It’s been more than six years since Congress first exposed the despicable gray market shortage drug distribution practices of certain pharmacies and distributors.  In its July 2012 report, Congress concluded, “gray market companies that operate outside of authorized distribution networks take advantage of drug shortage situations to charge exorbitant prices for drugs used to treat cancer and other life-threatening conditions. Gray market drugs leak out of authorized distribution chains, often through pharmacies that sell to wholesale distributors, and are sold to end users at aggressively marked-up prices. The questionable business practices of the distributors and pharmacies engaged in gray market sales result in higher health care costs and potential risks to patients.”  Although I’ve referenced this information several times before, its significance cannot be overstated.

In May of last year, FDA Commissioner Scott Gottlieb issued a statement on the agency’s efforts to mitigate drug shortages and noted how this problem results in “significant costs to our overall health care system.”  While I doubt the Commissioner was envisioning the impact of gray market shortage drug sales when he penned this observation, it’s foolhardy to discount the cumulative toll of this activity on patient safety and our nation’s health care expenditures.

The Congressional findings from 2012 were re-affirmed during a November 2018 public meeting on drug shortages co-sponsored by FDA and the Duke-Margolis Center for Health Policy.  A Premier Health Alliance presentation noted the following (see page 126):

During drug shortages, shortage drugs are often sold at exorbitant prices by unauthorized vendors. 

The gray market creates patient safety concerns as the products may not have been stored properly and therefore the integrity of the product cannot be confirmed.

 Recently, several Premier private label products have been found in the gray market: Ondansetron (1642% price increase); Naropin (291% price increase); and Rocuronium (691% price increase).

The November 2018 public meeting also included a moving presentation from Dr. Yoram Unguru, Assistant Professor of Oncology at the Johns Hopkins Kimmel Cancer Center, faculty member of the Berman Institute of Bioethics, and attending physician at The Herman and Walter Samuelson Children’s Hospital at Sinai. In an article, titled In Short Supply, that appeared in the Fall 2018 installment of Hopkins Medicine, Dr. Unguru had the following chilling observations on the drug shortage crisis:

Over the past several years, children with cancer, and those who care for them, have faced a seemingly unimaginable scenario—a shortage of lifesaving chemotherapy agents. Many of the drugs in short supply are the backbone of proven regimens needed to treat and to cure countless children (and adults) with cancer. 

Drug shortages have directly harmed countless patients, and those with cancer are particularly vulnerable. Chemotherapy shortages force my colleagues and me to delay treatments, skip or reduce doses, and select less effective and familiar alternatives. Shortages also cause increased medication-related errors, and adversely impact clinical trials, a critical component in improving outcomes.  

We also called for avoiding gray market suppliers (unauthorized secondary drug distributors who often profit from providing a scarce drug). 

Unfortunately, not much is being done at the federal level to address the continued diversion of shortage drugs and those who exploit this health care crisis for financial gain. Corrupt independent pharmacies and their similarly corrupt secondary wholesale distributor cohorts are running roughshod over FDA, as well as vulnerable patients, desperate hospitals, and even our nation’s health care system.  This is largely a result of an absent FDA and resource-strapped state pharmacy boards; an enticing landscape for shortage drug diverters, not to mention drug counterfeiters and other supply chain criminals.  By the way, this is the same sort of regulatory vacuum that preceded the New England Compounding Center catastrophe in 2012.  That parallel should give all regulators pause.

When hospitals are forced time and time again to pay outrageously marked-up prices for diverted shortage drugs, FDA should be motivated to act swiftly and aggressively. But instead of taking a leadership position on this issue, the sole-protector of our nation’s drug supply has remained on the sidelines.  This must be extremely disheartening to exasperated health care providers, especially pediatric oncologists.  As I wrote previously, “An unsettling by-product of our nation’s ongoing drug shortage crisis is that hospitals and medical clinics may be forced to consider unsolicited shortage drug offers from wholesale distributors of unknown legitimacy or employ less-effective, but more available, treatments for some of their most vulnerable patient populations.”

In order to turn a hefty profit, shady pharmacies and distributors funnel shortage drugs away from the patients who desperately need them. In doing so, they engage in unethical, deceptive, fraudulent, and potentially criminal activity.  Hospitals must therefore exercise increased vigilance when utilizing secondary wholesale distributors as shortage drug suppliers.  Any prior transactions involving pharmacies or suspected pharmacies, as well as purported sales to secondary wholesale distributors by manufacturers and their primary wholesale distributors, must be closely scrutinized and routinely validated to avoid exposing patients to drug products that were sold or distributed by pharmacies in violation own-use or closed-door pharmacy contractual restrictions.  Few as they may be, this activity has resulted in federal criminal prosecutions in 2009 and 2017.

Solving this problem, however, is still entirely within FDA’s grasp.  For instance, the agency can start by encouraging manufacturers and their immediate wholesale distributor customers to closely monitor sales of shortage drugs to independent pharmacies and routinely verify that such products are dispensed to patients of the pharmacies and not sold back into the supply chain though murky wholesale distributor alliances.  This solution is highly achievable and likely to produce solid results, but it cannot be accomplished without an impassioned and committed FDA.