Regulatory Focus™ > News Articles > Legislators: To Help Alleviate Drug Shortages, Establish Track and Trace Provisions

Legislators: To Help Alleviate Drug Shortages, Establish Track and Trace Provisions

Posted 13 June 2012 | By

Two Democratic legislators this week sent a letter to members of the Senate's and House of Representatives' healthcare oversight committees detailing the findings of the legislators' investigation into the effects of the so-called "gray market" on prescription drug shortages.

In their 11 June letter, Senator Jay Rockefeller (D-WV) and Representative Elijah Cummings (D-MD) said their investigation had "identified significant risks in the US pharmaceutical distribution chain that make it difficult for health care providers to obtain safe and affordable drugs for their patients."

The congressmen had been looking at instances of "gray market" selling, in which small wholesalers identify drugs either in a shortage situation or likely to experience one, purchase as much of the drug's stock as possible to further exacerbate the shortage, and then take advantage of the increased demand by increasing the price of the drugs. Hospitals have been increasingly reporting receiving unsolicited offers from the wholesalers, who are offering to sell them the drugs, the congressmen said.

Most troubling of all, their investigation found some wholesalers purposefully obtaining additional licensing just to be able to obtain greater supplies of drugs experiencing shortages with no intent to sell the medicines to hospitals or physicians, thereby worsening the shortage and increasing prices. Still other companies appeared to set up shell partners or subsidiaries to funnel short-supply drugs to other gray-market distributors for greater financial gain.

Both Rockefeller and Cummings said such actions threaten the integrity of the pharmaceutical supply chain, saying they were not confident about proper handling of medicines in light of facts disclosed during the course of their investigation.


The congressmen offered up three recommended solutions aimed at ameliorating or possibly solving the problem. The first would be the establishment of a drug pedigree system in which wholesalers of medicinal products would be required to establish the entire line the product traveled between manufacture and sale to a consumer. The congressmen said a federal pedigree system would be preferable to a patchwork of state-run pedigree systems, and called for its establishment.

The congressmen also called for the establishment of a "track and trace" system, which the committee has been considering for inclusion in the final version of the user fee bills for the US Food and Drug Administration. While track and trace measures, which assign a unique identification number for each product produced, have been adopted by the Senate, no such measures were adopted by the House of Representatives during its markup of its version of the same legislation.

The final recommendation by the congressman involved revamped standards for wholesalers, which the legislators said were lacking. While acknowledging the lawful operation of many drug distributors, Rockefeller and Cummings noted the numerous deficiencies found in the course of their investigation, and said many of them appeared "to serve little purpose other than facilitating transactions during which gray market entities apply large markups."

They referred to Cummings' Gray market Drug Reform and Transparency Act, released in May, as a model for reform in this area. The bill would make several reforms to the way wholesalers are allowed to operate, including prohibiting the purchase of prescription drugs from pharmacies, the establishment of a national wholesaler database, and the establishment of fees for wholesale distributors.

Read more:

Rockefeller and Cummings' Letter to Congress

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