OUTRAGEOUS Crony Capitalism: How A Drug Goes From $10 To $1,500 A Shot

Free market capitalism is defined by open competition. Competition increases quality and lowers cost. The polar opposite is crony capitalism, where the government picks winners and losers, competition is stifled if not banned, and monopolies are created. The public suffers significantly from the absence of competition.

No better example of how this works can be seen than with production of the drug Makena, a progesterone mix that has, for the past decade, successfully treated pregnant women at significant risk of spontaneous premature labor. It is a condition that effects black women at far higher rates than either whites or hispanics. The drug is given to such women once a week between the 16th and 36th week of their pregnancy. For years, the drug has been mixed at numerous pharmacies and has been sold at $10 to $20 per shot, with an entire regimen of the drug costing between $200 and $400. It is estimated that the drug could benefit up to 130,000 women in the U.S. annually. It is also the only known effective treatment for women suffering from high risk of spontaneous premature labor.

The FDA recently gave sole approval for production of Makena to KV Pharmaceutical of St.Louis. KV did not pioneer the use or production of the drug. And indeed, the drug was first developed over 50 years ago. Patent rights, which were never KV's to begin with, ended decades ago. Nonetheless, KV petitioned the FDA to give them approval to produce the drug under the "orphan drug" law, which would give KV, among other things, a seven year monopoly on the market to produce Makena. The FDA complied.

Yesterday, KV announced that physicians could purchase Makena from them at a cost of $1,500 per shot. An entire 20 week regimen of Makena will now cost $30,000. KV also sent out cease and desist letters to all other pharmacies producing the drug.

The costs for this will be born by the public through Medicaid and higher insurance premiums. The only winner in this gross distortion of the market is KV pharmaceutical and those who championed their cause - such as the March of Dimes who receives hundreds of thousands in support from KV annually.

This is an outrageous travesty that cries out for congressional investigation. Why did the FDA approve the monopoly under these facts? Is it as it appears, that the orphan drug law was wholly misused in this case? And if the government is going to grant a monopoly over lifesaving drugs, what responsibility does or should it have to oversee pricing? The bottom line, in a just society, we would hang the people at KV and FDA for this grand larceny taking place at the expense of women in need and the public purse.

(H/T The Anchoress)