2011-12-14 / Features

Schumer Bill: Price Gouging Short Supply Rx Drugs A Fed Crime

BY JOHN TOSCANO


“Forcing hospitals to buy life-saving medications at outrageously inflated prices is unquestionably unethical, and with this legislation would be illegal too....” “Forcing hospitals to buy life-saving medications at outrageously inflated prices is unquestionably unethical, and with this legislation would be illegal too....” U.S. Senator Charles Schumer is filing legislation that would make it a federal crime to engage in prescription drug price gouging when drugs are in short supply.

The proposed bill, known as the Protecting Patients and Hospitals From Price Gouging Act, would authorize the U.S. Department of Justice (DOJ) to prosecute price gougers and crackdown on unscrupulous drug distributors that buy lifesaving medications and sell them to hospitals at outrageous markups, making these acts a federal crime.

In October, the New York lawmaker had called on the Federal Trade Commission (FTC) to launch an investigation into possible price gouging by companies engaged in the practice.

Schumer declared, “Forcing hospitals to buy life-saving medications at outrageously inflated prices is unquestionably unethical, and with this legislation would be illegal too.

“Let this be a loud and clear message to any unscrupulous middlemen that are holding, or would attempt to hold, patients and hospitals hostage for outrageous ransoms: if you try to play games with vital medicines in short supply, you will be held accountable.”

The lawmaker’s bill would also allow the DOJ to prosecute individual gray market distributors who operate in an unscrupulous manner by engaging in price gouging. The bill would allow penalties of up to $500 million per violation.

Schumer’s legislation comes following reports that uncovered practices in which third-party companies purchase drugs in short supply, including life-saving medications that treat cancer and heart cases. These drugs are then resold to hospitals at significant markups.

Currently, Schumer points out, there is no federal law that explicitly prohibits prescription drug price gouging, tying the federal government’s hands from prosecuting unscrupulous drug distributors.

Schumer explained that hospitals across the U.S. are facing record drug shortages and are scrambling to purchase the medicines they need to treat patients. In addition to rationing drugs and delaying treatments, many hospitals have resorted to purchasing drugs from third party drug distributors, operating in a so-called gray market outside of the normal pharmaceutical system, in order to provide patients with the medicines they need.

Schumer is also a cosponsor of 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.

Schumer said that while it was important to address the root causes of the drug shortage plaguing hospitals all across the country, unscrupulous drug resellers should not take advantage of these shortages to rip off hospitals and put patients at risk of not getting the medicines they need.

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