Congress Probes Distributors Over Drug Shortages

Congress Probes Distributors Over Drug Shortages

October 7th, 2011 // 1:46 pm @ jmpickett

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

“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 .

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 .

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.

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

Source: Pharmalot