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What: Shares of drug company KV Pharmaceutical
So what: Angry villagers continue to light torches and grab their pitchforks after KV opted to price its drug Makena, which helps prevent premature births, at $1,500 per dose -- roughly 100 times what the same drug was selling for previously. U.S. Sen. Sherrod Brown from Ohio has raised his sword -- well, rather his pen, which is mightier anyway -- against KV, first suggesting that the Federal Trade Commission investigate the company for price gouging and anticompetitive behavior, and more recently prodding the Centers for Medicare and Medicaid Services to launch an investigation.
Now what: It was a nod from the Food and Drug Administration that put KV in a position to make the sky-high price increase, and now with multiple government agencies potentially bearing down on the company we could see an example of "the government giveth and the government taketh away." Obviously, KV shareholders will disagree with me, but the actions of KV really are pretty ludicrous. The synthetic hormone behind Makena (17P) has been around for a long time -- this isn't any sort of KV brainchild; it's simply looking to cash in from the government-granted manufacturing and distribution exclusivity. Of course even if KV "loses" here and has to lower its price, it's still likely to settle on something between the former $15 price tag and the outrageous $1,500, which still seems like a win for the company.
But win or lose, chalk one up for KV for giving consumers very good reason to be cynical about drug companies.
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Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.