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Bill would make gouging drug costs a federal crime

Schumer protests high markups to hospitals

TRENTON, N.J. - Price gouging on prescription drugs already in short supply would become a federal crime under legislation about to be introduced.

Senator Charles E. Schumer, Democrat of New York, said he’s proposing a bill that would give the Department of Justice authority to crack down on “unscrupulous drug distributors’’ who sell hospital life-saving prescription medicines in short supply at huge markups.

The problem has been growing this year, as shortages have dramatically worsened for normally cheap generic injected medicines that are the lifeblood of hospitals: drugs for cancer, pain, infections, even liquid nutrition, and anesthesia for surgery.

The shortages are disrupting care of patients and even clinical trials of experimental drugs that must be tested against older standard treatments.


In September, the Associated Press reported that at least 15 patient deaths since mid-2010 have been blamed on the shortages. In one case in Alabama, nine hospital patients died after getting contaminated liquid nutrition that had to be hand-mixed from a powder because the usual liquid version wasn’t available.

Schumer’s bill is to be introduced next week, an aide said. It would allow penalties of up to $500 million for each case of price gouging.

“Forcing hospitals to buy life-saving medications at outrageously inflated prices is unquestionably unethical, and with this legislation it would be illegal, too,’’ Schumer said in a statement.

A Schumer spokesman said Monday that the senator is working on lining up cosponsors to the bill. Earlier in October, Schumer requested an investigation by the Federal Trade Commission into possible price gouging by some distributors.

In a typical year, there are always some prescription drug shortages. But the number of new shortages reported each year has tripled since 2006. As of Nov. 30, there had been 251 new drug shortages this year.

Multiple causes have been cited, including manufacturing deficiencies leading to production shutdowns, companies ending production of some drugs with tiny profit margins, consolidation in the generic drug industry, and limited supplies of some ingredients.


Hospital pharmacists and other officials say the shortages have become a crisis, endangering patients and costing hospitals significant money and staff time to try to obtain crucial drugs not available from their regular suppliers. Some secondary suppliers say they are helping hospitals get desperately needed drugs by calling pharmacies and other suppliers around the country, and that the drugs have been marked up by other middlemen by the time the suppliers get them.

Politicians, responding to reports of patients harmed by shortages, have been taking up the issue, including President Obama.