Same Drug, DIfferent Price

By Laura Corlin


Recently, there has been much debate on issues involving women’s health at the national level. Beyond debates in Congress over funding such initiatives as Planned Parenthood (which, incidentally, is not allowed to use federal dollars for abortion due to the Hyde Amendment),1 other agencies have dealt with a range of issues including mental health, breast cancer, and reproductive health. Among these topics, an important recent announcement by the Food and Drug Administration (FDA) has caught the attention of many. For years a compounded drug has been used to prevent pre-term births in women. This drug was recently replaced by an FDA approved drug, Makena. Makena costs significantly more than the previous version of the same drug. Because pre-term births are most prevalent in women of lower socio-economic standing, many physicians and healthcare advocates are up in arms about this problem.

The FDA released their position on the issue, stating that “FDA does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an individually identified patient unless the compounded products are unsafe, of substandard quality.” 2 Essentially, this decision was meant to allow a cheaper version of a drug used to prevent pre-term births to continue to be sold, despite recent approval by the FDA of an essentially identical drug: Makena (hydroxyprogesterone caproate).

Both the cheaper version and the newly approved Makena version of the drug are used to prevent pre-term births. Pre-term babies , especially those who are born after less than seven months of gestation, are susceptible to a wide range of potential problems, since their organs are not fully developed at birth. Some of the risk factors for preterm births are multiples (twins, triplets, etc), mothers who smoke during pregnancy, have experienced chronic stress, or have folic acid deficiency during pregnancy. 3 The results of pre-term birth can be difficult as these infants not only tend to weigh less, they are also at risk for many serious conditions such as respiratory problems, physical abnormalities, and developmental and learning disabilities. Depending on how premature an infant is and what medical care is available, these infants are also at an increased risk of death within their first year of life. 4

On February 3, 2011 the FDA approved Makena for the use by women who have already had at least one pre-term baby. For these women, Makena is seen to be a safe and effective drug in preventing pre-term birth. The decision to allow the sale of the cheaper version of Makena followed oon after this controversial FDA approval. Makena was given “seven years of exclusivity under the Orphan Drug Act” which should have allowed it to be sold without marketing competition during this time. 5 Issues arose due to the exorbitant cost of Makena, priced at $150 per dose, from KV Pharmaceutical of St. Louis. The previously available compound drug had been priced at only $10-20 per dose. 3 The drug is administered as a weekly injection resulting in a price difference of hundreds of dollars per pregnancy.

The FDA responded to the outrage expressed over the unfairly cost-prohibitive nature of Makena. Opponents of this decision pointed out that the new price change would be especially problematic for the women most at risk of needing the drug, since pre-term babies are more likely to be born to mothers of low socioeconomic status. 3 Acknowledging the criticism and potentially harmful competition, Greg Divis, the CEO of KV Pharmaceutical stated that, “we reduced the list price of Makena by nearly 55%. We are providing additional discounts to Medicaid and health plans and have expanded our patient assistance program… Eighty-five percent of patients will pay $20 or less per injection. Those whose financial need is greatest won’t pay anything at all.” 7 While it has yet to be seen whether KV Pharmaceutical will actually follow through with ensuring fair access to a potentially lifesaving drug, this rather unprecedented series of events brings up two larger and interrelated issues.


The first issue is whether the FDA approval and the related patent processes should be modified to better account for off-label uses of drugs and potentially cheaper generic versions of needed drugs. Understanding this issue requires a brief discussion of the long development process of new drugs. It involves both pre-clinical laboratory trials and three phases of clinical trials. Pharmaceutical companies might initially investigate several thousand compounds and run pre-clinical trials on several hundred of these for each new drug eventually approved.

Each successive phase of a clinical trial involves more people and runs for a longer period of time. The goals of the phases differ from early phases, where the purpose is mainly to determine whether the drug works by expected pathway, to more advanced trials where the industry is examining side effects and safety at a population level. In total, from the early development of new drugs to their final approval, it typically takes 10-15 years and around $800 million. 8 Despite this lengthy process, the U.S. Food and Drug Administration’s Center for Drug Evaluation and Research (CDER) approves several new and generic drugs each day.9 These new drugs continue to be evaluated with long-term studies.

Due to the time and costs expended in developing drugs, pharmaceutical companies seek patents and exclusivity whereby other manufactures cannot develop and market generic versions of the drug for a specified amount of time. Patents are valid for 20 years. This does include several of the development years so once the drug is on the market there may be a substantially shorter amount of time before generic drugs can be developed. Exclusivity rights for marketing vary from a few months to seven years. 10 These protections are in place to help encourage companies to invest in the development of drugs. Once the patent and exclusivity are lifted, generic equivalents can be developed and marketed in competition with the original drug. These generic drugs are much more easily and cheaply developed because their basic science and safety have already been established in the development of the trade name drug. Given the fact that less time and money go into the development of generic drugs, it makes sense that these should typically be much more affordable for consumers.

The drug that had previously been given to women to prevent pre-term births was a compounded or “off-label” drug and, therefore, did not have to go through the long process of FDA approval. Compounded drugs still require a prescription from a physician, but they are not approved by the FDA for the specific use for which they are prescribed and are not allowed to be marketed for their off-label use. Typically, these drugs are approved for other uses, in other dosages, or in different forms (such as pill compared to liquid). Sometimes the compounded drugs contain different inactive ingredients from generic or brand name versions of the drug but have the same active ingredients. Physicians retain their role as the “gate-keepers” of off-label drug use. Still, off-label prescribing happens frequently, particularly in some specialties such as oncology, pediatrics, and obstetrics. Additionally, these compounded drugs are typically covered differently by insurance companies than generic or brand name drugs, although this varies by insurance provider. 11

While the case of the drug preventing pre-term births has seen quite positive outcomes as is typical with the use of off-label drugs, there is very little systematic research on this. Patient outcomes can vary and patients may be placed in dangerous circumstances if physicians prescribe compounded drugs that have unexpected actions. Professional ethical guidelines about off-label drugs suggest that providers only prescribe these drugs when there is enough evidence in the literature to suggest that the drug will have the intended effect and that it is in the best interests of the patient. Since 2007, the FDA has gained power and the ability to oversee the use of off-label drugs from post-approval studies, requiring public registration of industry studies of drugs, and restricting the use of drugs shown to have a negative effect on people. 12 The problem with this limited oversight mechanism is that it requires people to get sick or have adverse consequences from the off-label use before the drugs are more tightly regulated as opposed to proving the drugs are safe and effective for use first, as is done with typical medications. This tends to put an unfair burden of responsibility on the consumer rather than on the industry to report adverse symptoms of medicines.


The idea of an unfair burden on the public underlies the second major issue brought up by the recent approval of Makena and the subsequent FDA decision to allow pharmacies to continue giving women the compound version of the drug. Preterm births are a clear example of the unfair and preventable aspects of health disparities. There is no reason that one racial group should be more affected than another by the problems associated with pre-term births. However, the data shows that while one in eight babies are born prematurely and are at risk for a range of physical and emotional problems in life, 13 African-American women are 1.6 times more likely to have premature babies than Caucasian women and 2.5 times as likely to have very premature babies compared to Caucasian women.

The cost of a pre-term birth, greater than the cost of a semester at Tufts, is also ten times more than the cost of a term birth.14 This also represents a large cost to our society both in terms of lost potential of children who have to deal with physical and developmental disabilities and for the associated medical expenses.

While there remains a long way to go to reduce the health disparities associated with pre-natal care, it seems that both the FDA and pharmaceutical industries have taken important steps towards making safe, effective, and affordable medication available to women to prevent pre-term births. By making the series of controversial decisions that it did, the FDA made an implicit statement about the value of preventative care.

Our society places great value on down-stream care – in the development and administration of medicines for people once they become sick compared to trying to prevent people from becoming sick in the first place. However, this drug to prevent pre-term births falls somewhere in the middle since it is for women who have some risk factors but is designed to prevent a host of severe medical complications for the fetus. Hopefully, the acknowledgement by the FDA that this drug and its alternatives need to be available to women of all socioeconomic classes represents a shift towards placing greater value on equitable, preventative care.


1 Camia, Catalina. “Understanding the shutdown fight over women’s health.” USA Today. Web. Apr 8 2011.
2 “FDA Statement on Makena.” U.S. Food and Drug Administration. Web. Mar 30 2011.
3 Kramer, Michael S. et. al. “Socio-economic disparities in preterm birth: causal pathways and mechanisms.” Pediatric and Perinatal Epidemiology.15(2001). 104-123.
4 Lee, Kimberly G. “Premature Infant.” Medline Plus. Web. Jan 8 2010.
5 “FDA Statement on Makena.” U.S. Food and Drug Administration. Web. Mar 30 2011.
6 Stein, Rob. “FDA to allow cheaper preterm baby drug.” The Washington Post. Web. . Mar 30 2011.
7 Divis, Greg. “Opposing view: FDA approval costs more.” USA Today. Apr 6 2011.
8 “Drug Discovery and Development.” Pharmaceutical Research and Manufacturers of America. Web. 2007.
9 “New and Generic Drug Approvals.” U.S. Food and Drug Administration. Web. Apr 7 2011.
10 “Frequently Asked Questions on Patents and Exclusivity.” U.S. Food and Drug Administration. Web. Sept 20 2010.
11 “Compound Drug Information.” BlueCross BlueShield of Tennessee. Web. Feb 14 2008.
12 Dresser, Rebecca & J Frader. “Off-Label Prescribing: A Call for Heightened Professional and Government Oversight.” The Journal of Law, Medicine & Ethics, 37 (2009). 476-486.
13 “Premature Birth.” Centers for Disease Control and Prevention. Web. Nov 15 2010.
14 “Preterm Birth Overview.” (2011). March of Dimes Foundation. Web.

Subject: Healthcare Policy, Healthcare Economics
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