Congress Asks Where Gray Market Drugs Come From

Rep. Elijah E. Cummings of Maryland, the ranking Democrat on the House Oversight and Government Reform Committee, just launched an investigation into the gray market with a “document request” to five distributors regarding five drugs. See Cummings Investigates “Drug Speculation” and “Gray Market” Sales of Drugs in Critically Short Supply, complete with anonymous Tip Line.

In Drug Shortages and Gray Market Profiteering, I wondered: “How do these mysterious vendors get access to drugs in short supply?” This led to some very entertaining back-and-forth in the comments below my article with (anonymous) secondary distributors. I hope Rep. Cummings learns something more useful from his official inquiries.

THE DOSES CAN STILL BE DANGEROUS

Rep. Cummings contacted five distributors. Here is how the first company is described in the press release:

Allied Medical Supply Inc. offered cytarabine, which is used to treat leukemia in children and adults, for over $990 per vial, more than 80 times a typical contract price of about $12 per vial. A corporate address for this company appears to be the same as the address for Minnuto Publishing, LLC, which sells the “Passive Income For Life” system, allowing users to “create a steady stream of PASSIVE INCOME every single month for the rest of your life with NO MONEY DOWN APARTMENT BUILDINGS.” ‪

Yikes! I'm guessing (hoping?) that none of the five distributors are ADRs for any legitimate pharmaceutical manufacturers.

History has shown us that wild west secondary trading markets create a wide open gateway for counterfeit drugs to enter the legitimate drug distribution system. Read Dangerous Doses: A True Story of Cops, Counterfeiters, and the Contamination of America's Drug Supply, an expose of drug diversion by essentially unregulated drug wholesalers in Florida. The book will show you why Florida passed a pedigree law.

NO WHINING

I get plenty of complaints whenever I write about gray markets because the legitimate secondary wholesalers don't want to be lumped in with the "bad apples."

But as I point out in The 2011-12 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, smaller pharmaceutical wholesalers play a legitimate role in the industry:

• They are the primary wholesale suppliers for smaller retail and non-retail customers.
• They provide a secondary source of supply for customers of the Big Three wholesalers, especially independent retail pharmacies and small chains.
• They often focus on a subset of the market, such as a geographic region or a specific product category (generic or specialty drugs).

But the burden of proof is on the "legitimate" secondary wholesalers to distinguish themselves from the troublemakers.

This is not happening. In fact, the National Coalition of Pharmaceutical Distributors (NCPD), which purports to represent 4,000 "small and independent pharmaceutical distributors," hasn't even bothered to update their Press Room webpage in two years. Time to purchase Public Relations For Dummies?

P.S. Please don’t accuse me of Big Three bias because none (zero, nada, zip) of my clients are wholesalers or distributors.