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Bill would make drug price gouging a federal crime

Bill would make drug price gouging a federal crime

December 7th, 2011 in News

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

Sen. Charles E. Schumer, D-N.Y., said he's proposing a bill that would give the U.S. Department of Justice authority to crack down on "unscrupulous drug distributors" who sell hospitals 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 at least patient 15 deaths since mid-2010 have been blamed on the shortages. In one case in Alabama, nine hospital patients died after getting inadvertently 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 told the AP. 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 the senator is working on lining up co-sponsors 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 drugs shortages. But the number of new shortages reported each year has tripled since 2006. As of Nov. 30, there had been 251 different 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.