Lockyer Subpoenas Three Flu Shot Distributors in Price Gouging Investigation

Attorney General Bill Lockyer (D) on Friday subpoenaed three Southern California-based flu shot distributors as part of an investigation into alleged price gouging by companies selling flu vaccine amid a national shortage, the Los Angeles Times reports. Dubin Medical, Nationwide Medical Surgical and Advanced Medical Sales were subpoenaed to provide information about flu vaccine sales and pricing. None of the companies has been charged with a crime (Los Angeles Times, 10/23).

Tom Dresslar, a spokesperson for Lockyer, said the attorney general's office has received reports of flu vaccine, which ordinarily sells for about $85 a vial, being offered for $400 to $900 a vial (Coleman, San Francisco Chronicle, 10/23).

According to the Times, "It's not always clear when corporate pricing practices cross the line from a savvy reading of the marketplace to illegal gouging."

Price gouging is not a federal offense, and laws governing the practice vary from state to state. In California, price gouging is prohibited during a natural disaster or man-made emergency, such as a riot.

Dresslar said that the distributors could be prosecuted under state laws governing consumer protection and unfair business practices.

If Lockyer finds sufficient evidence of price gouging by distributors, he could file a lawsuit seeking a preliminary injunction or temporary restraining order. In addition, civil charges could be brought with fines of up to $25,000 for each infraction.

Dresslar said the attorney general's office also could seek restitution. He added, "We believe the information these distributors will provide ... will help us understand how this market is working and how prices are being set. We will not rush to court. But if we have a solid basis, Lockyer will swiftly and aggressively take action against gougers" (Los Angeles Times, 10/23).

Lockyer in a statement said, "The vaccine shortage threatens the health of hundreds of thousands of Californians, and millions of their fellow citizens across the country. My message to those thinking about exploiting this crisis to rip off health care providers and vulnerable consumers is this: You're not going to get away with it in California."

Lockyer also suggested that state legislators consider expanding the definition of a "state of emergency" to include a public health crisis, which would give the attorney general the authority to regulate vaccine distributors in the future.

Kasey Thompson, director of patient safety for the American Society for Health System Pharmacists, said, "If there is one silver lining in this current shortage, it is that it may raise awareness in Congress of the need to prevent price gouging when it threatens public health."

John Grubbs, pharmacy director for University of California-Davis Medical Center, said he refused three offers from distributors to buy vaccine at prices between $400 and $600 a vial. Grubbs said, "There is almost no circumstance where we would [buy vaccines for inflated prices]," Grubbs said. He added, "With unfamiliar distributors calling, we have no way of knowing where the drugs have been from the time they left the manufacturer to the time they reach us. They could be contaminated or counterfeit" (Sacramento Bee, 10/23).

About 900 doses of flu vaccine out of about 3,000 doses were stolen from the Merced Faculty Associates Medical Group "in what appears to be the largest theft of vaccine in the United States," the Modesto Bee reports. The stolen vaccine doses had been stored in an unlocked laboratory refrigerator at the clinic in a bag containing 90 five-milliliter vials, according to police reports.

Police Commander Jeff Schindler said that the vaccine likely will be sold on the black market. If the doses are recovered, they would be considered tainted and could not be used.

Richard Rios, Merced County's deputy director of public health, said, "This just makes a situation that's already acute that much worse."

The theft is the third of its kind in the United States since the vaccine shortage announcement (Milbourn, Modesto Bee, 10/23).