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Gray Markets Gouge Drug Shortages

Shopping card with money insideLeucovorin is available — but at over 3000 percent markup on the gray market.

And there is no guarantee that the drug has been handled safely, is not counterfeit or stolen, or is even leucovorin.

The gray market is taking huge advantage of  struggling health care pharmacists trying meet pressures causes by drug shortages.

In April of 2011, the Premier healthcare alliance asked its member hospitals to report “examples of unauthorized offers to sell products in short supply”. Over two weeks, 1,745 such offers were received by 42 hospitals.

The average mark-up over the price Premier had contracted with its trusted suppliers was a staggering 650 percent, with many — including leucovorin — at much higher prices.  The vendor with the most drugs in shortage to sell  marked up prices by an average of 757 percent.

Leucovorin had the fourth highest markup at 3,170 percent!

In its report, Premier noted,

The marketing offers were often in the form of emails and fliers that contained language such as: “We only have 20 of this drug left and quantities are going fast.” All of the top 10 offers to sell products involved drugs in short supply or those that were completely back-ordered by their manufacturers. All were drugs specifically indicated for critically ill patients.

Prices varied as the quantity of drugs available changed.  As demand increased, so did the price.  Some marketing emails didn’t even include a price, but told customers to call for the current price.

Gray markets or parallel markets buy up goods — in this case drugs in shortage — and sell them outside of authorized channels.  Not only do they inflate prices, they cannot guarantee the chain-of-custody from safe and inspected manufacturer to the doctor and patient who eventually use the medicine. Since many medicines are acutely sensitive to time and temperature, they can lose effectiveness if not handled properly during distribution.

Gray marketers may also obtain stolen or counterfeit drugs or import drugs from unsafe and uninspected foreign manufacturers.

Many states now require a drug pedigree that documents all transactions in the distribution chain from the manufacturer through the dispensing pharmacy.  The pedigree needs to include names, addresses, and dates of each step from plant to consumer.

Verified-Accredited Wholesale Distributors (VAWD) are accredited by the National Association of Boards of Pharmacy and can be trusted to protect the public from drugs that have been mishandled, counterfeited, or stolen.  VAWD checks for required licenses and safe and secure distribution policies.  Checking for the VAWD Seal helps pharmacists verify safety of what they buy and provide to patients.

Premier tells its members to reduce risks from purchasing drugs outside their regular suppliers by being sure they:

  • Verify that a drug pedigree will be provided and all pedigree transactions can be authenticated.
  • Check to see that wholesalers, distributors, and suppliers all have appropriate licenses.
  • Scrutinize all purchases for altered labels or contents that don’t look like previous purchases.
  • Report suspicious vendors to the FDA Medwatch program, their state boards of pharmacy, and local, state, or federal law enforcement.
  • Listen to patients!  They often can tell if their medicine doesn’t look like or act like what they are used to.

While discouraging gray marketeers from taking advantage of the drug shortage crisis, it is only a small piece of solving the problem.  Fight Colorectal Cancer continues to work towards being sure that necessary medicines for treating colorectal cancer are available.  You can help by supporting legislation that would improve the FDA’s ability to respond to shortages earlier.

Stock Photo by Sergey Peterman

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