KV Holders: Pricing Backlash Seems Likely (KV-A)
When we first covered the rebirth of KV Pharmaceutical Co. (KV-A) for its Makena drug aimed to prevent premature birth, we knew this was going to be a home run due to FDA market exclusivity. Premature births result in costs that run into the billions yearly to healthcare providers and insurers. Now it seems very likely that there is going to be a backlash in the form of public outrage that works its way into both the legal system and the political outrage venues against the company. A price hike seemed certain after getting FDA approval for exclusivity, but the degree of the gouging is going to be where the line gets drawn in the sand between high stakes capitalism and grand larceny. Keep in mind that yours truly believes in and supports the belief that capitalism is the incentive behind most creation. In this case, it does not take a rocket scientist to realize that KV is very likely going to have yell a “Do over!” on its pricing.
It seems that KV decided that the price per patient should now be $1,500.00. The price was about $15.00 per patient before KV got this exclusive in an off-label use regime. What do you think is going to happen when politicians arguing against the cost of medicine start bashing a company for literally a one-hundred-fold increase in the price of a drug?
Forbes’ David Whelan wrote in his Health Dollars blog “Is KV Pharmaceutical A Flat-Out Evil Company?” and Derek Lowe outlined a more balanced or methodical approach to this called “KV Pharmaceuticals Gets Away With Pricing on Makena” at Seeking Alpha.
Here is the take from a capitalist-minded centrist who would generally rather have less government involvement in most cases. There is going to be more backlash against KV on this in the weeks ahead. It is one thing when reporters and patients are angered by what they see, but companies generally tend to not do as well when they are the target of politicians and consumer activists. KV will probably take a lot more incoming heat from this move.
KV shares have already risen exponentially from the bottom. This stock was above $20.00 in 2008 before it woes began, yet it literally fell to under $1.00 at the lows in 2010. Shares closed on Friday at $11.99 with a 5.14% drop on that day.
JON C. OGG
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Hopefully the “do over” on pricing will be soon. The backlash is growing on a daily basis and if the 150x increase in the price of an effective drug reaches is allowed to reach it’s logical outcome of significant increased stillbirths and premature births, would expect this company will be sued out of business next year.
KV is claiming their are meeting with effected parties this week to adjust price point. Haven’t seen any official dates or actions. If they really do correct this quickly they may be able to put this behind them, if this is just posturing expect they’ll be out of business by next year