all of those – like myself – who have lost faith in the organization?

If the March of Dimes made a grand statement in some way, perhaps refusing to take any more support from K-V, returning what they got this year (or setting it aside in a fund to act as a safety net for those who don’t qualify for the Ther-Rx assistance program), and taking a more public advocacy position against the pricing of Makena, would that change your opinion of them?

Please let me know in the comments below. I still need some help in deciding whether to support the March of Dimes again this year or to back out of this year’s March for Babies, and I’d like to hear some more, well-reasoned arguments on any side.