'Gray market' grows for cancer drugs

Without a clear resolution to the monthslong shortage of life-saving cancer drugs, hospital pharmacy leaders told Becker's the "gray market" is barging into their emails and phone logs. 

In the pharmaceutical supply chain, the "gray market" is when local drug distributors try to sell drugs to hospitals that the nation's three biggest wholesalers — Cardinal Health, AmerisourceBergen and McKesson — can't access. These smaller companies then bid their supply to hospital pharmacy leaders, usually at a higher markup and less guarantee of safety and quality. 

In an email shared with Becker's, a pharmacy company in Springfield, Ky., offered about three dozen products that are in shortage, including methotrexate and 5FU (fluorouracil), which are two cancer drugs that some hospital pharmacy leaders said they have enough supply for only the next few weeks. 

One of the offered drugs was cleocin phosphate 150 milligram / 1 milliliter injection, an antibacterial treatment in shortage after one drugmaker discontinued its product, two experience manufacturing delays and another has a third-party supplier issue, according to the American Society of Health-System Pharmacists. 

The Kentucky-based distributor offered to sell a box of 25 solutions for $135 — nearly twice as much as its wholesale acquisition cost. 

Ryan Pepper, assistant vice president of pharmacy supply chain of New Orleans-based Ochsner Health, said he isn't buying from the gray market, but these scarce drugs are "certainly more expensive."

"Our leaders are telling us, 'That's the cost of doing business in such a really challenging environment.' They're OK with that," Mr. Pepper said. "There are other wholesalers [and] distributors that sell shortage drugs. There's a couple out there — I'm not even going to name names; I can't quite give out all our secrets — that are getting hold of those drugs. A lot of people want to call that the gray market."

"This isn't quite the gray market," he said. "This is the 'manufacturers don't want to deal with the wholesalers, so they're sending them to the smaller, more local, regional distributors that actually do have the drug.'"

Erin Fox, PharmD, associate chief pharmacy officer for shared services at University of Utah Health in Salt Lake City, said the "gray market" distributors might be buying supply from pharmacies. It isn't a long-term solution because they might have one or two doses, but hospitals could need 20 or 80, she said.

There's a middle ground between regional distributors and wholesalers, which Ochsner is buying from, and the "gray market" with its "enormous upcharges," Mr. Pepper said.

The high cost isn't the only reason eyebrows are raising: There's also a question of quality and integrity, according to Andrew Salzillo, PharmD, manager of pharmacy supply chain at Providence, R.I.-based Lifespan.

A majority of hospital pharmacy leaders aren't engaging in the market because of these concerns, Dr. Fox said, but "chemotherapy shortages, in particular, can make people feel desperate."

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