Prescription Drug Safety Held Imperiled

The federal government has “lost control” of prescription drug sales and may no longer be able to assure their safety because pharmaceuticals are being distributed at discount prices through a submarket that thrives in California, according to a House subcommittee report scheduled for release today.

“Consumers can no longer purchase prescription drugs with the certainty that the products are safe and effective,” states the report, prompted by last year’s discovery of subpotent birth-control pills in California and at least 11 other states.

The unchecked drugs reach store shelves through a complex and firmly entrenched system of illegal sales, according to the report, is sued by Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce subcommittee on oversight and investigations.

According to the report, non-profit hospitals, which receive huge discounts from drug manufacturers, buy more pharmaceuticals than they need and sell the excess to illegal distributors, known as diverters. In turn, diverters sell the supplies to legitimate wholesalers who offer the merchandise to pharmacies at a discounted price.

Consumers, who cannot tell the difference between regular and diverted drugs, can save money, but state and federal pharmacy experts warn that such discounted products may not be safe.

“Laced in with the legitimate goods are goods whose potency have expired . . . they may have been incorrectly labeled . . . or they may have been bald counterfeits,” said Stephen Sims, a special assistant to the subcommittee and one of the investigators for the report. “The bottom line is, when you walk into a drugstore, you don’t know what you’re getting.”

‘We’ve Lost Control’

The multimillion-dollar submarket is driven by a desire among some in the drug industry to increase profits, Sims said. “Basically, we’ve lost control of a lot of prescription drugs,” he declared.

And California Rep. Henry A. Waxman (D-Los Angeles), a member of the subcommittee, said: “It would be tragic if the public’s confidence and health are undercut by the acts of common criminals.”

The most dramatic example of what can happen when drugs are circuitously distributed occurred last November, when more than 1 million subpotent, counterfeit Ovulen birth-control pills found their way into drugstores nationwide.

Difficult to Recall

Once “bad” drugs enter the market, they are nearly impossible to trace or recall, Lorie Rice, executive officer of the California Pharmaceutical Board in Sacramento, said. “Distribution of those items is like wildfire,” she said in a telephone interview.

The board has identified five individuals who have allegedly distributed drugs illegally in California and now is monitoring their transactions, Rice said.

Drug manufacturers virtually “give away” merchandise to non-profit hospitals in the hope that doctors will prescribe the product to patients once they leave the hospital, said one California pharmacist familiar with the diversion procedure.

Speaking on the condition that he not be identified by name, he said manufacturers sell nitroglycerin patches, for example, to some hospitals at the price of 100 for a penny. In a drugstore, he said, they sell for nearly $1 each.

‘Crooked or Naive’

A “crooked or naive” hospital pharmacist can order extra items such as those patches “to make a profit along the way,” he said. The pharmacist, who said he turned down an offer by diverters to supply low-priced merchandise, said some hospitals have been pressed to bring in more revenue since Medicaid payments were cut in recent years.

Indeed, economic problems resulting from diversion may rival the health risks, Sims said.

Pharmacies that do not buy the discounted goods are likely to lose business to competitors who do, he said. In addition, as discounted hospital supplies fill the market, fewer drugs will be purchased at regular prices and manufacturers will be hard pressed.

Hospital resale is the most common means of diversion, but many other techniques also are available, the subcommittee report found. It said some Americans have set up bogus organizations to provide drugs in foreign countries where pharmaceuticals can be purchased inexpensively.

The strength of the American dollar also makes it possible for those schemers to ship the drugs back to the United States for distribution, the report said.

Sims said the Federal Trade Commission is investigating whether the resale of discounted drugs by nonprofit groups constitutes a violation of federal antitrust law. If the practice of illegal sales cannot be controlled, he said, the subcommittee might consider changing the law that permits discounts for nonprofit groups.