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Drug prices soar as hospital suppliers are forced into ’gray market’

PBS News Hour, August 30, 2011

Michael O'Neal buys drugs for a living -- and too often these days, he's forced to do it on the "Gray Market." Like most pharmacists charged with stocking an entire hospital, O'Neal prefers to conduct his official business for Vanderbilt University Medical Center through big-name distributors. But there are days when his "back's against the wall," O'Neal said -- when official supply chains run dry for all kinds of drugs -- from the "bread-and-butter variety" used every day in hospitals to specialty medication for cancer treatment. On those days, O'Neal resorts to haggling on the little-known sector of the health care economy that's only a slight shade more legal than the black market. The gray market is an expanding world fueled by a deepening drug-shortage crisis in which secondary retailers buy up medication outside of the normal, tightly controlled pharmaceutical distribution channels and then sell their stockpiled supplies to desperate pharmacists and hospitals at exorbitant mark-ups. High blood pressure medication that normally costs $25.90, for example, can go for $1,200 -- a mark-up of 4,533%.