Drug shortages and the Grey Market

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Thanks, . I'll forward to the support lists as well.

Subject: Drug shortages and the Grey Market

Congress Investigating Drug Shortages

A.

TRENTON, N.J. (AP) - A Congressman investigating worsening shortages of

hospital drugs is demanding that secondary drug distributors reveal where

they're getting scarce, lifesaving medicines - and explain the huge markups

they charge hospitals.

Letters from a House committee cite an Associated Press report that the

shortages are responsible for at least 15 patient deaths and that secondary

distributors are selling drugs for chemotherapy, anesthesia and infections

for hugely inflated prices, in extreme cases up to 80 times the normal

price.

Rep. Elijah E. Cummings, the ranking Democrat on the House Oversight and

Government Reform Committee, has given five distributors - companies

hospitals say have been offering them hard-to-find drugs at dramatic markups

- two weeks to answer his questions.

" For people to be taking advantage under these circumstances, it ought to be

criminal, " Cummings told the AP in an exclusive interview.

Currently, there is no federal law against price gouging on medicine.

Cummings said he's trying to learn as much as possible about the causes of

the drug shortages and the high prices being charged. He said his staff has

found that the huge markups mainly are for " life-or-death drugs. "

" The idea that people would be charging these kind of prices, taking

advantage of people in vulnerable positions and driving up our health care

costs, should be a concern to all of us, " Cummings said.

He's set up an Internet tip site for anyone with information about price

gouging on drugs in short supply.

One of the companies Cummings is investigating, PRN Pharmaceuticals of

Rockville, Md., will comply with the information request and is not doing

anything wrong, CEO Steve Greenwald said.

" We don't charge excessive prices, " Greenwald told the AP. " We're here to

fill the need during a short period of time while there is a shortage (of

particular drugs). We are not hoarding drugs. "

He said that when his company acquires drugs in short supply, it has to pay

many times the usual price negotiated between manufacturers, hospital groups

and the large distributors that supply most medicines to hospitals.

The number of new drug shortages reported this year has hit 213, two more

than the record set for all of last year, according to the University of

Utah Drug Information Service, which tracks the shortages.

The total is three times the roughly 70 shortages per year from 2003 to

2006. And dozens of shortages from before this year still are not resolved.

The shortages mainly involve injected generic drugs on the market for many

years that ordinarily are cheap. They range from widely used cancer drugs

and medicines for potentially deadly infections to nausea medicines and

components of liquid nutrition for critically ill patients.

Increasingly, hospitals are learning drugs they order regularly aren't

available from their regular suppliers, usually with no advance notice and

little information on how long the shortage will last.

A recent AP investigation found at least 15 deaths in the past 15 months

have been blamed on the shortages, because the right drug wasn't available

or because, while resorting to alternative treatments not normally used,

staff made dosing errors or contaminated medicine being mixed by hand.

The shortages also have forced hospitals to give less-effective treatments,

delayed surgeries and cancer treatments, and left patients in unnecessary

pain. That's resulted in complications and longer, more-expensive hospital

stays, extra costs that hospitals will soon have to pass on to insurers and

patients.

And hospitals buying from secondary vendors can't always be sure drugs

coming from those suppliers have been stored properly and aren't stolen or

counterfeit.

Multiple factors are at play in the shortages, although the Food and Drug

Administration says the biggest cause is manufacturing quality problems that

cause drugmakers to shut down production while they make improvements. In

addition, the generic drug industry has been consolidating and some generic

drugmakers have stopped making certain drugs because they make little

profit. So when the maker of a particular generic drug stops producing it,

other companies don't have enough capacity or time to make up the shortfall

before the halt starts hurting patients.

Hospitals and pharmacists say they suspect that secondary marketers have

been cornering the market on scarce drugs and driving up prices to make a

big profit.

That's the focus of Cummings' investigation right now.

On Wednesday, his staff faxed letters asking five distributors to explain

markups reported on specific drugs, mainly cancer treatments.

The letters cited a specific drug allegedly marketed to hospitals by each

distributor and the price charged to hospitals, such as the cancer drug

cytarabine. It normally sells for about $12 per vial but was allegedly

offered by Allied Medical Supply Inc. of Miami for more than $990 per vial.

Allied's CEO, Minnuto, did not return a call from the Associated

Press seeking comment. Top executives at another distributor, Superior

Medical Supply Inc. of Superior, Colo., also did not call back, and a woman

at Reliance Wholesale Inc. of Miami repeatedly said no one was available to

speak to a reporter and then hung up.

Late Wednesday, owner Dan Herlihy of Premium Health Services Inc. of

Columbia, Md., sent a statement that he will provide the information

Cummings requested.

" I look forward to meeting Congressman Cummings to highlight the

inefficiencies that have led to the shortages we are facing, " Herlihy wrote.

At PRN, the Rockville distributor, Greenwald said he's not making a big

profit, citing one case where he had to pay $399 for a cancer drug that

would normally sell for $30, because of the layers of distributors that

handled the drug and added their own profit before his company purchased it.

" We have put on as little as 15 percent " markups to hospitals over his

company's acquisition and handling costs, Greenwald said. " The markups that

we have are legitimate and fair. "

Date: October 5, 2011

Source: Associated Press