Providers fuel ‘gray mar­ket’

Some sell while oth­ers buy dur­ing drug short­age

Modern Healthcare - - The Week In Healthcare - Jaimy Lee

Hos­pi­tals, phar­ma­cies and physi­cian’s of­fices are both buy­ers and sell­ers feed­ing a so-called gray mar­ket for drugs of­ten marked up to ex­or­bi­tant prices and sold to hos­pi­tals strug­gling with drug short­ages.

The grow­ing num­ber of drug short­ages in the U.S. has led to an in­creased fo­cus on gray­mar­ket ven­dors and con­cerns about the qual­ity and safety of the prod­ucts they are selling. There were 198 re­ported drug short­ages as of Aug. 25, com­pared with 211 for the full year of 2010, ac­cord­ing to the Univer­sity of Utah Drug In­for­ma­tion Ser­vice.

“There have al­ways been drug short­ages, but it re­ally peaked this past year,” said Michael Co­hen, pres­i­dent of the In­sti­tute for Safe Med­i­ca­tion Prac­tices.

Hos­pi­tal phar­ma­cists say gray-mar­ket ven­dors buy drugs from hos­pi­tals, phar­ma­cies, physi­cian groups, man­u­fac­tur­ers and whole­salers, and then the ven­dors of­fer to sell them to other hos­pi­tals with marked-up prices. The term is loosely used to re­fer to sup­pli­ers that vary from state-li­censed whole­salers to less sa­vory ven­dors that have re­port­edly sup­plied hos­pi­tals with ex­pired, dam­aged, stolen or coun­ter­feit prod­ucts. But Co­hen notes, “There wouldn’t be a gray mar­ket if we knew it was all stolen.”

While some hos­pi­tals have poli­cies in place that re­strict or pro­hibit pur­chases from these sources, fears about in­ter­rupt­ing pa­tient treat­ment or pres­sure from physi­cians have in­flu­enced hos­pi­tal phar­ma­cists to buy prod­ucts from gray-mar­ket sup­pli­ers.

“My un­der­stand­ing is that it’s a last re­sort,” said Joseph Hill, di­rec­tor of fed­eral leg­isla­tive af­fairs for the Amer­i­can So­ci­ety of Health-Sys­tem Phar­ma­cists. “If a pa­tient is fac­ing a cer­tain death, your hand is forced.” The trade group’s guid­ance on buy­ing drugs in short sup­ply does not pro­hibit phar­ma­cists from us­ing gray-mar­ket ven­dors but en­cour­ages hos­pi­tals to develop poli­cies be­fore a short­age, weigh pa­tient risks and es­ti­mate price vari­a­tions. The as­so­ci­a­tion doesn’t ac­tively dis­cour­age hos­pi­tals from selling drugs to ven­dors but it does not sup­port the prac­tice. “We wouldn’t be in fa­vor of it.”

Pur­chas­ing drugs from such ven­dors is wide­spread, de­spite well-pub­li­cized con­cerns about drugs that are coun­ter­feit, stolen, ex­pired or stored in­ap­pro­pri­ately.

The In­sti­tute for Safe Med­i­ca­tion Prac­tices sur­veyed pur­chas­ing agents and phar­ma­cists at 549 hos­pi­tals in July and Au­gust and re­ported that 51% of re­spon­dents had bought one or more phar­ma­ceu­ti­cal prod­ucts from sources con­sid­ered gray mar­ket in the past two years. More than 13% of re­spon­dents to the sur­vey had re­ceived so­lic­i­ta­tions to sell the hos­pi­tal’s med­i­ca­tions.

Re­cent short­ages have led to con­cerns that ven­dors are stock­ing up on the drugs in short sup­ply.

In­di­ana Univer­sity Health pur­chased two prod­ucts from a se­condary ven­dor last year, ac­cord­ing to Wil­liam Shaw, di­rec­tor of statewide phar­macy pur­chas­ing and lo­gis­tics for the sys­tem. Although IU Health estab­lished a pol­icy to avoid buy­ing gray-mar­ket drugs two years ago, the phar­macy staff de­cided to pur­chase two prod­ucts for which

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