Prices Inflated for Scarce Flu Vaccine
More than half of U.S. hospitals that took part in a trade group survey said they had been offered scarce flu vaccine at highly inflated prices in recent days, stirring allegations of gouging.
The findings from the survey by the American Society of Health-System Pharmacists, released Wednesday, gave credence to scattered reports of market exploitation after last week’s announcement that the nation’s flu vaccine supply would be cut almost in half this year. The Bethesda, Md., group surveyed 2,800 hospital pharmacy directors and 677 responded.
Fifty-three percent of the pharmacy directors said drug distributors had offered to sell flu vaccine at inflated prices. The distributors, who weren’t identified, were pricing vaccine at anywhere from four to 10 times the usual wholesale cost, according to the Oct. 8 survey.
Richard Carvotta, a pharmacy director at Los Robles Hospital and Medical Center in Thousand Oaks, said a distributor called him last week offering to sell a 10-dose vial of the flu vaccine for $800 -- around 10 times the usual cost of $70 to $85.
“I just told my staff, ‘Forget it,’ ” said Carvotta, who declined to name the supplier. “It’s one thing to have a shortage, it’s another to take advantage of it with such an outrageous cost.
“We’ve lost all compassion for our fellow man and thrown out business ethics,” he added.
In a sign of the urgency surrounding the vaccine shortage, 16% of the hospitals surveyed said they planned to buy the vaccine at the inflated costs to cover some of their most vulnerable patients, such as young children and the elderly.
“Shame on the people who are price gouging,” said Julie Gerberding, director of the federal Centers for Disease Control and Prevention, who said her agency was working with state and local officials to monitor the situation. “This is a reprehensible thing to be doing.”
The country’s flu vaccine supply line for the coming season was interrupted Oct. 5 when British regulators shut down Emeryville, Calif.-based Chiron Corp.’s factory in Liverpool. Chiron is one of only two primary suppliers of flu vaccine to the U.S. market.
On Wednesday, Chiron said the Securities and Exchange Commission had begun an informal probe related to the supply disruption. Congress and the federal prosecutors are also looking into the matter.
Most hospitals and pharmacies are members of large purchasing groups that buy drugs at predetermined prices from wholesalers, which purchase them from the manufacturers. In some cases, manufacturers distribute drugs directly to hospitals and pharmacies.
But a small number of independent distributors routinely buy certain drugs -- sometimes from manufacturers, sometimes from third parties such as clinics -- on speculation that shortages will cause prices to soar.
“There are a group of distributors that lay in wait for this type of opportunity and acquire scarce products and charge outrageous prices for it,” explained Patrick Schmidt, chief executive of Temecula-based FFF Enterprises, a Chiron vaccine distributor, which says it doesn’t have any of the flu shots to sell.
“I don’t begrudge anyone trying to make a buck,” Schmidt added. “We all have to be profitable, but they are taking advantage of the situation.”
Whether that crosses the line of legality is not always clear. Price gouging is not considered a federal offense, although laws governing it vary from state to state, officials said.
For instance, Florida state officials won a settlement from 60 gas stations accused of jacking up prices in the hours after the Sept. 11 terrorist attacks. A Florida law, passed after Hurricane Andrew hammered the state in 1992, forbids gouging during an emergency.
On Tuesday, Kansas Atty. Gen. Phill Kline sued a Florida company for allegedly trying to gouge a Kansas City pharmacy that was seeking flu shots. Meds-Stat, based in Fort Lauderdale, is accused of proposing to deliver and sell a vial of five doses of flu vaccine to the pharmacy for $900, knowing that the vaccine was intended for a nursing home. That same vial was listed at $85 on Oct. 1, according to Kline’s office. Meds-Stat officials couldn’t be reached for comment.
In California, profiteering suppliers could be prosecuted under state laws governing consumer protection and unfair business practices. On Wednesday, state Atty. Gen. Bill Lockyer urged consumers and pharmacists to report any cases of price gouging and warned that he would take immediate enforcement action.
“You cannot sink much lower than illegally cashing in on a vaccine shortage that threatens the health of millions of Americans, and hundreds of thousands of Californians,” said Lockyer, who added that his office had yet to receive any complaints.
Ken August, spokesman for the California Department of Health Services, said his office in Sacramento also hadn’t received any complaints of price gouging.
But just down the highway in Davis, John Grubbs, director of pharmacy services for UC Davis Medical Center, said he had received three or four calls this week from drug distributors offering to sell the flu vaccine at as much as $400 for a 10-vial dose. Grubbs said he couldn’t remember the names of the suppliers.
“These are secondary distributors who have been associated in the past with counterfeit products,” he said. “We don’t buy from them.”
In fact, the American Society of Health-System Pharmacists is advising its members to watch out for counterfeit vaccines and is urging them to carefully check labels for irregularities.
