$15 Compound Vs. $1,500 Injection – Price Gouging?

You don’t often get to see outrageous pricing examples like the one around KV Pharmaceutical’s Makena product.  Specialty pharmacies have been compounding and making a version called 17P for years.  17P sells for around $15 per shot and patients typically take 15-20 injections during pregnancy to help prevent pre-term birth. 

“As far as I know, most physicians are using the compounding pharmacies for 17P,” said Dr. George Saade, president of the Society for Maternal-Fetal Medicine. “If we feel there’s no extra advantage of a more costly treatment, then our obligation is to prescribe the less costly treatment … It’s not right to abuse the health care system by prescribing an astronomically more costly medicine when there’s no evidence that it’s better.”

KV Pharmaceuticals came out with a branded version of the compound to create easier access to the drug.  They initially priced it at $1,500 but had already dropped it to $590 per shot when an article with the above quote appeared at the beginning of May. 

For those of you less familiar with compounding, here’s a statement from an FDA study in 2006:

FDA regards traditional pharmacy compounding as the extemporaneous combining, mixing, or altering of ingredients by a pharmacist in response to a physician’s prescription to create a medication tailored to the specialized medical needs of an individual patient. Traditional compounding typically occurs when an FDA-approved drug is unavailable or a licensed health‑care provider decides that an FDA-approved drug is not appropriate for his or her patient’s medical needs.  By definition, pharmacy compounding involves making a new drug for which safety and efficacy have not been demonstrated with the kind of data that FDA requires to approve a new drug.  In virtually all cases, FDA regards compounded drugs as unapproved new drugs.

The unapproved status of compounded drugs notwithstanding, FDA has long recognized that traditional pharmacy compounding serves an important public health function.  FDA has historically exercised enforcement discretion and generally has not taken enforcement action against pharmacies engaged in traditional compounding.  Rather, FDA has directed its enforcement resources toward firms that manufacture large quantities of unapproved new drugs under the guise of traditional compounding, and whose compounding practices result in significant violations of the new drug, adulteration, or misbranding provisions of the FDCA.

Will managed care, managed medicaid, and PBMs aggressively limit the use of Makena or will they leave it to physicians?