Physician practices told to be extra cautious in purchasing supplies from 'grey market'

A physician's stethoscope
Practices should be extra cautious about purchasing supplies on the "grey market" in light of scammers taking advantage of the coronavirus. (Getty/millionsjoker)

Scammers may be trafficking counterfeit or faulty products from protective masks to disinfectants during the coronavirus pandemic, and physician practices may be particularly vulnerable.

Practices that are running low on critical supplies, including personal protective equipment (PPE) to protect doctors, staff and patients, might be tempted to buy products on the so-called “grey market." That refers to supply channels that are unauthorized by a product’s original manufacturer.

In these cases, unauthorized, third-party sellers are offering masks, gowns and other scarce supplies at a markup, but not all of the products are legitimate.

While hospitals likely have well-established supply chains, providers at other sites, including physician practices, do not necessarily have a history of purchasing PPE from distributors, which is making it difficult in general for them to obtain those in-demand products, said John Sganga, senior vice president of alternate site programs at Premier, a major healthcare group purchasing and improvement organization.

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At the same time, Premier has seen an uptick in grey market activity around PPE, he said, in a statement to FierceHealthcare.

Several Premier members have shown the company examples of counterfeit offers (PDF) they’ve received for N95 masks and disinfectant products, some of them offering pages of fake research and experiment results certifying the products’ effects, he said.

“For this reason, Premier is asking alternate site providers to be extra cautious in any purchasing activities they pursue outside of their normal channels,” Sganga said. ”In this environment, everyone should be vigilant about vetting products that are offered to them. “

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It’s best for healthcare organizations to stick with their usual supply chain channels and vetted marketplaces such as traditional wholesalers, group purchasing organizations and trusted e-commerce platforms, he said. 

Grey market vendors are attempting to capitalize on providers’ needs, sometimes offering difficult to obtain supplies at a 50-times markup, Premier said.  

In one case, Premier officials contacted the legitimate manufacturer of N95 masks, who could not determine how fraudulent sellers obtained its supplies and noted differences in packaging, said Chaun Powell, group vice president of strategic supplier engagement at Premier.

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Modified packaging is often a hallmark of a counterfeit product, as are different packaging materials and misplaced logos or markings, he said.

“In other words, these sellers are not authorized distributors of the product they are purporting to sell, signaling that the respirators did not come from the manufacturer as advertised,” he said.

“At best, this means these respirators came from a questionable source, with no way to verify safe storage, handling, and valid expiration dates. At worst, they could be out-and-out fakes. Either way, there is a risk that the offered products will not perform as marketed, increasing the risk to healthcare workers, as well as patient health and safety,” he said.

How can healthcare organizations ensure products are reliable, safe and legitimate? Premier recommended the following:

Check that the product is registered with the U.S. Food and Drug Administration (FDA). With the exception of industrial N95s, (which the Centers for Disease Control and Prevention has only recently and temporarily permitted for emergency use in healthcare), all other PPE including surgical masks, face shields, surgical gloves and gowns, isolation gowns, caps and shoe covers must be registered with the FDA, Premier said. If a supplier is unable to provide a demonstration of FDA registration, then it is not permitted to legally market that product for sale or use in healthcare in the U.S.

If an offer is too good to be true, it probably is. Be wary of any sellers who offer products outside of your usual supply chain channels. Those claiming to have products that no other legitimate source can access are most likely trafficking in suspicious products or products from suspicious sources, Premier said.

Develop and communicate a policy for purchasing decisions. Develop a policy for how you will decide which distributors and suppliers to do business with. Carefully consider and document exceptions that you may allow, such as accepting products from hospitals or other healthcare organizations in an emergency or purchases from sources outside of normal suppliers and distributors. This is important amid reports that some health workers, afraid of shortages of protective equipment, are starting to search for it on their own, as Stat reported.

When in doubt, check it out. Unscrupulous sellers may be offering products that look like the original manufacturers' items but aren’t, Premier said. Counterfeiters can be very sophisticated and replicate packaging to look almost identical to the real thing, it warned. If you are not sure of a product’s legitimacy and you work with a group purchasing organization, ask them to vet the offer with the original manufacturer.