How We’re Rationing Life-Saving Drugs
Half of all hospitals are buying drugs on the gray market:
Fifty-two percent of hospital purchasing agents and pharmacists reported they’d bought drugs from so-called “gray market” vendors during the previous two years, according to a just-released survey of 549 hospitals by the Institute for Safe Medication practices, an advocacy group.
Gray-market suppliers are those that operate outside official channels, often buying drugs from uncertain sources and reselling them at a steep profit. A report issued last week by a one hospital association found their average mark-up was 650 percent.
Pressures from demanding doctors and desperate patients helped fuel the transactions, making hospital staffers feel like they had no choice but to buy drugs in short supply at steep prices.
Every time I read about this problem, it seems to get worse and worse.
This is only the beginning. There is more rationing to come.
There would be no gray market in scarce drugs were it not for the price controls that Medicaid and the 340b mandatory discount drug program requires.
Most of the drugs in short supply are old, injectable drugs. Prices are a function of the CPI and cannot be increased to compensate for needed upgrades to manufacturing facilities. Once the old plant becomes obsolete, the drug maker has an incentive to stop producing the drug.