Looks Bearish: K-V Pharmaceutical Company v. FDA, U.S. District Court, District of Columbia, No. 12-01105 ($KV)

Just took a look at the complaint filed in K-V Pharmaceutical Company v. FDA, U.S. District Court, District of Columbia, No. 12-01105. Here are some of the highlights:

• Unless FDA publicly signals that it will stop the unlawful competition by non-customized compounded drugs (and thereby give KV's creditors a reason to believe that KV is likely to be able to meet its financial obligations if given more time), 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 bankruptcy before then.
• FDA has issued further public statements on Makena [...] None of these statements has announced an intent to take enforcement action against unlawful compounded 17P that is not customized to meet the special needs of individual patients who have the condition for which Makena, a drug that has statutory market exclusivity, is indicated but for whom Makena is medically inappropriate.
• Unless KV is able to immediately generate significantly higher market share and revenues from Makena than the current levels, the company will not be able to meet its cash obligations, and will run out of cash in less than three months from the date of this Complaint.
• As a result of FDA's Statement, Makena is being, and will continue to be, widely displaced in the market by compounded 17P.

Also interesting, from one of the declarations which was filed:

• [T]oday more than 100 firms compound 17P, the largest of which are doing so in commercial quantities.
• State Medicaid agencies' policies precluding access to Makena persist
• [O]ne of the larger compounders of 17-P appears to have widely distributed to its customers and the public a fax stating 'The FDA found no reason to change its enforcement policies regarding compounded [17P]'
• KV has been informed by certain State Medicaid agencies... that they do not interpret the June 15 [FDA] Statements as requiring any changes to their policies.

Reading the complaint and supporting materials was highly revealing. It looks like the FDA has been very uninterested in blocking competition from compounded 17P, and state Medicaid agencies have been very uninterested in paying for Makena.