Washington, D.C. – U.S. Senator Amy Klobuchar today said that gray market companies are charging exorbitant prices for drugs that are in short supply, driving costs up for Minnesota hospitals and limiting patients’ access to vital medications. During a Senate hearing focused on the “gray market” – an unofficial supply channel where vendors sell drugs in high demand to hospitals for exorbitant prices – Klobuchar highlighted a study showing companies are marking up drugs by 650% or more. Klobuchar recently passed into law legislation to help prevent drug shortages by giving the FDA the tools it needs to stop shortages before they occur, and vowed to continue to fight to put an end to drug shortages and the gray market that stems from them.

“Price gouging predators are currently making exorbitant profits at the expense of patients and hospitals who desperately need these medications, and that’s simply unacceptable,”said Klobuchar.  “I worked hard to pass a law to help stop drug shortages before they occur so bad actors can’t hold patients and hospitals hostage to their high prices, and I will continue to work to ensure access to safe, affordable prescription drugs.” 

According to a survey conducted by the Premier Hospital System and the American Hospital Association, over a two-week period at the beginning of 2011, more than 1,700 examples of gray market offers were recorded from 42 acute care hospitals. Of these offers, the average markup was 650%, but even higher prices were seen in certain critical care areas.

 The Food and Drug Administration Safety and Innovation Act, signed into law earlier this month, includes a bipartisan drug shortages agreement Klobuchar helped forge that will require prescription drug manufacturers to give early notification to the Food and Drug Administration (FDA) of any incident that would likely result in a drug shortage. This is the key provision in the Preserving Access to Life-Saving Medications Act, legislation Klobuchar introduced with Sen. Bob Casey (D-PA) and cosponsored by Senator Susan Collins (R-ME) and 28 other senators.  The FDA prevented nearly 200 drug shortages in 2011 due to voluntary early notifications from companies, up from 38 in 2010. During a recent FDA workshop, FDA officials said that the rise in preventions is due to increased pressure from Klobuchar and other members of Congress.

The agreement also includes two other provisions similar to Klobuchar’s legislation: it will direct the FDA to expedite inspections and reviews of manufacturing sites or new products that could be helpful in addressing a drug shortage, and require the FDA to keep detailed records of previous drug shortages and the actions taken to prevent them. It will also establish a task force to create a strategic plan to improve communication within the FDA and with public stakeholders, as well as commission a report on price gouging and how pricing structures factor into drug shortages.