John Pritchard
In the June 2019 issue of The Journal of Healthcare Contracting, I read with great interest the article “The Grey market: Financial issue. Patient safety issue”. The article details how one large supplier, BD, has proactively tried to manage the grey market to maintain financial integrity, as well as patient safety.
What is the grey market?
Diverted products can enter the grey market from both inside and outside the U.S. “For example, a U.S. manufacturer sells its product to a supplier outside the U.S. for the sole purpose of servicing a different country or region (e.g. Latin America),” details Jim Berdela, channel development and marketing vice president, BD. “The product is sold to this supplier, but after the sale, all or much of it is fraudulently diverted from the region, unbeknownst to the manufacturer, and re-sold back into the U.S.”
The desire for the lowest-price option on the part of purchasers fuels the secondary market, contends Richard Bergner, chief operating officer, Integritet Global Consulting & Investigations in Miami, Florida. Manufacturers inadvertently fuel the problem with varying global cost structures to penetrate emerging markets and improve healthcare for patients globally. “Savvy traders exploit these opportunities, which means products intended for a particular market never make it to those patients.”
While diversion can lead to financial implications to the supplier, what really worries me is the safety implications that come along with this shadowy secondary market. Many experts believe that this secondary market opens the door to expired, stolen and counterfeit products. Bergner continues “This channel can lead to improperly handled, misbranded, or counterfeit products being sold to healthcare providers, putting patients at risk.”
I’m worried we will start to see more cases of injured patients due to the grey market, and I’m greatly concerned this has yet to hit many Supply Chain Leaders’ radar. Bergner gives some great advice on how we can slow the flow of products on this secondary market;
- Requiring proof of performance beyond simple assurances that the products went where they were supposed to go.
- Conducting formal or informal market surveys or reviews. These can be done by company personnel or third parties.
- Developing and maintaining a program to address and confront grey market activity and build it into day-to-day business.
- Educating internal and external partners on the risks of the grey market and this illicit supply chain.
- Partnering with suppliers and listening to what they are seeing out there, and then reacting to it.
I’d love to hear your thoughts on the grey market. Thanks for reading this issue of The Journal of Healthcare Contracting.