Navigating the murky shortage drug marketplace can be a daunting responsibility for hospitals. Unfamiliar sources of unknown legitimacy, multiple ownership transfers, prior pharmacy sales, unauthorized trading partners, and exorbitant prices are common elements in many shortage drug transactions. Hospitals may feel compelled to wade through this supply chain muck or consider less effective (but more available) treatment protocols for vulnerable patients. This troubling scenario represents an untenable calculus for hospitals.  It has been the status quo for far too long and must change.

Unethical, corrupt, and potentially illegal shortage drug diversion schemes pose a risk to hospitals and the patients they treat.  Deceptive secondary wholesale distributor and independent pharmacy alliances are often the genesis of these schemes. For instance, shortage drugs may be diverted by independent pharmacies to their secondary wholesale distributor affiliates in violation of own-use contracts. Additionally, proper storage, handling, and shipping processes for sensitive shortage drug products may also be a concern when these pharmacies engage in wholesale distribution.

Unraveling this shortage drug supply chain mess is no easy task for ill-equipped hospitals.  Simply put, they need help. Even though this problem was well-documented by Congress more than seven years ago, guidance from state and federal regulators on how to deal with it has been non-existent.

To address this vacuum, I’ve developed a safe-sourcing solution for hospitals (see below). This due-diligence road map will facilitate suspect product determinations associated with diverted shortage drug schemes involving fraudulent transactions. It will also uncover potential criminal activity related to these schemes that may not be subject to suspect and illegitimate product determinations under the DSCSA due to FDA’s overly-restrictive proposed definitions of “diverted” and “fraudulent transaction.”

In its October 2018 draft guidance on DSCSA verification systems, FDA stated trading partners “must have a system in place to enable them to identify and determine whether a product is a suspect product (emphasis added).” My due-diligence solution will support compliance with this DSCSA mandate.

Lastly, hospitals are reminded that non-compliance with applicable DSCSA requirements for dispensers under section 582 (d) of the FD&C Act (the Act) could result in criminal prosecution. Specifically, failure to comply with these DSCSA requirements is prohibited under section 301 (t) of the Act and may lead to criminal penalties under section 303 of the Act.

To contact me about this solution and to view additional posts on this topic, please go to my company’s web site, Baymar Consulting LLC.