Pharma gets social: was Facebook page responsible for K-V Pharmaceutical Chapter 11 bankruptcy?
Daniel Ghinn
Creation Healthcare
Daniel Ghinn takes a look at the part social media, specifically the Facebook page, “Shame on you, K-V Pharmaceutical and CEO Greg Divis”, may have played in the recent bankruptcy of K-V Pharmaceuticals.
(Continued from “Pharma gets social – LillyPad provides platform for Lilly's corporate engagement”)
“WOOT! I feel bad celebrating anyone losing needed jobs, but this company has to GO... what they tried to do to women and children was UNACCEPTABLE!!!” reads a Facebook comment in response to news this month that K-V Pharmaceutical has filed for Chapter 11 bankruptcy.
The comment is one of many views expressed on a Facebook page titled “Shame on you, KV Pharmaceutical and CEO Greg Divis”, launched in March 2011 after K-V Pharmaceutical announced pricing for its drug Makena, which had just been approved by the US Food and Drug Administration (FDA).
Figure 1: Did one angry consumer’s Facebook page bring down K-V Pharmaceutical?
The drug, which helps to reduce the likelihood of preterm birth for at-risk pregnant women, was approved by the US FDA in February 2011 and given orphan drug status, meaning that only K-V Pharmaceutical would be allowed to supply the synthetic progesterone product for the next seven years. Prior to this, however, the compound was available from pharmacies who produced their own drugs, at less than $20 per dose. After FDA approval, K-V Pharmaceutical set their price at around $1,500 per dose and wrote letters to pharmacists warning them that they should stop producing the drug themselves or face potential FDA enforcement.
This pricing strategy by K-V Pharmaceutical sparked immediate outrage among traditional media titles around the world, but in my view the single most damaging media activity was not from traditional press, but from social media.
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"...in my view the single most damaging media activity was not from traditional press, but from social media."
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Christine O’Connell, a Facebook user in the US, decided to take matters into her own hands and coordinate an online protest against K-V Pharmaceutical via a page she titled “Shame on you, KV Pharmaceutical and CEO Greg Divis”. The page rapidly became a hub for people to share ideas about taking action, which ranged from stopping using other K-V Pharmaceutical products, to writing to government. When I spoke with Ms O’Connell at the time, she told me that Facebook provided a platform to reach many people quickly and share ideas about action:
“I started this page quite simply because I was outraged. I knew if other people knew about this unconscionable price increase, they’d be outraged too. Facebook gave me the best platform to reach a lot of people in a short time.
“My hope was that we’d stir up enough public anger to somehow force K-V Pharma to right this wrong. I wasn’t sure how the page could achieve that, but I believed that if we put our heads together, we’d figure something out.
“And that’s exactly what happened. Not only did affected moms and dads get involved, but doctors, news reporters and medical organizations joined the conversation. We shared information and ideas on everything from boycotts to contacting our Congressional representatives.”
Just three weeks after the Facebook page’s launch, the FDA took what appears to have been an unprecedented step and announced that “in order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription.”
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"The company is noticeably absent from any engagement via social media channels..."
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This move by the FDA seems to have sealed K-V Pharmaceutical’s fate. In a statement this month announcing the company’s bankruptcy filing, CEO Greg Divis blamed the FDA’s failure to enforce orphan drug exclusivity granted to Makena: “The Company has been unable to realize the full value of its most important product, Makena®…because of a lack of enforcement of the orphan drug marketing exclusivity granted to K-V for Makena® by the Food and Drug Administration (FDA)”.
Over the past 18 months, K-V Pharmaceutical has been, for me, the model industry case study in how not to do social media. Or, in this particular case, why not to avoid social media. The company is noticeably absent from any engagement via social media channels, despite the fact that the top result in Google searches for CEO Greg Divis is the protest Facebook page, which also appears on the first page of results in searches for “K-V Pharma”.
Since the FDA statement last march, when K-V Pharmaceutical’s share value plummeted 20% in one day, the Facebook page has continued to act as a hub for documenting, and contributing to, the company’s decline. Not that the fall of K-V Pharmaceutical was in itself the purpose of the page, as an update on its wall says on 6 August, commenting on the company’s bankruptcy filing:
“Well, we knew this was coming. I never wished for the demise of this company. On the contrary, they had such potential to help our babies get their full nine months, but instead they bungled the launch of the drug with ridiculous pricing, bad public relations, a difficult assistance program and misinformation. And this is where their greed got them: they are in bankruptcy and their potential to help us goes unrealized. Which is why we say Shame on you, K-V Pharmaceutical and CEO Greg Divis! Shame!”
Was the Facebook page solely responsible for K-V Pharmaceutical’s bankruptcy filing? Of course not, but in Ms O’Connell’s page, the company arguably had the most valuable insight tool providing a clear picture of the views and actions of most of its stakeholder groups, and the effect of these views and actions upon the company’s future.
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"The moral of the story for pharmaceutical companies is loud and clear: ignore social media at your peril."
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While the Facebook page was launched to mobilise action against K-V Pharmaceutical’s pricing policy, it also brought together a community of mothers helping each other around the Makena product. When I asked Ms O’Connell about the outcomes from the page, she said that she is most proud of the way people supported each other to make a real difference:
“I'm most proud of how this page brought at-risk moms together. These are moms who have experienced unspeakable loss and struggles and they took time to help out other moms facing similar challenges. My biggest triumph with this page came in May of last year. Katie Warner posted: ‘Just found this page by chance, glad I am not alone! Just found out I will not be able to get p17 [progesterone] at all. It is just so sad that a company would do this.’ This just didn't sound right to me so… I put it out to the larger group and so many people came to her aid. She'd been trying to get the medication for a month and in two days with us, she was on her way to getting what she needed to help her baby go full term. The whole exchange still brings tears to my eyes because I know we really made a difference.”
The moral of the story for pharmaceutical companies is loud and clear: ignore social media at your peril. In this digital era, opting out of listening to the voice of stakeholders on Facebook, Twitter, blogs, or any other social media channel will leave you entirely out of control of your communication strategy.
About the author:
Daniel Ghinn is CEO at Creation Healthcare, a consultancy advising pharma on managing digital communications. Daniel may be contacted at daniel.ghinn@creationhealthcare.com.
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