Many of the facilities in FDA’s public database of wholesale distributors are also licensed as pharmacies or co-located with pharmacies. The existence of these dubious relationships is highly problematic for several reasons. First, it suggests that such pharmacies are deceiving their manufacturer and primary wholesale distributor sources to fraudulently obtain shortage drugs, in addition to discounted own-use drugs (i.e. institutionally priced/not for further distribution). Instead of dispensing these drugs to patients as intended, the scamming pharmacies are selling them back into the supply chain through their related wholesale operations. Second, these pharmacies may not be inclined, proficient, or equipped to maintain proper storage and handling of temperature sensitive shortage drugs throughout the distribution process. This should be extremely troubling to FDA, but I suspect little attention is being paid to this aspect of our nation’s drug shortage crisis. Lastly, in its July 2012 report on drug shortages, Congress found that these questionable practices “put patients at risk and cost the United States health care system hundreds of millions of dollars each year.” Congress added, “As the drugs pass through these gray market distribution chains, they are significantly marked up, sometimes to prices that are hundreds of times higher than the prices that hospitals and other health care providers normally pay. The markups in these chains often bear no relation to the companies’ cost of purchasing, shipping, or storing the drugs. Instead, they reflect an intent to take advantage of the acute demand for short supply drugs by charging health care providers exorbitant prices.”
In his latest drug shortages statement, FDA Commissioner Scott Gottlieb referenced the Centers for Medicare and Medicaid Services and the Department of Veterans Affairs which collectively provide or pay for prescription medicine for millions of Americans. In addition to ripping off our health care system to the tune of hundreds of millions each year, shortage drug diverters are likely placing the health and safety of our nation’s most vulnerable patients at risk. My sincere hope is that FDA’s newly-minted Drug Shortages Task Force will make reading the Congressional report on drug shortages one of its highest priorities. Deceptive, unethical, and potentially criminal shortage drug diversion schemes involving corrupt pharmacy and wholesale distributor relationships are exacerbating this national health care crisis. However, the key to unraveling these exploitive practices can be found in FDA’s own public database.