Schumer Pushes Plan to Ensure Hospitals and Patients Get Medicine They Need

January 5, 2012 Updated Jan 5, 2012 at 1:27 PM EDT

By WKBW News

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Schumer Pushes Plan to Ensure Hospitals and Patients Get Medicine They Need

January 5, 2012 Updated Jan 5, 2012 at 1:27 PM EDT

Buffalo, N.Y. (WKBW release) -- Thursday, at the Roswell Park Cancer Institute in Buffalo, New York Senator Charles E. Schumer announced his three-point plan to help ward off shortages of life-saving drugs that are currently hitting hospitals throughout Western New York.

Schumer is pushing the Preserving Access to Life-Saving Medications Act, which would require drug makers to immediately notify the FDA when a raw material shortage, manufacturing problem, or production decision is likely to cause a drug shortage. The early notification would allow the FDA to work with other manufacturers, both domestic and international, to find new sources and ensure that the supply chain is not interrupted. Schumer is also introducing legislation that would make it a federal crime to engage in prescription drug price gouging when drugs are in short supply.

His bill would give the Department of Justice the authority to prosecute price gougers and crackdown on unscrupulous drug distributors that buy life saving medications and sell them to hospitals at outrageous mark-ups. Additionally, Schumer is calling for an investigation into “gray market” drug resellers that are marking up life saving medications in short supply and re-selling them to hospitals at exorbitant prices.

Schumer’s plan comes as Roswell Park and a number of hospitals throughout Western New York have reported shortages of a number of drugs, including chemotherapy medication, that are essential to patient care. Physicians have been forced to substitute alternative medicines to cover for drug shortages, increasing the risk of error as well as the cost of care. One analysis suggested the increase in health care costs due to the need for substitutions could be as much as $200 million each year nationwide.

“Fighting cancer and other diseases is hard enough; doctors and patients shouldn’t have to do it with one hand tied behind their back. With drug shortages on the rise, it is absolutely critical to establish a comprehensive plan to ward off negative impacts to hospitals, physicians, pharmacists and patients,” Schumer said in a news release. “Most importantly, patients and medical personnel cannot be the last to know when an important drug will be unavailable to them, and this plan to minimize that risk by creating an early warning system from drug makers to the FDA makes eminent sense. What’s more, disturbing trends show that when shortages do occur, hospitals have been forced to buy life-saving medications at outrageous prices, often due to price gouging and bad actors in the medical ‘gray market’. These unscrupulous middlemen are holding patients and hospitals hostage and depriving them of much needed medicines. It has to stop. There is nothing more critical than ensuring that Buffalo doctors have the medicine they need to deliver top-notch medical care and this plan will do just that.”

Schumer was joined by Dr. Donald Trump, President and CEO of Roswell Park Cancer Institute. And other hospital doctors and nurses as he announced his three point plan to create an FDA early-warning system designed to prevent drug shortages, make drug price gouging a federal crime and demand an FTC investigation into medical “gray market” that has sent drug costs skyrocketing.

This year, pharmacists and other health care providers have been reporting unprecedented shortages of prescription drugs. Experts cite a number of factors behind the shortages, including scarcity of some raw materials, manufacturing problems, and unexpected demand.

Business decisions within the pharmaceutical industry are also a factor, such as cutting back on the production of low-cost generic drugs in favor of more profitable brand-name drugs. The frequency and impact of drug shortages have risen to critical levels, more than tripling since 2005, and affecting all segments of healthcare. According to a report from the Premier Health Alliance, in 2010, over 240 drugs were either in short supply or completely unavailable and more than 400 generic equivalents were backordered for greater than five days. From 2009 to 2010, the number of newly reported shortages rose from 166 to 211. Physicians in Western New York have noted that shortages of drugs in hospitals and clinics are occurring at an alarming rate.

Physicians in the Buffalo region have been working to deal with long and short-term shortages of a variety of drugs including:

• Doxil- A drug used for the treatment of ovarian cancer and some lymphomas

• Mitomycin C- A drug primarily used for bladder cancer

• Methotrexate Preservative Free – A drug used for a variety of cancers (breast, lung, head, neck) and for childhood leukemia

• Intravenous norepinephrine – A drug used for supporting blood pressure in patients in shock

• Succinylcholine – A unique short acting anesthetic for which there is no real equivalent alternative

• Intravenous Bactrim – An important antibiotic needed for certain specific bacterial and parasitic infections in patients with compromised immune systems.

Schumer also noted that drug shortages at Roswell Park Cancer Institute are having a negative impact on clinical trials. Executives at Roswell reported to Schumer’s office that promising clinical trials are often never getting off of the ground because many trial drugs are in short supply, which greatly hinder new and future drug development and research for diseases like cancer. Reports show that hundreds of trials sponsored by the US National Cancer Institute (NCI) involve drugs that are in short supply.  

In addition, Schumer noted that throughout the state hospitals have reported nearly cancelling elective surgeries, which were only allowed to go forward when substitute drugs were located. Shortages of essential medications throughout New York have also led to longer hospital stays and slower recovery periods for patients. In many of these cases, the drugs in question have been on the market for several years, or even decades. Treatment plans have been created and established based on the availability of these drugs, making it extremely difficult for physicians to adjust to their absence.

The Roswell Park Cancer Institute works hard to combat these drug shortages. RPCI Pharmacy Department continues to monitor drug supplies very closely on a daily basis, and works closely with all vendors, wholesalers and manufacturers to get status updates and obtain products as soon as they’re available. Roswell Park utilizes the many resources available from their GPO and other Pharmacy organizations to monitor current and potential shortages, as well as their experience and knowledge of the drug supply chain to be proactive to avert a shortage when possible. Schumer is pushing his plan to alleviate drug shortages so that Roswell Park and other medical facilities aren’t forced to spend precious time and resources worrying about the supply of their medication, and can focus full time on patient care.

To combat this trend, Schumer announced his support for a key portion of his plan that would create an early warning system within the Food and Drug Administration to help ward off shortages of life-saving drugs. S. 296, the Preserving Access to Life-Saving Medications Act, introduced by Senator Amy Klobuchar (D-MN), would give the FDA the ability to require early notification from pharmaceutical companies when a factor arises that may result in a shortage. These factors may include changes made to raw material supplies, adjustments to manufacturer production capabilities, and certain business decisions such as mergers, withdrawals, or changes in output. The bill would also direct the FDA to provide up-to-date public notification of any shortage situation and the actions the agency would take to address them. This bill shifts shortage reporting responsibility from providers to manufacturers; requires all manufacturers to report upcoming drug shortages to the FDA; increases manufacturer accountability by requiring them to anticipate and notify of future manufacturing stoppages, but does not impose fines or other sanctions for reporting; and allows providers to better anticipate impending shortages so both providers and patients can prepare for alterations in treatment regimens. This early warning system would allow the FDA more time to work with domestic and international manufacturers in order to provide increased availability of life-saving drugs.

Second, Schumer announced that he is introducing legislation to make engaging in prescription drug price gouging when drugs are in short supply a federal crime. The Protecting Patients and Hospitals From Price Gouging Act would give the U.S. Department of Justice (DOJ) the authority to prosecute price gougers and crackdown on unscrupulous drug distributors that buy life saving medications and sell them to hospitals at outrageous mark-ups.

The Protecting Patients and Hospitals From Price Gouging Act would make it a federal crime to engage in price gouging of prescription drugs during drug shortages and federal emergencies. The bill would give the DOJ the authority to prosecute companies that engage in price gouging during shortages in order to protect patients and hospitals from being forced to buy life-saving medications at exceptionally inflated prices. The legislation would allow penalties of up to $500 million per violation.

Schumer’s bill comes on the heels of reports that uncovered the practice in which third-party companies purchase drugs in short-supply, including life-saving medications to treat cancer and heart conditions, and resell them to hospitals at significant mark-ups. Currently, there is no federal law that explicitly prohibits prescription drug price gouging, tying the federal government’s hands from prosecuting unscrupulous drug distributors. Schumer’s legislation would give the DOJ the authority to prosecute price gouging to prevent drug resellers from taking advantage of drug shortages and charging hospitals outrageous prices for vital, life-saving medications. The legislation would help crackdown on unscrupulous operators and serve as a deterrent to rouge gray market distributors whose prices are wholly unrelated to their actual costs or market demand.

Finally, Schumer called for an investigation into “gray market” drug resellers that are marking up life saving medications in short supply and re-selling them to hospitals at exorbitant prices. Schumer states that drug shortages require costly resources and time to alleviate, costing Buffalo hospitals massive amounts of money and hundreds of hours in manpower to find alternatives. Because there is currently no warning system, pharmacists and physicians are forced to do work-arounds, substitutions, and occasionally must even secure the drug from an alternate source - the “gray market” – due to the short supply or complete unavailability from wholesalers. 

Though not illegal, Pharmacy Directors aim to avoid using this alternate source, based on safety and cost concerns. The ‘gray market’ is made up of distributors who purchase medicine and medical supplies and markup prices, sometimes by as much as 335% according to the Premier Health Alliance survey, before selling to hospitals and doctors. These third-party companies were uncovered to purchase drugs in short-supply, including life-saving medications to treat cancer and heart conditions, and resell them to hospitals at outrageous prices. Schumer also notes that doctors believe these drug shortages can create longer stays in hospitals, and slower recoveries.