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Congressman probes drug shortages, price markups

By the CNN Wire Staff
October 5, 2011 -- Updated 2241 GMT (0641 HKT)
STORY HIGHLIGHTS
  • Congressman unhappy with "gray market" prescription price markups
  • He demands information from five companies
  • Prescription drug shortages a problem for hospitals, elsewhere

(CNN) -- Concerned about the nationwide drug shortage and exorbitant markups, a congressman Wednesday asked five "gray market" companies that buy and sell hard-to-find drugs to provide information on their sales.

Rep. Elijah E. Cummings, D-Maryland, ranking member of the House Committee on Oversight and Government Reform, said in a statement that he is looking into the extent at which "middleman companies are making substantial profits by engaging in a form of drug speculation."

One of the companies allegedly sold a drug used to treat leukemia for more than $990 per vial, more than 80 times a typical contract price of about $12 per vial, according to Cummings.

‪"Price gouging for drugs that treat cancer in children is simply unconscionable," said Cummings. "We want to know where these companies are getting these drugs, and how much they are making in profits. Obtaining this information will help us develop concrete solutions."

The "gray market" is a parallel market for drugs. Companies in that market don't manufacture prescription drugs, but obtain them as distributors and try to sell them to hospitals, pharmacies and doctors' offices.

The U.S. Food and Drug Administration says it has been working to alleviate prescription drug shortages.

Valerie Jensen, associate director of the agency's drug-shortage program, told CNN's Randi Kaye last month that part of the problem in hospitals is quality problems with drugs, fewer manufacturers and discontinued drugs.

Shortages of some 150 crucial medicines have killed at least four hospital patients, according to 2010 reports from a patient safety group.

One of the hospital drugs in shortage is morphine, and two patients died of an overdose when hospitals substituted a more powerful drug instead, according to the Institute for Safe Medication Practices.

Cummings, who said he has set up a tip line on price gouging related to drugs in short supply, said one of the five companies is cooperating.

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