Drug Wholesalers Receive Subpoenas from Eliot Spitzer

Mr. Spitzer is demanding documents describing how much the companies use the “alternative source market,” where middlemen buy from other middlemen, to either improve their margins or to keep up pharmaceutical distribution to hospitals when products are in short supply.
Both companies said Mr. Spitzer’s probe concerns the broader industry, but no other companies have been immediately identified as being under investigation.
Merrill Lynch analyst Thomas Gallucci speculated that the probe could be related to the growing problem of counterfeit drugs because a complicated supply chain can muddle a drug’s pedigree. Food and Drug Administration figures show that the number of agency investigations into possible counterfeit drugs has increased from four in 1998 to 22 in 2003 (see Bad Medicine).