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Cummings Introduces Bill to Reform "Gray Market" Drug Sales

May 17, 2013
Press Release

Washington D.C.—This week, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, introduced legislation to address “gray market” drug companies that are taking advantage of the national drug shortage crisis to charge exorbitant prices for drugs used to treat cancer and other life-threatening conditions.

“Nobody should be allowed to profiteer at the expense of children and adults with cancer or other critical illnesses by jacking up the price of drugs that are in critically short supply,” said Cummings.  “This bill closes loopholes in the supply chain and ensures that consumers and health care providers have more information about who is handing their drugs.”

H.R. 1958, The Gray Market Drug Reform and Transparency Act of 2013, addresses weaknesses in the drug supply chain, deters price gouging, and improves drug safety and efficacy.  The bill prohibits wholesalers from purchasing drugs from pharmacies, a practice that has been abused by unscrupulous wholesalers to obtain access to shortage drugs, charge excessive markups, and divert drugs away from patients who need them.  It also strengthens oversight and transparency by creating a national, publicly available database of information on distributors that includes information on their licensing status and disciplinary actions.

Over the past year, Cummings, in conjunction with Senator John D. Rockefeller, Chairman of the Senate Committee on Commerce, Science, and Transportation, and Senator Tom Harkin, Chairman of the Senate Committee on Health, Education, Labor, and Pensions, investigated gray market drug companies and issued a detailed report with the following findings:

  • Gray market drug companies charge exorbitant prices for shortage drugs.  Wholesalers often charge exorbitant prices to health care providers for drugs facing critical national shortages that are used to treat cancer and other life-threatening illnesses.  These inflated prices are often the result of unnecessarily long distribution chains that include significant markups at almost every level.
  • Gray market drugs often exchange hands numerous times before reaching patients.  In one drug chain examined by investigators, 25 vials of a chemotherapy drug called fluorouracil traveled from an authorized distributor to a pharmacy and then to five additional gray market companies before reaching patients in a hospital in California.
  • Gray market drugs “leak” out of authorized distribution chains.  In more than two-thirds of the 300 drug distribution chains reviewed by investigators, drugs leaked into the gray market through pharmacies.  Instead of dispensing the drugs to patients who needed them, pharmacies re-sold the drugs to gray market wholesalers.  Some pharmacies sold their entire inventories to gray market companies and appeared to operate for the sole purpose of acquiring short-supply drugs to sell into the gray market.
  • A number of gray market companies with disciplinary actions continued to operate in many states. For example, the state of North Carolina refused to renew a wholesaler license for a company called International Pharmaceuticals in 2011 because the company “willfully violated NC wholesale prescription drug distribution laws for an extended period of time during 2011.”  In 2012, however, the company still had active wholesaler licenses in at least 23 other states.

Cummings originally launched this investigation after receiving a heartfelt letter from Brenda Frese, the women’s basketball coach at the University of Maryland, whose son was diagnosed with leukemia and treated with a drug called cytarabine, which was on FDA’s shortage list.

 

 

113th Congress