Term Paper: Status of the Nation's Drug Supplies

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[. . .] The PDMA was passed in response to growing concerns over counterfeit pharmaceuticals in the United States. In this regard, Conlan advises that, "To a large degree, [the PDMA] was spurred by the discovery of two million birth control pills meant to look like G.D. Searle's Ovulen-21. However, they contained little or no estrogen" (2009, p. 33). The FDA's Web site states that the PDMA was enacted: (a) to ensure that drug products purchased by consumers are safe and effective, and (b) to avoid the unacceptable risk to American consumers from counterfeit, adulterated, misbranded, subpotent, or expired drugs (Prescription Drug Marketing Act of 1987, 2014). The FDA also reports that, "The legislation was necessary to increase safeguards in the drug distribution system to prevent the introduction and retail sale of substandard, ineffective, or counterfeit drugs" (Prescription Drug Marketing Act of 1987, 2014, para. 1).

Among the more salient provisions of the PDMA with respect to the gray market are the following:

Section 3. Reimportation. Section 801 (21 U.S.C. 381) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following:

"(d)(1) Except as provided in paragraph (2), no drug subject to section 503(b) which is manufactured in a State and exported may be imported into the United States unless the drug is imported by the person who manufactured the drug.

"(2) The Secretary may authorize the importation of a drug the importation of which is prohibited by paragraph (1) if the drug is required for emergency medical care."

Section 4. Sales Restrictions. Section 503 (21 U.S.C. 353) is amended by adding at the end the following:

"(c)(1) No person may sell, purchase, or trade or offer to sell, purchase, or trade any drug sample. For purposes of this paragraph and subsection (d), the term 'drug sample' means a unit of a drug, subject to subsection (b),which is not intended to be sold and is intended to promote the sale of the drug. Nothing in this paragraph shall subject an officer or executive of a drug manufacturer or distributor to criminal liability solely because of a sale, purchase, trade, or offer to sell, purchase, or trade in violation of this paragraph by other employees of the manufacturer or distributor.

"(2) No person may sell, purchase, or trade, offer to sell, purchase, or trade, or counterfeit any coupon. For purposes of this paragraph, the term 'coupon' means a form which may be redeemed, at no cost or at a reduced cost, for a drug which is prescribed in accordance with section 503(b).

"(3)(A) No person may sell, purchase, or trade, or offer to sell, purchase, or trade, any drug

"(i) which is subject to subsection (b),and

"(ii)(I) which was purchased by a public or private hospital or other health care entity, or "(II) which was donated or supplied at a reduced price to a charitable organization described in section 501(c)(3) of the Internal Revenue Code of 1954.

Section 5. Distribution of Drug Samples. Section 503 (as amended by section 4 of this Act) is amended by adding at the end thereof the following:

"(d)(1) Except as provided in paragraphs (2) and (3), no representative of a drug manufacturer or distributor may distribute any drug sample.

Despite these and other provisions of the PDMA, the gray market for pharmaceuticals in the United States has ballooned to more than $2 billion in recent years (Conlan, 2009) and to between $20 and $48 billion worldwide (Chi, 2009). According to Conlan, "PDMA was meant to sweep away the murky gray market in diverted prescription drugs. But the law didn't get rid of the gray market entirely, and now the profit margins are even higher." (2009, p. 34). Moreover, the PDMA failed to address the problem with closed-door pharmacies. For instance, Conlan adds that, "An apparent loophole in FDA regulations implementing PDMA may have opened the way for closed-door pharmacies. It seems to allow entities that service nursing homes and long-term care patients to resell discounted drugs" (2009, p. 34).

Furthermore, despite the timeliness of the PDMA in 1987, the law has become outdated with respect to online sales of pharmaceuticals, an eventuality that was not even envisioned when the law was crafted (Conlan, 2009). In this regard, Conlan reports, "Although samples and returned American goods seem to be less of a problem under PDMA, a law written 13 years ago could not have foreseen the rise of the Internet and its use to market prescription drugs" (2009, p. 34). Some progress has been made in the battle against gray markets using the PDMA, but some marketers continue to operate outside of the reach of U.S. authorities. As Conlan concludes, "While rogue domestic Web sites remain a concern, state and federal authorities have put some of them out of business. But offshore facilities, beyond the reach of U.S. law, remain a threat" (2009, p. 34).

The implications of gray market pharmaceuticals for American consumers are severe, particularly when the products are counterfeit or adulterated. According to Foxman and Muehling (2009), "Imitator or counterfeit brands may contain different (and inferior) ingredients from original brands, and unknowing exposure to these ingredients can threaten a consumer's health" (p. 171). There is a paucity of timely and relevant research in this area, though, that makes determining the true implications of counterfeit or adulterated pharmaceuticals extremely difficult. In this regard, Willis and Anderson (2011) emphasize that, "Supply and use of illicit drugs are, by their largely clandestine nature, a hidden phenomenon that can only be monitored through use of indirect indicators linked to observable consequences, such as crime, drug-related illness, injury and death" (p. 2).

What is known for certain is that to date, there have been a number of cases of imitation pharmaceuticals discovered in the United States. Many of these cases have involved generic prescription drugs that are considered therapeutically inferior to name brands (Foxman & Muehling, 2009). In this regard, Foxman and Muehling emphasize that, "Consumers that mistakenly buy imitative generic drugs clearly can suffer harm to the extent that such products perform less well than the original brand" (2009, p. 171). In some cases, counterfeit pharmaceuticals can even contain toxic substances that can harm or kill unsuspecting healthcare consumers (Cherici et al., 2011).

Conclusion

The research showed that the gray market for pharmaceuticals in the United States has been estimated to be at least $2 billion, and between $20 and $48 billion worldwide. The research also showed that Public Law 100-293, the Prescription Drug Marketing Act, was passed in 1988 in an effort to address the gray market in pharmaceuticals. Although the Act has experienced some success in combating the pharmaceutical gray market, the law was written before the advent of the Internet and new ways to defeat the law continue to emerge. The research made it abundantly clear that the main force driving the gray market in pharmaceuticals is greed, and a growing number of pharmacies are exploiting the system to bilk healthcare organizations with grossly inflated prices. Because shortages of essential medicines or extravagant prices for them can threaten the public health, gray markets in pharmaceuticals represent a clear and present threat to the nation's security interests.

References

Bender, A.D. (2004, Winter). The coming of the baby boomers: Implications for the pharmaceutical industry. Generations, 28(4), 26-30.

Chen, H.L. (2002, June). Gray marketing and unfair competition. Atlantic Economic Journal,

30(2), 196-202.

Chercici, C., McGinnis, P. & Russell, W. (2011, August). Buyer beware: drug shortages and the gray market. Premier, 3-11.

Chi, J. (2009, May 6). Experts give clues on how to stay clear of counterfeit drugs. Drug Topics,

146(9), 66.

Conlan, M.F. (2001, October 15). How safe is the drug supply? Drug Topics, 145(20), 32-35.

Foxman, E.R. & Muehling, D.D. (2009, Summer). An investigation of factors contributing to consumer brand confusion. The Journal of Consumer Affairs, 24(1), 170-177.

Kelly, G.G. (1999, October). Improving the PPI sample for prescription pharmaceuticals.

Monthly Labor Review, 120(10),… [END OF PREVIEW]

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