Des­per­a­tion premium

Providers, pa­tients, phar­ma­cies can all work to stop drug-price goug­ing

Modern Healthcare - - Opinions Commentary - Mike Alkire Mike Alkire is chief op­er­at­ing of­fi­cer of the Premier health­care al­liance, Char­lotte, N.C.

Af­ter Hur­ri­cane Ike hit in 2008, cities across the South­east faced a sig­nif­i­cant fuel short­age. At one point in Char­lotte, N.C., only 1 in 7 gas sta­tions was open with as many as 60 com­pletely out of gas.

Peo­ple were des­per­ate to get the gas they needed to func­tion and oth­ers tried to make a buck off the sit­u­a­tion. Within days, state of­fi­cials re­ported hundreds of cases of price goug­ing by prof­i­teers who sought to cap­i­tal­ize off oth­ers’ mis­ery. In some cases, prices more than dou­bled, hit­ting $7.30 a gal­lon!

The sit­u­a­tion forced then-North Carolina Gov. Mike Easley to ac­ti­vate anti-goug­ing pro­vi­sions, pro­hibit­ing sta­tions from charg­ing un­rea­son­ably high prices.

It’s no se­cret that health­care is ex­pe­ri­enc­ing one of the most se­vere drug short­ages in recorded his­tory (Sept. 5, p. 8). A num­ber of or­ga­ni­za­tions, in­clud­ing the Amer­i­can Hos­pi­tal As­so­ci­a­tion, Amer­i­can So­ci­ety of HealthSys­tem Phar­ma­cists, Univer­sity of Michi­gan Health Sys­tem and Premier health­care al­liance, have found that the vast ma­jor­ity of hos­pi­tals are ex­pe­ri­enc­ing life-threat­en­ing short­ages of medicines.

Short­ages are get­ting so se­vere that, ac­cord­ing to the Univer­sity of Utah, 360 drugs will be un­avail­able by the end of the year, the high­est num­ber recorded. These in­clude those used in chemo­ther­apy, se­da­tion drugs used to con­duct surg­eries and drugs needed to pro­vide emer­gency treat­ments to heart at­tack pa­tients.

We might hope that in this time of cri­sis, peo­ple would band to­gether and do every­thing they could to help hos­pi­tals get the drugs they need, when they need them. In­stead, some price gougers are us­ing this short­age as an op­por­tu­nity to en­rich them­selves, at pa­tients’ ex­pense.

Price gougers of­ten ob­tain short­age medicines from quasi-le­gal sources, called “gray” mar­kets. Also known as a par­al­lel mar­ket, a gray mar­ket is a sup­ply chan­nel that is un­of­fi­cial, unau­tho­rized or un­in­tended by the orig­i­nal man­u­fac­turer. They of­ten crop up in mar­kets where the prod­ucts are scarce or in short sup­ply. Cap­i­tal­iz­ing on the des­per­a­tion of phar­macy di­rec­tors and buy­ers who are find­ing it in­creas­ingly dif­fi­cult to se­cure a suf­fi­cient sup­ply of the needed drugs, these prof­i­teers may be the only avail­able source of sup­ply.

But price gougers in health­care are even more un­con­scionable than those af­ter Hurri- cane Ike be­cause they are tak­ing ad­van­tage of some of our most vul­ner­a­ble cit­i­zens. And it didn’t re­ally mat­ter where the North Carolina gougers got their fuel sup­ply or how it was trans­ported into the area. With medicines, those con­sid­er­a­tions are ex­tremely im­por­tant.

Modern medicines are highly so­phis­ti­cated, re­quir­ing ap­pro­pri­ate stor­age and han­dling and spe­cific tem­per­a­ture or other con­trols to en­sure safety and ef­fi­cacy. This is why phar­ma­ceu­ti­cal dis­tri­bu­tion is highly reg­u­lated, with strict re­quire­ments to record the prod­uct’s chain of cus­tody from man­u­fac­turer, to dis­trib­u­tor, to phar­macy.

When price gougers emerge with short­age prod­ucts, sev­eral ques­tions emerge: Where and how are they get­ting medicines that no one else can? How can the in­tegrity of these drugs be as­cer­tained? Is it best prac­tice—or even ac­cept­able—to buy from these sources?

Ac­cord­ing to a Pew Health Group re­port, gray mar­ket drugs are of­ten bought and sold across state lines, moved in whole or par­tial lots, repack­aged or re­la­beled. These com­plex webs of trans­ac­tions can make it al­most im­pos­si­ble to de­ter­mine the sup­ply source or the prod­uct’s au­then­tic­ity.

This adds in­sult to in­jury. Not only are phar­ma­cies be­ing asked to pay the price gouger’s premium, but in some cases, they can’t be sure that the medicine they’re buy­ing is safe or even the real thing.

A key way to stop price goug­ing is for phar­ma­cies to avoid do­ing busi­ness with gray mar­ket ven­dors. Close scrutiny is sug­gested of drugs from a new sup­plier, look­ing for le­git­i­mate ex­change of prod­uct be­tween points of sale to and from li­censed dis­trib­u­tors and buy­ers. And when­ever a pur­chase is made from a new sup­plier, com­par­ing and scru­ti­niz­ing the prod­uct pack­age, la­bel and con­tents is es­sen­tial. Pa­tients can help, as they can of­ten de­tect sim­i­lar ab­nor­mal­i­ties.

Phar­ma­cies should also refuse to do busi­ness with any or­ga­ni­za­tion that can’t ver­ify its sup­ply source and ap­pro­pri­ate state li­cen­sure. Sus­pi­cious or­ga­ni­za­tions can be re­ported to the Food and Drug Ad­min­is­tra­tion and state phar­macy boards.

An­other so­lu­tion is to ad­dress the drug short­ages them­selves. Con­sol­i­da­tion of pre­scrip­tion drug man­u­fac­tur­ers and un­pre­dictable prob­lems in ob­tain­ing raw ingredients can lead to short­ages, but no one cause ex­plains the is­sue al­to­gether.

Like­wise, no easy so­lu­tion ex­ists. Though a bi­par­ti­san group of sen­a­tors is urg­ing ac­tion, govern­ment can­not or­der the pro­duc­tion of more drugs. They can work with man­u­fac­tur­ers to give phar­ma­cies ad­vance no­tice of pend­ing short­ages, as well as ease some of the reg­u­la­tory bur­dens of drug ap­provals and ex­pe­dite qual­ity in­spec­tions in emer­gency sit­u­a­tions.

Whether gaso­line or med­i­ca­tion, it’s never ac­cept­able to profit off of national cri­sis by en­gag­ing in price goug­ing. Con­sid­er­ing the na­tion’s bud­get cri­sis and the pos­si­ble threats to pa­tient care, this type of ac­tion in health­care is much more per­ilous.

Prof­i­teer­ing at the ex­pense of cit­i­zens is not only un­eth­i­cal. It’s tak­ing ad­van­tage of those who are strug­gling to af­ford and ob­tain some­thing des­per­ately needed to sur­vive.

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