KV Pharmaceutical Sues Illinois Over Payment for Drug Makena

Published: Aug 29, 2012

St. Louis Business Journal by Greta Weiderman, Web Editor

KV Pharmaceutical Co. sued the Illinois Department of Healthcare and Family Services to compel the state’s Medicaid program to pay the company more than $500 per injection of KV's Makena drug, instead of just $20 for non-branded versions.

The Bridgeton-based drug company (OTCQB: KVPHA/KVPHB), which filed for Chapter 11 bankruptcy Aug. 4, filed the lawsuit Aug. 21 in U.S. District Court in Chicago, Crain’s Chicago Business reports.

The list price for Makena, which is used to prevent preterm birth, was initially $1,500 per injection, but in April, KV cut the price down 54 percent, to $690, Crain’s reports. To avoid KV’s pricing, some state Medicaid programs are using compounded versions of Makena, which have the same active ingredient as the branded drug and cost $20 per injection.

In the bankruptcy filing, KV Pharmaceutical Co. said federal actions prevented it from getting the “full value” of its Makena medicine to prevent premature births.

The Bridgeton-based drug company listed debts of $728 million and assets of $237 million in its Chapter 11 filing in U.S. Bankruptcy Court in Manhattan.

CEO Greg Divis said in a statement that KV has been unable to realize the full value of its “most important product,” Makena, because of a lack of enforcement of the orphan drug marketing exclusivity granted to KV for the drug by the FDA. “The lack of enforcement has also led certain state Medicaid agencies to impose barriers to access to Makena on low-income pregnant women at high risk for recurrent preterm birth, despite those states’ legal obligation to cover FDA-approved drugs,” he said.

KV Pharmaceutical reported a net loss of $102 million on revenue of $23 million for its fiscal year ended March 31, 2012.

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