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A drug company pressing Utah's Medicaid program to cover a preterm labor drug that local compounding pharmacies have cheaply mixed for years says state estimates of the cost to taxpayers are "highly inflated."

Initial figures from the Utah Department of Health indicated it saved $640,158 in 2012 by requiring doctors to seek prior authorization for Makena, a form of progesterone given as a twice weekly shot to prevent premature births.

Missouri-based KV Pharmaceutical Co., the drug's bankrupt manufacturer, says rebates and a possible volume discount could cut those savings in half.

Still, Makena's discounted price is a far cry from the $2.10 that local compounding pharmacies charge per dose.

The dispute highlights the complicated nature of drug pricing and growing prominence of Medicaid, the government-funded insurance program for the low-income that in Utah could double in size in 2014 under Affordable Care Act.

"As physicians, we definitely face a moral dilemma prescribing a medicine not known to be more effective, but more expensive," said Erin Clark, an obstetrician and gynecologist and assistant professor at the University of Utah.

Counting the costs • Makena, or 17P as it's known in its compounded form, was produced by another drugmaker more than 50 years ago for another purpose. KV won rights to re-market it under the Orphan Drug Act after a study by the U.S. Food and Drug Administration (FDA) showed it worked to prevent early labor.

Under KV, the price shot up to $1,500 per dose. After an outcry, KV dropped the price to $690 two years ago.

Utah's Medicaid's price, after rebates, is even less, at about $481.48 per dose, the Health Department confirmed.

"The claim of dramatic savings is simply bogus," said company spokesman Anthony Herrling in an email. "No state Medicaid program in the country ... paid anywhere near Makena's original list price last year."

Adding Makena to Medicaid's preferred drug list would leverage yet more savings, potentially bringing the price to as low as $218, say health officials.

"These accurate numbers give a much clearer comparison of the value that could be realized by Utah's citizens if [Medicaid] physicians had easy access to prescribe Makena," said KV in a prepared statement.

"Providing access to FDA-approved and inspected drugs like Makena," it said, " ... provides the 'greater assurance of safety and effectiveness' as the FDA has stated repeatedly."

But there also would be additional costs, Utah Health Department spokeswoman Kolbi Young noted.

"We have to have the money to cover prescriptions before we ever get anything back [through rebates,]" she said. There's also the cost of billing and collecting rebates, and carrying those balances, not to mention dispensing fees, she said.

The FDA announced in 2011 it would not enforce KV's exclusive rights, especially since most of the cost for the drug's development and research was shouldered by others, including taxpayers.

Subsequently, Utah imposed rules that steer Medicaid patients to compounded 17P. Doctors seem satisfied; state health officials report zero prior authorization requests last year for Makena.

Debating safety issues • KV is pushing to strike Utah's rule, arguing it creates a disparity between the publicly and privately insured.

Last week the company made its case to Utah Attorney General John Swallow, pointing to the deadly meningitis outbreak caused late last year by products compounded by a pharmacy in New England.

"In violation of Utah law, compounding pharmacies continue to make and distribute large volumes of … copies, or essential copies of Makena," alleged KV Vice President Patrick Christmas in a letter to Swallow.

State attorneys are reviewing the information and may, or may not, act on it. KV hasn't sued Utah, a tactic deployed with some success in Illinois, South Carolina and Georgia.

In Georgia, where Medicaid rolls exceed 1.5 million, a federal judge filed a temporary injunction ordering the state to pay for Makena. Officials there declined to comment on the still-active case.

Legal action in Utah, where Medicaid serves about 250,000 enrollees, might not pencil out for KV.

KV has a discount drug program for the uninsured, but it takes time to apply for — and delays make it hard to prescribe as directed, as close as possible to 16 weeks gestation, said Clark. "We all agree there are benefits to having an FDA-approved version of the drug. But there's no evidence that Makena is safer or more effective than 17P," she said.

In fact, she said, the seminal FDA study proving its worth for pregnant women was done using the compounded form, created by a research pharmacy in compliance with U.S. Food and Drug Administration standards.

Higher prices hurt the privately insured, too, who are forced to pay higher copayments and premiums, she said.

"They're bad for everybody, bad for patients and bad for the health care system," said Clark. "But I'm not worried about the fully insured. I'm worried about the uninsured and underinsured. We're failing those people."

Twitter: @kirstendstewart —

What is Makena, and who uses it?

Makena is a synthetic form of the hormone progesterone that first came on the market more than 50 years ago to treat other problems.

It has been shown to calm the muscles of the uterus, preventing preterm labor in women. Children born very early may not survive, or may need months of intensive care and often suffer disabilities.

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