Legislation Would Make Drug Price Gouging a Federal Crime

Kate H. Gamble, Senior Editor
Published Online: Thursday, December 8, 2011
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Sen. Chuck Schumer is introducing legislation that would make it a federal crime to engage in prescription drug price gouging when drugs are in short supply. The bill would give the US Department of Justice the authority to prosecute price gougers and crackdown on distributors that purchase life-saving medications and sell them to hospitals at mark-ups.

The problem has been growing, as shortages have significantly worsened for injected medications to treat, cancer, pain, cardiovascular conditions, and infections. The shortages are disrupting patient care and are threatening the viability of clinical trials in which experimental drugs must be tested against older standard treatments.

In September, the Associated Press reported that at least patient 15 deaths since mid-2010 have been attributed to shortages. In one case in Alabama, 9 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, the Boston Globe reported.

In October, Schumer called for the FTC to launch an investigation into possible price gouging by companies engaged in the practice. His bill would allow penalties of up to $500 million for each case of price gouging.

The Protecting Patients and Hospitals From Price Gouging Act would give the Department of Justice the authority to prosecute companies that engage in price gouging during shortages in order to protect patients and hospitals from being forced to buy life-saving medications at inflated prices. It would also allow the Department of Justice to prosecute individual gray market distributors who operate in an unscrupulous manner by engaging in 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,” said Schumer in a statement.

Schumer is also a co-sponsor of Minnesota Senator Amy Klobuchar’s bill, The Preserving Access to Life-Saving Medications Act, which would require drug makers to immediately notify the FDA when a raw material shortage, manufacturing problem, or production decision is likely to cause a drug shortage. Schumer said that although it is important to address the root causes of the drug shortage plaguing hospitals all across the country, unscrupulous drug resellers should not take advantage of these shortages to rip off hospitals and put patients at risk of not getting the medicines they need.


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