The St. Louis based K-V Pharmaceutical Company, the creators of a problematic preterm birth drug named "Makena", has filed for Chapter 11 bankruptcy protection, as reported by Bloomberg Businessweek and other news outlets.
Blamed for the filing are weak sales, sanctions due to manufacturing issues in the past and an overdue payment directly related to Makena.
Shares of K-V Pharmaceutical Co. have been suspended from the New York Stock Exchange. It's last trade of Class A shares was 32 cents.
K-V announced that the bankruptcy was filed, in New York on August 4, in an effort to restructure its financial obligations while continuing its day-to-day operations.
K-V has blamed the bankruptcy in part on the FDA. In not enforcing the exclusive marketing of the Makena brand awarded to them by the FDA, the FDA, according to K-V, prevented the company from being able to realize the value of Makena.
Hologic Inc., the company that developed Makena, is still owed a milestone payment from K-V. K-V claims that they have been unsuccessful at renegotiations over the payment.
K-V further claims that 2008 and 2009 manufacturing problems led to restrictions and further reductions in its business.
Makena was designed to assist mothers who've experienced one premature birth already, against another preterm birth in a subsequent pregnancy.
The hormone progesterone is made into a synthetic version in Makena. The FDA approved it in February of 2011. The cost, at $1,500 per injection, had been a stigma at first. Then K-V lowered the expense to $690 for a week's worth of injections. The company also began a program to assist uninsured and lower income women obtain the medication at a reduced cost, or no cost at all.
However, even with the cost incentives, pharmacies were making a generic version of the drug for only $10 to $20 per dosage. The FDA, though they had approved Makena, refused to prevent pharmacies that wanted to continue creating a generic version. This further hurt K-V's sales.
Marketing exclusivity allows a manufacturer up to seven years before competing versions can be introduced in the market.
K-V claims that Makena has a more consistent result than the pharmacy-made version.
According to K-V. Medicaid, though obliged to cover medications that have FDA approval, stopped covering Makena for its recipients.
In 2008 the FDA ordered K-V to discontinue manufacturing some of its time-released drugs, but K-V ignored the order. This action prompted the FDA to seize several millions of dollars worth of K-V products.
In January of 2009 K-V, after several product recalls, stopped all of its manufacturing and shipping.
In February of 2010, over allegations that some of the pills they had manufactured were too large and posed risks of accidental overdoses, K-V pleaded guilty to charges of failure to inform regulators of its manufacturing problems.
K-V paid $27.6 million to settle over the government investigations.
Whether you are facing a business or personal bankruptcy contact a bankruptcy lawyer for help with your filing. The sooner you enter your bankruptcy, the sooner you can plan for your exit.