Facing the threat of imminent bankruptcy, Lumara Health Inc. has filed suit against FDA to try to force the company to take enforcement action compounded versions of hydroxyprogesterone caproate, the active ingredient in its pre-term birth drug Makena.

The complaint, filed July 5 in the U.S. District Court for the District of Columbia, contends that the agency has effectively nullified KV’s rights to seven years of marketing exclusivity due Makena as an orphan drug by “approving, inviting, encouraging, and permitting the manufacture and distribution of unapproved, non-customized compounded drugs.”

The suit says FDA bowed to political pressure when it issued a press release on March 30, 2011 saying it did not intend to take enforcement action against pharmacies that compound hydroxyprogesterone unless the product is unsafe or not being produced in accordance with appropriate standards. The agency explained in the release that it would not take enforcement action in order to support access to the drug “at this time and under this unique situation” Also see "FDA Steps Into Makena Pricing Dispute In The Name Of "Access"" - Pink Sheet, 4 April, 2011..

As a result of FDA’s compounding policy, “the regulatory system has been turned upside down: the FDA-approved drug is now disfavored in comparison to unapproved versions (and in some states is effectively off limits),” KV’s complaint states.

KV had initially priced the drug at $1,500 per injection, or up to $30,000 for a course of treatment, while the compounded products cost about $300 for a course of treatment. Following critical press reports, FDA issued the statement and KV subsequently reduced the list price of Makena to $690 per injection Also see "KV Cuts Makena Price 54%, Increases Medicaid Rebates, But Is It Enough?" - Pink Sheet, 4 April, 2011..

The complaint says FDA’s “unprecedented press release” permitted “for the first time ever – direct nationwide competition between an entire class of unapproved compound drug products (not customized to meet the medical needs of individual patients) and an approved orphan drug product.”

KV’s lawyer Richard Cooper, a partner at Williams & Connolly and former FDA chief counsel, signed the complaint.

Asked about the suit, an FDA spokesperson said the agency did not comment on ongoing litigation.

KV Faces Bankruptcy In Three To Six Months

The complaint notes that Makena is KV’s most important drug and that unless FDA stops the unlawful competition by non-customized compounded drugs, “KV will not be able to attract new capital at a reasonable cost, and is likely to exhaust its working capital within three to six months and be forced to file for bankruptcy before then.”

KV argues that it spent more than a quarter of a billion dollars to acquire, develop and market Makena. Adeza BiomedicalCorp. submitted an NDA for the drug, then called Gestiva, in 2006. Cytyc Corp. acquired Adeza in 2007, and Cytyc in turn was acquired by and became a subsidiary of Hologic Inc. KV entered into an asset purchase agreement with Hologic and Cytyc in January 2008 whereby it acquired Makena assets.

Makena was approved in February 2011 to reduce the risk of preterm birth in women with a singleton pregnancy who have a history of singleton spontaneous preterm birth. KV notes that more than 130,000 women have this condition.

Pricing Reasonable Compared To Other Orphan Drugs, KV Says

The complaint also addresses the criticism KV received for its pricing of Makena. It criticizes news outlets for reporting “in very heated terms” that Makena would have a list price of $1,500 per injection. The complaint says the list price of the drug is not the final price, which reflects discounts and rebates. It also states that KV will be providing Makena to all eligible uninsured patients at a significantly reduced cost and free of charge to eligible uninsured.

Under Makena’s patient financial-assistance program, an uninsured patient with an annual gross household income of less than $60,000 will not pay anything for Makena, and an uninsured patient with an annual gross household income of $115,000 will pay $20 per injection of Makena, the complaint states.

The suit also notes that other orphan drugs have a higher list price than Makena. It cites an August 2011 Wall Street Journal article that reported Pfizer Inc.’s Xalkori (crizotinib) costs $115,200 per year, Roche’s Herceptin (trastuzumab) costs $50,400 per course of treatment, and Roche’s Zelboraf (vemurafenib) costs $56,400 for six months of treatment.

KV has struggled to get FDA to halt competing compounded products. KV subsidiary Ther-Rx Corp. commissioned independent laboratories to test compounded hydroxyprogesterone, also known as 17P, and their active pharmaceutical ingredients and submitted the results to FDA. The agency then conducted its own analysis of samples of the compounded drug and APIs and announced in a June 15 release that it had found no major safety problems Also see "Regulatory News, In Brief" - Pink Sheet, 25 June, 2012..

Two weeks later, the agency issued a June 29 Q&A document on Makena saying it “may take action against compounding pharmacies if warranted” and reiterating that the compounding of any drug “should not exceed the scope of traditional pharmacy compounding” Also see "FDA Helps Makena With Statement Against High-Volume Compounding" - Pink Sheet, 2 July, 2012..

But KV wants FDA to take definitive action.

The suit seeks a court order requiring FDA to suspend its March 30, 2011 and June 15, 2012 statements, desist from permitting importation into the U.S. of unapproved API for compounded hydroxyprogesterone, and issue a new public statement communicating the agency’s intent to take enforcement action against compounders and that shipments of unlawful compounded hydroxyprogesterone must cease immediately.

In addition, the complaint asks the court to declare that KV is entitled to seven years marketing exclusivity for Makena, and that the seven-year period is to be calculated in two sections, the first running from FDA approval on Feb. 3, 2011 until the announcement of its compounding enforcement policy on March 30, 2011, and then from the date of the grant of temporary, preliminary or final declaratory and/or injunctive relief, whichever is first, until the date that is six years and 310 days from that date.

Further, the complaint seeks an order requiring FDA to report to the court quarterly for one year and semi-annually for the following two years, under seal if necessary and with a redacted version publicly filed, the actions it has taken to terminate shipments of non-customized compounded 17P.

Some Medicaid Agencies Put Makena On Prior Authorization

KV contends that FDA’s actions have placed it at a disadvantage.

As a result of FDA’s statement and policy “the regulatory system has been turned upside down: the FDA-approved drug is now disfavored in comparison to unapproved versions (and in some states is effectively off limits)” and Medicaid beneficiaries are being subject to risks by compounded hydroxyprogesterone, the complaint states.

When FDA issued its June 15 release on the results of its analysis of compounded hydroxyprogesterone, the Centers for Medicare and Medicaid Services also issued a statement reminding states of their “responsibility to cover FDA approved products, such as Makena” that qualify as covered drugs under the Medicaid drug rebate program. CMS also said that states may, under appropriate circumstances, cover APIs as incident to another service category, or as a pharmacy service.

The complaint says that some Medicaid programs have interpreted the statements by FDA and CMS as authorizing the total displacement of Makena by compounded 17P. It says that the Medicaid Division of the Georgia Department of Community Health started requiring prior authorization for any prescription of Makena and requiring physicians “‘to demonstrate the medical necessity of the manufactured product, Makena, over the compounded CHC product to obtain a prior authorization.’”

The suit says Montana’s Medicaid program also requires a prescribing physician seeking approval for a patient to receive Makena to demonstrate the patient has a medical need for the drug compared to the compounded product.

Makena’s Orphan Exclusivity Is “Nullified” By FDA’s Compounding Policy, KV Suit Says

More from Legal & IP

More from Pink Sheet