Providers fuel ‘gray market’
Some sell while others buy during drug shortage
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