The Grey Market Is…

//The Grey Market Is…

The Grey Market Is…


Keith Watts


Global medicineThis is the first in a series discussing the unnecessary failure of major drug manufacturers to address legitimate patient-specific early access, also called “named patient” access, worldwide. US pharmaceutical manufacturers have a poor understanding of the gray market that channel supplying newly FDA approved medicines outside the US. This poor understanding results in ignoring the desperate demand for these products outside the US, which opens the door for gray market players to take on a prominent role in supplying medicines for early access.

The gray market is the unauthorized, unintended, or unofficial trade of pharmaceutical goods or services through legal distribution channels[1] in the domestic United States for the sole purpose of export to another country. Gray marketed pharmaceuticals differ from counterfeits [fake copies of a product] in that drugs entering this channel are lawful, genuine, branded products.[2]

This brief discussion does not focus on the variations of the gray market that disrupt competition. Parallel trade, reimportation, and lateral importation represent serious gray market activities that can negatively impact markets.[3] Fear of these distribution channels likely causes the greatest harm to patients in need of life-saving medicines who have exhausted every alternative treatment. This fear results in ignoring patient demand outside targeted regions. Fear may also encourage manufacturer reluctance, or failure, to enable ethical “named patient” access through channel-specific distribution specialists.

Physicians in many countries around the world must often search for access to newly approved medicines that might help their patients with immediate treatment needs. These are patients in countries having legislated ethical temporary early access to unapproved medicines. Payment eligibility for these medicines fall under either solely private pay or some combination national health insurance and private pay in their home country. Often these qualifying, or named patients, live in regions not selected for product distribution or commercialization. Depending on the region, manufacturers ignore named patients living in these excluded territories, occasionally resulting in death or further health decline while awaiting domestic product approval. Try explaining to a patient that a live-saving drug is not available; all the while knowing an ethical, regulatory compliant pathway exists.[4]

Manufacturer refusal to address these needs, while product sits in US inventories, knowing ethical and legal pathways exist for access, comes at a high cost. Manufacturers’ failure to address early global demand only strengthens incentives for gray market participation.[5] Inflated pricing makes arbitrage profitable at the expense of provider and patient support, pharmacovigilance, and introduces potential product safety and other supply-chain security concerns.[6]

Overlooking patient and provider demand is not the solution to the gray market. By simply naming a specialty distributor, preferably one that is a US based export-only specialist, manufacturers will reduce incentives for arbitrage through unauthorized drug sales, including those occurring out of U-Haul trailers.[7] Research to better understand why so many manufacturers ignore, or poorly manage, the temporary access channels is in early stages. The goal of the research is to discover what steps can reduce the role of the gray market, improve supply chain security, and patient safety. Look for more information to follow.

[1] Peggy E. Chaudhry, “Confronting the Gray Market Problem,” Business Economics 49, no. 4 (2014).[2] Ibid.[3] Ibid.[4] E. T. Rosenthal, “The “Gray Market” Raises Concerns About Cost, Safety, and Ethics,” J Natl Cancer Inst 104, no. 3 (2012).[5] Frank J. Cavaliere et al., “Prohibiting Gray Market Prescription Drugs: The Ethical Dimensions,” Southern Law Journal 27, no. 1 (2017).[6] Rosenthal.[7] E. T. Rosenthal, “”Frustration over Gray-Market Drugs Lingers Throughout Nation,” J Natl Cancer Inst 104, no. 4 (2012).


Cavaliere, Frank J., Toni Mulvaney, Marleen R. Swerdlow, Soumava Bandyopadhyay, and Vivek Natarajan. “Prohibiting Gray Market Prescription Drugs: The Ethical Dimensions.” [In English]. Southern Law Journal 27, no. 1 (Spring 2017): 91-111.

Chaudhry, Peggy E. “Confronting the Gray Market Problem.” [In English]. Business Economics 49, no. 4 (Oct 2014): 263-70.

Rosenthal, E. T. “Frustration over Gray-Market Drugs Lingers Throughout Nation.” J Natl Cancer Inst 104, no. 4 (Feb 22 2012): 264-7.

Rosenthal, E. T. “The “Gray Market” Raises Concerns About Cost, Safety, and Ethics.” J Natl Cancer Inst 104, no. 3 (Feb 08 2012): 168-70.

By | 2017-12-06T16:52:50+00:00 December 6th, 2017|News|0 Comments