Congressman pushes for ‘gray market’ reform bill

Congressman Elijah E. Cummings has introduced a bill to stop price-gouging for drugs that are in short supply. He introduced H.R. 1958, The Gray Market Drug Reform and Transparency Act of 2013, on May 17.

During the national drug-shortage crisis, some wholesalers have been purchasing drugs from pharmacies, holding onto drugs in short supply, and then charging hospitals high prices for much-needed cancer drugs and other drugs for life-threatening conditions. This weakness in the drug supply chain, known as the gray market, can be corrected with this legislation, according to Rep. Cummings (D-Maryland), who is ranking member of the House Committee on Oversight and Government Reform.

“This bill closes loopholes in the supply chain and ensures that consumers and healthcare providers have more information about who is handling their drugs,” said Rep. Cummings in a prepared statement.

Under provisions in the reform bill, wholesalers will no longer be able to purchase drugs from pharmacies and turn around and charge high prices on the basis of shortage. In addition, a national database that will be publicly available will include information on distributors, such as licensing status and any disciplinary actions they may have received.

Rep. Cummings worked with Senators John D. Rockefeller (D-West Virginia) and Tom Harkin (D-Iowa) to investigate the gray market and released a report last July. They found that the gray market of drug wholesalers was charging high prices to health systems for drugs that were in short supply. Many of the drugs had gone through a number of gray-market drug companies receiving successively higher markups before a health system purchased them. Some pharmacies involved in selling to the gray market were dealing only with the gray-market wholesalers and dealing only with drugs in short supply.

Some gray-market drug companies that operated in numerous states had received disciplinary action against them, according to Rep. Cummings.