Lawmaker investigates possible price gouging of drugs on shortage lists

The Maryland congressman has requested information on how distributors get the medications, how they store them and who buys them.

By Doug Trapp — Posted Oct. 14, 2011

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A leading Democratic lawmaker is investigating companies that sell prescription drugs in shortage for dozens of times their original prices.

Rep. Elijah Cummings (D, Md.), the ranking Democrat on the House Oversight and Government Reform Committee, said he has found five prescription drug distributors that charge between seven and 80 times the retail prices for certain drugs, including generic injectable cancer drugs that would retail for as little as $5 per vial, according to an Oct. 5 statement by Cummings.

"Price gouging for drugs that treat cancer in children is simply unconscionable," he said. "We want to know where these companies are getting these drugs and how much they are making in profits. Obtaining this information will help us develop concrete solutions." Cummings has not accused the companies of violating any laws.

The Food and Drug Administration identified 178 drugs in shortage in 2010, 132 of which were generic sterile injectable drugs, including anesthetics, cancer drugs and intravenous nutrition drugs. The FDA expects the list to grow. Production and quality issues are the most common reason for drug shortages. Pharmaceutical companies have said slow FDA approval for new production facilities has hampered the companies' ability to keep up with demand, but the Dept. of Health and Human Services has pegged industry consolidation as a significant factor in shortages.

Cummings' staff consulted physicians and hospitals on current market prices for shortage drugs. For example, PRN Pharmaceuticals of Rockville, Md., has offered fluorouracil -- used to treat colon, stomach, breast and pancreatic cancer -- for more than $350 per vial, about 23 times the typical contract price of roughly $15 per vial, Cummings said.

Cummings sent letters to PRN and four other distributors, asking them to explain the source of their drugs, the clients to whom the companies sold drugs and the companies' storage and recordkeeping for these medications, among other information. PRN and Premium Health of Columbia, Md., have agreed to cooperate with Cummings on the investigation, said Ashley Etienne, a Democratic staff member of the House Oversight and Government Reform Committee. The other three companies have not yet responded.

Brian Greenwald, president of PRN Pharmaceuticals, said the company is reviewing Cummings' request and intends to respond to it in a timely manner. Anthony Minnuto, CEO of Allied Medical Supply, said his company welcomes a review of the secondary distribution market. He said his company, also targeted by Cummings, will cooperate fully with his investigation.

Cummings offered to conduct the investigation with House Oversight and Government Reform Committee Chair Darrell Issa (R, Calif.). Cummings did not receive a response as of this article's deadline.

The House Energy and Commerce Committee held a bipartisan hearing on drug shortages on Sept. 23, but Cummings expects his work to continue separately, Etienne said.

Cummings' examination of the shortage drug market began after receiving a letter in April 2011 from Brenda Frese, the University of Maryland women's basketball coach. Frese was upset about shortages of cytarabine, an anti-leukemia drug she said helped save her son's life. "Every family should have access to these drugs, and it is a shame that they are either not available or are only available to the highest bidder," she said.

Cummings established a website tip form for anyone with information about the source of shortage market drugs and their prices (link).

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