Scarce drugs boom on the gray market

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Drug shortages, as ACSH s Dr. Bloom explained in a recent op-ed, are a serious and growing problem in the U.S. As he points out, these shortages consist largely of pharmaceutical staples: saline solution, antibiotics, sedatives, epinephrine and morphine supplies found in every emergency room. Now, a recent analysis by the Premier healthcare alliance finds there is a booming gray market of secondary pharmaceutical suppliers for many such products.

These drugs, either back-ordered or unavailable from the manufacturer, may be marked up from 100 to 4,500 percent of their typical price by sometimes questionable vendors. Such vendors solicit buyers via email or fax, taking advantage of a market shortage that has hospitals scrambling for a means to treat their patients with the medications they rely on. Yet exorbitant mark-ups aside, there are other reasons why hospitals should think twice before resorting to gray market drugs: the Premier analysis found that many of these drugs have been mishandled, rendering them ineffective or harmful, while some may be counterfeit or diluted.

Dr. Bloom observes that all of these shortages are the result of expired patents that have driven the original manufacturer out of the market, sometimes leaving companies with little incentive to make certain drugs. For a combination of reasons, says Dr. Bloom, once a patent expires, there is no way to ensure that a generic company will manufacture a drug. These issues rarely occur with the brand-name drugs, he notes. So, in effect, those who counted on cheap generics to get back at our pharmaceutical companies have won a Pyrrhic victory.