Lawmakers: Fake pharmacies price gouging on drugs

LINDA A. JOHNSON

AP Busi­ness Writer

TRENTON, N.J. — Mem­bers of Con­gress inves­ti­gat­ing short­ages of cru­cial drugs are tar­get­ing fake phar­ma­cies allegedly set up solely to buy and resell the drugs at huge markups.

Two sen­a­tors and one U.S. rep­re­sen­tive on Wednes­day sent let­ters to about two dozen oper­a­tors of phar­ma­cies, request­ing detailed infor­ma­tion about their busi­ness, par­tic­u­larly their pur­chases and resale of can­cer and other life-saving drugs.

Three of the tar­gets are indi­vid­u­als believed to have obtained licenses to oper­ate both a phar­macy and a pre­scrip­tion drug whole­sale busi­ness — solely to make money by tak­ing advan­tage of the grow­ing drug short­age cri­sis that’s dis­rupt­ing hos­pi­tal and other patient care.

Twenty other let­ters were sent to phar­ma­cies that may be doing the same thing, but inves­ti­ga­tion of those com­pa­nies is in an ear­lier stage.

The let­ters were sent by Rep. Eli­jah Cum­mings, the rank­ing Demo­c­rat on the House Over­sight and Gov­ern­ment Reform Com­mit­tee, along with Sen. John D. Rock­e­feller, chair­man of the Sen­ate Com­mit­tee on Com­merce, Sci­ence, and Trans­porta­tion, and Sen. Tom Harkin, chair­man of the Sen­ate Com­mit­tee on Health, Edu­ca­tion, Labor and Pensions.

The three have been inves­ti­gat­ing the role of the whole­salers, known as “gray mar­keters,” together with gov­ern­ment agen­cies and hos­pi­tal and phar­macy groups. Their let­ters state that they’ve found evi­dence of phar­ma­cies buy­ing pre­scrip­tion drugs from legit­i­mate whole­salers, trans­fer­ring those med­i­cines to their own whole­sale com­pany and then sell­ing them to other whole­salers for a sub­stan­tial profit.

“If it’s not ille­gal, we’re going to have to find a way to make it ille­gal, because this threat­ens vir­tu­ally every per­son in the coun­try,” Cum­mings told The Asso­ci­ated Press in an interview.

Drug short­ages have been wreak­ing havoc in hos­pi­tal phar­ma­cies, forc­ing doc­tors to post­pone chemother­apy and surg­eries and give patients sec­ond– or third-best treat­ments that may have more seri­ous side effects or cost sub­stan­tially more.

Patients have had to endure unnec­es­sary dis­com­fort, pre­ventable com­pli­ca­tions and longer hos­pi­tal stays, which is cost­ing hos­pi­tals mil­lions of extra dol­lars. Most of the drugs that are unavail­able or hard to find are generic injectable drugs that nor­mally would be cheap, includ­ing seda­tives for surgery and pow­er­ful antibi­otics and painkillers.

An Asso­ci­ated Press inves­ti­ga­tion last fall found at least 15 deaths since 2010 have been caused by the short­ages, which have set a record high in each of the past five years. And future treat­ments also are being endan­gered, as patient test­ing of new exper­i­men­tal med­i­cines has been delayed or halted due to the lack of the stan­dard med­i­cines against which they must be compared.

The law­mak­ers’ inves­ti­ga­tion found evi­dence of one trans­ac­tion where a licensed phar­macy called Pri­or­ity Health­care bought a chemother­apy drug called flu­o­rouracil for $6.77 per vial. It then “sold” it to a dis­trib­u­tor it owned called Tri-Med Amer­ica for $50 per vial, although that com­pany does not appear to have taken pos­ses­sion of the drug. Tri-Med Amer­ica then allegedly sold the can­cer med­i­cine to another com­pany for more than 10 times the ini­tial price — $69 per vial.

The other two pairs of com­pa­nies under inves­ti­ga­tion are Colum­bia Med Ser­vices and Colum­bia Med­ical Dis­trib­u­tors, and LTC Phar­macy and Inter­na­tional Phar­ma­ceu­ti­cals Inc.

The pres­i­dents of Pri­or­ity Healthcare/Tri-Med Amer­ica and Colum­bia Med Services/Columbia Med­ical Dis­trib­u­tors did not imme­di­ately return calls seek­ing comment.

The phone at Inter­na­tional Phar­ma­ceu­ti­cals went unan­swered Wednes­day morn­ing and tele­phone list­ings for LTC Phar­macy and for Jes­sica Hoppe, who is listed as the pres­i­dent and owner of both those com­pa­nies, could not be found.

LTC Phar­macy, which has been under inves­ti­ga­tion by the North Car­olina Board of Phar­macy, sur­ren­dered its oper­at­ing per­mit last Sep­tem­ber. The two busi­nesses shared offices in a build­ing in Durham, N.C., but had no actual phar­macy, accord­ing to the board.

Cum­mings said of Hoppe that “it appears she essen­tially estab­lished a fake phar­macy in order to gain greater access to drugs that are in crit­i­cally short sup­ply and are des­per­ately needed to treat patients with can­cer and other dis­eases. What remains unclear is how much she may have prof­ited from this ille­gal activity.”

Man­u­fac­tur­ing lapses and pro­duc­tion shut­downs for con­t­a­m­i­na­tion and other seri­ous prob­lems are behind many of the short­ages, and there is no quick or easy fix for those prob­lems. Other rea­sons include increased demand for some drugs, com­pa­nies end­ing pro­duc­tion of some drugs with tiny profit mar­gins, con­sol­i­da­tion in the generic drug indus­try and lim­ited sup­plies of some ingredients.

Yet some gray mar­keters — who may not be licensed, autho­rized dis­trib­u­tors — have used the cri­sis as a way to make lots of money by cor­ner­ing the mar­ket on drugs in short sup­ply and then offer­ing them to des­per­ate hos­pi­tal phar­ma­cists and can­cer clin­ics at out­ra­geous markups.

Cur­rently, there are 268 pre­scrip­tion drugs in short sup­ply in the U.S. That includes 34 new short­ages reported this year, 204 that began in 2010 or 2011 and remain unre­solved, and oth­ers that have per­sisted even longer, accord­ing to Erin R. Fox, man­ager of the Uni­ver­sity of Utah Drug Infor­ma­tion Ser­vice, which tracks national drug shortages.

A report based on a sur­vey last sum­mer said that hos­pi­tals forced to buy cru­cial drugs from whole­salers out­side their nor­mal dis­tri­b­u­tion chain were being charged markups aver­ag­ing 650 per­cent. In one case, a drug for dan­ger­ously high blood pres­sure, nor­mally priced at $25.90 per dose, was being offered to hos­pi­tals for $1,200.

Posted by AP News on Mar 21 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.