Senate attacks drug distributors for price gouging
July 25th, 2012
06:05 PM ET

Senate attacks drug distributors for price gouging

The Senate Commerce Committee bashed drug distributors for up-charging patients at a hearing Wednesday about the “grey-market” for short-supply drugs.

The “grey market” is the second-hand market, where drugs, frequently in short supply, are re-distributed and sold by various distributors and wholesalers.

It’s an already dire situation for many patients in need. According to the U.S. Food and Drug Administration, drug shortages have increased nearly 300% since 2005. Many of the drugs on this list are cancer treatments. The “grey market” only exacerbates the price and the shortage issue.

Drug distributors "are profiteers, people who exploit the misery of sick patients to make a quick buck," said committee chairman Sen. Jay Rockefeller (D- West Virginia).

The committee unveiled a new joint investigation, conducted with the House Oversight Committee, which found drug distributors sold to multiple distributors, and charged hospitals up to 85 times what the initial distributor charged. In one case, a hospital paid a 1,200% mark-up over what the drug was initially priced.

Fluorouracil, a cancer drug that was initially $7 per vial, was sold to five different distributors, until the hospital ended up paying $600 for the vial. That’s a mark-up of nearly 8,500%.

Congressman Elijah Cummings, D-Maryland, who chairs the House Committee, testified that this wasn’t an isolated incident. The report surveyed 125 different drug distribution companies and reviewed 300 different drug transaction chains.

“This system makes absolutely no sense for patients who need these critical drugs or for hospitals that treat them. The current system allows this network of private companies to boost their profits,” said Cummings.

“Secondary distributors have come under fire recently,” said Patricia Earl, of the National Coalition of Pharmaceutical Distributors. “The arguments have ranged from accusations of price gouging to shifting product between multiple companies as a means to increase profits to working with fake pharmacies.”

Earl argued that distributors have to abide by the laws and can’t price gouge to remain competitive. She claimed that frequently these small distributors are the only way people can get the drugs they need.

When asked about the high costs the distributors charged, Earl said the price that people see doesn’t reflect what goes into getting the drug. She said the prices “do not show much was spent on things like shipping, which can be much more expensive than the drug itself if the hospital needs it delivered overnight.”

She maintained that a drug changing multiple distribution hands was an anomaly. Rockefeller replied, “Cancer is anomaly. Cancer hurts. It costs and it hurts. And people die. “

While no concrete solutions were determined on how to manage the “grey market,” Sen. Rockefeller closed the hearing by saying, “We’re trying to root-out bad behavior.”

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