Medical ‘cartels’ had links to local firms tied to meningitis outbreak Hub Business — September 3, 2013

Note: This post has been updated and changed a bit since original filing.

Margaret Clapp, the former chief pharmacy officer at Massachusetts General Hospital, has co-authored a NYT op-ed piece today, charging that large “group purchasing organizations” are still causing shortages of even the most basic drugs needed by patients.

And the authors are linking the recent shortages and the group “cartels” to two now infamous firms in Framingham and Westborough:

A deadly outbreak of fungal meningitis, which was first identified last September in Tennessee, was triggered by shortages of asteroid painkiller, prompting providers to turn to the now bankrupt New England Compounding Center, which, as a so-called compounding pharmacy, was not held by the Food and Drug Administration to the same stringent standards as regular drug manufacturers. The pharmacy’s sister company, Ameridose, which has also been closed, had supply contracts with five of the largest American hospital purchasing organizations.

Here’s the kicker: The authors say these shortages and the purchasing groups themselves are ultimately the result of federal government policies:

By awarding select suppliers exclusive contracts in return for exorbitant (and undisclosed) “administrative,” marketing and other fees, they have reduced the number of suppliers to just one or two for many generics. …

This perverse system was created in 1987 when Congress enacted the Medicare anti-kickback “safe harbor,” which exempted these buying organizations from criminal prosecution for accepting vendor kickbacks.

Fyi: NECC and Ameridose are now closed.

quoted from here