Ondis Eardensohn discovered America’s drug crisis first hand. On August 8, the former Plainfield postmaster drove two hours to New Hampshire’s Dartmouth Hitchcock Hospital for an infusion of Doxil, one of the only remaining treatments for her  stage-4 breast cancer. The Johnson and Johnson (J&J) drug is one of some 200 pharmaceuticals—from chemotherapy agents to antibiotics, from anesthesia to morphine—that critically ill people and their providers are discovering is currently unobtainable, rationed, or scalped for stratospheric prices.

At the hospital, Eardensohn went through the usual tests, and was waiting for the infusion, when her doctor walked in. “ ‘I’m sorry,’ he told me, ‘but we don’t have enough Doxil to treat you.’ ”

“I drove home with no treatment. I was in shock,” said Eardensohn, 58, a warm and resolutely optimistic mother of two. With an easy laugh and a soft ring of her white curls grown in after the last round of chemo, Eardensohn does not fit the stereotypical image of a wasted cancer patient. But after 16 years of on-and-off radiation and chemotherapy treatments, “I am not the same person I used to be.”

“When you are at stage- 4, your options get more and more limited. If you have one option taken away, it may have been your last.” A week later, the hospital called her at home, where she lives with her partner of almost 30 years, state archivist Gregory Sanford. The major teaching institution still hadn’t located any Doxil and was cancelling her rescheduled appointment.

Dartmouth Hitchcock is not alone in being unable to supply an increasing number of scarce life-saving and -sustaining drugs. Nor is it the only institution that has turned to the grey market, where unofficial, unauthorized middleman-companies, aggressive as Times Square scalpers, shill vital drugs.

“Drug shortages have been a way of life for some time,” says Vermont Health Department Commissioner Harry Chen. In the first six months of 2011, some 99.5 percent of hospitals reported at least one drug shortage, according to a June American Hospital Association (AHA) survey; 44 percent fell short on more than 20 drugs, and 78 percent rationed supply.

“On a weekly basis, we are making multiple phone calls,” says Karen McBride, Fletcher Allen’s director of Pharmacy Services, “and it’s ten times more work than it used to be” to scrounge drugs from other facilities and beg emergency rations from manufacturers. It helps, she says, that “my buyer is on it like a junkyard dog.”

Even then it can be touch and go. Several months back, when a patient needed a critical antibiotic, intravenous Bactrim, McBride “was still working the phones on a Friday night at 7:30,” she said, “to ensure that the patient didn’t have an interruption in supply. ” She finally located the drug at another New England hospital four hours away, and arranged for a courier to drive it to Burlington.

The problem is escalating, and pharmacists all over the country “are scrambling and desperate,” says Amanda Forster of Premier,  a major hospital drug purchasing cooperative. Five years ago the FDA reported only 55 drugs in short supply; by 2010, there were 178; and this year there will be 350, Premier predicts. The majority are low-profit generics, but big name drugs are also affected. Hard-to-make sterile injectables such as anesthesias and chemotherapies are particularly hard hit. The AHA survey confirmed the extent of the problem with “82% of hospitals report[ing] they have delayed patient treatment as a result of a drug shortage, and more than half were not always able to provide the patient with the recommended treatment. Three out of four hospitals report rationing or implementing restrictions for drugs that are in short supply.”

Shortages cost hospitals about $200 million a year. In addition to staff time for tracking drugs, costs for treating side effects, and price gouging on scarce drugs, the substitute meds can cost many times more than the standard treatment. Faced with a shortage the generic cancer treatment leucovorin at $7.41 a dose, Chevy Chase, Md. oncologist Frederick Smith turned to a similar drug, Fusilev for $177 a dose, the Wall Street Journal reported. 

But there is a deeper price: “adverse patient outcomes” including death. The AHA survey revealed that shortages have caused adverse patient outcomes at one in five facilities, while one third of physicians surveyed by the non-profit Institute for Safe Medication Practices knew of shortage-related adverse outcomes. The impact is “disquieting, the Institute for Safe Medication Practices reported, noting delayed surgeries, dosage errors, and interrupted drug studies, as well as deaths linked to the use of substitute antibiotics to which the patient’s microbes were resistant.

“No patient care has been compromised at Fletcher Allen,” says Bruce Leavitt, head the hospital’s Pharmacy and Therapeutics Committee,  because alternatives to unavailable drugs are found.

But “for a significant portion of unavailable drugs, it’s not as simple as just switching” medications.” Chen notes. “Maybe there has been some compromise in patient care [but] I have not been made aware of it in Vermont.” Fundamental solutions must originate at the federal level, he says, but “we should look for ways to create a system in Vermont that would lessen the effect” of shortages. He has “no immediate plans to implement a process or program.”

The program is “very successful,” said J&J spokesperson Monica Neufang. But on August 26, after weeks without securing a supply, Eardensohn’s doctors switched her to a different chemotherapy agent, apparently having lost faith in Johnson and Johnson’s ability to deliver Doxil--even for the continuing patients for whom it C.A.R.E.[D].

“There are some [old users] that are qualified, but haven’t gotten Doxil,” admits  Neufang. How many? The length of the “waiting list” is “proprietary,” she says, and J&J “wouldn’t give that information to the FDA.”

The causes for the shortages are complex. But quality problems, including potentially deadly microbial contamination, caused more than half the recent shortages in injectable drugs, according to the Food and Drug Administration (FDA). In addition, supply is impacted by cost-cutting manufacture, lack of raw ingredients, just-in-time production, Medicare price controls, discontinuation of less lucrative products, domestic and foreign outsourcing, substandard ingredients, and pay-to-delay sweetheart deals, under which companies, whose patent for a brand-name drug is about to run out, pay generics manufacturers not to produce a cheaper version.

J&J insists that the Doxil shortage is not due to “quality, safety issues.” Instead, Neufang blames “production delays.”

 In fact, it is not J&J that is doing the producing. Although Doxil bears the J&J brand, it is outsourced and produced by Ben Venue Laboratories (BVL), an Ohio-based third-party contract manufacturer. BVL press materials also lay vague blame on “manufacturing capacity constraints.”

But Health Canada suggests an alternative. On August 17, Canada’s FDA counterpart banned importation of some BVL drugs for “quality deficiencies” and what Health Canada spokesperson Olivia Caron calls “shortcomings in the Good Manufacturing Practices … including product sterilization and quality oversight.”

Recognizing that desperate patients have nowhere to turn, Canada is allowing importation of Doxil and a few other “medically necessary drugs from BVL as the health benefits of these drugs outweigh the risk associated with the quality concerns.”

BVL spokesperson Jason Kutz said that concluding there was a link between the Canadian ban and quality issues was “inaccurate and misleading.”

Within days of the Canadian action on August 17, and also facing restrictions on its products in Europe, BVL announced it was quitting contract-manufacturing. A division of Boehringer Ingelheim, headquartered in Germany with affiliates in more than 100 countries, BVL also produces for Pfizer, Takeda and Bristol-Myers Squibb. BVL is part of a vast  $46 billion global contract-manufacturing industry that plays a major role in the increasing globalization of the drug industry.

GOING GRAY MARKET
Doxil is just one break in a world-wide supply chain corroded by Washington’s lax regulation and industry’s need to turn a profit.

Some industries more than others: In a move that makes BigPharma look like Doctors Without Borders, grey-market price gougers are speculating, profiteering, and cashing in. Big time. Concentrating on the scarce, essential drugs that treat patients extremely ill with cancer and infections, or needing surgery, the grey marketers are extorting price hikes averaging 650 percent.

Which sounds almost humanitarian compared to the  “astonishing markup of 6,213 percent,” reported by the San Antonio Express-News. The faxed grey-market price for the lifesaving leukemia drug Cytarabine was among many offers deluging pharmacists. One company, Florida-based Atlantic Biologicals, emailed a Vermont pharmacy offering shortage drugs that “are AVAILABLE. Of course quantities are limited,” it noted, but promised “service that will amaze you. ” In closing, Account Executive Lisy Nicolas, “***YOUR #1 GO-TO GIRL!” asked the target customer to : “HAVE A JOY FILLED DAY!!!!” (Emphasis in original.)

Some 52 percent of respondents to a Institute for Safe Medication Practices survey reported buying drugs on the gray market in the last two years. This network of wholesalers operates outside normal pharmaceutical distribution channels, but for the most part, within the law. The companies buy drugs bulk at discounts prices and resell them to other wholesalers who may sell them again, with price increases and profits accumulating like undercarriage dirt in mud season. By monitoring recalls, plant closings, trade and government websites, and other indicators, the grey marketers can anticipate the market in order to stockpile and hoard potentially scarce drugs.

“We’d like to get an answer to where they are getting their supply,” says Joseph M. Hill, director of Federal Legislative Affairs at the American Society of Health System Pharmacists. “Large national wholesalers say they don’t supply to the secondary market,” says “That may be a policy, but [products] could also could come from sales reps trying to make their quarterly numbers.”

But when pharmacists, “know a patient will die without it, you really don’t want to buy from the gray market, but it is an option of last resort,” says Hill. “What are you going to do?”

Some 39 states, including Vermont require a drug “pedigree,” a paper trail that tracks the drug on every stop from manufacturer to end destination, but it is not clear that the system is foolproof. New Hampshire has “no legislation pending or passed for pedigree,” says Hill.

Dartmouth Hitchcock has “been fairly successful in obtaining needed medications for our patients,” spokesperson Rick Adams emailed. “However, we have been forced at times to go to market to purchase some medications, and have been subject to gray market upcharges.”

Fletcher Allen has rejected that route, says McBride. “We get daily solicitations from grey marketers by telephone fax and email, but we don’t buy from them because we can’t be assured of authenticity and integrity. Some are stolen or counterfeit, and there are ethical concerns about what they are doing: inflating the price hugely,” she says, adding with a flash of outrage: “They are very shady, trying to capitalize on a bad situation. That is unethical. It’s disgusting.”

“If it’s not illegal, someone should look into it,” says Commissioner Chen. “It is certainly unconscionable to operate like that.” 

And potentially unsafe, since before reaching a hospital pharmacy, grey market drugs “can pass through five or six brokers, getting repackaged, relabeled, and possibly stored under poor conditions,” says Premier spokesperson Amanda Forster.

But quality and safety problems also affect drugs obtained through normal channels. “The largest percentage of current shortages is caused by domestic quality problems,” says Mike Levy, FDA acting director, Center for Drug Evaluation and Research (CDER), Drug Security, Integrity and Recalls.

“[D]rugmakers in the U.S. are increasingly implementing cost-cutting measures that may directly or indirectly contribute to an increasing number of manufacturing quality issues,” Business Monitor International wrote. Recently Teva and Hospira—two of the U.S.’s largest makers of generics, including key chemotherapies—closed factories because of “manufacturing problems.” J&J units had to issue massive recalls, and the FDA placed three of its plants under consent decrees for persistent failures to meet quality standards.

BigParma’s rising reliance on cheaper imported ingredients and finished products is compounding the problem. “The race to the bottom has led to an increase of products coming from plants in China and India that may have uncertain supply and may have never been inspected,” Heather Bresch, president of the generic drug giant Mylan, told the New York Times. A 2007 GAO report found that 586 U.S. drugs were made in China and 299 in India.

The availability and purity of foreign ingredients is a factor in the U.S. drug supply chain since -- according to Huascar Batista, acting chief, Import Operations Branch, Office of Compliance, CDER, FDA -- “80 percent of all active pharmaceutical ingredients consumed in the U.S. are imported.”

While Johnson & Johnson and Ben Venue Laboraties deny quality problems with Doxil, both stonewall questions on foreign sourcing. “It’s proprietary,” Neyfang said. “Ask Ben Venue.” BLV’s Kurtz counters by directing questions to J&J.

PROFITABLE PRIORITIES
No matter what the proximate cause of any particular shortage, profit considerations are almost always a factor. “Corporations look at profit margins,” says Fletcher Allen’s Leavitt,  “and if a generic or other drug is not profitable, it is not a priority.”

“Whether a company makes drugs or iPads, it has a mission to maximize profit,” says Steven Kappel who worked with William Hsiao to develop Vermont’s proposed health care reform models. “The problems come when that goal diverges from what we believe is the public interest,” says the head of Policy Integrity, a Vermont non-profit that develops and evaluates health policy.  “It raises major ethical issues when making profits conflicts with saving lives.”

With the current US health care system relying heavily on profit-making organizations to deliver essential goods and service, Vermont’s health care reform effort “is trying to move that balance point between markets and the common good.”

As far as affecting shortages, says Kappel, “Vermont’s only tool is negotiating as a buyer as effectively as we can.” That strategy may be a component of the state’s upcoming health care reform package.

Beyond that, solutions to the rise in drug shortages must come from federal regulation. But the FDA, which is charged with ensuring safety, is hobbled by budget constraints, industry ties and the irrepressible demands of BigPharma’s deep-pocketed Congressional lobbyists. “The growing challenges of globalization have far outstripped the nation’s product safety inspection and quality monitoring resources,” FDA Senior Regulatory Counsel Carolyn Becker told a $1,995-per-person pharmaceutical industry conference in early August.

It’s bad enough that the FDA inspects domestic facilities about once every 2.5 years, but it would take nine years to inspect the agency’s prioritized list of companies in the 150 countries that export drug or ingredients into America, the GAO reports. It certainly doesn’t help that the FDA lacks authority to mandate recalls, require prior notification of impending shortages, and force companies to continue manufacturing essential drugs. 

And even when problems are found with imports, the FDA can’t destroy poor quality or dangerous drugs. It can only refuse them entry, after which importers can “port shop” the rejected products: “They try at several different ports, and sometimes they are successful [getting them into the U.S.],”  says the FDA’s Batista.

That there is plenty of blame to go around is no help to Eardensohn. Her Doxil substitute, Eribulin, “has more side effects for me, including increased fatigue and unwellness. And since I went off Doxil I have developed a cough, and there has been a slight progression of the disease in my lungs.” She also has to make the 140-mile round trip to Dartmouth Hitchkock three times a month rather than the once-a-month regimen for Doxil.

Eardensohn wonders why the grey marketers were able to hoard essential drugs when hospitals and government agencies did not adequately anticipate or prepare for shortages. “I believe a lot of companies are making money hand over fist and not caring, not putting resources into old drugs with proven track records, and instead into ones that might be more profitable.” Indeed, while Doxil is a mainstay chemotherapy agent, it earns J&J less than 1 percent of its annual revenue.

“This thing horrifies me, and not just for me,” says Eardensohn. “This is a kind of healthcare rationing. Why hasn’t something been done?”