KV V FDA-Alere Amicus

Case 1:12-cv-01105-ABJ Document 9 Filed 07/24/12 Page 1 of 7
Case 1:12-cv-01105-ABJ Document 9-1 Filed 07/24/12 Page 1 of 2
EXHIBIT A
Amici Physicians
John P. Elliott, M.D. Medical Director Womens Hospital Saddleback Memorial Medical Center Laguna Hills, California and Clinical Professor, Department of OB/GYN University of Arizona Medical School Tucson, Arizona
Kenneth Higby, M.D. Center for Maternal Fetal Care San Antonio, Texas
Peter S. Sanfilippo, M.D. Comprehensive Care Medical Staten Island, New York
Michael Gordon, M.D. Center for Maternal Fetal Care San Antonio, Texas
Stephen Jones, M.D. Christus Schumpert Health System Shreveport, Louisiana
Michael Moretti, M.D. Chairman, Department of Obstetrics & Gynecology New York Medical College/Richmond Program Staten Island, New York and Chairman, Department of Obstetrics & Gynecology St. Vincents Medical Center Staten Island, New York
Phillip Shubert, M.D. Mt. Carmel St. Anns Maternal Fetal Medicine Westerville, Ohio
Christopher Lang, M.D. Mt. Carmel St. Anns Maternal Fetal Medicine Westerville, Ohio
Jack Graham, M.D. Clinical Faculty, Associate Attending Department of Obstetrics and Gynecology The University of Texas Southwestern Medical School Dallas, Texas
Dr. Michael Ruma Perinatal Associate of New Mexico 6100 Pan American East Fwy NE Albuquerque, NM 87109
Sue Palmer, M.D. Maternal Fetal Medicine Houston, Texas
EXHIBIT B
APPENDIX 1
APPENDIX 1 Amici Physicians
John P. Elliott, M.D. Medical Director Womens Hospital Saddleback Memorial Medical Center Laguna Hills, California and Clinical Professor, Department of OB/GYN University of Arizona Medical School Tucson, Arizona
Kenneth Higby, M.D. Center for Maternal Fetal Care San Antonio, Texas
Peter S. Sanfilippo, M.D. Comprehensive Care Medical Staten Island, New York
Michael Gordon, M.D. Center for Maternal Fetal Care San Antonio, Texas
Stephen Jones, M.D. Christus Schumpert Health System Shreveport, Louisiana
Michael Moretti, M.D. Chairman, Department of Obstetrics & Gynecology New York Medical College/Richmond Program Staten Island, New York and Chairman, Department of Obstetrics & Gynecology St. Vincents Medical Center Staten Island, New York
Phillip Shubert, M.D. Mt. Carmel St. Anns Maternal Fetal Medicine Westerville, Ohio
Christopher Lang, M.D. Mt. Carmel St. Anns Maternal Fetal Medicine Westerville, Ohio
Jack Graham, M.D. Clinical Faculty, Associate Attending Department of Obstetrics and Gynecology The University of Texas Southwestern Medical School Dallas, Texas
Dr. Michael Ruma Perinatal Associate of New Mexico 6100 Pan American East Fwy NE Albuquerque, NM 87109
Sue Palmer, M.D. Maternal Fetal Medicine Houston, Texas
APPENDIX 2
Case 1:12-cv-01105-ABJ Document 9-4 Filed 07/17/12 Page 1 of 51 Case 1:12-cv-02491-CAP Document 1 Filed 07/24/12 Page 2 of 52
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA K-V PHARMACEUTICAL COMPANY, THER-RX CORPORATION, ) ) ) ) Plaintiffs, ) ) v. ) ) DAVID A. COOK, in his official capacity as ) Commissioner of the Georgia Department of ) Community Health ) ) and, ) ) JERRY DUBBERLY, MD, in his official ) capacity as Division Chief of the Medicaid ) Division of the Georgia Department of ) Community Health ) ) Defendants. )
Case No. _____________
COMPLAINT AND APPLICATION FOR PRELIMINARY INJUNCTION John E. Floyd (GA 266413) Manoj S. Varghese (GA 734668) BONDURANT, MIXSON & ELMORE LLP 1201 W. Peachtree Street, N.W. Suite 3900 Atlanta, GA 30309 Telephone: (404) 881-4100 Facsimile: (404) 881-4111 floyd@bmelaw.com varghese@bmelaw.com
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Margaret Peg Donahue Hall, Esq. (TX 05968450) SNR DENTON US LLP 2000 McKinney Avenue, Suite 1900 Dallas, TX 75201-1858 Telephone: (214) 259-0900 Facsimile: (214) 259-0910 peg.hall@snrdenton.com pro hac vice application pending
Drew Marrocco, Esq. (DC 453205) SNR DENTON US LLP 1301 K Street, NW, Suite 600, East Tower Washington, DC 20005 Telephone: (202) 408-6400 Facsimile: (202) 408-6399 drew.marrocco@snrdenton.com pro hac vice application pending Stephen D. Libowsky (GA 451965) SNR DENTON US LLP 233 South Wacker Drive, Suite 7800 Chicago, IL 60606 Telephone: (312)-876-8000 Facsimile: (312)-876-7934 Stephen.libowsky@snrdenton.com
Attorneys for Plaintiffs
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GLOSSARY OF TERMS
Term 17P API CMO CMS DCH FDA FDCA GMP HHS MDRA NDA
Meaning hydroxyprogesterone caproate the active ingredient used in Makena active pharmaceutical ingredient care management organization Centers for Medicare & Medicaid Services Georgia Department of Community Health United States Food and Drug Administration Federal Food, Drug, and Cosmetic Act good manufacturing practice standards promulgated by FDA United States Department of Health and Human Services Medicaid Drug Rebate Agreement New Drug Application
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This case involves Georgia Medicaids refusal, in flagrant violation of federal law, to cover the only Food and Drug Administration (FDA) approved drug for pregnant women with a rare, but severe, condition causing life-threatening spontaneous preterm birth. Although an FDA-approved drug has been available since March 2011 and thousands of women in Georgia seek treatment for this condition each year, on information and belief, Georgia has not approved payment for any vials of the medication for any Medicaid patients. This denial of medical care to the poor and vulnerable is not only unlawful, but it is in defiance of statements recently issued by the two lead federal agencies FDA and Centers for Medicare & Medicaid Services (CMS) regarding states legal obligation to cover the FDA-approved drug and to stop supporting the unlawful preparation of compounded copies of the drug that are not customized to meet the special medical needs of individual patients. Plaintiffs KV Pharmaceutical Company (K-V) and its wholly-owned subsidiary Ther-Rx Corporation (Ther-Rx) (together, KV) hold the exclusive rights to market and sell Makena (sterile injections of hydroxyprogesterone caproate) the only U.S. FDA-approved drug in its therapeutic category. KV seeks a preliminary and permanent injunction prohibiting the defendants, in their official capacities as officials of the Georgia Department of Community Health
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(DCH), from using sham restrictions (1) to deny women on Medicaid in Georgia who have high-risk pregnancies access to Makena women already burdened with the many difficulties and costs associated with at least one other preterm child, and (2) to direct these underprivileged pregnant women and their clinicians to use unapproved (and, hence, much cheaper) compounded preparations or to forego treatment for their condition altogether. DCH is violating the drug-access provisions of Title XIX of the Social Security Act, 42 U.S.C. 1396a et seq. (hereinafter the Medicaid Act), it is paying for violations of the Federal Food, Drug, and Cosmetic Acts drug-approval requirement (21 U.S.C. 355(a)), and its actions are contrary to the best interests of Medicaid beneficiaries in Georgia, in violation of 42 U.S.C. 1396r-8 and 1396a(a)(10). These unlawful actions by Georgia, and similar unlawful actions by other states, have placed KV on the verge of financial failure. KV is almost entirely dependent upon sales of Makena and has significant and imminent payment obligations related to its investment in the drug. Georgia is a large state with a significant Medicaid population; thus, Georgias failure to cover Makena has contributed substantially to the companys looming potential failure. Further, because KV holds the exclusive rights to market and sell this important product, the injunctive and declaratory relief sought herein is necessary
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to ensure that Georgia women on Medicaid have the same chance to improve the health of their unborn children as is afforded to women with private insurance. I. Introduction 1. Preterm birth is a terrible medical condition, which often has life-long
ramifications for the child, his or her family, and the affected health care, educational, and social security systems. This condition plagues the United States and the state of Georgia. And, sadly, it affects the already vulnerable poor even more than the general population. In fact, in a widely acclaimed report published by the March of Dimes in May 2012 Born Too Soon: The Global Action Report on Preterm Birth the United States ranked an abysmal 131st in the world (12 preterm births per 100 births), below countries such as Somalia and Afghanistan. 2. Each year, in the state of Georgia, thousands of pregnant women on Preterm birth is especially
Medicaid are at risk of having a preterm birth.
troublesome in Georgia, which received a grade of F from the March of Dimes in 2010 because of its 13.4 percent rate of premature births. These women and their unborn children are at significant risk of severe negative health care outcomes, and the very high costs that go with them. Prematurity costs the United States more than $26 billion annually, a large portion of which is borne by Medicaid, which covers an estimated 50 percent or more of the Makena-eligible
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patients. The March of Dimes reports that the [m]edical costs of a preterm baby are much, much greater than they are for a healthy newborn. Citing a report published by the Institute of Medicine (2006), the March of Dimes noted that the cost of preterm birth in the United States was at least $26.2 billion in 2005, an average of $51,600 per infant born prematurely, and that the average first-year medical costs were about 10 times greater for a preterm infant ($32,325) than for a full-term infant ($3,325). 3. Since March 2011, a new FDA-approved drug called Makena has
been available. Makena has been shown through regulated clinical studies to reduce the risk of preterm birth in women who have: (i) a pregnancy in which a single baby develops in the uterus (a singleton pregnancy) and (ii) a history of singleton spontaneous preterm birth. Unfortunately for these women and their families and despite the States poor record in preventing preterm births, on June 1, 2011, Georgia Medicaid instituted a so-called prior authorization policy that denies Medicaid beneficiaries access to this critical drug (the Makena prior authorization policy). Defendants have directed Medicaid beneficiaries to accept treatment with non FDA-approved compounded formulations or forego treatment altogether.
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4.
Compounded formulations are not generic drugs.
Like Makena,
FDA-approved generic drugs are regulated to be manufactured in accordance with strict FDA good manufacturing practice (GMP) standards. Compounded
preparations, by contrast, are not required to be made in compliance with those standards. Moreover, as FDA has repeatedly cautioned, compounded preparations, including compounded hydroxyprogesterone caproate, have never been studied for clinical effectiveness and safety, and they lack an FDA finding of manufacturing quality.1 5. Since March 2011, FDA has consistently informed the public that
FDA-approved drugs, such as Makena, provide a greater assurance of safety and effectiveness than do compounded products.2 More recently, FDA has become
1
FDA, Questions and Answers on Updated FDA Statement on Compounded Versions of hydroxyprogesterone caproate (June 29, 2012), available at http://www.fda.gov/newsevents/newsroom/pressannouncements/ucm310215.htm (last visited July 15, 2012), a true and correct copy of which is attached hereto as Exhibit 1. 2 FDA, Updated FDA Statement on Compounded Versions of hydroxyprogesterone caproate, (June 15, 2012), available at http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm308546.ht m (last visited July 1, 2012), a true and correct copy of which is attached hereto as Exhibit 2; see also FDA, FDA Statement on Makena, (Mar. 30, 2011), available at http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm249025.ht m (last visited July 1, 2012); a true and correct copy of which is attached hereto as Exhibit 3; Fiscal Year 2012 Budget Request for FDA: Hearing Before the Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, 112th Cong. 10 (Mar. 17, 2011)(Statement of Margaret A.
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more direct in its statements. On June 29, 2012, in Makena-specific Questions and Answers (the June 29 Makena FAQs), FDA stated: (1) when there is an FDA-approved drug that is medically appropriate for a patient, the FDA-approved product should be prescribed and used, and (2) that the compounding of any drug, including hydroxyprogesterone caproate, should not exceed the scope of traditional pharmacy compounding. Ex. 1. FDA explained that compounding is appropriate only: to produce a drug tailored to an individual patients particular medical needs, based on a valid prescription from a licensed medical practitioner. For example, compounding may occur if a patient needs a medication to be produced without a dye or preservative due to an allergy, or needs a medication in a liquid or suppository form because the patient cannot swallow a pill. Id. (emphasis added). FDA went on to state that it: may take enforcement action against pharmacies that compound large volumes of drugs that are essentially copies of commercially available products and for which there does not appear to be a medical need for individual patients to whom the drug is dispensed.
Hamburg, M.D., Commissioner of the U.S. Food And Drug Administration, Department Of Health And Human Services), a true and correct copy of which is attached hereto as Exhibit 4; FDA, FDA Statement on Makena, (Nov. 8, 2011), available at http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm279098.ht m (last visited July 1, 2012), a true and correct copy of which is attached hereto as Exhibit 5.
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Id. (emphasis added). In the June 29 Makena FAQs and in a statement it released on June 15, 2012 (the June 15 FDA Statement), FDA stated that the agency looks to see whether the prescribing practitioner has determined that a compounded product is necessary for the particular patient and would provide a significant difference for the patient as compared to the FDA-approved commercially available drug product. Exs. 1 & 2. 6. Also on June 15, CMS issued a companion statement (the June 15
CMS Statement) that cross-referenced the June 15 FDA Statement and reminded states that they must cover Makena in compliance with federal law and without imposing unreasonable conditions.3 7. Despite the directives of CMS and FDA, DCH has refused to remove
the unreasonable conditions it imposes on access to Makena in violation of federal law. DCHs refusal makes it necessary for Plaintiffs to seek this Courts intervention for a preliminary injunction and a final judgment: (1) declaring that DCHs policy regarding Makena violates the requirements of the Medicaid Act and ordering DCH immediately to rescind the June 1, 2011 changes to its policy; (2) declaring that DCH must defer to treating healthcare practitioners clinical
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judgment and cover Makena without unreasonable restrictions or conditions; (3) declaring that DCH may cover and pay for compounded hydroxyprogesterone caproate only where the treating physician documents that his or her patient has a specific medical need for a compounded variation rather than Makena; (4) declaring that DCH must ensure that all Medicaid care management organizations in Georgia make Makena available to their Medicaid beneficiaries without unlawful restrictions or conditions; (5) declaring that DCH must ensure that all Medicaid care management organizations in Georgia limit their coverage of compounded hydroxyprogesterone caproate to those situations where the treating physician demonstrates that his or her patient has a specific medical need for a compounded variation rather than Makena; and (6) ordering all ancillary relief necessary to allow clinically-eligible Medicaid beneficiaries in Georgia access to Makena, including an order that DCH notify all relevant persons of the courtmandated changes regarding its coverage of Makena.
CMS, Updated FDA Statement on Compounded Versions of hydroxyprogesterone caproate, June 15, 2012, a true and correct copy of which is attached hereto as Exhibit 6.
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II. The Parties A. 8. Plaintiffs K-V and Ther-Rx Plaintiff K-V is a corporation organized under the laws of the state of
Delaware, and maintains its principal place of business at 2280 Schuetz Road, St. Louis, Missouri 63146. K-V advertises, sells and distributes its drugs through Ther-Rx. Under Medicaid law, K-V is considered a pharmaceutical manufacturer and distributor, and holds the rights to Makena and its regulatory approval by FDA. K-V has committed over a quarter of a billion dollars to acquire and develop Makena and to bring it to market with FDA approval. 9. Plaintiff Ther-Rx is a corporation organized under the laws of the
state of Missouri, is a wholly-owned subsidiary of K-V, and is a pharmaceutical distributor. Ther-Rx has its principal place of business at the same address as K-V. For ease of reference, Plaintiffs K-V and Ther-Rx are referred to herein collectively as KV. 10. KV is a participant in the Medicaid program. K-Vs wholly-owned
subsidiary Ther-Rx has entered into a Medicaid Drug Rebate Agreement (MDRA) with the Department of Health and Human Services (HHS). Through that agreement, KV provides significant rebates to the Medicaid program for prescriptions written for Medicaid beneficiaries. In return, KVs FDA-
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approved drugs, including Makena, must be covered by state Medicaid agencies, including DCH. 11. Because KV is almost entirely dependent on sales of Makena to
generate income, DCHs so-called prior authorization policy has caused KV to lose significant revenue it would have received from sales of Makena in Georgia revenue that is very much needed to sustain the companys operations. As a result, and unless injunctive relief is ordered, KVs available cash will be depleted within a few months, KV may cease to exist, and Makena may no longer be available to pregnant women. B. 12. Defendants Defendant David A. Cook currently serves as the Commissioner of
the Georgia Department of Community Health, with an office at 2 Peachtree Street, NW, Atlanta, Georgia 30303-3159. In that capacity, Mr. Cook oversees the Medicaid Division of DCH, the government agency of the state of Georgia that administers the states Medicaid program. Mr. Cook is being sued in his official capacity. 13. Defendant Jerry Dubberly, MD currently serves as the Division Chief
of the Medicaid Division for DCH, with an office at 2 Peachtree Street, NW, Atlanta, Georgia 30303-3159. In that capacity, Dr. Dubberly directs the
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administration of Georgias Medicaid program. Dr. Dubberly is being sued in his official capacity. 14. Defendants Mr. Cook and Dr. Dubberly have taken, or are otherwise
responsible for, the actions challenged here. III. 15. Jurisdiction and Venue
This case arises under the Supremacy Clause of the United States
Constitution. U.S. Const. art. VI, cl. 2. Jurisdiction in this Court is founded upon 28 U.S.C. 1331, which affords original jurisdiction of all civil actions arising under the Constitution, Laws or Treaties of the United States, including the Supremacy Clause of the United States Constitution. Preliminary and permanent declaratory and injunctive relief are authorized by 28 U.S.C. 2201 and 2202, Rules 57 and 65 of the Federal Rules of Civil Procedure, and the inherent equitable powers of this Court. 16. Venue in this district is proper under 28 U.S.C. 1391(b) because
Defendants reside in this judicial district and a substantial part of the events or omissions giving rise to the claims occurred in this district.
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IV. A.
Allegations Common To All Counts
The Medicaid Act Significantly Restricts States Ability to Deny Coverage of FDA-Approved Medications 1. Federal Requirements for Drug Coverage.
17.
Medicaid is a joint federal-state program established by Congress in
1965 for the purpose of providing medical assistance to underprivileged Americans. The federal agency responsible for administering the Medicaid
program is CMS. As part of HHS, CMS promulgates regulations and policy guidance governing the administration of the Medicaid program. 18. Although states are not required to participate in the Medicaid
program, if a state chooses to participate in the program, it must comply with the requirements of the Medicaid Act. 19. Section 1396a(a)(10) of the Medicaid Act requires each participating
state to make certain services available to all individuals who are covered by the states Medicaid plan. Sections 1396a(a)(10), 1396a(a)(54), and 1396d(a)(12)
authorize states to voluntarily cover specified services, including outpatient prescription drugs. Where a state chooses to provide outpatient prescription drug services, those services become part of the state plan, and are subject to all applicable requirements of federal law.
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20.
The Medicaid Acts provisions governing coverage of outpatient
drugs generally require state plans to provide coverage for the medically acceptable indication of any covered outpatient drug. 8(d)(1)(B)(i). 42 U.S.C. 1396r-
Covered outpatient drugs are those drugs (1) that may be
dispensed only upon a prescription and (2) that have been approved for safety and effectiveness as a prescription drug under the Federal Food, Drug, & Cosmetic Act (FDCA). 42 U.S.C. 1396r-8(k)(2)(A). The term medically accepted
indication includes any use approved under the FDCA. 42 U.S.C. 1396r8(k)(6). Compounded preparations, which are not FDA-approved, are not
covered outpatient drugs. 21. Federal Medicaid law (Section 1396a(a)(19) of the Medicaid Act) also
requires state plans to provide Medicaid services in a manner consistent with . . . the best interests of the recipients. 2. 22. Georgia is Required to Cover Makena Prescriptions.
CMS recently reminded Georgia and other states that Makena, which
was approved by FDA in February 2011 and is subject to an MDRA, is a covered outpatient drug under the Medicaid Act, and therefore must be covered.4
See Ex. 6 (We would like to remind States of their responsibility to cover FDA approved products, such as Makena, that qualify as covered outpatient drugs under the Medicaid drug rebate program.)
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23.
The Medicaid Acts drug rebate program requires manufacturers and
distributors, such as KV, that wish to participate in the Medicaid program to enter into a written MDRA with the Secretary of HHS on behalf of the states. 42 U.S.C. 1396r-8(a)(1). The MDRA, in turn, requires KV to pay a rebate
(currently in the amount of 23.1 percent) to every participating state on all of its covered outpatient drugs paid for by Medicaid. Id. 24. In return for KV entering into the MDRA, federal law requires the
states, including Georgia, to provide coverage of all of KVs covered outpatient drugs, including Makena, under their state plan. 42 U.S.C. 1396a(a)(54)
(providing that a state plan that provides medical assistance for covered outpatient drugs must comply with the applicable requirements of Section 1396r-8). DCH has recognized that Makena is a covered benefit under the Medicaid Fee-forService pharmacy program.5 25. Likewise, DCH must ensure that Care Management Organizations
(CMOs) with whom it has contracted comply with federal law. 42 C.F.R. 438.210 provides that contracted services provided by a CMO must be furnished in an amount, duration, and scope that is no less than the amount, duration, and scope
DCH, Makena Position Statement, a true and correct of which is attached hereto as Exhibit 7.
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for the same services furnished to beneficiaries under fee-for-service Medicaid. 42 C.F.R. 438.206 requires DCH to ensure that all services under the State Medicaid plan are available and accessible to enrollees of any CMO. 26. The Medicaid Act does allow states in very limited circumstances to
exclude, i.e., refuse to pay for a covered outpatient drug. 42 U.S.C. 1396r8(d)(1)(B). Georgias exclusion of Makena, however, does not fall into any of the narrow statutory exclusion categories. It is, after all, the only FDA-approved drug (and, hence, the only covered outpatient drug) in its therapeutic category. Therefore, Georgia must make the medication available to Medicaid beneficiaries. 3. 27. Compounded Preparations are Neither FDA-Approved Nor Covered Outpatient Drugs.
Both prior to and since the approval of Makena, pharmacists have
made compounded preparations using hydroxyprogesterone caproate, commonly referred to as 17P, the active ingredient in Makena. Importantly, compounded preparations of 17P are not approved as generic versions of, and are not pharmaceutically equivalent or bioequivalent to, FDA-approved Makena. 28. FDA recently defined compounding as the combining or altering
of the ingredients of a drug by a licensed pharmacist to produce a drug tailored to an individual patients particular medical needs, based on a valid prescription from a licensed medical practitioner. Ex. 1.
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29.
Thus, compounded preparations are intended to be individually
prepared, not manufactured, let alone manufactured under FDAs GMP standards. As a consequence, and as FDA has repeatedly stated, compounded products are vulnerable to variability from dose to dose, which variability may manifest itself through different levels of potency, purity and sterility. According to FDA,
compounded versions of 17P, in contrast to Makena, do not undergo the same premarket review and thus lack an FDA finding of safety and efficacy and lack an FDA finding of manufacturing quality. Ex. 1. Such products lack FDA approval of the process by which they are produced, and they are not labeled in accordance with the stringent FDA requirements applicable to Makena. 30. In March of 2011, FDA Commissioner, Margaret Hamburg, M.D.,
testified before Congress to the importance of Makenas approval, and stated as part of the reason for that importance concern about the safety of compounded 17P: I think it is important and an advance that we have an FDA-approved drug to prevent pre-term pregnancy and all of its consequent serious medical concerns for both mother and infant. And while the drug had been available through
compounding, . . . compounding as a practice has been associated with serious health risks . . . . Ex. 4 at 10 (emphasis added).
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31.
However, less than two weeks later, on March 30, 2011, FDA
publicly stated that, to support access to hydroxyprogesterone caproate injection, it was not going to apply to compounded versions of 17P its longstanding enforcement policy regarding compounding when an FDA-approved drug is available in the market. Under that policy, FDA typically clears the marketplace to remove compounded copies of an FDA-approved drug and allows compounding only in those limited circumstances where there is a documented medical need for the compounded variation, i.e., where the treating physician determines that a patient has a medical need for a compounded variation of the FDA-approved drug because the FDA-approved drug is clinically inappropriate for the patient. Ex. 3. 32. Many state Medicaid agencies, including DCH, used FDAs March
30, 2011 statement to justify their actions in unlawfully substituting their judgment for the medical judgment of physicians, directing or requiring their beneficiaries to use unapproved and cheaper compounded 17P, and thereby creating, over time, a new access problem different from the one originally mentioned by FDA.
Specifically, in many states, including Georgia, women on Medicaid have been unable to gain access to FDA-approved Makena. 33. After KV met with FDA and CMS and explained the issue of denial
of Makena to Medicaid patients in Georgia and other states, FDA issued a new
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statement on Makena on June 15, 2012.
As FDA explained in its June 15
statement, compounded preparations, including 17P, are not FDA approved and do not undergo premarket review nor do they have an FDA finding of safety and efficacy. Ex. 2 at 2. To the contrary, FDA noted that approved drug products, such as Makena, provide greater assurance of safety and effectiveness . . . Id. at 1. The agency also reminded the public of the limits on lawful compounding: (1) [c]ompounding large volumes of drugs that are copies of FDA-approved drugs circumvents important public health requirements, including the Federal Food, Drug, and Cosmetics Act[] . . . and (2) [t]he compounding of any drug, including hydroxyprogesterone caproate, should not exceed the scope of traditional pharmacy compounding. Id. at 2. Subsequently, on June 29, 2012, FDA also stated that it does not consider compounding large volumes of copies, or what are essentially copies, of any approved commercially-available drug to fall within the scope of traditional pharmacy practice. Ex. 1. 34. The June 15 FDA statement explained again, and consistent with
FDAs longstanding policy, that the scope of traditional compounding includes the situation where the prescribing practitioner has determined that a compounded product is necessary for the particular patient and would provide a significant difference for the patient as compared to the FDA-approved commercially
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available drug . . . Ex. 5. The most common such situation is where a patient has an allergy to an ingredient in the FDA-approved product or cannot tolerate the form of the FDA product, i.e., cannot swallow a pill. statements in the June 29 Makena FAQs. Ex. 1. 35. As FDA explained in the June 29 Makena FAQs, Makena was FDA repeated these
approved based on an affirmative showing of safety and efficacy and the premarket review included a review of the manufacturing process, the source of the active pharmaceutical ingredient (API) used, and adherence to GMP standards. Ex. 1. Specifically, Makena is manufactured in a GMP-compliant manufacturing facility that is inspected by FDA. The approved manufacturing process uses API made in another FDA-compliant API manufacturing facility that is regularly inspected by FDA and by European Union health authorities to FDA-approved specifications. By the end of the approval process, KV had invested or committed over a quarter of a billion dollars in bringing Makena to market, including more than $80 million in research and clinical trials. 36. Improper compounding can and does (with some frequency) result in
contaminated, ineffective (sub-potent), or too-potent products. Government tests by FDA and state Boards of Pharmacy have found that significant percentages often in the 20 percent to 33 percent range of numerous types of compounded
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products failed quality tests, primarily due to potency failures (i.e., too much or too little active ingredient in the compounded product). 37. The safety, effectiveness, and quality of compounded 17P have not
been studied and are therefore unknown. None of the commercially available compounded 17P formulations have been used in any randomized clinical trial and none have any supporting effectiveness, safety, or stability information that have been reviewed by FDA. 38. Further, on information and belief based on extensive investigation,
much if not all of the API used in compounded 17P comes from non-FDA approved or regulated factories in China, the country where drug manufacturing facilities exporting to the United States are least inspected by FDA.6 39. In testimony before Congress, FDA stated:
FDA remains immensely concerned about unapproved, imported pharmaceuticals whose safety and effectiveness cannot be assured
A GAO Report found that as of 2009, China had the highest percentage (88%) of drug manufacturing establishments known to FDA that may never have been inspected. See U.S. Government Accounting Office, Drug Safety: FDA Has Conducted More Foreign Inspections and Begun to Improve Its Information on Foreign Establishments, but More Progress Is Needed, GAO-10-961 (Sept. 2010), (Table 2) at 18, available at http://www.gao.gov/new.items/d10961.pdf (last visited July 11, 2012).
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because they originate outside the closed legal structure and regulatory system we are fortunate to have in the United States.7 40. FDAs concerns are legitimate and are borne out by testing of
compounded 17P. At KVs request, independent laboratories tested 10 samples of 17P API.8 Seven of the suppliers were original manufacturers of the API and located in unapproved facilities in China. The remaining three suppliers, based in the United States, were identified as resellers of API that, on information and belief, also originated in China. In addition, the independent laboratories tested 30 vials of compounded 17P prepared by 30 different compounding pharmacies from 15 states.9 41. The independent laboratories evaluated the API samples and
compounded 17P vials - against United States Pharmacopeia (USP) standards
Testimony of Randall W. Lutter, Ph.D., Acting Deputy Commissioner for Policy at the U.S. Food and Drug Administration before the Subcommittee on Interstate Commerce, Trade and Tourism, Senate Committee on Commerce, Science and Transportation (Mar. 7, 2007), available at http://www.fda.gov/NewsEvents/Testimony/ucm154233.htm (last visited July 11, 2012).
8
See Press Release, K-V Pharmaceutical Company, Independent Laboratory Testing Demonstrates Important Quality Differences Between FDA-Approved Makena and Compounded 17P Formulations (Nov. 8, 2011), available at http://www.kvpharmaceutical.com/news_center_article.aspx?articleid=353 (last visited July 11, 2012). Id.
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and the more rigorous FDA quality standards for Makena to assess potency, chemical impurities, and drug identity. 42. 80% of the API samples failed the impurity specifications FDA set for
Makena; 50% failed the USP minimum potency standard; and one contained no active ingredient at all (instead, it contained glucose that was made to look like hydroxyprogesterone caproate).10 43. Of the samples of finished dosage form, 27% failed to meet the USP
potency standards. The samples potency ranged from just 57% to 252% of the labeled potency. In addition, 53% had levels of unknown purities that exceeded FDA impurity standard required for Makena. Thus, two-thirds of the
compounded 17P vials failed to meet at least one USP requirement or at least one FDA quality standard required for Makena for potency and/or purity.11 44. KV submitted to FDA the results of the laboratory testing and
supporting documentation. Upon careful review of the independent laboratory testing that KV provided, including chain of custody, storage, and laboratory procedure, FDA issued a statement confirming that there is variability in the
10 11
Id. Id.
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purity and potency of both the bulk APIs and compounded hydroxyprogesterone caproate products that were tested.12 45. In June of this year, FDA published findings of its own study which
noted that 100% (16 of 16) of the API samples procured and tested by FDA failed Makenas standards for unidentified impurities. FDA also found potency and unidentified impurity issues in compounded 17P finished goods samples. According to FDA requirements, if Makena were to have these deficiencies, it would be considered adulterated.13 FDA's testing of the compounded 17P samples provided by the Company also confirmed variability in potency and purity. 46. Healthcare professionals and their Medicaid patients have no ability:
(i) to assess the potency, safety, or quality of compounded 17P; (ii) to assess the quality of the people or facilities that produce the API used in compounded 17P or the quality of those that produce the compounded 17P itself; or (iii) to assure
See U.S. Food and Drug Administration, FDA Statement on Makena (Nov. 8, 2011), available at http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm279098.ht m (last visited July 15, 2012). See FDA, Guidance for Industry, Investigating Out-of-Specification (OOS) Test Results for Pharmaceutical Production, available at http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation /Guidances/ucm070287.pdf (last visited July 11, 2012).
983525.1
12
13
- 23 -
themselves that the compounded product being injected into any given pregnant woman was prepared, stored and transported in a proper manner. 47. As a result, and faced with growing evidence that compounding
pharmacies and state Medicaid agencies alike were disregarding the June 15 statements, FDA spoke again in the June 29 Makena FAQs: [i]f there is an FDA-approved drug that is medically appropriate for a patient, the FDAapproved product should be prescribed and used. Ex. 1 (emphasis added). To leave no room for doubt, FDA reiterated in the same June 29 Makena FAQs: when an FDA-approved drug is commercially available, the FDA recommends that practitioners prescribe the FDA-approved drug rather than a compounded drug unless the prescribing practitioner has determined that a compounded product is necessary for the particular patient and would provide a significant difference for the patient as compared to the FDA-approved commercially available drug product. Id. (emphasis added). 48. In August 2010, CMS announced that compounded products should
not be considered covered outpatient drugs under the Medicaid program.14 At the time, CMS reaffirmed its position that Medicaid coverage of compounded therapies is limited to extemporaneous[] prescriptions where no commercially
See Centers for Medicare & Medicaid Services, Medicaid Drug Rebate Program Notice, CMS Release No. 155 (Aug. 11, 2010), at 4, available at
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available drug is medically appropriate. Id. Thus, consistent with FDA law and policy, CMS has limited Medicaid coverage of compounded products to those that are made pursuant to a documented individualized need for the compounded product in place of the FDA-approved, commercially available drug. 49. The June 15 CMS Statement cross-referenced the June 15 FDA
Statement, reiterated the need to limit compounding of 17P to the traditional scope of compounding (i.e., customized to meet the need of an individual patient for whom the FDA-approved drug is medically inappropriate) and reminded states of their legal obligation to cover Makena without unreasonable restrictions.15 50. DCHs so-called Makena prior authorization policy does not limit the
use of compounded 17P to extemporaneous compounding that is customized to meet the needs of particular patients who have the condition for which Makena is meant to treat but for whom Makena is medically inappropriate. In fact, it does not attempt to limit the compounding of 17P at all. Rather, DCH ignores federal
http://www.dhs.state.or.us/policy/healthplan/guides/pharmacy/cms_releases/cms_r el155.pdf (last visited July 15, 2012). In July 2011, CMS also clarified that compounded drugs are not covered outpatient drugs subject to section 1927(d) of the Medicaid Act. See Centers for Medicare & Medicaid Services, Medicaid Drug Rebate Program Notice, CMS Release No. 158, (July 13, 2011), at 1, available at http://www.dhs.state.or.us/policy/healthplan/guides/pharmacy/cms_releases/cms_r el158.pdf (last visited July 15, 2012).
983525.1
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- 25 -
law and the recent and repeated public statements of the lead federal agencies by effectively requiring the use of compounded 17P (or nothing) instead of the FDAapproved drug. B. DCHs Makena Prior Authorization Policy is Unlawful Because it Operates as an Exclusion. 1. 51. The States Requirements for Coverage of Makena
The state of Georgia voluntarily chooses to participate in the Medicaid
Program and to provide a prescription drug benefit. Although DCH concedes that Makena is a covered benefit, in practice it effectively refuses to cover Makena by imposing undue and unachievable conditions on access to it. 52. As described in more detail below, a state may condition coverage of
covered outpatient drugs on a prior authorization if the state meets certain requirements in 42 U.S.C. 1396r-8(d)(1)(A), 1396r-8(d)(5). However, a state may not use a prior authorization policy to bar access to an otherwise covered drug where there is no FDA-approved alternative, as is the case here. 53. On June 1, 2011, DCH issued a Makena PA Summary (the PA
Summary), which states that to obtain prior authorization for Makena, the
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beneficiary must have a history of at least one preterm birth and be unable to obtain or not able to use compounded hydroxyprogesterone.16 54. In its Makena Position Statement DCH acknowledges that
Makena is a covered benefit under the Medicaid Fee-for-Service program, but discourages providers from prescribing it: Medicaid Division encourages providers to rely on their prior success with compounded [17P] when making decisions for their patients. Ex. 7. In addition, DCH invited pharmacies and
physicians to contact the Pharmacy Unit for assistance with locating a compounding pharmacy. Id. 55. DCHs policy places further unlawful and insurmountable obstacles
between Medicaid patients and Makena: As a matter of policy, the Medicaid Division will require prior authorization for any prescription for Makena. The physician will be required to demonstrate the medical necessity of the manufactured product, Makena, over the compounded [17P] product to obtain a prior authorization. Id. (emphasis added).
16
See Makena PA Summary, a true and correct copy of which is attached hereto as Exhibit 8 (emphasis added). In addition, the beneficiary must be between ages 16-43 and have a confirmed pregnancy with one fetus with a gestational age between 16 weeks, 0 days and 20 weeks, 6 days.
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56.
These requirements that a beneficiary (i) show that she is unable
to obtain compounded 17P; and (ii) demonstrate the medical necessity of Makena over compounded 17P preparations turn the federal regulatory scheme on its head by preferring unapproved drugs of unknown composition and produced by unknown and unapproved processes over the only FDA-approved drug for this condition. 57. DCHs provision that a patient may obtain Makena if she shows that
she is unable to obtain compounded 17P is a sham because it requires a showing that cannot be made. There are many compounders throughout Georgia (and mail order compounders located in other states) that are willing and able to compound 17P and provide it to physicians and patients in Georgia. Because Medicaid beneficiaries can always obtain an unapproved compounded 17P preparation, the so-called prior authorization is, in operation, a drug formulary exclusion, and is an attempted end-run around states obligation under federal law to cover FDAapproved drugs. 58. Similarly, the requirement that a patient demonstrate medical
necessity for the use of Makena over compounded preparations is a further unlawful refusal to reimburse for a covered outpatient drug notwithstanding the fact that federal law requires DCH to provide Georgia beneficiaries services in a
983525.1
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manner consistent with . . . the best interests of the recipients and the fact that FDA has made it clear on multiple occasions that Makena is more reliable, effective, safe and of requisite overall quality, than are unapproved compounded versions of 17P. 59. In addition, Georgias policy is the direct opposite of FDAs position
that in determining whether a drug may be compounded, one shall consider whether the prescribing practitioner has determined that a compounded product is necessary for the particular patient and would provide a significant difference for the patient as compared to the FDA-approved commercially available drug product. Ex. 2 at 2 (emphasis added). Indeed, on June 29, FDA went further by stating that practitioners should prescribe the FDA-approved drug rather than a compounded drug unless the prescribing practitioner has determined that a compounded product is necessary for the particular patient and would provide a significant difference for the patient as compared to the FDA-approved commercially available drug product. Ex. 1 at 1. 60. Thus, whereas FDA and Medicaid law require a showing of medical
necessity for the unapproved, compounded product, DCH policy requires such a showing for the FDA-approved product.
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61.
DCH has provided no standards for establishing such medical
necessity, and no guidance is available for physicians to understand what proof or documentation is necessary. It is also unclear how a patient could prove she cannot use compounded 17P or that it is ineffective for her. This policy suggests that a woman on Medicaid must first try compounded 17P preparations, have them fail by going into early labor and risking or having a preterm birth, before Georgia will consider approving coverage of the FDA-approved product. In short, she probably would have to have a third high-risk pregnancy to be eligible for Makena. Plainly, such a policy unecessarily endangers the health of the unborn children of women in Georgia who are eligible for Makena. Georgia has rendered federal law requiring coverage meaningless by the imposition of arbitrary and insurmountable barriers to access to Makena. 62. DCH has also entered into contracts with CMOs to facilitate the
delivery of Medicaid health benefits to the Medicaid-eligible population in Georgia. Each CMO must comply with federal Medicaid laws and regulations and DCH is ultimately responsible for ensuring such compliance. 63. Both federal regulations DCHs contracts with its CMOs require that 42 C.F.R. 438.210
DCH ensure that its CMOs comply with federal law.
provides that each contract DCH has with a CMO must require that services
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provided by the CMO be furnished in an amount, duration, and scope that is no less than the amount, duration, and scope for the same services furnished to beneficiaries under fee-for-service Medicaid. 42 C.F.R. 438.206 requires that DCH ensure that all services under the State Medicaid plan are available and accessible to enrollees of any CMO. DCHs Amended and Restated Contract Between the Georgia Department of Communicated Health and Care Management Organization for Provision of Services to Georgia Families (the Model Contract) states: The Contractor agrees that all work done as part of this Contract is subject to CMS approval and will comply fully with applicable administrative and other requirements established by applicable federal and State laws and regulations and guidelinesand assumes responsibility for full compliance with all such applicable laws, regulations, and guidelines17 The Model Contract also obligates DCH to monitor CMO compliance with federal Medicaid laws: DCH will comply with, and will monitor the
17
See Amended and Restated Contract Between the Georgian Department of Community Health and Care Management Organization for Provision of Service to Georgia Families (the Model Contract), 27.2.1, available at: www.dch.georgia.gov/vgn/images/portal/cit_1210/27/43/164261788CMO_Restate ment_12-General.pdf (last visited July 14, 2012).
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Contractors compliance with, all applicable State and federal laws and regulations.18 64. On information and belief, several CMOs have denied prior
authorization requests for Makena in violation of the Medicaid Act. Despite their obligation to do so, DCH has failed to adequately monitor these CMOs to ensure that they are not violating federal laws by unlawfully denying prior authorization requests for Makena. 2. 65. Georgias Use of a Prior Authorization Requirement is Unlawful
Under the Medicaid Act, a state may impose a reasonable prior
authorization procedure to require a provider to go through certain procedural steps before getting access to a particular drug. Historically, prior authorization
requirements have been used to ensure the medical appropriateness and safety of a drug for a particular beneficiary and to avoid harms such as drug-drug interaction, therapeutic duplication, overuse by beneficiaries and, occasionally, off label prescribing by practitioners. A prior authorization program may provide for
conditions of coverage based on satisfaction of approriate medical criteria.
18
Id. 2.2 (emphasis added).
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66.
DCHs prior authorization, is not a mere procedural hurdle or
condition of coverage that must be met to obtain Makena it has been structured to exclude coverage for Makena entirely. By setting up a condition precedent that cannot be met (i.e., inability to obtain compounded 17P or undefined medical necessity), and that is unrelated to clinical criteria for use of Makena, Georgias prior authorization requirement acts as an impermissible de facto exclusion of Makena from DCHs drug formulary in favor of unapproved, injectible compounded products of unknown potency, safety, and quality. 67. Georgias Makena prior authorization policy is, in reality, an attempt
to exclude coverage for Makena without adhering to the formulary provisions of the Medicaid Act, which prohibit a formulary exclusion of an FDA-approved drug unless the drug does not have a significant, clinically meaningful therapeutic advantage in terms of safety, effectiveness or clinical outcome, over other drugs included in the formulary. 42 U.S.C. 1396r(d)(4)(C). For example, if there are certain covered drugs that each treat a particular condition, such as elevated blood cholesterol, the Medicaid Program need not cover all of them. But, if a certain drug has a meaningful therapeutic advantage over other covered drugs, it must be included in the formulary cost is irrelevant in that circumstance.
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68.
A lawful formulary creates one or more tiers of preference among two
or more therapeautically equivalent covered outpatient drugs. A lawful formulary restriction cannot exist where there is only one FDA-approved drug, however, because formularies cannot involve anything other than covered outpatient drugs, compounded preparations are not covered outpatient drugs. 69. Where, as here, there is no existing FDA-approved drug that is an
alternative to Makena, there is no lawful basis to exclude Makena from the state formulary. Title 42 U.S.C. 1396r-8(d)(4)(C) requires the inclusion of covered outpatient drugs in a formulary, unless a permissible exclusion applies. C. 70. Georgias Policy Unlawfully Supplants the Medical Judgment of Practitioners. On information and belief, of the approximately 2,500 to 3,000
Medicaid recipients in Georgia who have been eligible to receive Makena since it became available, DCH has not approved any vials of the medication for any Medicaid patient. 71. Notwithstanding the apparent hurdles to obtaining approval, KV is
generally aware of at least 79 Makena prescriptions written by healthcare providers in Georgia for their Medicaid patients that have, on information and belief, been denied coverage by DCH despite the prescribing physicians decisions to try to show medical necessity. The physicians writing these prescriptions
983525.1
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undoubtedly were discouraged from writing additional prescriptions in light of the categorical denials they received from DCH. 72. On information and belief, there are many more physicians in Georgia
who would prefer to prescribe and obtain Makena for their patients because of the assurance of safety and efficacy that accompanies an FDA-approved drug, but are discouraged from even trying to do so by DCHs requirements of medical necessity and unavailability of compounded 17P. 73. This state of affairs is evidenced by the fact that Makena is
prescribed in much larger numbers by providers in states that do not have an impermissible prior authorization process. For example, KV estimates that in Florida, approximately 3,100 Medicaid patients are eligible for Makena. Since October 2011, 521 Medicaid patients have been prescribed Makena and 429 vials have been provided to Medicaid patients in Florida (compared to two vials provided to Medicaid beneficiaries in Georgia during a longer period in which Makena was available). 74. DCHs Makena prior authorization policy, based solely on cost,
unlawfully overrides the clinical judgments of practitioners who believe that Makena is medically necessary or preferable for their patients.
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D. 75.
DCH Has Ignored Recent Statements Issued by FDA and CMS. DCHs Makena prior authorization policy is inconsistent with FDAs
June 15 statement reiterating the greater assurance of safety and efficacy of Makena as compared with compounded 17P formulations, and stating that largescale compounding of drugs that are copies of FDA-approved drugs goes
beyond the scope of traditional pharmacy compounding and circumvents important public health requirements. . . Ex. 2 at 2. 76. DCH also continues to ignore CMSs June 15 statement reminding
states of their responsibility to cover FDA-approved products, such as Makena, that qualify as covered outpatient drugs under the Medicaid drug rebate program. CMS cautioned states that any prior authorization procedures for such drugs must be administered in accordance with Section 1927(d) of the Social Security Act, 42 U.S.C. 1396r-8, without imposing unreasonable conditions. Ex. 6. 77. On June 19, 2012, two business days after FDA and CMS statements,
Joseph Auci, a National Account Director for Ther-Rx, sent an email to Defendant Dr. Jerry Dubberly to inform him and DCH of the June 15, 2012 FDA and CMS statements. Mr. Auci sent the email in the hope that it would cause DCH to reopen a dialogue with KV regarding Makena, a dialogue that had long been shut down by DCH. Toward that end, Mr. Auci offered to work with the state of
983525.1
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Georgia to assist it in providing access to Makena, and offered a substantial rebate on the product for Georgia Medicaid patients. 78. Dr. Dubberly rejected the offer, and responded, I believe the [FDA]
statement affirms our current position on this matter. 79. On June 22, 2012, Scott Goedeke, Senior Vice President of Marketing
for Ther-Rx, sent a detailed follow up email to Dr. Dubberly seeking further explanation of his seemingly indefensible position. 80. Dr. Dubberly responded in less than one hour, as follows: There is
really nothing to explain. We will not be entertaining any policy or coverage changes as a result of the release. Have a great weekend. 81. Efforts to resolve Georgias continuing violation of Medicaid law and
FDA and CMS policies just prior to the filing of this suit were also fruitless. 82. Thus, despite the June 15 statements by FDA and CMS, DCH has no
intention of removing the unreasonable and unlawful conditions imposed by its prior authorization policy. If a preliminary injunction is not entered, DCH will continue to deny Georgias Medicaid beneficiaries access to the only FDAapproved drug to treat their condition, and will compel them to take an unapproved compound of uncertain origin, quality and potency or no drug for their condition at all.
983525.1
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E. 83.
Harm to Plaintiffs and the Public Resulting From DCHs Policy. KV has invested or committed over a quarter of a billion dollars to
acquiring Makena, obtaining approval for it, and bringing it to market as an orphan drug that would enjoy seven years of market exclusivity under the Orphan Drug Act.19 Makena is KVs most signficant product, and was expected to account for the vast majority of KVs projected revenue during the remaining Makena exclusivity period. 84. KVs survival as a going concern is now dependent on Makenas KVs June 14, 2012 SEC disclosures include a
success in the marketplace.
prominent reference to substantial doubt regarding KVs ability to continue as a going concern, and KVs independent auditor opined that it is probable that KV will cease to exist within 12 months. 85. KV has engaged financial advisors and outside counsel to explore
strategic alternatives, including the possibility of restructuring its debt. Unless Georgia and other states begin covering Makena as required by law, (and thereby give KVs creditors a reason to believe that KV is likely to be able to meet its
The Orphan Drug Act of 1983s seven year exclusivity period is meant to incentivize pharmaceutical companies to expend the large amounts of time and money necessary to obtain FDA approval of, and to comply with FDA postapproval requirements applicable to, drugs that address relatively small patient populations.
983525.1
19
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financial obligations if given more time), KV will not be able to attract new capital at a cost that is reasonable, and is likely to exhaust its working capital within 3 to 6 months and be forced to file for bankruptcy protection before then. 86. However, due to unreasonable prior authorization policies such as
Georgias, KVs revenue from sales of Makena is far below what it should be. 87. Absent a preliminary injunction, KV will be irreparably harmed
because, absent immediate action by the Court to address Georgias actions, KV will be unable to maintain its operations and meet its financial commitments. 88. Medicaid beneficiaries will also be irreparably harmed because if
DCHs policy continues in force, the health and safety of women with high-risk pregnancies and their unborn children will continue to be subjected to the significant, avoidable risks posed by compounded 17P products as compared to the FDA-approved Makena. 89. Absent a preliminary injunction, DCH will continue to ignore federal
regulations and the recent directives of FDA and CMS. It is certainly in the public interest that state agencies such as DCH act in compliance with the statutes they are governed by and administer. 90. Plaintiffs have no adequate remedy at law to make themselves whole
for the injury to KVs business resulting from DCHs prior authorization policy.
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They cannot recoup past, present or future sales from the state and, without a reversal of Georgias policies, Plaintiffs are unlikely to be in existence for the length of time a trial on the merits would take to complete. 91. Accordingly, Plaintiffs need preliminary and permanent declaratory
and injunctive relief. V. Counts A. Count I (Violation of 1396r-8(a) and (d)(1)(A) of the Medicaid Act and the Supremacy Clause of the United States Constitution; Seeking Injunctive and Declaratory Relief) Paragraphs 1 through 91 of this Complaint are incorporated by
92.
reference as if set forth fully herein. 93. Section 1396r-8(a) of the Medicaid Act provides that a state must
provide access to and coverage for the covered outpatient drugs of a manufacturer that has entered into a Medicaid Drug Rebate Agreement with HHS, subject to certain limitations. 42 U.S.C. 1396r-8(a). 94. Makena is a covered outpatient drug as defined in Section 1396r-
8(k), and is subject to a Medicaid Drug Rebate Agreement executed between TherRx and HHS. DCH has agreed that Makena is a covered drug. 95. None of the bases for excluding coverage of a covered outpatient
drug set forth in 1396r-8(a) apply to Makena.
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96.
DCHs PA Summary purports to establish a prior authorization policy
as to Makena. 97. DCHs Makena prior authorization policy as written and
implemented serves as an exclusion of Makena, rather than as a condition of coverage. No legitimate prior authorization policy, other than to ensure that the clinical criteria for use are met, could lawfully be conducted in these circumstances, given that Makena is the only FDA-approved drug for its approved indication. 98. As a result of DCHs Makena prior authorization policy, a Medicaid
beneficiary generally cannot obtain the FDA-approved Makena even if the beneficiarys provider believes it is in his or her patients best interests. 99. Therefore, DCHs Makena prior authorization policy violates section
1396r-8(a) of the Medicaid Act, which requires DCH to provide access to covered outpatient drugs. 100. Plaintiffs KV and Ther-Rx have been, are being, and will continue to be, irreparably harmed by DCHs violation of section 1396r-8(d)(1)(A) of the Medicaid Act.
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B.
Count II (Violation of 1396a(a)(19) of the Medicaid Act and the Supremacy Clause of the United States Constitution; Seeking Injunctive and Declaratory Relief)
101. Paragraphs 1 through 91 of the Complaint are incorporated by reference as if set forth fully herein. 102. Section 1396a(a)(19) of the Medicaid Act requires that any state participating in the Medicaid program provide such safeguards as may be necessary to assure that eligibility for care and services under the plan will be determined, and such care and services will be provided in a manner consistent with simplicity of administration and the best interest of the recipients. 103. DCHs refusal to provide coverage for an FDA-approved drug for its stated indication and DCHs policy that Medicaid beneficiaries be treated with an unapproved, non-FDA-regulated substitute made through an inherently variable process or have no treatment at all for their condition is not in the best interest of the Medicaid beneficiaries for whom Makena is indicated. 104. DCHs Makena prior authorization policy is not based on any clinical or medical evaluation of a particular patients needs, but, instead, is based solely on the lower cost of compounded 17P. Thus, the prior authorization operates to deny Medicaid beneficiaries access to the most reliably effective, safe and highquality product, FDA-approved Makena indeed, the only FDA-approved drug
983525.1
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for women at high risk of preterm birth and the consequent infant deaths or longterm illnesses that are associated with this condition. 105. DCHs Makena prior authorization policy results in the state overriding the medical judgments of Medicaid beneficiaries physicians. 106. Accordingly, DCH is not providing care and services in a manner consistent with the best interests of Georgias Medicaid recipients, and is in violation of section 1396a(a)(19) of the Medicaid Act. 107. Plaintiffs KV and Ther-Rx have been, are being, and will continue to be, irreparably harmed by DCHs violation of section 1396a(a)(19) of the Medicaid Act. VI. Relief Requested
WHEREFORE, Plaintiffs respectfully request that this Court, pursuant to the Supremacy Clause, 28 U.S.C. 1331, 28 U.S.C. 2201 and 2202, and Rules 57 and 65, Fed. R. Civ. P.: a) Issue preliminary and permanent relief that: (1) Enjoins DCH from further implementing its Makena prior authorization policy;
983525.1
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(2)
Enjoins DCH from denying coverage for any prescription of Makena made by a health care provider for its indicated use;
(3)
Requires DCH to provide written notice to those whose prescriptions were denied since June 1, 2011 that they can obtain Makena if it is needed for its approved indication;
(4)
Requires DCH to provide written notice to all health care practitioners whose prescriptions of Makena since June 1, 2011 have been denied, that Makena is now covered and that DCH no longer applies the unlawful obstacles to coverage that it previously applied;
(5)
Requires DCH to take all steps necessary to ensure that CMOs and all of DCHs agents or other parties under its power or acting by or under its authority or on its behalf provide coverage for any prescription of Makena made by a health care provider for its indicated use;
(6)
Prohibits
DCH
from
covering
and
paying
for
compounded hydroxyprogesterone caproate except where
983525.1
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the treating physician documents that his or her patient has a specific medical need for a compounded variation rather than Makena; (7) Requires that DCH ensure that all Medicaid CMOs limit their coverage of compounded hydroxyprogesterone caproate to those situations where the treating physician documents that his or her patient has a specific medical need for a compounded variation rather than Makena; (8) Requires DCH to take all steps necessary to ensure that notice of this change in the prior authorization policy is communicated to all affected individuals, including providing a notice in the same manner its prior policy was communicated. b) Issue a judgment declaring that: (1) DCH acted in violation of the Medicaid Act by subjecting Makena to an impermissible prior
authorization process structured with the intent and effect of excluding access by Medicaid beneficiaries to this FDA-approved covered outpatient drug;
983525.1
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(2)
DCHs requirement that physicians obtain a prior authorization for prescriptions of FDA-approved
Makena while reimbursing for compounded substitutes for the indicated treatment violates the Medicaid Act; (3) DCH must cover Makena in accordance with Ther-Rxs Medicaid Drug Rebate Agreement when it is prescribed by a health care practitioner for his or her Medicaid patient who has the condition for which Makena is indicated, and must take all steps necessary to ensure that CMOs and all of its agents or other parties under its power or acting by or under its authority or on its behalf do likewise; (4) DCH may cover and pay for compounded
hydroxyprogesterone caproate only where the treating physician documents that his or her patient has a specific medical need for a compounded variation rather than Makena; and (5) DCH must ensure that all Medicaid CMOs limit their coverage of compounded hydroxyprogesterone caproate
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to those situations where the treating physician documents that his or her patient has a specific medical need for a compounded variation rather than Makena. c) Grant such other and further relief as the Court may deem just and
proper. Dated: July 17, 2012 Respectfully submitted, s/ John E. Floyd John E. Floyd (GA 266413) Jeffrey O. Bramlett (GA 075780) Manoj S. Varghese (GA 734668) BONDURANT, MIXSON & ELMORE LLP 1201 W. Peachtree Street, N.W. Suite 3900 Atlanta, GA 30309 Telephone: (404) 881-4100 Facsimile: (404) 881-4111 floyd@bmelaw.com varghese@bmelaw.com Margaret Peg Donahue Hall, Esq. (TX 05968450) SNR DENTON US LLP 2000 McKinney Avenue, Suite 1900 Dallas, TX 75201-1858 Telephone: (214) 259-0900 Facsimile: (214) 259-0910 peg.hall@snrdenton.com Pro hac vice application pending
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Drew Marrocco, Esq. (DC 453205) SNR DENTON US LLP 1301 K Street, NW, Suite 600, East Tower Washington, DC 20005 Telephone: (202) 408-6400 Facsimile: (202) 408-6399 drew.marrocco@snrdenton.com Pro hac vice application pending Stephen D. Libowsky (GA 451965) SNR DENTON US LLP 233 South Wacker Drive, Suite 7800 Chicago, IL 60606 Telephone: (312)-876-8000 Facsimile: (312)-876-7934 Stephen.libowsky@snrdenton.com Attorneys for Plaintiffs
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APPENDIX 3
Case 1:12-cv-01105-ABJ Document 9-5 Filed 07/17/12 Page 1 of 9 Case 1:12-cv-02491-CAP Document 2 07/24/12 2 43
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA K-V PHARMACEUTICAL COMPANY, THER-RX CORPORATION, ) ) ) ) ) ) ) ) ) ) )
Plaintiffs, v. DAVID A. COOK, et al., Defendants.
Case No. _____________
MOTION FOR PRELIMINARY AND PERMANENT INJUNCTION Pursuant to Rule 65 of the Federal Rules of Civil Procedure, Plaintiffs K-V Pharmaceutical Company and Ther-Rx Corporation (collectively, KV) seek preliminary and permanent injunctive relief from Defendants David A. Cook, in his official capacity as Commissioner of the Department of Community Health (DCH), and Jerry Dubberly, M.D., in his official capacity as Division Chief of the Medicaid Division of DCH. Plaintiffs seek to enjoin the defendants from (i) directing Medicaid beneficiaries to use non-FDA approved compounded copies of a drug meant for pregnant women with a rare, but severe, condition that can cause life-threatening spontaneous preterm birth and (ii) denying these women access to Makena, the
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only drug approved by the U.S. Food & Drug Administration (FDA) to treat their condition. The actions sought to be enjoined are in clear violation of federal Medicaid laws. Preterm birth is a serious condition that affects the well-being of both mothers and their babies and is associated with exorbitant health care costs. The problem is particularly acute in Georgia, which has a 13.4% preterm birth rate and received a failing grade for preterm health from the March of Dimes in 2010. Plaintiffs hold the rights to, and distribute, Makena. When Makena was approved as an orphan drug in February 2011, the FDA Commissioner lauded its approval, stating that it is important and an advance that we have an FDAapproved drug to prevent preterm pregnancy and all of its consequent serious medical concerns for both mother and infant. Despite the exceptionally high rate of preterm births and particular need for an FDA-approved drug in Georgia, DCH has instituted an impermissible prior authorization program that acts as a complete barrier to Makena for pregnant women in the states Medicaid program. In a transparent effort to avoid having to cover the cost of Makena, the DCH policy requires a patient to show that she is either unable to obtain a cheaper, non-FDA approved compounded product or that
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she has a medical need that requires use of the FDA-approved drug over the nonFDA approved compounded product. Likelihood of Success on the Merits DCHs preauthorization requirements that a beneficiary (i) show that she is unable to obtain compounded 17P (the active ingredient in Makena); and (ii) demonstrate the medical necessity of Makena over compounded 17P preparations turn the federal regulatory scheme on its head by preferring unapproved drugs of unknown composition and produced by unknown and unapproved processes over the only FDA-approved drug for this condition. Plaintiffs are substantially likely to succeed on the merits because Makena is a covered outpatient drug under the Medicaid Act, is subject to a Medicaid Drug Rebate Agreement, and there is no FDA-approved alternative (compounded products are not FDA-approved). Thus, federal law requires Georgia to cover Makena. 42 U.S.C. 1396r-8(a). In violation of this federal law, DCHs policy excludes virtually all access to the FDA-approved drug and acts as an impermissible formulary exclusion. Access to Makena is denied by DCHs policy because there are compounders throughout the state (as well as mail order compounders outside the state) that are willing and able to create compounded products at any time.
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Moreover, by requiring a showing of medical necessity for Makena over compounded 17P without any guidance as to what that need could be based on, DCH effectively supplants its judgment for the medical judgment of the treating physician. Although couched as a prior authorization, it is not; prior
authorizations are not permitted under federal law to be used in such a restrictive and exclusionary manner. Plaintiffs records show that in practice, since February 2011, DCH has not approved a single prescription of Makena. Georgias at-risk pregnant women on Medicaid have been treated with non-FDA approved compounds or, where their physicians are reluctant to prescribe a non-FDA approved product, nothing at all. In addition to violating the drug access provisions of the Medicaid Act, DCHs prior authorization policy violates section 1396a(a)(19), which requires state plans to provide care and services in the best interests of the recipients. Since DCH directs the use of unapproved compounded products when an FDAapproved drug is available, Medicaid beneficiaries best interests are clearly being ignored. In addition to violating the letter and spirit of the Medicaid Act, the DCH program is in direct conflict with FDAs recent pronouncement: [i]f there is an FDA-approved drug that is medically appropriate for a patient, the FDA-approved
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product should be prescribed and used and the Centers for Medicare and Medicaids (CMS) directive that all states cover FDA approved drugs and that they cover Makena without imposing unreasonable conditions. Irreparable Harm to Plaintiffs Plaintiffs are being irreparably harmed by DCHs violation of federal law because not only does the Eleventh Amendment preclude any recovery of losses from Georgia, but DCHs policy (along with the policies of several other states) threatens KVs continued existence. In fact, auditors have predicted that if KVs financial situation does not improve immediately; KV will cease to exist as soon as August 2012. Makena is KVs primary product. However, due to these unlawful prior authorization programs, KV has lost significant revenue from sales of Makena during the exclusivity period granted to orphan drugs and cannot cover the cost of developing the drug and ongoing research & development and operating expenses. KVs stock price has dropped dramatically, KV is unable to attract investors and unless immediate action is taken by the Court, KV will run out of cash before this case ends. KVs impending demise, in addition to the potential
harms to Medicaid beneficiaries from being denied access to the FDA-approved drug for their condition, clearly outweighs the added expenditure Georgia will
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need to make in order to act in the best interests of its Medicaid recipients and to comply with federal law. The Public Interest Injunctive relief is in the public interest because it would bring the state into compliance with federal law and enable the state to provide an underprivileged portion of its population access to an FDA-approved drug that may significantly improve outcomes for the lives of pregnant women and their unborn children. Injunctive relief would also allow doctors to exercise their independent medical judgment as to what is best for their patients. The public interest strongly favors providing Georgias most vulnerable population the healthcare that they are entitled to under federal law. Accordingly, Plaintiffs respectfully request that a preliminary and permanent injunction be issued enjoining DCH from continuing to deny Medicaid beneficiaries access to Makena through its prior authorization program and requiring DCH to comply with the Medicaid Act. A Proposed Order is submitted herewith.
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Dated: July 17, 2012 Respectfully submitted, s/ John E. Floyd John E. Floyd (GA 266413) Jeffrey O. Bramlett (GA 075780) Manoj S. Varghese (GA 734668) BONDURANT, MIXSON & ELMORE LLP 1201 W. Peachtree Street, N.W. Suite 3900 Atlanta, GA 30309 Telephone: (404) 881-4100 Facsimile: (404) 881-4111 floyd@bmelaw.com varghese@bmelaw.com Margaret Peg Donahue Hall, Esq. (TX 05968450) SNR DENTON US LLP 2000 McKinney Avenue, Suite 1900 Dallas, TX 75201-1858 Telephone: (214) 259-0900 Facsimile: (214) 259-0910 peg.hall@snrdenton.com Pro hac vice application pending Drew Marrocco, Esq. (DC 453205) SNR DENTON US LLP 1301 K Street, NW, Suite 600, East Tower Washington, DC 20005 Telephone: (202) 408-6400 Facsimile: (202) 408-6399 drew.marrocco@snrdenton.com Pro hac vice application pending
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Stephen D. Libowsky (GA 451965) SNR DENTON US LLP 233 South Wacker Drive, Suite 7800 Chicago, IL 60606 Telephone: (312)-876-8000 Facsimile: (312)-876-7934 stephen.libowsky@snrdenton.com Attorneys for Plaintiffs
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Case 1:12-cv-01105-ABJ Document 9-5 Filed 07/24/12 Page 10of 9 Case 1:12-cv-02491-CAP Document 2 Filed 07/17/12 Page 9 of 43
CERTIFICATE OF SERVICE I hereby certify that I have this day electronically filed Motion for Preliminary and Permanent Injunction and all supporting documents with the Clerk of Court using the CM/ECF system and certify that I will cause a true and correct copy of the foregoing to be served with the Complaint. This 17th day of July, 2012
s/ John E. Floyd John E. Floyd
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Case 1:12-cv-01105-ABJ Document 9-5 Filed 07/24/12 Page 11 of 33 Case 1:12-cv-02491-CAP Document 2-2 Filed 07/17/12 Page 1 of 43
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA K-V PHARMACEUTICAL COMPANY, ) and THER-RX CORPORATION, ) ) Plaintiffs, ) ) v. ) ) DAVID A. COOK, et al., ) ) Defendants. ) )
Case No.: ________________
MEMORANDUM IN SUPPORT OF APPLICATION FOR PRELIMINARY INJUNCTION __________________________________________________________________ John E. Floyd (GA 266413) Manoj S. Varghese (GA 734668) BONDURANT, MIXSON & ELMORE LLP 1201 W. Peachtree Street, N.W. Atlanta, GA 30309 Telephone: (404) 881-4100 Facsimile: (404) 881-4111 floyd@bmelaw.com varghese@bmelaw.com Margaret Peg Donahue Hall, Esq. (TX 05968450) SNR DENTON US LLP 2000 McKinney Avenue, Suite 1900 Dallas, TX 75201-1858 Telephone: (214) 259-0900 Facsimile: (214) 259-0910 peg.hall@snrdenton.com pro hac vice application pending Drew Marrocco, Esq. (DC 453205) SNR DENTON US LLP 1301 K Street, NW, Suite 600, East Tower Washington, DC 20005 Telephone: (202) 408-6400
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Facsimile: (202) 408-6399 drew.marrocco@snrdenton.com pro hac vice application pending Stephen D. Libowsky (GA 451965) SNR DENTON US LLP 233 South Wacker Drive, Suite 7800 Chicago, IL 60606 Telephone: (312)-876-8000 Facsimile: (312)-876-7934 stephen.libowsky@snrdenton.com Attorneys for Plaintiffs
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TABLE OF CONTENTS GLOSSARY OF TERMS ........................................................................................ iii INTRODUCTION ..................................................................................................... 1 FACTUAL BACKGROUND .................................................................................... 4 I. II. III. IV. V. VI. Preterm Birth. ........................................................................................ 4 FDA Approval of Makena................................................................... 5 Georgias Unlawful Restriction on Patients Access to Makena. ............................................................................................... 6 Makena and Compounded Versions of 17P Are Not Equivalent. ............................................................................................. 8 KVs Effort to Engage With DCH. ..................................................... 10 KVs Financial Condition. .................................................................. 11
ARGUMENT ........................................................................................................... 11 I. II. Standard for Injunctive Relief. ............................................................ 12 Plaintiffs Have a Substantial Likelihood of Success on the Merits................................................................................................... 12 A. B. C. Federal Law Requires Georgia to Cover Makena. ................. 12 DCHs Prior Authorization Program Imposes Unreasonable Conditions on Access to Makena. ................... 14 None of the Medicaid Acts Exclusions Apply Here. .............. 15 1. 2. DCHs Policy Acts as an Impermissible Formulary Restriction. ...................................................................... 16 Georgias Exclusion of Makena Is Not a Valid Prior Authorization. ........................................................ 19
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D. III. IV. V.
Defendants Restrictions on Access to Makena Violate Section 1396a(a)(19) of the Medicaid Act. .............................. 21
Plaintiffs Will Be Irreparably Harmed If Injunctive Relief Is Denied.................................................................................................. 23 Injunctive Relief Will Not Result In Greater Harm To Georgia. ....... 24 Injunctive Relief Is in the Public Interest. ........................................... 25
CONCLUSION ........................................................................................................ 25
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GLOSSARY OF TERMS Term 17P API CMO CMS DCH FDA FDCA GMP HHS MDRA NDA Meaning hydroxyprogesterone caproate the active ingredient used in Makena active pharmaceutical ingredient care management organization Centers for Medicare & Medicaid Services Georgia Department of Community Health United States Food and Drug Administration Federal Food, Drug, and Cosmetic Act good manufacturing practice standards promulgated by FDA United States Department of Health and Human Services Medicaid Drug Rebate Agreement New Drug Application
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INTRODUCTION1 K-V Pharmaceutical Company (K-V) and Ther-Rx Corporation (Ther-Rx), the owners of Makena, the only FDA-approved drug that treats a rare, but severe, condition which can cause spontaneous preterm birth ask the Court for injunctive relief against the Georgia Department of Community Health (DCH) to prevent DCH officials from continuing to deny this critical drug to pregnant women on Medicaid (for ease of reference, Plaintiffs K-V and Ther-Rx are referred to herein collectively as KV). This refusal to provide required medical care to the poor and vulnerable is not only unlawful, but flies directly in the face of recent warnings by the two lead federal agenciesthe U.S. Food and Drug Administration (FDA) and Centers for Medicare & Medicaid Services (CMS)regarding states legal obligation to cover FDAapproved drugs. Further, DCH is preventing Plaintiffs from recouping their significant investment in making this safe and reliable drug available to at-risk pregnant women. Without immediate relief, DCHs unlawful acts (combined with those of other states) threaten Plaintiffs financial existence. The Medicaid Act requires DCH to cover and pay for covered outpatient drugs. Although Makena is a covered outpatient drug, DCH has devised and is
Plaintiffs rely upon and incorporate by reference herein the allegations set forth in their Complaint and the Declarations and Exhibits filed herewith.
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attempting to hide behind a sham prior authorization policy that systemically denies all prescriptions for Makena. DCHs policy has been so effective that Plaintiffs records show the agency has not paid for any vials of Makena since it was launched. Despite receiving written prescriptions for Makena, DCH overrides the medical judgment of Georgia physicians and forces those on Medicaid to use cheap, compounded formulations that are not subject to Food and Drug Administration (FDA) approval or to use nothing at allan untenable choice those with private insurance are generally not required to make. Compounds are not generic drugs: they are not made using FDAs rigorous good manufacturing practices (GMP) standards; and, as FDA recently noted, [c]ompounded drugs do not undergo the same premarket review and thus lack an FDA finding of safety and efficacy and lack an FDA finding of manufacturing quality. On information and belief, nearly all of the active pharmaceutical ingredient (API) used by US compounders comes from factories in China. At Plaintiffs request, independent laboratories tested ten samples of Chinese API for compounded 17P and 30 samples of US-compounded 17P in finished dosage form. The majority of tested API samples failed at least one of the specifications FDA set for Makena, and one contained no 17P at all. Of the finished compounded samples, the majority failed at least one of the specifications FDA set for Makena, including unacceptable potency
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and/or impuritiesin an injectable drug intended for women with high-risk pregnancies. Under federal law, compounds cannot be used as cheaper substitutes for an FDA-approved, commercially available drug. If an FDA-approved drug is available, compounding may be used only for the limited purpose of meeting the specific medical need (e.g., as an allergy to an ingredient) of a particular patient for whom the FDAapproved drug is medically inappropriate. DCH has turned this long-standing legal structure on its head by openly soliciting and paying for unrestricted unlawful compounding and failing to cover FDA-approved Makena. Because Georgia and other states effectively continue to refuse to cover Makena, on June 15, 2012, the two affected federal agenciesFDA and CMS issued two separate but related statements specific to Makena. FDA cautioned that: FDA-approved drugs, such as Makena, provide a greater assurance of safety and effectiveness than do compounded drugs; Compounded copies of Makena are appropriate only in limited circumstances e.g., when a treating physician determines that a patient has a specific medical need for a compounded variation as opposed to the FDA-approved drug; and Compounding large volumes of drugs that are copies of an FDA-approved drug circumvents important public health requirements under FDA law. CMS, in turn, reminded states that they must cover Makena in compliance with federal Medicaid law and without imposing unreasonable conditions.
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Despite these directives, DCH informed KV that it will not change its policy. The open defiance of federal law appears to have prompted FDA to issue yet another statement on June 29. FDA did not mince words: if there is an FDA-approved drug that is medically appropriate for a patient, the FDA-approved product should be prescribed and used. The inability of Georgias underprivileged women to access FDA-approved Makena requires immediate intervention by this Courtnot only because DCH is violating federal law, but also because its unlawful conduct (along with that of other states) has put Plaintiffs into a dire financial position that threatens their existence, and thus threatens the ability of women to ever obtain Makena. FACTUAL BACKGROUND I. Preterm Birth. Prematurity costs the United States more than $26 billion annually, a large portion of which is borne by Medicaid, which covers an estimated 50% or more of the Makena-eligible patients. See Declaration of Michael Jozwiakowski (Jozwiakowski Decl.) 2. On average, the cost of a preterm birth in the United States is approximately $51,600; and, the average medical costs for a preterm infants first year of life are about 10 times greater ($32,325) than for a full-term infant ($3,325). Id. 3. Georgia is no exception. Thousands of pregnant Medicaid women in Georgia are at
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risk of having preterm births. In fact, the March of Dimes gave Georgia an F in 2010 in view of its 13.4% rate of preterm birth. See Declaration of Thomas McHugh (McHugh Decl.) 21. II. FDA Approval of Makena. The FDA-approved Makena (sterile injections of hydroxyprogesterone caproate) on February 3, 2011, as an orphan drug under the Orphan Drug Act of 1983. McHugh Decl. 8. Makenas orphan drug status entitled Plaintiffs to a seven-year exclusivity period, which is intended to reward pharmaceutical companies for the extraordinary time and money necessary to obtain FDA approval for drugs that are vital, but benefit relatively small patient populations. 21 U.S.C 360bb(a)-360cc(a). KV invested or committed over a quarter of a billion dollars to bring Makena to market. McHugh Decl. 10. Prior to FDA approval of Makena, women with a history of spontaneous preterm singleton birth had two options: use unapproved, non-federally regulated compounded formulations of hydroxyprogesterone caproate (17P) or nothing at all. See Declaration of Scott Goedeke (Goedeke Decl.) 10. Although versions of compounded 17P are made with versions of the same active pharmaceutical ingredient (API) used in Makena, compounded 17P is not a generic version of Makena. Jozwiakowski Decl. 14-15. Like Makena, generic drugs are manufactured under
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rigorous FDA-mandated good manufacturing practices standards. Id. Compounds are not; they are made by processes that are neither regulated nor approved by FDA; and those processes can give rise to unknown variability in purity, potency and even sterility. Id. 14-16. Makena is both FDA-approved and covered by a Medicaid Drug Rebate Agreement (MDRA) between Ther-Rx and the U.S. Department of Health & Human Services (HHS). Goedeke Decl. 8-9. It is considered a covered outpatient drug under the Medicaid Act. States must cover and pay for covered outpatient drugs that are subject of an MDRA. 42 U.S.C. 1396r-8(a)(1), (k)(2). III. Georgias Unlawful Restriction on Patients Access to Makena. DCH concedes that Makena is a covered benefit. McHugh Decl. at Ex. 10. On June 1, 2011, however, DCH issued a Makena PA Summary (the PA Summary) that instituted unachievable prior authorization requirements for Makena. McHugh Decl. at Ex. 9. To obtain Makena, a treating physician must be unable to obtain or not able to use compounded hydroxyprogesterone. Id. (emphasis added). Because versions of compounded 17P are available directly or by mail, this so-called preauthorization condition essentially precludes Medicaid beneficiaries from ever accessing Makena. Goedeke Decl. 12. Indeed, DCH expressly invited pharmacies
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and physicians to contact its Pharmacy Unit for assistance with locating a compounding pharmacy. McHugh Decl. at Ex. 10. In its Makena Position Statement, DCH encourages providers to rely on their prior success with compounded [17P] when making decisions for their patients. McHugh Decl. at Ex. 10. DCH further states: As a matter of policy, the Medicaid Division will require prior authorization for any prescription for Makena. The physician will be required to demonstrate the medical necessity of the manufactured product, Makena, over the compounded [17P] product to obtain prior authorization.. Id. (emphasis added). DCH provides no indication or guidance regarding what would be sufficient to show a need for Makena over compounded 17P. KV estimates that, since the FDA approval of Makena, approximately 2,500 to 3,000 Medicaid patients in Georgia have been eligible for Makena. McHugh Decl. 21. Despite DCHs policy, physicians have attempted to prescribe Makena to 79 Medicaid patients in Georgia. Id. However, DCH has overridden physicians medical judgment (plaintiffs records show no approvals of Makena) and likely caused many physicians to give up trying to get Makena for their patients. See Declaration of Dr. Lawrence Robillard.
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IV.
Makena and Compounded Versions of 17P Are Not Equivalent2. In testifying before Congress in March 2011, FDA Commissioner, Margaret
Hamburg M.D., drew a sharp distinction between FDA-approved Makena and compounded 17P: I think it is important and an advance that we have an FDA-approved drug to prevent preterm pregnancy and all of its consequent serious medical concerns for both mother and infant. And while the drug has been available through compounding.compounding as a practice has been associated with serious health risks. Goedeke Decl. 16 (emphasis added). On November 8, 2011, the FDA stated: we remind physicians and patients that before approving the Makena new drug application, FDA reviewed manufacturing information, such as the source of the API used by its manufacturer, proposed manufacturing processes, and [KVs] adherence to current good manufacturing practice. Therefore, as with other approved drugs, greater assurance of safety and effectiveness is generally provided by the approved product than by a compounded product. Id. 17 (emphasis added). On June 15, 2012, the FDA reiterated that: . . . approved drug products, such as Makena, provide a greater assurance of safety and effectiveness than do compounded products. Before approving the Makena [New Drug Application (NDA)], FDA reviewed manufacturing information, such as the source of the API used by its manufacturer, proposed manufacturing processes, and the firms adherence to current good manufacturing practice. Id. 18 (emphasis added).
Even if they were equivalent, coverage is required for the FDA-approved product.
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FDA highlighted that compounded products are not FDA-approved and warned that compounding large volumes of drugs that are copies of FDA-approved drugs circumvents important public health requirements . . . Id. 19. Under FDAs normal policy as to compounded drugs, the compounding of drugs, including 17P, should not exceed the scope of traditional pharmacy compounding. Id. at Ex. 8. Compounding is appropriate only where the prescribing practitioner has determined that a compounded product is necessary for the particular patient and would provide a significant difference for the patient as compared to the FDA-approved commercially available drug product. Id. 21. Also on June 15, 2012, CMS issued a companion statement on Makena: We would like to remind States of their responsibility to cover FDA approved products, such as Makena, that qualify as covered outpatient drugs under the Medicaid drug rebate program. Any prior authorization procedures for such drugs must be administered in accordance with Section 1927(d) of the Social Security Act, without imposing unreasonable conditions. Id. 24 (emphasis added). Faced with open defiance of the FDA and CMS June 15 statements, on June 29, FDA got right to the point: when an FDA-approved drug is commercially available, practitioners should prescribe the FDA-approved drug rather than a compounded drug unless the prescribing practitioner has determined that a compounded product is necessary for the particular patient and would provide a significant difference for
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the patient as compared to the FDA-approved commercially available drug product. Id. 21 (emphasis added). Despite these federal statements, DCH continues to impose unreasonable conditions on access to Makena. McHugh Decl. 16, 21. V. KVs Effort to Engage With DCH. On February 15, 2012, KV wrote Defendant Cook a letter explaining the significance of FDA approval, how the DCH prior authorization policy is inconsistent with federal law, and reminding DCH of its obligation to provide access to covered outpatient drugs. Goedeke Decl. 26. DCH did not reply. Id. On June 19, 2012, KV contacted DCH again, drew the agencys attention to the two June 15th statements, and requested the opportunity to address Makena coverage with DCH. Goedeke Decl. 27. Defendant Dr. Dubberly, the Division Chief of DCHs Medicaid Division, inexplicably responded that the FDAs June 15, 2012 statement actually affirms our current position on this matter. Id. When KV requested an explanation, Dr. Dubberly stated there was nothing to explain: [DCH] will not be entertaining any policy or coverage changes as a result of the [FDA] release. Id. 28. Evidently, Dr. Dubberly saw no need to address the CMS statement or explain why a policy effectively barring access to Makena is reasonable. Additional attempts to resolve this dispute have likewise failed.
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VI.
KVs Financial Condition. KVs loss of revenue from the lack of use of Makena by Medicaid patients in
Georgia (and other states) threatens to cripple the company. McHugh Decl. 21-23. Potential future sales of Makena account for the vast majority of KVs projected revenue. Id. 22. Without Court intervention to address unlawful Medicaid restrictions on Makena, KVs current cash will continue to be rapidly depleted and the companys survival threatened. Id. 22-24. KVs June 14, 2012, SEC disclosures include a prominent reference to substantial doubt regarding KVs ability to continue as a going concern, and KVs independent auditor opined that it is probable that KV will cease to exist within 12 months. Id. 25. ARGUMENT DCH has effectively turned Medicaid drug coverage law on its head by denying underprivileged pregnant women access to FDA-approved Makena (a covered outpatient drug) and directing them, instead, to unapproved compounded products (which are not covered outpatient drugs). Taken in concert with the actions of several other states with large Medicaid populations, this end-run around federal Medicaid law is economically crippling Plaintiffs.
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I.
Standard for Injunctive Relief. To succeed on a motion for a preliminary injunction, Plaintiffs must show: (a) a
substantial likelihood of success on the merits; (b) irreparable injury will be suffered unless the injunction is issued; (c) the threatened injury to the moving party outweighs any injury to the non-moving party; and (d) the injunction would not be adverse to the public interest. See BellSouth Telecomms., Inc. v. MCIMetro Access Transmission Servs., LLC, 425 F.3d 964, 968 (11th Cir. 2005). Here, all factors overwhelmingly support granting Plaintiffs application. II. Plaintiffs Have a Substantial Likelihood of Success on the Merits. A. Federal Law Requires Georgia to Cover Makena.
Medicaid is a joint federal-state program that was established to provide medical assistance to financially needy patients, including pregnant women. See 42 U.S.C. 1396a(a)(10). Any state participating in the Medicaid program must comply with the Medicaid Act and its implementing regulations. Martes v. Chief Executive Officer of S. Broward Hosp. Dist., No. 11-12464, 2012 WL 2161280, at *1 (11th Cir. June 15, 2012). Section 1396r-8 of the Medicaid Act outlines a state Medicaid agencys legal obligations to cover outpatient prescription drugs. Edmonds v. Levine, 417 F. Supp. 2d 1323, 1326 (S.D. Fla. 2006). Pursuant to 1396r-8, covered outpatient drug[s] are drugs that are dispensed only upon a prescription and that have been approved for
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safety and effectiveness by the FDA under the Federal Food, Drug, & Cosmetic Act (FDCA). 42 U.S.C. 1396r-8(k)(2)(A). To receive payment for covered outpatient drugs, manufacturers must enter into an MDRA with HHS and pay the various states rebates (of at least 23.1 percent) on the sale of outpatient prescription drugs to their respective Medicaid beneficiaries. 42 U.S.C. 1396r-8(a); Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644, 652 (2003). In return, a state must provide coverage under its state plan, unless a specific statutory exclusion or restriction applies. 42 U.S.C. 1396a(a)(10),(54); 42 U.S.C. 1396r-8(a); Walsh, 538 U.S. at 652. There is no dispute that Makena is a covered outpatient drug covered by an MDRA. Goedeke Decl. 8-9. It follows, therefore, that DCH is required to cover Makena, subject only to the limited statutory exceptions described below. 42 U.S.C. 1396r-8(k)(2)(A). Unlike Makena, compounded versions of 17P are not covered outpatient drug[s]. The FDA has not reviewed or approved any version of compounded 17P either as a branded or generic drug. Jozwiakowski Decl. 15. In August 2010, CMS clarified that Medicaid will cover compounded products under very limited circumstances only, i.e., when they are made extemporaneously for a particular patient who is unable to take the corresponding FDA-approved drug. See Goedeke Decl.
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22-23. This position was confirmed in the June 15 CMS statement as to Makena and compounded 17P. Id. 24. B. DCHs Prior Authorization Program Imposes Unreasonable Conditions on Access to Makena.
DCHs prior authorization program is transparently set up to block physicians who seek coverage for Makena. Because no Medicaid patient can actually meet DCHs prior authorization conditions, the process is in reality a de facto and improper formulary exclusion. The requirement that a patient be unable to obtain an unapproved compounded 17P product before she can be considered for Makena is farcical. Many compounders in Georgia (and mail-order compounders elsewhere) are willing and able to provide compounded 17P. Goedeke Decl. 12. Consequently, this requirement acts as a complete bar to access to Makena and puts Defendants in clear violation of the requirement that Georgia cover FDA-approved Makena. With respect to the requirement that a patient show that she is not able to use compounded 17P or that she has a medical necessity for Makena over compounded 17P, DCH has not provided any standards or criteria as to when it would consider Makena medically necessary over the compounded product. It is unclear how a patient (or her doctor) could establish she cannot use compounded 17P (or that it is ineffective for her) without going into early labor while using compounded 17P. Such
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a requirement unnecessarily endangers the health of the unborn child and, as a public policy, is unconscionable. FDA approval is based on specific FDA findings that a drug is effective and safe for its intended indication(s). To require Medicaid beneficiaries to demonstrate they are entitled to FDA-approved products when federal law mandates they receive them is patently unreasonable. In addition, in violation of FDA law and policy, DCH, by mandating universal usage of compounded 17P, is encouraging unrestricted compounding not customized to meet the need of an individual patient who has the conditions for which Makena is indicated but for whom Makena is medically inappropriate. As FDA stated on June 15, the compounding of 17P should not exceed the scope of traditional pharmacy compoundingnamely, to meet the specific medical need of a particular patient. Goedeke Decl. at Ex. 8. Given FDAs reminder that unrestricted compounding circumvents important public health requirements, DCHs policy is unreasonable within the meaning of the CMS June 15 statement. Goedeke Decl. at Exs. 8, 12. C. None of the Medicaid Acts Exclusions Apply Here.
The Medicaid Act specifies five bases pursuant to which states may exclude, i.e., refuse to pay for, covered outpatient drugs: when they (1) are not prescribed for a medically accepted indication; (2) are either listed in the statute or subsequently
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determined by HHS regulation to be subject to clinical abuse or misuse; (3) are excluded pursuant to an agreement between the manufacturer and the state; (4) have been excluded pursuant to a drug formulary,3 provided that the state takes a set of procedural steps specified at 42 U.S.C. 1396r-8(d)(4); or (5) are prescribed in quantities that exceed the refill limits imposed by the state. 42 U.S.C. 1396r8(d)(1)(B)(i)-(iv), (d)(6). As one federal court has stated: The statutory scheme is carefully constructed in such a way to precisely circumscribe the only methods by which a state may remove a Medicaid eligible drug from coverage and prevent it from either arbitrarily removing a drug or adopting its own ad hoc procedure for removing a drug from coverage. Edmonds, 417 F. Supp. 2d at 1330-31. DCHs Makena policy does not meet any of the permissible exclusion criteria set forth above. 1. DCHs Policy Acts as an Impermissible Formulary Restriction.
Congress was careful to distinguish a prior authorization process from a drug formulary. A prior authorization program established by a State under paragraph (5) is not a formulary . . . 42 U.S.C. 1396r-8(d)(4). DCHs policy, however, acts as a
See U.S., ex rel., Foster v. Bristol-Myers-Squibb Co., 587 F. Supp. 2d 805, 809 (E.D. Tex. 2008) (For the uninitiated, a formulary is a list of medications for which an HMO provides coverage. Formularies come in a variety of shapes and sizes. . . Because a drugs inclusion on an [HMOs] formulary can dictate prescription choices for patients covered by [HMOs], drug manufacturers seek to secure inclusion on [HMO] formularies as well as favorable placement within those formularies through financial rewards, including rebates, to [HMOs]. (quoting J.B.D.L. Corp. v. WyethAyerst Labs., Inc., 485 F.3d 880, 884 (6th Cir. 2007)).
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de factoand unlawfulformulary exclusion of Makena without having met any of the requirements for such an exclusion. In fact, DCHs Makena prior authorization procedures contain exactly the kind of unreasonable prior authorization conditions CMS warned against. See Goedeke Decl. at Ex. 12. A lawful formulary must: (1) be developed by a committee comprised of physicians, pharmacists, and others appointed by the Governor; and (2) include the covered outpatient drugs of any manufacturer that has entered into and complied with an MDRA. 42 U.S.C. 1396r-8(d)(4)(A)-(B). Obviously, neither of those requirements have been met by DCH. A state may exclude a covered outpatient drug from a formulary only if there is a written finding that the excluded drug does not have a significant, clinically meaningful therapeutic advantage in terms of safety, effectiveness, or clinical outcome of such treatment for such population over other drugs included in the formulary. Id. 1396r-8(d)(4)(C)-(D); Pharm. Research & Mfrs. of Am. v. Meadows, 304 F.3d 1197, 1207 (11th Cir. 2002) (as compared to a prior authorization program, a formulary could have the more stringent consequence of excluding coverage for certain covered outpatient drugs only if certain clinical criteria are adhered to). No other covered outpatient drug has a clinically meaningful therapeutic advantage over Makena. Therefore, Makena cannot be excluded from any
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formulary. Indeed, a formulary requires two or more therapeutically equivalent covered outpatient drugs. Here, for reducing the risk of pre-term birth in pregnant women with a prior pre-term birth, there is only one covered outpatient drug Makena. Because compounded 17P products are not covered outpatient drugs, they cannot be included in a formulary. Nor could DCH plausibly contend that an FDAapproved drug has no meaningful therapeutic advantage over unapproved, nonfederally regulated compounded products. Indeed, although compounded 17P was available when FDA was reviewing the application for approval of Makena, Goedeke Decl. 10, FDA designated the NDA for Priority Review, Jozwiakowski Decl. 6. A Priority Review designation is given to drugs that offer major advances in treatment, or provide a treatment where no adequate therapy exists. Id. at n.9. Thus, FDA considered Makena a major advance on compounded 17P and/or considered compounded 17P inadequate therapy. Finally, a state is not permitted to base a formulary restriction on economics or price when no other drug on the formulary has a meaningful therapeutic advantage. Meadows, 304 F.3d at 1201. The Medicaid Act limits the criteria for formulary restrictions to clinical (i.e., medical) justifications. Id. at 1203. DCHs exclusion of Makena is based solely on price. Thus, DCH has purported to effectuate an improper
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formulary-like exclusion of Makena without satisfying any of the statutory criteria for an exclusion. 2. Georgias Exclusion of Makena Is Not a Valid Prior Authorization.
In contrast to excluding a drug, Section 1396r-8(d)(1)(A) of the Medicaid Act allows a state to require that a healthcare provider obtain prior authorization from Medicaid before administering a particular drug. Prior authorizations are strictly procedural, and may be used only to condition, but not to exclude coverage. Edmonds, 417 F. Supp. 2d at 1329.4 Prior authorization requirements generally are used as a means for implementing elements of a drug-utilization program to ensure the medical appropriateness and safety of a drug for a specific beneficiary, and to avoid harms such as drug-drug interaction, therapeutic duplication, over-prescribing by providers, and overuse by beneficiaries. They also have been used to inform providers about more cost-effective or therapeutically advantageous alternatives. Meadows, 304 F.3d at 1208 n.9. DCHs program is specifically designed to exclude coverage of Makena. As the Edmonds court stated:
4
As Justice OConnor explained in Walsh, [p]rior authorization is, by definition, a procedural obstacle to Medicaid beneficiaries access to medically necessary prescription drugs covered under the Medicaid program. 538 U.S. at 685 (emphasis added).
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While [State Medicaid] may condition drug coverage for medically accepted indications upon certain prior authorization procedures being followed, the agency may not exclude coverage, i.e., deny reimbursement, for a covered drug under these subsections pursuant to the type of prior authorization program established by the state. To do so clearly violates the federal act. 417 F. Supp. 2d at 1336 (emphasis in original). Georgias program excludes coverage of Makena in exactly the manner the Edmonds court said clearly violates the federal act. Id. In Meadows, the Eleventh Circuit determined a state program was a valid prior authorization because approval of the prescribing doctors first choice drug is guaranteed in 100 percent of all cases, provided only that he or she make [a telephone call.] 304 F.3d at 1198. [T]he state may try to persuade a doctor to use an alternative drug, but ultimately the doctor retains the final word on use of the drug. Edmonds, 417 F. Supp. 2d at 1329 (emphasis added). The prior authorization program at issue in Meadows was held to be valid precisely because it did not exclude any drug from coverage. Meadows, 304 F.3d at 1208. In Edmonds, the Court distinguished between a formulary and a prior authorization program, and explained that one of the factors for distinguishing between the two was who retains the final authority with regard to coverage of a Medicaideligible drug. 417 F. Supp. 2d at 1330. The court was clear that in the case of a prior authorization, the prescribing doctor retains the authority to override any suggestions
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made by the state pharmacist; but in the case of a formulary, the state retains the last word as to whether a drug will be covered. Id. at 1329. As the court explained: the state can require a prescribing doctor seek approval of a particular drug as a condition of Medicaid coverage. Ultimately, though, the doctor retains the authority to override any suggestions made by the [State] and obtain approval of, and eventual reimbursement for, the doctors first choice drug. However, under the formulary prior authorization program, a prescribing doctor may ask the state to cover a Medicaid-eligible drug that has been excluded from the formulary, but ultimately, the state can deny the request for coverage, meaning it is the state which retains the final authority over coverage of non-formulary drugs. Id. at 1330 (emphasis/bolding added; italics in original).5 Here, the DCH policy provides no deference to a physicians view as to when Makena would be considered medically necessary. Given that virtually no Makena prescriptions have been approved in Georgia, it is clear DCH uses its unfettered discretion systematically to deny coverage of and access to Makena. D. Defendants Restrictions on Access to Makena Violate Section 1396a(a)(19) of the Medicaid Act.
DCHs policies also conflict with Section 1396a(a)(19) of the Medicaid Act, which requires a state plan to: [P]rovide such safeguards as may be necessary to assure that eligibility for care and services under the plan will be determined and such care and
5
Indeed, Edmonds allowed coverage for off-label use (i.e., use for which FDA has not approved the drug at issue); here, DCH is denying coverage even for Makenas FDAapproved use, instead favoring a non-FDA approved drug.
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services will be provided, in a manner consistent with simplicity of administration and the best interests of the recipients. 42 U.S.C. 1396a(a)(19) (emphasis added). The analysis in Grier v. Goetz is instructive: a prior authorization regime must not severely curtail access to prescription drugs, as that may violate the best interests of Medicaid recipients... 402 F. Supp. 2d 876, 905 (M.D. Tenn. 2005) (citing Walsh, 538 U.S. at 655)). In addressing a claim under section (a)(19) that states should not be permitted to deprive Medicaid beneficiaries of FDA-approved drugs, the First Circuit stated, the possibility that first-choice drugs will not be readily approved where second-choice inferior alternatives exists concerns us. Pharm. Research & Mfrs. of Am., v. Concannon, 249 F.3d 66, 78 (1st Cir. 2001), affd sub nom, Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644 (2002). The First Circuit ultimately upheld the program under review because it concluded that Medicaid patients were not being denied any first-choice drugs. Id. Here, DCH plainly is denying beneficiaries coverage of a first-choice drug. DCHs denial of coverage here is based on perceived (short term) cost savings to Medicaid. [B]udgetary considerations may not be the sole basis for a [Medicaid related decision] . . . Rite Aid of Pa., Inc. v. Houstoun, 171 F.3d 842, 856 (3d Cir. 1999). This is an additional reason to hold DCHs policies unlawful.
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III.
Plaintiffs Will Be Irreparably Harmed If Injunctive Relief Is Denied. DCHs (and other states) refusal to cover Makena threatens KVs economic
survival. The threat of corporate extinction is a well-established form of irreparable harm and warrants immediate injunctive relief. Doran v. Salem Inn, Inc., 422 U.S. 922, 932 (1975) (a substantial loss of business and perhaps even bankruptcy sufficiently meet the standards for granting interim relief); see also Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380, 386 (7th Cir. 1984) (A damages remedy can be inadequate [if] the damage award may come too late to save the plaintiffs business.). Under present circumstances, sales of Makena, on which KV is highly dependent, cannot generate the cash KV needs to meet its ongoing cash operating expenses and the material, near term payment obligations KV faces beginning in August 2012. McHugh Decl. 27. Makenaas stated in the Declaration of KVs Chief Financial Officeris KVs only hope for survival. Id. 22. KV cannot recoup its ongoing losses from the state even if a Court determines that the defendants unlawfully restricted access to Makena because the Eleventh Amendment precludes an award of retroactive payment by a federal court. James v. Richman, 465 F. Supp. 2d 395, 407 (M.D. Pa. 2006), affd 547 F.3d 214 (3d Cir.
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2008).6 Thus, injunctive relief is the only means by which KVs injury can be redressed. See Temple Univ. v. White, 941 F.2d 201, 215 (3d Cir. 1991); see also Cal. Pharmacists Assn v. Maxwell-Jolly, 596 F.3d 1098, 1113-14 (9th Cir. 2010) (citations omitted), vacated and remanded on other grounds 132 S.Ct. 1204 (2012), (finding that Medicare providers had suffered irreparable harm where they will lose considerable revenue through the reduction in payments that they will be unable to recover due to the States Eleventh Amendment sovereign immunity).7 IV. Injunctive Relief Will Not Result In Greater Harm To Georgia. If relief is granted, Georgia would be required to pay (as it is legally required to do) the state portion of the cost of providing Makena. This harm is far outweighed by the risk of survival KV faces from Georgias (and other states) refusal to cover Makena. This type of irreparable harm tips the scales in favor of KVs position. See Guidance Endodontics, LLC v. Dentsply Intl, Inc., 633 F. Supp. 2d 1257, 1279
See also Temple Univ. v. White, 941 F.2d 201, 215 (3d Cir. 1991) ([T]he Eleventh Amendment bar to an award of retroactive damages against the Commonwealth . . . clearly establishes that any legal remedy is unavailable and that the only relief available is equitable in nature); W. Va. Univ. Hosps., Inc. v. Rendell, No. 1:cv-991684, 2009 WL 3241849, at *14 (M.D. Pa. Oct. 2, 2009) (finding irreparable harm [i]n light of the absolute bar on damages imposed by the Eleventh Amendment); see also Edelman v. Jordan, 415 U.S. 651, 678 (1974). 7 In any event, [d]epending on circumstances, evidence of price erosion, loss of market share, loss of profits, loss of research opportunities, and possible layoffs may constitute irreparable harm. Research Found. of State Univ. of N.Y. v. Mylan Pharm., Inc., 723 F. Supp. 2d 638, 658 (D. Del. 2010).
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(D.N.M. 2008) (Guidance . . . stands on the brink of bankruptcy and going out of business. The scales thus already tip in Guidances favor.).8 V. Injunctive Relief Is in the Public Interest. Requiring DCH to provide pregnant women on Medicaid and at high risk for preterm birth access to an effective and safe treatment obviously is in the public interest. The primary purpose of Medicaid is to enable states to provide medical services to those whose income and resources are insufficient to meet the costs of necessary medical services. Concannon, 249 F.3d at 75; 42 U.S.C. 1396. The public has a significant interest in being assured that DCH is meeting that standard. See Edmonds, 417 F. Supp. 2d at 1342 (the public interest would be advanced by [DCHs] compliance with the outpatient prescription drug coverage requirements of the Medicaid Act.). CONCLUSION For the foregoing reasons, Plaintiffs Application for a Preliminary Injunction should be granted. Respectfully submitted this 17th day of July, 2012.
Moreover, as the Edmonds court stated in granting preliminary relief, the harm to Plaintiffs of being deprived of essential medical services outweighs any harm to the state. Edmonds, 417 F. Supp. 2d at 1342. Here, the denial of relief to KV is, in essence, denial of access to an important therapy for Medicaid beneficiaries.
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s/ John E. Floyd_________________ Margaret Peg Donahue Hall, Esq. TX Bar No: 05968450 SNR DENTON, US, LLP 2000 McKinney Avenue, Suite 1900 Dallas, TX 75201-1858 Telephone: (214) 259-0900 Facsimile: (214) 259-0910 peg.hall@snrdenton.com Stephen D. Libowsky GA Bar No: 451965 SNR DENTON, US, LLP 233 South Wacker Drive, Suite 7800 Chicago, IL 60606 Telephone: (312) 876-8000 Facsimile: (312) 876-7934 stephen.libowsky@snrdenton.com John E. Floyd (GA 266413) Jeffrey O. Bramlett (GA 075780) Manoj S. Varghese (GA 734668) BONDURANT, MIXSON & ELMORE LLP 1201 W. Peachtree Street, N.W 3900 One Atlantic Center Atlanta, GA 30309 Telephone: (404) 881-4100 Facsimile: (404) 881-4111 Drew Marrocco, Esq. DC Bar No: 453205 SNR DENTON, US, LLP 1301 K Street, NW Suite 600, East Tower Washington, DC 20005 Telephone: (202) 408-6400 Facsimile: (202) 408-6399 drew.marrocco@snrdenton.com
Attorneys for Plaintiffs
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CERTIFICATION REGARDING COMPLIANCE WITH LOCAL RULE 7.1 Pursuant to Local Rule 7.1(D), this Memorandum was prepared using Times New Roman, 14-point font.
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CERTIFICATE OF SERVICE I hereby certify that I have this day electronically filed this MEMORANDUM OF LAW IN SUPPORT OF APPLICATION FOR PRELIMINARY INJUNCTION with the Clerk of Court using the CM/ECF system and certify that I will cause a true and correct copy of the foregoing to be served with the Complaint. This 17th day of July, 2012
s/ John E. Floyd_____________
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Stephen Jones, M.D. Christus Schumpert Health System Shreveport, Louisiana

Sue Palmer, M.D. Maternal Fetal Medicine Houston, Texas

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APPENDIX 1 Amici Physicians

Stephen Jones, M.D. Christus Schumpert Health System Shreveport, Louisiana

Sue Palmer, M.D. Maternal Fetal Medicine Houston, Texas

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Case No. _____________

Attorneys for Plaintiffs

Medicaid are at risk of having a preterm birth.

Compounded formulations are not generic drugs.

Allegations Common To All Counts

Medicaid is a joint federal-state program established by Congress in