Secondary drug distributors are now the focus of a congressional probe in the worsening prescription drug shortage. Elijah Cummings, the ranking Democrat on the House Oversight and Government Reform Committee, has given five distributors two weeks to respond to questions after hospitals have complained that they have received offers of hard-to-find meds at huge mark-ups.
The move comes shortly after the Associated Press reported that shortages are responsible for at least 15 patient deaths and that secondary distributors are selling drugs for chemotherapy, anesthesia and infections for inflated prices; in some cases, at up to 80 times the normal price (see here). Overall, there is a record number of shortages this year - the number rose to 178 last year from 56 in 2006, according to the FDA (read this)
“Price gouging for drugs that treat cancer in children is simply unconscionable,” Cummings says in a statement. “We want to know where these companies are getting these drugs, and how much they are making in profits. Obtaining this information will help us develop concrete solutions.”
The shortage is wreaking havoc. A survey last spring of 311 pharmacy experts at 228 hospitals and other healthcare sites - infusion and surgery centers, retail pharmacies, and long-term care facilities - found they are paying an average of 11 percent more for hard-to-find drugs, and 42 percent bought a more expensive med from gray market vendors. Meanwhile, 89 percent experienced shortages that may have caused a safety issue or error in patient care, and 80 percent pointed to shortages that delayed or cancelled patient care (back story).
Meds for cancer, seizures and sedation are among the more than 180 medications unavailable this year, according to the Utah Drug Information Service, which maintains a list sent to pharmacists in conjunction with the American Society of Health-System Pharmacists. “We’ve seen a dramatic increase in the last three to four years, steadily increasing last year,” Cynthia Reilly, director of the Practice Development Division for the American Society of Health-System Pharmacists, tells Bloomberg News.
The reasons for the ongoing shortages are sometimes blamed on consolidation among generic suppliers, since many drugs are made by just one or two manufacturers, and increased enforcement of manufacturing standards by the FDA. The issue has been exacerbated by difficulties at Teva Pharmaceuticals and Hospira, which are two of the largest generic suppliers. Both received warning letters citing contamination and other problems (see here and here). More recently, a Boehringer Ingelheim unit called Ben Venue Labs that also sells meds that have been in short supply also ran into compliance problems (read this).
However, Cummings has sent letters to the five distributors seeking information about how they are obtaining certain drugs and, in turn, how much they are making in profits by selling these drugs to hospitals, pharmacies, and health care providers. One is Allied Medical Supply, which sold cytarabine, a med used to treat leukemia in children and adults, for over $990 per vial, more than 80 times the contract price of about $12 per vial (read the letter).
Another is Superior Medical Supply, which sold paclitaxel, which is used to treat breast and ovarian cancer, for over $500 per vial, more than seven times a typical contract price of approximately $65 per vial. Cummings notes the California Attorney General filed a suit alleging the distributor “purchased, traded, sold or transferred dangerous drugs they knew, or reasonably should have known were misbranded,” and that the company “disseminated false, misleading or deceptive statements, claims or images via the Internet, to induce the rendering of professional services or furnishing of products.” Then there is Premium Health Services, which offered a med called leucovorin that is used in combination with fluorouracil to treat advanced colon cancer, for over $270 per vial, more than 50 times a typical contract price of approximately $5 per vial. PRN Pharmaceuticals offered fluorouracil, which is used to treat colon, stomach, breast, and pancreatic cancer, for over $350 per vial, more than 23 times a typical contract price of approximately $15 per vial. And Reliance Wholesale offered magnesium sulfate, which is used to control life-threatening seizures in pregnant women and to treat magnesium deficiency in patients who receive intravenous feeding, for over $400 for 25 vials, more than 40 times a typical contract price of approximately $9 for 25 vials.
Brian Greenwald, president of PRN, says his industry doesn’t hoard drugs to drive up prices and mark-ups do not reflect associated costs. “It’s like Gordon Gecko in ‘Wall Street,’ saying we could buy enough of a stock to cause a price increase,” he tells Bloomberg. “It just doesn’t happen. We don’t have the resources...We do above-the-board business."
He blamed the largest distributors - McKesson, Cardinal Health and AmerisourceBergen - for the scrutiny placed on smaller operators. "We’re competition for those big guys,” he said. “They have a lot of money and a lot of power, so what they’re going to try and do is to claim as much of the industry for themselves as they can. If they’re inefficient, there’s going to be an industry that helps more efficiently distribute products.”
And Anthony Minnutto, the ceo at Allied Medical, claims reseller prices are high because the drugs have been bought and sold many times over before finding their final buyer - for example, a drug originally purchased at $10 may be marked up each time it’s resold. “It’s nowhere near price gouging,” he tells Bloomberg. “If companies like us went away, that doesn’t mean the shortage goes away.”
A recent survey by the Institute for Safe Medicine Practices, a non-profit watchdog group, found that 56 percent of purchasing agents and pharmacists at 549 hospitals reported receiving daily solicitations from up to 10 different gray market vendors by phone, e-mail and fax. And 31 percent of small, critical access hospitals and 35 percent of community hospitals that purchased a gray market med in the past two years reported price mark-ups of 10 times or more contract prices - a 900 percent mark-up (read here).
5 Comments
PRN Pharmaceuticals marks their products up over 900%with some clients. Their trick is, they know that the accounts payable team does not communicate with the pharmacy team, so the other does not know about the gauging. Look for Debbie Clarke with PRN.
The gray market problem is a direct result of the pharma companies causing drug shortages. Preventing a shortage in the first place will prevent the gray market from even emerging. Congress needs to address the root cause of the problem.
It could be argued that the root cause of the problem is that this is a closely regulated marketplace with tight operating margins & high legal exposure. There aren't going to be a lot of companies chomping at the bit to enter or stay in such a marketplace.
Fewer market entrants=less competition & lower supplies=higher prices.
Of course, there's no defense for illegal activity if proven true. But the mere existence of grey markets shows there's some systemic failure.
yup, too hard to do
one excuse to rule them all...
CharityMobi, Inc is a new Child Health Advocacy Organization. It is truly tragic that we are talking about thousands of people that will die before Christmas because of the drug shortages. We are talking about Moms,Dads and Kids, and GrandMa and GrandPa.
We sit by and allow the Griches to steal Christmas from these people. Many will die before Christmas because they will not receive the cancer chemo therapy that they need to stay alive.
Our focus is Advocacy for children. Children with cancer have been provided the best of treatment in Pediatric Cancer Centers across the United States. Now, Our physicians and the oncology pharmacists in these pediatric hospitals are outraged that lifesaving chemo-therapy drugs are not available to save the lives of children. How can we stand by and let this happen, in the United States.
If all these affected children , and all the moms and dads without chemo drugs were in big airplanes, crashing into the world trade center, we would do something. What a tragic event, we would see them. More than 2000 died at the world trade center, and then we went to war and have spent " how much money?" It seems like we need to look at how "we our selves are killing our own people", by allowing the Greedy Grinches to deprive people of lifesaving drugs, and let other Grinches profiteer by selling the last of the drugs and grey market drugs at 900% mark-ups.
Someone needs to tally the number of people that are suffering from the drug shortages, and just see how many planes and big sky skyscraper buildings represent children and other people. It would be great advocacy picture, and then just maybe the US congress would take emergency action to save peoples lives.
It is sad, no one sees the suffering individuals. They are just sitting in their homes, waiting for that call from the oncologist to say " come and get your chemo therapy", and that call may never come.
Linda Melvin CharityMobi