Five “gray market” drug companies face an investigation spearheaded by U.S. Rep. Elijah Cummings, (D-Md.) into alleged price gouging and hoarding policies.
Cummings, the ranking member of the House Committee on Oversight and Government Reform, said Oct. 5 that he has requested documentation from Allied Medical Supply Inc., Superior Medical Supply Inc., Premium Health Services Inc., PRN Pharmaceuticals and Reliance Wholesale Inc. justifying the prices they set on medication.
The companies do not make medications themselves. Instead, Cummings said, they profit by acting as “secondary wholesalers”—or middle men—buying drugs on the Food and Drug Administration’s current list of shortages and selling them at inflated prices to caregivers.
Cummings initiated the investigation following a letter he received from University of Maryland women’s basketball Head Coach Brenda Frese which claimed that the companies are selling drugs on the FDA shortage list to health care providers, hospitals and pharmacies at significant markups.
According to a press release from Cummings’ office, Allied Medical Supply supplies one drug needed by Frese’s son, cytarabine, at “over $990 per vial, more than 80 times a typical contract price of about $12 per vial.”
Currently, there isn’t a law against price gouging on medicine, Cummings told the Associated Press.
“For people to be taking advantage under these circumstances, it ought to be criminal,” he said.
Cummings also expressed concern that these secondary distributors may be hoarding or otherwise impacting the availability of critical medications – many of which needed in life and death circumstances—to drive up their price.
The FDA told the AP that a major cause of drug shortages is the unavailability of generic equivalents. Without them, quality control problems that stop production from a drug’s sole supplier, coupled with the elimination of some product lines by a single company because of low profitability, leaves a hole in the supply chain until other companies can increase their production. The “gray market” companies targeted by Cummings fill that hole as dealers of the scarce medicines.
According to The Washington Post, Cummings’ letters to the companies claim that 15 deaths have resulted from medication shortages, and give the companies two weeks to answer his questions.
Frese, according to the congressman’s press release, is pleased with the investigation.
“My son Tyler wouldn’t be alive today if we did not have access to these drugs and it is a shame that they are either not available, or are only available to the highest bidder. I applaud Congressman Cummings for pursuing this important investigation,” she said in a statement.
Brian Greenwald, president of Rockville, Md.-based PRN Pharmaceuticals, told The Wall Street Journal, “As a general rule, we believe secondary wholesales play an important role in helping healthcare providers locate needed products during manufacturing shortages.”
He told The Post that the company will respond to the request from Cummings and added, “We don’t charge excessive prices. We’re here to fill the need during a short period of time while there is a shortage . We are not hoarding drugs.”
According to the press release, an online tip line has been created for anyone with information about price gouging and speculation related to drugs in short supply. The tip line is http://democrats.oversight.house.gov/.