Gray market vendors are adding exorbitant price mark-ups to desperately needed drugs in the wake of record-high drug shortages in the United States, according to a Premier healthcare alliance analysis of unsolicited sales offers.
Premier collected 1,745 unsolicited gray market sales offers in April-May 2011. Also known as a parallel market, a gray market is the trade of goods through distribution channels that, while legal, are unofficial or unauthorized by the original manufacturer.
Of the offers, the 636 that contained both price and proper drug identification information were analyzed.
In its analysis, Premier found the average mark-up for shortage drugs was 650 percent, with the single highest mark-up being 4,533 percent for a drug used to treat high blood pressure. The drug, normally priced at $25.90, was being offered at $1,200.
Premier’s research also showed that of the mark-ups offered:
- 96 percent were at least double normal price
- 45 percent were at least 10 times normal price
- 27 percent were at least 20 times (2,000 percent) normal price
The most egregious mark-ups included:
- 3,980 percent for chemotherapy medicines to treat leukemia and non-Hodgkin’s lymphoma
- 3,170 percent for medicines to help cancer patients retain bone marrow
- 3,161 percent for sedation medicines for surgeries
- 2,979 percent for medicines to dilate veins and prevent brain or heart spasms
- 2,642 percent for medicines to prevent damage during a heart attack
The problem is only going to get worse. The University of Utah predicts that more than 360 products will reach shortage levels by the end of 2011, the highest in history.
Analysis from the American Hospital Association, American Society of Health-System Pharmacists, University of Michigan and Premier found that the vast majority of hospitals nationwide are experiencing life-threatening shortages of medicines needed to provide essential patient care. Combined, these analyses suggest the shortage could cost U.S. hospitals at least $416 million annually through the purchase of more expensive generic or therapeutic substitutes and enhanced labor costs.
In a press conference held Tuesday about drug shortages and price gouging, Senator Amy Klobuchar (D-Minn.) said, “Gray market vendors will sometimes take advantage of shortages and charge exorbitant prices. But when a patient is in dire need of a medication, the hospital and patient are forced to pay high prices.”
Klobuchar has sponsored the Preserving Access to Life-Saving Medications Act, which would require drug manufacturers to inform the FDA whenever there are factors that may result in a shortage. This would “allow the FDA to start looking for alternative drugs and help prevent drug shortages,” said Klobuchar.
Senator Richard Blumenthal (D-Conn.) is one of three senators to request a Government Accountability Office study on drug shortages. “The Premier report is a game changer because it shows how widespread the gray market is and demonstrates the magnitude and impact of this appalling and alarming activity,” Blumenthal said at the press conference.
“We should say ‘no’ to gray markets playing Russian roulette with our healthcare,” said Blumenthal.
In addition to cost, safety is also a major concern for gray market drugs.
“It is almost impossible to confirm gray market drug source and authenticity," said Mike Alkire, Premier’s COO. “We can’t be sure the medicine is safe or even the real thing. Where and how are the gray market vendors getting medicines that no one else can get access to?”
“There is no promise that drugs sold on the gray market are safe,” agreed Klobuchar.
Continued on next page.
In its report, Premier outlined its recommendations for how providers can best deal with drug shortages:
- Understand risks to your hospital/health system and the patients you serve by engaging legal and risk departments.
- Develop and widely communicate policies for decisions regarding purchases.
- Carefully consider and document exceptions to existing purchasing policy.
- Confirm with the State Board of Pharmacy or Department of Health that the seller is appropriately licensed and not subject to any current investigations, and verify with the product manufacturer that the distributor is an authorized distributor of record (ADR).
- If the distributor is not an ADR, ask for and confirm receipt of a drug pedigree that records the products’ chain of custody from the original distributor to the pharmacy and confirm the distributor is a Verified-Accredited Wholesale Distributor through the National Board of Pharmacy.
- Keep records of sellers you have refused to do business with and reasons why.
- If purchasing from a new supplier, compare and scrutinize the package, label and contents. Don’t use drugs if concerned.
- Consider reporting suspect suppliers to appropriate local, state and national authorities and organizations.