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Hearing of the Senate Commerce, Science, and Transportation Committee - Short-Supply Prescription Drugs: Shining a Light on the Gray Market


Location: Washington, DC

We're holding this hearing today because some unscrupulous people have figured out a way to make a quick buck at the expense of sick patients, hospitals, and our entire health care system. For the past few years, hospitals all over the country have been struggling with the terrible problem of drug shortages. The drugs that have been in short supply are not allergy or blood pressure pills. They are powerful drugs doctors need to treat cancer patients or perform surgery. These drug shortages make it difficult, and sometimes impossible, for doctors, nurses and other health care professionals to do their job -- which is to care for us when we are critically ill.

A West Virginia hospital recently told me about two young ovarian cancer patients who travelled several hours to reach the hospital and start their treatment. When they arrived, the hospital had to send them home because it didn't have the needed drug. The main purpose of this hearing today is not to talk about the causes of drug shortages. There have been hearings in other committees about this issue. I know that the FDA and the drug industry are working hard on averting shortages. I applaud them and urge them to keep at it.

What we are here to talk about today are the opportunists who suddenly appear when drugs are in short supply. They are profiteers, people who exploit the misery of sick patients to make a quick buck. We usually call them "gray market" companies, although they have been given more colorful names, like "sharks" or "drug scalpers." These gray market companies seem to know when drugs are in shortage, even before the hospitals do. And they always seem to be able to get their hands on short-supply drugs, even when authorized prescription drug distributors don't have them in stock.

For the past few months, my friends Senator Harkin, Congressman Cummings and I have been investigating who these gray market companies are and where they are getting their drugs. I ask unanimous consent to insert our staff report on this investigation into the record of this hearing.

What we have found is that our drug distribution system has weak points, and gray market companies know how to exploit them. We have learned that there are people in the drug supply chain who ignore their professional and business obligations, and sell their drugs to gray market companies instead of to doctors and patients. We have carefully mapped out dozens of cases where prescription drugs that should have been delivered to hospitals and administered to sick patients instead spent weeks circulating in the gray market.

We're not sure about everything that happens to the drugs while they are being passed from hand to hand in the gray market. But here's one thing we do know -- every company in the chain charges a big mark up. By the time the gray market has done its work, a cancer drug that originally cost 10 or 12 dollars has become a drug that cost 500 or even a thousand dollars. This kind of price gouging is disgusting and indefensible. Not even the gray market companies themselves are willing to defend it. I invited the five companies we looked at in this investigation to testify at this hearing. They all declined my invitation. They know what they're doing is wrong.

We need to close down this gray market, and do a better job making sure prescription drugs are safe and affordable. That's what I look forward to talking about today.

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