WASHINGTON, D.C.—Chairman John D. (Jay) Rockefeller IV today praised final congressional passage of the Drug Quality and Security Act (H.R. 3204), bipartisan legislation with major consumer and life-saving benefits that President Obama will now sign into law. The bill was developed with critical information uncovered during Rockefeller’s joint Senate-House investigation into the prescription drug “gray market”, which found that unscrupulous operators can make enormous profits by buying hard-to-find drugs and then marking them up and re-selling at astronomical price points.

Rockefeller’s investigation, which was co-led by Senator Tom Harkin, Chairman of the Health, Education, Labor, and Pensions Committee, and Representative Elijah Cummings, Ranking Member of the House Committee on Oversight and Government Reform, exposed significant risks in the prescription drug distribution network. The months-long investigation revealed that gray market companies – those not part of the typical distribution chain – mark up the prices of prescription drugs, especially those prescription drugs that are in short supply, by as much as 8000% of what they would normally cost. It also found that these companies may not properly store and ship these drugs.

The so-called “track and trace” title of H.R. 3204 will go a long way toward improving the security of the pharmaceutical supply chain in the U.S. by requiring the pharmaceutical industry to track individual units of prescription drugs through the distribution chain. This will result in bringing to patients safer and more affordable critical drugs for cancer and other serious illnesses.

“This bill brings much-needed accountability to the prescription drug market and closes serious gaps in the supply chain that our investigation found.  It’s going to make it much harder for these shady companies to obtain critical life-saving drugs and profit off families in need of a lifesaving medication for their loved one,” said Rockefeller. “I’m proud to have played a role in making the prescription drug market safer and more accessible and affordable for Americans, especially those fighting heartbreaking life-threatening illnesses. The last thing any patient or parent should worry about when they’re seeking care is whether they’ll have to declare bankruptcy to get the medications and treatment they need.”

Background:

The bicameral investigation found that gray market companies can divert life-saving prescription drugs out of their authorized distribution chains and sell them to hospitals and other health care providers for prices that are often hundreds of times higher than normal prices. For various reasons, these drugs are sometimes in extremely short supply and hospitals are then forced to spend exorbitantly to treat their patients, even if it means purchasing prescription drugs from gray market companies.

Rockefeller and Cummings wrote the House-Senate negotiators in June 2012 to summarize their findings and offer policy recommendations based on their investigation. As a result of these recommendations, Title II of the legislation contains several important provisions that will improve the security of the U.S. drug distribution chain:

• It requires the pharmaceutical industry to develop a method to track individual units of prescription drugs as they travel “downstream” through the distribution chain. This so-called “unit-level serialization” will make it much more difficult for gray market companies and other unauthorized parties to divert, steal, or adulterate drugs. It will also make it easier for regulators and health care providers to verify the quality and legitimacy of a drug.

• It also raises federal standards for companies that operate as drug wholesalers. It requires the FDA to establish a national drug wholesaler database that would not only contain wholesalers’ licensing and contact information, but would also list any disciplinary actions state regulators have taken against the wholesalers. This provision addresses the finding of the investigation that some gray market companies sanctioned in one state would continue to operate with impunity in other states.

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