Drug company deals eyed in probe of shortage

Congressional lawmakers investigating the shortage of lifesaving drugs used to treat cancer and other illnesses are looking into three companies in North Carolina and Maryland that they believe set up "fake pharmacies" to access the drugs that they then sold at a markup.

The lawmakers, led by Rep. Elijah E. Cummings, a Baltimore Democrat, said Wednesday that they sent letters to the three pharmacies that they believe sold drugs to wholesalers that they also owned, which then sold the drugs on the "gray market" to entities that do not manufacture drugs or treat patients. The drugs often passed through several other entities before reaching patients at hospitals and other medical facilities.

The companies sometimes operated as shell operations with no staff and where the owners were rarely seen, the investigation found.

In two cases the companies' licenses have been revoked or were not renewed by the state. But Cummings said the investigation is useful because it provides a better understanding of abuses and could lead to measures to stop other companies from engaging in similar practices. The letters requested more documents.

A national drug shortage has left hospitals and doctors scrambling for ways to treat patients. Some say patients are having to use less effective or more costly drugs. There are also safety concerns because nobody knows whether drugs are handled correctly as they change hands on the gray market. The number of drug shortages annually has nearly tripled from 61 in 2005 to 178 in 2010, according to the Food and Drug Administration.

"What these greedy folks are doing is putting people's health and their lives in jeopardy," Cummings said.

The companies that received letters were LTC Pharmacy Inc. in Durham, N.C., Columbia Med Services in Columbia and Priority Healthcare LLC in Elkton.

The investigation, which Cummings launched in October, found that LTC Pharmacy had a license to purchase drugs such as fluorouracil, which is used to treat colon, stomach, breast and pancreatic cancers. The drugs were to be sold to long-term care facilities and infusion clinics. Instead, investigators said they were sold to International Pharmaceuticals, a company with the same owners as LTC Pharmacy. The drugs were then sold to other wholesalers on the gray market.

The licenses of both companies were revoked or denied by the state of North Carolina after an investigation there determined that the company violated wholesaler prescription drug distribution laws.

In Elkton, the congressional investigation found that a husband-and-wife team created the pharmacy Priority Healthcare. They also formed Tri-Med America, a separate wholesale company in New Jersey. The fluorouracil was transferred from Priority Healthcare to their wholesale company before being sold to another company on the gray market at a higher price.

Columbia Med Services was set up as a pharmacy to serve long-term care patients, the investigation found. The drugs were then transferred to Columbia Medical Distributors, a company with the same owners. The companies' licenses expired last year and were not renewed, according to the Maryland Board of Pharmacy.

The owners of Columbia Med Services and Priority Healthcare could not be reached for comment.

Jessica Hoppe, president and owner of LTC Pharmacy Inc., said, "For now, we are just going to leave it at no comment."

Letters were also sent to 19 other licensed pharmacies requesting information about their possible role in selling drugs on the gray market. The names of those companies were not released.



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