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As patients in the U.S. struggle with ongoing shortages of critical prescription drugs, federal lawmakers are investigating so-called “fake pharmacies” that they say are trying to turn a profit by buying and reselling scarce medications.
When cancer patient Jay Cuetara, 50, of San Francisco arrived for a scheduled chemotherapy treatment last August, his infusion nurse told him one of his prescriptions, an injectable form of the drug fluorouracil, was out of stock.
“When my nurse told me that the drug wasn’t available, that I wouldn’t be able to do my chemo that day, I was literally shocked,” says Cuetara, who has stage IV rectal cancer. “How could this be happening in the United States of America?”
Cuetara’s experience is not uncommon. The number of drugs in shortage reached a record 267 in 2011, up from 211 the year before, according to the University of Utah Drug Information Service, which tracks the problem. Some of the drugs in shortage treat cancer and other life-threatening diseases.
At the same time Cuetara learned his chemo drug was out of stock, congressional investigators say, records show that a company called LTC Pharmacy, licensed as a pharmacy in Durham, N.C., was buying the same drug – fluorouracil – supposedly to fill its own patients’ prescriptions.
But when North Carolina regulators inspected LTC Pharmacy, they found what appeared to be just a shipping and receiving office – with no records, no dispensing equipment, no patients. Not even a pharmacist on duty.
Congressional investigators claim "fake pharmacies" are popping up around the country that purchase drugs in short supply, and then turn around and sell them at higher prices. NBC's senior investigative correspondent Lisa Myers reports.
“They had not dispensed any medications for a prescription,” said Bob Braswell, one of the inspectors who visited the company.
Suspicious, the inspectors opened an investigation and obtained prescription drug sales records, invoices and purchase orders, which they later shared with congressional investigators. The records showed that LTC Pharmacy was buying drugs – including some chemotherapy drugs in shortage – and then, sometimes on the same day, reselling them to a wholesale drug company called International Pharmaceuticals. That wholesale company, it turned out, was located at the same address as LTC Pharmacy, and was registered to the same individual.
The records showed that International Pharmaceuticals was then reselling the drugs to other companies, at higher prices.
According to Braswell, the records showed that approximately 26 percent of the drugs they were buying were in short supply.
Although the company was selling some drugs to health-care providers such as hospitals, Braswell told NBC News that it was reselling approximately two-thirds of the drugs it bought to other wholesale distributors.
Congressional investigators told NBC News and Reuters that all inspections and records showed that, although the company had applied for and received appropriate licenses, and although the wholesale part of the business was legitimate, the pharmacy was in fact a “fake.”
Rep. Elijah Cummings, D-Md., says the investigation he launched in October shows that so-called “gray-market” drug suppliers – sometimes operating as fake pharmacies – are reselling scarce medications at higher prices, while some hospitals and patients scramble for supplies. And making drug shortages worse.
“This is about greed,” Cummings, ranking member of the House Oversight and Government Reform Committee, told NBC News. “This is simply about greed, people wanting to make a quick buck at the expense of sick American people.”
Braswell’s supervisor, Dan Regan, director of the Food and Drug Protection Division of the North Carolina Department of Agriculture, told NBC News his office denied renewal of the International Pharmaceuticals’ wholesale license, effectively shutting it down in North Carolina. (It denied the renewal because of a rule violation. While International Pharmaceuticals had a wholesale license, LTC Pharmacy was reselling drugs without one.)
“We took it seriously enough to deny renewal of the license, Regan said. “That's about as significant as we can react.”
When NBC News reporters visited the building where LTC Pharmacy and International Pharmaceuticals had operated earlier this year – after the renewal of the license was rejected -- no one was there. A “for lease” sign stretched across one window. The interior space, glimpsed through blinds, appeared empty.
Documents filed with the State of North Carolina list Jessica Hoppe of Florida as president of both companies. A lawyer for Hoppe told NBC News that she is a smart businesswoman who is “helping, not hurting” the drug shortage problem by enabling medical facilities to get medications to their patients more quickly.
This spring, however, Hoppe acknowledged that she and her partners “decided to close” International Pharmaceuticals and that the company had “ceased operations” as of the end of last year. Her statements came in a letter to the State of Texas’ licensing office, requesting that it cancel its wholesale drug distributor license for International Pharmaceuticals. Congressional investigators released the letter, dated in March, a few weeks ago.
Congressional investigators say LTC Pharmacy is not an isolated case. They say they’ve found what appear to be fake pharmacies around the country, buying up medicines in short supply and then selling them at a profit.
“It’s definitely making the shortages worse," Cummings said.
Recently, two Senate committees – the Committee on Commerce, Science, and Transportation and the Committee on Health, Education, Labor, and Pensions – joined in Cummings’ investigation and are also making active inquiries.
In late May, Cummings introduced a bill H.R. 5853, the “Gray Market Drug Reform and Transparency Act of 2012,” to address the issues his investigation revealed. The bill “includes several provisions to address weaknesses in the drug supply chain, deter price gouging and improve drug safety and efficacy,” according to a statement from the House Committee on Oversight and Government Reform.
Meanwhile, the shortages of critical drugs continue. Cancer patient Jay Cuetara told NBC News this week that he is now experiencing new shortages of the drugs prescribed to treat his cancer. The same chemotherapy drug that was out of stock last summer, fluourouracil, is again unavailable, he said. And now another cancer-treating drug his doctor had prescribed, Leukovorin, is unavailable too.
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This is about corruption in the American healthcare system. But it's the best damn healthcare system in the world...
I'm not sure how you determined we have the best healthcare in the world, but I think it could be argued, justifiably, that we DO NOT have the best. I simple review of other nations would probably reveal that we aren't even in the top 10.
Just my opinion, however.
Sureee, in the same way that the religious are the most educated and truthful.
Fox News told me ours is the best healthcare system in the world, elremo. That was until O'blah blah wrecked it.
The "best damn healthcare system in the world..." ranks 37th out of 191 countries according to a recent World Health Organization study. The U.S. is ranked just one higher than the United Kingdom which has socialized medicine.
See, just like Fox News suggested, we went from #1 to #37 in 3.5 years. It's a crying shame.
It may have been the best at one time, but not anymore. I can't imagine how this is not 100% illegal? These people should be arrested for illegal drug operations, they should also be charged with attempted murder. Why is there a shortage of drugs, to begin with? Did they run out of the chemicals they are made from or just decide to cull the poor and middle classes??
and Credit.... WHAT does religion have to do with this????
I took "Credit's" message to mean, "Just because you [Fox News, Mitt Romney, John Boner] say it, doesn't make it so."
Deregulation will fix this rampant creating of false shortages and improper price gouging! (sarcasm)
corruption? YES!
best healthcare system in the world? NOT EVEN CLOSE. NOT EVEN IN THE GAME! i'll go as far as saying HORRIBLE healthcare system.
the false shortages are simply designed to inflate pricing in the u.s. it is amazing that you can buy prescription pharms without insurance in about any country at a mere fraction of the purchase price in the u.s. even with insurance. big pharm has to have enough money to buy all of the members of congress.
is healthcare reform needeed? absolutely.....is obummer's plan the right direction? not even close. it simply does not address 90% of the real issues that are wrong with the u.s. system. the first issue being the corruption.
i heard a great saying....."i wish members of congress had to wear uniforms like nascar pit crews so we could tell who their sponsors are."
skeptical one
You're wrong! We're still number 1, in expenditures per capita. The 2000 World Health Organization put the U.S. at #37 and it hasn't changed much since.
Just ignore the facts and depend on Faux Noise to tell you what you think.
Hummmmmmmmmmmmmm ..... "How could this be happening in the United States of America?”
It' the new American way ..... "Avarice & Greed" .... and in health care, the main cause is never discussed .... "Third Party Payee's" ................................................................................................ Who cares what anything cost if you don't have to pay for it?
The chemo I take for cancer Is BCG .... and the last few times I have had to return to the doctors office because it wasn't available, and my doctor is forced to buy it from independent suppliers to get it for me.. It's wholesale cost to him (according to my physician) is $200 per dose BUT he is told that it can be purchased on the open market in Canada for $5.00 per dose .... WHY?
If that isn't bad enough after having gone through 41/2 years of the protocol ( three doses, once a week for three weeks, Twice a year) the last treatment of the last series, destroyed my quality of life to the degree, that I have refused to take the last three treatments of the final treatment.
Why? ..... because, I'm not sure that the drug administered in the last treatment was really" BCG" the system has no valid checks and balances to insure that the patient is even receiving the real drug!
The Government is so concerned that citizens might put a "illegal" drug in his body that our prisons have over 1,000,000 persons incarcerated for drug offenses and jet they can't even assure cancer patients that the drugs sold & administered to them are what they are labeled ....(Fake cancer drugs are a 3 billion dollar business in this country)
It's time that we reevaluate our priorities in this nation .....
If there are middlemen buying and reselling the medicine, how is that creating a short supply? They have to be selling it to SOMEONE who in turn has to make a profit by selling it to the consumer. I think there are short supplies due to other reasons and people are now taking a closer look at the inner goings-on of the specialty pharmaceutical industry and seeing shady business practices and not liking it...this particular middleman did not have a resell license so yes, that is an illegal practice, if it DID have a resell license everything would have been ok. I guess there is just something about this I don't quite understand, most goods in the USA change hands a few times before making it to the consumer.
BTW - I do work for a specialty pharmacy and have not noticed any shortages with our particular drugs, our wholesale buyers never have a problem locating drugs to purchase to dispense to our patients.
The more middlemen you have in the equation, the more inventory is sitting in their warehouses, especially if they're betting the price will rise. Essentially, new supply remains the same, but stockpiling by resellers reduces the end-user supply amid increasing demand.
Well Tamara, it works like this.
Middlemen/companies buy most of the production from a manufacturer until supply is short.
Then they mark the price WAY up and walk away big winners, leaving insurance companies, patients, medicare/medicaid(ie your taxes) holding the bag.
Let's pray you don't get sick and need one of those scarce medicines. Would you still think profiting off of your illness is the right thing to do?
Hmmm, ok that makes more sense, stock sitting around with the middleman waiting for higher and higher prices to sell will surely cause a shortage. Kind of like how Enron ran California's energy back in the day, creating false shortages to charge more.
Scott - It has nothing to do with whether I personally think it's the right thing to do and I certainly did not say that, read much? Companies are in business to make a profit, just because medicine is needed to treat people doesn't mean that it will be manufactured and given away for free, thinking otherwise is just naive. Do you think that everyone in the medical industry (or ANY industry) is in it for the sake of their fellow man and is willing to run a non-profit organization? Nope. I want a new Hyundai, how dare they mark up the value to make a profit! Yes, there are human lives in hanging in the balance but the way the laws are written, it doesn't matter. Call your Congressman if you want changes to the way pharmaceuticals are manufactured and sold in this country.
Tamara, what makes you think if they had a resale license it would be OK? Have you ever heard of collusion? Same business owners selling to themselves and passing on the increased price.
Taken from a definition of collusion: "to limit open competition by deceiving, misleading, or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair advantage." There should be a special place in hell for people who deprive cancer patients of their life-savings medications in order to line their pockets with money.
But... but... capitalism!
And how 'bout that teabagger Niki Haley? Wouldnt she be just the bees' knees as VP? Go get 'er, Willard!
Unchecked capitalism, unchecked anything is ripe for abuse.
Eliminate the FDA for anything more than prosecuting people making or selling drugs without full disclosure of the knowledge of side effects or how effective it is. If we did this then pharama companies wouldn't be forced to sell to resellers. They would be able to ship it directly from their door to your door.
The problem with grey market drugs is that the name makes it sound benign. Call it diverted and stolen and see how well that sits.
Since the drugs are paid for, they are neither.
they are illegally bought ... yes it is a crime ... they were diverted from paying customers for some middleman to get rich by sitting on them .... till he gets the price he wants .... what if you had that happen to you? you would be screaming your head off...
Get outta here!
This is what the private sector and capitalism is all about. I get charged $17.50 for an oil filter in California at the Ford Dealership and then drive home to Missouri where the Ford Dealership charges me $2.89. My wife has to go see a dental specialist who tries to hijack her away from her regular dentist and after taking $25,000 in charges, he comes up with $1300 more in work he says she needs, a new filling and a new cap. She goes back to her regular dentist and she tells my wife that there are too many dentists in this area who think they can make big bucks so they find unneeded work to do. Air conditioner repairmen. Look at MSN today and you'll see that 6 out of 6 air conditioner repairmen are either incompetent or crooks. I tune my car up myself. Everything is set perfect, dwell, timing mark and the car runs like crap. I take it to a Chevron Station where the mechanic tells me my timing chain is slipping and it will cost me several $100 to correct it. I call my brother-in-law a grocer up. He says "When's the last time you changed the spark plug wires.?" I say "Never." He tells me to try that, it works, the car runs perfectly. I guess the mechanic was going to grease some spark plug wires up to make them look old and then replace them and charge me several $100 for my timing chain slipping. American Capitalism. Look at the Greed. Read the old testament in the bible and tell me there is any difference in what God was angry about back then the way people were ripping one another off.
That's why when I buy from a "fake" pharmacy I always use a "fake" credit card............fair's fair.
Oh I forgot the pharmacist in Kansas City who diluted chemo drugs, drugs that may have been used on my father who died.
But when they catch these crooks nothing happens.
How dare they cut into legit pharmacy's profiting off of scarce drugs!? I only want the companies responsible for the shortage getting my money.
Hospitals throw good drugs away and people complain about fake pharmacies.
Hospitals do not throw away good drugs, they EXPIRE.
Do you eat old bread and yogurt? Restaurants aren't allowed to serve old food, why do you want hospitals serving old drugs?
Required by the administration. Don't worry, they get theirs first.
Public execution of these people would be a good way of putting a stop to this. No trial just taken out to the street and shot in the head. Left with signs on them. Hurt the sick by their greed.
Get the money out of politics, especially the big pharma money.
These secret fund and unreported campaign contributions from newly formed 'super pacs' threaten the whole regulatory system.
Government can do better than this, when they are not paid to look the other way.
ObamaCare is coming. Get used to it.
This is happening before the ACA takes any real effect. This is not CAUSED by the ACA.
Try posting something that isn't an absolute fabrication next time.
This is what a 'Free Market' brings to healthcare, GREED, GREED, GREED!
Capitalism at its coldest. Just creating another middleman to collect a profit for doing nothing more then passing something along. Jessica Hoppe the 1%er wannabe has given up her Pharmaceutical License. I'd like to know what she is doing now to rip off the average guy.
As a proud Republican I want you to know that when our man Mittens is elected he's going to do away with all these bothersome, piddling state agencies that get in the way of people trying to help other people and make a few honest dollars at the same time. Yesiree, our man Mittens will fix this country up right. Count on it.
A wiff, just ever so slight an odor of sarcasm permeates this post Mr bobber-3677831. You sir, I believe, are not really a proud Republican. You sir are probably not a Repulican at all. I'd ask to see your papers, but that would be profiling. I Thank God every day for Mittington, He'll close those agencies down and put those useless bureaucrats on the wellfare line where they belong.
Ah, another wiff or sarcasm. LOL
Not sarcasm sir. A true believer. I truly believe that Mittington will put more folks on the welfare line. I just hope they deserve it. Then he'll pull it out from under them. Who needs a safety net?
I'm sick with 2 chronic illnesses, but this makes me sicker.
Isn't this simply free enterprise in the goper mold?
No regulation. No oversight. If one can lie with SCOTUS approval about your non-existent service record then why not sell non-existent drugs, as long as you pay the bribes-extortions-contributions to the right-wing PACs so they can afford to wreck this country even worse?
Private sector business people = crooks
What's the prob? Let the invisible hand of the free market regulate things. It's capitalism at it's purest and if you want drugs or health care you should go out and get it and not expect government to provide a level playing field. If you're rich you'll find a way to get your drugs. If you're not rich, go out and find a way to GET rich. All these damned teachers and cops and firefighters are practically welfare cases living off the public dole. Quit whining and get your piece of the American Dream
Signed,
Mitt Romney
This is a harbinger of things to come in a world of no regulation. Why even deny them a license. Let them eat cake!
This same thing happened in Europe with carbon share credits. They were issued, the Russians bought up the lions share then resold them for twice the cost. If you wanted to turn on the lights of machines it cost double. There will always be people, gangs or governments that are willing to hurt others to make big profits. Hoarding or raising the price on plywood in advance of an approaching huricane was done for years until they made it against the law. That is what they should do here.
The question I have is why is there a sortage in the first place? Drugs are relatively cheap and easy to make. The big cost of drugs is to pay for the research costs. That's why when drugs become eligable to be made by companies that didn't develope them the prices drop radically. Someone should be investigating why the drug company holding the pattent isn't make more of the drug. Most likely it is to hold prices at a higher level through planned shortages.
We don't want the government in charge of health care yet we are such a money hungry greedy people, when left to our own devices this is what we do to one another.....Things are too out of control. Someone has to police us. We can't trust on another and no one can be trusted to do the right thing. I know everyone is not like this but it doesn't take that many to spoil it all. Such a shame. I hope my son doesn't have children. Who knows what things will be 40 years from now.