Prices of Life-Saving Drugs Grossly Inflated Due to Scalping
On 04.09.11, In Legal Industry, by Blake Houser
Reports of another prescription drug that is unavailable or in short supply continue to pour in daily. Meanwhile, fax machines in hospitals nationwide continuously light up, spewing out “offers” to provide a desired drug at a huge cost.
Scalping has penetrated the therapeutic drug industry, with average mark ups at 650%, but sometimes skyrocketing to as much as 4,500%. Industry experts say that they are referred to as “gray market” offers because they are perceived as unsavory, but nevertheless, legal. This was according to an analysis that was released by Premier Healthcare Alliance this week. The group is a quality improvement and purchasing organization with around 2,400 provider members, which include hospitals.
According to Mike Gwynn, a pharmacy buyer at St. Mark’s Hospital, “People looking to sell pharmaceuticals in short supply contact us on a regular basis, almost daily. They are charging exorbitant prices for drugs that are in high demand, sometimes up to 100 times the normal price.”
He said that St. Mark’s Hospital and MountainStar, as well as their parent company, HCA, has a policy against dealing with these types of suppliers.
The same policies are being observed in University Hospital and Intermountain Healthcare.
In its analysis, Premier explained that the gray market is “a supply channel that is unofficial, unauthorized or unintended by the original manufacturer. They sometimes evolve in response to drug shortages, it noted, to sell those drugs at “any price the market will bear.”
Premier, in its analysis, mentioned 416 shortage drugs that are being offered on the gray market. It revealed that drugs used to treat the critically ill have the highest mark ups. These drugs are typically used in critical care sedation and surgery, chemotherapy, fighting infectious diseases, and emergency care.