- Associated Press - Wednesday, October 5, 2011

TRENTON, N.J. (AP) - A Congressman investigating shortages of hospital drugs is demanding that secondary drug distributors reveal how they are getting scarce, life-saving medicines and explain the huge markups they charge.

Letters from a House committee cite an Associated Press report that the shortages are responsible for at least 15 patient deaths and that secondary distributors are selling drugs for chemotherapy, anesthesia and infections at hugely inflated prices. In extreme cases, they are asking 80 times the normal price.

Rep. Elijah E. Cummings of Maryland, the ranking Democrat on the House Oversight and Government Reform Committee, has given five companies that hospitals say have been offering them hard-to-find drugs at dramatic markups two weeks to answer his questions. The questions cover where the distributors are buying these drugs, what their profit is and how much their executives are being paid.

“For people to be taking advantage under these circumstances, it ought to be criminal,” Cummings told the AP in an exclusive interview.

There is no federal law against price gouging on medicine. Cummings said he’s trying to learn as much as possible about the causes of the drug shortages and the high prices. He said his staff has found that big markups mainly are for “life-or-death drugs.”

The Food and Drug Administration says the biggest cause of the shortages is manufacturing quality problems that cause drugmakers to shut down production while they make improvements. In addition, the generic drug industry has been consolidating and some generic drugmakers have stopped making certain drugs because they make little profit. When the maker of a particular generic drug stops producing it, other companies don’t have enough capacity or time to make up the shortfall before the halt starts hurting patients.

Experts testifying at a Sept. 23 hearing held by another House committee suggested required alerts of upcoming shortages and expedited approvals for other drugmakers to help cover gaps would alleviate the shortages.

Hospitals and pharmacists say they suspect brokers have been cornering the market on scarce drugs and driving up prices to make a big profit.

“The idea that people would be charging these kind of prices, taking advantage of people in vulnerable positions and driving up our health care costs, should be a concern to all of us,” Cummings said.

He’s set up an Internet tip site for anyone with information about price gouging on drugs in short supply.

One of the companies Cummings is investigating, PRN Pharmaceuticals of Rockville, Md., will comply with the request and is not doing anything wrong, CEO Steve Greenwald said.

“We don’t charge excessive prices,” Greenwald told the AP. “We’re here to fill the need during a short period of time while there is a shortage. We are not hoarding drugs.”

He said his company has to pay many times the usual price when it acquires drugs in short supply.

The number of new drug shortages reported this year has hit 213, two more than last year’s record, according to the University of Utah Drug Information Service, which tracks the shortages.

The total is three times the roughly 70 shortages per year from 2003 to 2006. And dozens of shortages from before this year still are not resolved.

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