Report Says ‘Diverters’ Continue to Pose Danger to Public Health : Wholesale Drug Field Still Lacks Controls, Study Finds

American consumers cannot purchase prescription drugs with the certainty that they are safe and effective because the distribution system still lacks effective controls to prevent the introduction of substandard, ineffective or counterfeit pharmaceuticals, a congressional report released Saturday said.

The existence of a wholesale submarket, or “diversion” market, often permits the sale of drugs that are mislabeled, misbranded, improperly stored or expired or are “bald” counterfeits, said the report, which was prepared by the House Energy and Commerce subcommittee on oversight and investigations.

‘Variety of Sources’

“This submarket is fed from a variety of sources, some of which are legal and many of which are not,” John D. Dingell (D-Mich.), committee chairman, said. “By homogenizing drugs from various sources, the diversion market defeats strict quality control by manufacturers and rewards the unscrupulous. It is an obvious danger to the public health and safety.”

The report added, however, that “while diversion is commonplace, documented instances of harmful or ineffective merchandise reaching consumers through normal retail outlets are few.”

The subcommittee study said the practice of providing drug samples to physicians through manufacturers’ sales representatives “invites abuse,” adding: “Samples that are improperly sold, bartered or exchanged often end up in the secondary market, where they may easily become adulterated, misbranded or both.”

Exempted From Scrutiny

Also, a “significant volume” of pharmaceuticals is being brought back to the United States as “American goods returned,” a designation that enables them to re-enter the country without being subject to inspection by the Food and Drug Administration, the report said. These goods are a danger to American consumers “because they may have become sub-potent or adulterated during foreign handling or shipping,” it said.

The problem of so-called drug “diverters” began to receive national scrutiny after the FDA disclosed in November, 1984, that at least 1 million counterfeit and possibly ineffective birth control pills had been made by an unknown manufacturer and widely distributed under the G. D. Searle & Co. Ovulen brand name. The source of the pills remains a mystery, and no one has been charged in the case.

In another instance of drug diversion, several dozen people--including doctors, pharmacists and employees of drug manufacturers and wholesalers--were indicted last August on fraud charges in an alleged international scheme to obtain prescription drugs at discounted prices and resell them for substantial profits, often after mislabeling or adulterating them.

The investigation, headed by the U.S. attorney in Atlanta, charged alleged “diverters” in California, Georgia, Indiana, Florida, New York, New Mexico, Mississippi, Ohio, Tennessee, Alabama and Kentucky.

The subcommittee said that the investigation and others are continuing.

Ploy Tied to Use

“Diverters” obtain drugs at low cost from manufacturers by claiming they are intended for use by hospitals, nursing homes, clinics, Third World and other foreign countries and international nonprofit organizations, then resell the drugs at higher prices for ultimate distribution to U.S. consumers, according to the Justice Department.

Dingell said that he will introduce legislation within several weeks “to correct these serious health problems.” He said that his bill would ban the re-importation of pharmaceuticals manufactured in the United States and sold to foreign buyers, establish criminal penalties for the sale or trading of drug samples, ban the resale of prescription drugs by health-care institutions and require wholesalers to tell their customers where and from whom they obtained the prescription drugs they sell.