Drugs In Short Supply

HIGHER PRICES, MORE COMPROMISES

The faxes, e-mails and phone calls come in every morning to hospitals
across the country, touting hard-to-find medications that small wholesalers
have ready for sale -- at dramatically marked-up prices.

Medications in short supply from major wholesalers are pitched on those
sales calls, confounding and enraging many hospital pharmacy managers who
say they are held hostage to price-gougers.

The scramble for suddenly scarce drugs exposes patients to increased risk
of medication errors, pharmacists said. When hospitals must use substitutes
for their usual drugs, "it affects the quality of patient care in a huge
way," said Rita Shane, pharmacy director for the vast Cedars-Sinai Medical
Center in Los Angeles.

The small wholesalers offer everything from workhorse drugs to combat
infections and nausea to lifesaving drugs for managing premature births and
spinal injuries. The drugs are hawked at double or triple the usual price,
dozens of solicitations obtained by The Washington Post show.

"It's a vile business practice," said Alyce Holmes, pharmacy director for
the 101-bed Betsy Johnson Regional Hospital in Dunn, N.C.

Shortages often hit without warning, for reasons as varied as drops in raw
materials, production delays, unexpected demand and phase-outs of
brand-name drugs as cheaper generics enter the market.

"You open your order and look in the box, and what you wanted isn't there,"
said Tamra Kaplan, pharmacy director at Anaheim (Calif.) Memorial Medical
Center. "That's one way you find out. It's even more aggravating when the
first indication you get are the calls from these gray-marketers."

Anaheim has booked surgeries around its supply of Solu-Medrol, an
anti-inflammatory. Earlier this year, it rationed the antifungal drug
amphotericin B after it increased from $6 to $31 a vial.

When production of the snakebite treatment CroFab lagged last year, the
price for a two-vial carton went from $1,720 to as much as $5,000. The
average patient needs 20 vials. Some hospitals had to turn to veterinary
drugs and medications from zoos, said Leslie Boyer, medical director of the
Arizona Poison and Drug Information Center in Tucson.

When hydrocortisone supplies dropped and prices soared earlier this year,
Cedars-Sinai scoured its 850-bed facility for every bit of the drug, a
mainstay to treat severe allergic reactions. "It is absurd and perverse to
me that something like flu vaccine or the drugs our anesthesiologists need
can be out of supply from our usual, major wholesaler yet be available from
very small secondary wholesalers," Shane said.

To avoid the small wholesalers, the hospital spent $250,000 in 2002 on
expensive substitute drugs. "Sometimes we have six or eight people working
all day to find a supplier we know because we don't deal with small
wholesalers," said Ron Reinhart, a pharmacy buyer for Cedars-Sinai. "We've
been a bit fearful of where they buy their product from."

At times, when urgent needs arise, there is no avoiding small wholesalers.
"I try to keep up on who is who, and we look very closely at dating and
packaging when it comes in," said Doris S. Craft, chief pharmacist at the
100-bed Wilson (N.C.) Medical Center. "But sometimes you're buying on faith
that it's good and on the up-and-up because you have to have it."

Desperate for Solu-Medrol, Craft ordered with small suppliers who had
approached her through faxes, paying $358 on July 11 and $263 on July 14
for the same amount of the drug, which is as much a staple to a hospital as
milk is to a household. Two weeks later, she was able to buy from her
regular wholesaler -- Cardinal Health Inc., one of the nation's biggest
distributors -- for about $74.

"I don't care what they say about being smart business people, and knowing
the marketplace and supply and demand," Craft said. "If I have to pay four
or five times my usual price to get something my patients can't do without,
then I'm being gouged."

In a letter to Craft, the wholesaler who charged her $358 wrote that
providing hard-to-find drugs on short notice involved "a lot of legwork"
and significant costs. "Our company is proud to be part of the healthcare
delivery system and, in our view, we do not deserve a pejorative label like
'price gouger,' " wrote Trevor Yankoff, president of Zylex Pharmaceuticals
of San Clemente, Calif. "If the price is too high we would recommend not
buying from us."

Some small wholesalers say they build inventories by stocking medications
nearing their expiration dates that other wholesalers need to sell quickly.
Others take advantage of regional variations in supply. Still others pay
painstaking attention to market forces that may cause drugmakers to alter
production.

But other small wholesalers have obtained medications under less reputable
circumstances.

During the shortage-plagued 2000 flu season, a New Jersey wholesaler bought
steeply discounted vaccine for nursing home patients and pledged not to
sell the drug on the open market. The wholesaler violated that contract,
according to Food and Drug Administration records released under the
Freedom of Information Act. The records show the wholesaler sold nearly
half of the 15,000 doses it had purchased at $23.65 each to a wholesaler in
Savannah, Ga., for $93, who sold to a Miami wholesaler for $95, who sold to
various hospitals and clinics, charging $130 to two in New Jersey and $147
to one in Pittsburgh. That chain of sales took fewer than 11 days, the
records show.

A General Accounting Office report found that wholesalers ignored
pre-booked orders to sell to "the highest bidders." Hawaii's state health
system ordered 12,000 flu vaccine doses at $2.80 in May, well before the
outbreak. But its distributor cut the order, and the state had to pay
double to other suppliers in September.

Shortages have risen since 2000 and are lengthening, according to a Web
site for hospital pharmacy buyers maintained by the University of Utah.

From about 20 drugs per year before 1999, the list expanded to 80 in 2001
before dropping back to 39 last year -- but those shortages were more
persistent.

As shortages rise so do the pitches from wholesalers, some hand-scrawled,
some promising to "find anything you need" and loaded with exclamation marks.

"I even had one offer me a coffee mug," Holmes said.