Medical 'gray market' bypasses Lee Memorial

FLORIDA WEEKLY PHOTO MICHELLE START Robert Simpson, president and CEO of LeeSar, holds up a plastic bag of vitamin E syringes that will be shipped to The Children's Hospital of Southwest Florida at HealthPark Medical Center. Lee- Sar buys only from companies that deal with the FDA and are licensed manufacturers, he said.

It's enough to lure even a savvy, educated consumer. Bargain basement priced medical equipment - everything from sterilized gloves to emergency trauma bags - fills 212 pages and accounts for more than 10,000 items on EBay.

"The way it happens is that there is a global gray market for medical supplies, and also a black market," said Richard Bergner, regional director for the Miamibased PICA, which works with companies to protect the assets of global brands. "The gray market is for supplies that are intended for outside of the U.S. while the black market involves devices that are stolen and sold into secondary markets and ultimately can end up in a hospital setting."

Bergner said companies develop and market some of the same products sold in the United States to third world countries at a discounted price. Those products sometimes are re-sold to an American supplier and then to American clinics, hospitals and private practices. While the product ought to still be able to stand up to FDA standards, often it is not stored as required and thus becomes non-sterile.

Hospital infections, sometimes caused by non-sterile instruments or products, cause thousands of deaths every year.

The black market products are normally stolen and then make their way back onto the market, he said.

"This poses a problem," he said. "It creates an illicit supply chain. You run the additional risk of products being altered or not stored properly and of purchasing counterfeit products."

So, in tight economic times, what can medical professionals do to ensure that they get the lowest priced items and still ensure that the products meet quality standards?

Faced with that question, Lee Memorial Health System and Sarasota Memorial Health System set up LeeSar. Located in Lehigh Acres, the facility is responsible for tracking, ordering and distributing all of the medical supplies for the hospitals within the systems.

On a daily basis, LeeSar ensures that every last mask, glove, medication and medical instrument is accounted for. When supplies dwindle, the organization orders more. The warehouse holds a 90-day supply of medications, food trays, gauze, toothpaste and everything else necessary to run the two hospital systems.

Robert Simpson, president and chief executive officer, said his group negotiates contracts directly with the companies that produce medical products thus eliminating the opportunity for gray or black market medical supplies to enter the hospitals. According to audits conducted annually by the hospitals' board of directors, LeeSar's cost rank in the lowest 5 percent of the nation.

LeeSar purchases wholesale lots but is able to repackage those supplies so they can be used by the individual hospitals. In order to do so, though, employees have to document extensively. For example, when pharmacists receive a bottle of Vitamin E, they dispense it into pediatric syringes for HealthPark Medical Supply. Those syringes are then packaged together for shipment. A copy must be made of the original label as well as the individual labels that go on each syringe. The labels are then stored in a book that inspectors look through on a regular basis.

The company has been so successful that other hospitals are now calling them to ask about becoming costumers.

"We only deal with companies that deal with the FDA, licensed manufacturers," Simpson said. "We know (there's a black and gray market) out there. We see it all of the time. Ninety-nine percent of what those folks do is over the Internet, though. Hospitals don't buy their product that way. People will try to do that sort of thing in storefronts until the local government shuts them down."

Lee Memorial Health System board of directors is also expected to vote within the next few weeks on whether to move the facility's location. Simpson said they have outgrown the current facility.