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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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November 1, 2011

President Obama Orders the FDA to. . .Do What, Exactly?

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Posted by Derek

Headlines of the "Obama Orders FDA to Take Action on Drug Shortages" were all over the news yesterday. But anyone who actually knows the industry could be forgiven for wondering what was going on.

That's because the drug shortage problem is not something that can be solved by fiat. There are a number of factors that got us all into this fix: two big ones are changes in Medicare billing for generic cancer drugs, and manufacturing problems with overseas suppliers. (A low-margin business gives you even more incentive to source the bargain-basement options). None of these things can be fixed overnight.

And when you look at the executive order itself, you find that there's not much there. It directs FDA to expedite reviews of new suppliers and new manufacturing sites, but aren't they doing that already? And it also tells the agency to send out letters to all the companies, reminding them to remind the FDA about potential shortages, which is clearly the kind of decisive step this crisis has been waiting for. Oh, and it also calls for determining whether any of the shortages have led to "price gouging". Can't have the price of something going up just because there's a shortage - that's just basic economics, right?

So call me cynical, or call me someone who just hasn't been that impressed with Obama. (Note: the Republicans have not been covering themselves in glory, either, as far as I can see). But this whole announcement seems to be just a public relations game, made to provide a line for a speech. "Congress wouldn't take action, so I issued an Executive Order for the FDA to. . ." But during the campaign, that sentence won't end the way it should: ". . .for the FDA to do what it's already doing! Yes! And send out some letters, too!"

Comments (33) + TrackBacks (0) | Category: Regulatory Affairs


1. gyges on November 1, 2011 6:59 AM writes...

Yesterday I read an article from the UK's Guardian newspaper that had the heading, "Self-defence law shows how politicians use legislation as PR".

I wonder if your article could've been titled "[Executive Order] shows how [president] uses legislation as PR."

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2. provocateur on November 1, 2011 7:35 AM writes...

This is the sign of times we live in.
This headline-gouging self-centered mentality
is how you stay in the news and appear effective eventhough
you are clearly not...
Stupid politicians.I hate them.
My ploy is to keep changing them constantly irrespective of party.I have not found one exception.

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3. PW on November 1, 2011 7:49 AM writes...

I agree but I am voting republican.
I am just counting on enough fights so the things they can accomplish will be something along the lines of what normal folks want

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4. passionlessDrone on November 1, 2011 8:01 AM writes...

Hehe. Very nice, I thought exactly the same thing, but only because I've been lurking here for a while. Nicely done!

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5. Anonymous on November 1, 2011 8:06 AM writes...

The wrong people got hold of Obama's head when he was young. He is a sad example of what happens when bright people adopt a failed ideology. Statism doesn't work. You can order problems away all day long. It never works, no matter how great and powerful you think the government is.

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6. sepisp on November 1, 2011 8:26 AM writes...

In this case, we see how a republic is not a dictatorship. Obama can order the FDA to dance samba if he wants, but not unilaterally include that in the budget or change the law to make the FDA review process faster. He isn't a Great Leader since a republic is not supposed to have one.

Second, I've basically lost the faith on American people on understanding the difference between regulation and action. Or any nuances like this at all. See #5, for example. Statism would mean that the government would build - not even buy! - a pharmaceutical plant, run it and produce drugs. (The same occurs now with the postal service.)

And how's the private market treating you? One third of population bankrupted by the medical establishment, the highest drug prices in the world, etc. etc. I assume you'd suggest to "deregulate" it so that we can get back to the cozy and nice 1880s.

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7. bbooooooya on November 1, 2011 8:28 AM writes...

Sure it'll work, just like Nixon's price and wage controls in the early 70s prevented rampant inflation in the late 70s......

It really is a shame Obama has been such a dud, though this is partly in comparison to the expectations heaped upon him: at this point if he walked across the Potomac, the GOP would complain that he can't swim.

Part of me hopes to see Bachmann/Palin in '12, but then I realize there is a non-zero chance it happens.

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8. luysii on November 1, 2011 8:55 AM writes...

Perhaps he should the GS-15 Director of Winds and Tides on it

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9. johnnyboy on November 1, 2011 9:35 AM writes...

Oh dear, here we go with the political "discussion".
Wake me up when it's done.

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10. bad wolf on November 1, 2011 9:41 AM writes...

#7: The expectations heaped upon him seemed largely of his own making. Which to me makes his situation--constantly compared to inflated campaign rhetoric--less sympathetic.

But overall voters still have to learn that the President, even of the USA, does not have magical powers that will unilaterally change the world, even (or especially) if it is someone they fundamentally agree with.

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11. Anonymous on November 1, 2011 10:04 AM writes...


Yes, this is a chemistry blog. But politics affects us all. For the most part, the people commenting here are rational and intelligent, and usually avoid the vicious ad hominem attacks characteristic of political blogs. Besides, Derek brings up a valid issue here.

If you don't like this one, you may notice he's already started a new topic.

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12. hibob on November 1, 2011 10:09 AM writes...

Oh, and it also calls for determining whether any of the shortages have led to "price gouging". Can't have the price of something going up just because there's a shortage - that's just basic economics, right?

Distributors buying from each other to try to keep up stocks of a suddenly rare item can easily drive up a price legitimately, if unfortunately.

Distributors exacerbating a shortage by trying to corner the market and then marking up by 1000, 2000, or 4600%? Yep, that's price gouging, and hopefully actionable.

If Obama wants to help, he's going to need to get someone to tinker with the Medicare Modernization Act's structure so that there's a more consistent incentive to produce generics.

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13. Snarky McSnark on November 1, 2011 10:53 AM writes...

President Obama Orders the FDA to placate the uneducated masses with bread and circuses so that he can guarantee his victory in the 2012 election.

In the end, it doesn't matter who you vote for...politicians are all the same.

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14. Michael Caton on November 1, 2011 11:14 AM writes...

Derek, this was exactly my reaction to this announcement. It seems nonsensical on its face. At best it's a political move motivated as you describe. At worst (i.e. if there's any action from this announcement) it's one of the worst ideas this administration has had.

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15. johnnyboy on November 1, 2011 11:15 AM writes...

#11 - I agree that Derek's post on the FDA thing was justified, but with is impromptu judgement on Obama's performance he just opened the door to the usual garbage - one side screaming that Obama's the antichrist, the other side complaining that he's not Jesus, and the rest putting forth highly perceptive, "rational and intelligent" comments like "stupid politicians, I hate them", "politicians are all the same", etc...

One thing no one ever says is that you get the government that you deserve. So good luck with that.

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16. Kyle Wilso on November 1, 2011 11:26 AM writes...

Does anyone here really think this is a Republican versus Democrat issue? This is the usual game for politicians. If you can't fix it then at least talk about fixing it. If the public wouldn't like the result of your actions then paste a nicer name on them and assume that no one will read the details. The President can't do much here, the congress has decided that they don't want to do anything until after the elections (either because they don't want to do anything that might help the Democrats look better or because they don't want to get tagged with enlarging government or spending a penny). Same, same...if Romney is our next President I predict that he'll do the same things and implement pretty similar policies...

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17. MTK on November 1, 2011 12:02 PM writes...

Presidents say and order stuff that they really have no direct power over all the time. And sometimes it's just a PR ploy, sometimes it's a kick in the pants, and sometimes it's the ol' "we've got our eyes on you". Sometimes all three. The President simply addressing the issue puts a spotlight on it.

I guess what I'm saying is that it may or may not be a pure campaign move, but there's no reason to get all riled up about it. Happens all the time.

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18. Anonymous on November 1, 2011 12:28 PM writes...

Funny no one remarks on Derek's statement about problems with oversees manufacturing. If Obama or any politician wants to help patients, maybe they could get some of the jobs back here. We're not perfect but I'll take the US healthcare system over any other (yes, Canada and Europe as well) and I'd prefer to take a drug manufactured here over anywhere else. Call me an isolationist if you want.....

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19. JC on November 1, 2011 12:34 PM writes...

One doesn't see consumers clamoring for 80386 chips or copies of Windows 95 a much as for these off patent drugs. Maybe Andy Grove could shed some light on that.

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20. bbooooooya on November 1, 2011 1:15 PM writes...

"but I'll take the US healthcare system over any other (yes, Canada and Europe as well)"

#50 by life expectancy!


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21. Anonymous on November 1, 2011 2:42 PM writes...

Life expectancy has nothing to do with the quality of our healthcare system. We also have amongst the highest concentration of fast food restaurants and obesity. Your point?

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22. johnnyboy on November 1, 2011 3:35 PM writes...

Life expectancy has absolutely nothing to do with the quality of the healthcare system ? Really ?

Hmm, about infant mortality (US: #34, or 46, depending on the source) ? Is that because of McDonalds too ?

As a canadian who's lived a long time in the US, I'd agree that the US health care system is somewhat better. Better, that is, if you have decent insurance. The people who clamor about the quality of the US system usually do.

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23. Drew on November 1, 2011 4:09 PM writes...

#22: worldwide data on infant mortality is inherently flawed since there is no universal definition on what to include. One country doesn't count stillbirths while others do. One country doesn't count late term miscarriages while others do. Until there is consensus amongst all countries, the numbers are useless.

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24. metaphysician on November 1, 2011 4:23 PM writes...


I hope your not saying the Postal Service is a government agency, because its not. It hasn't been since the 70s. Its a private business. . . that just happens to be stuck with a congressional committee as its Board of Directors. All the detriments of being a private business, combined with all the detriments of a government agency.

This, btw, is why the USPS has financial issues: the people making decisions for it aren't responsible for paying for it.

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25. to johnnyboy on November 1, 2011 8:37 PM writes...

I agree that we get the govt we deserve!
how abt on top of your statement i put the fact
that ppl are willing to fight for a better govt and this is a step, albeit miniscule, in fighting towards getting a better one...nobody is writing a scientific paper here so at least a lil color in the comment, a little opinion does not hurt.
Abt Obama or any politician,a majority of them , I think is probably hating them(congress approval was 7%)or holding them responsible for at least a big part of our problems now.If you really thinka little opinion offends you in the comments section, I think you have a problem with the truth.

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26. Dan on November 1, 2011 10:36 PM writes...

'So call me cynical, or call me someone who just hasn't been that impressed with Obama.' Really? Big shocker there. Republicans will never be happy till we return to the robber barons and the boom and bust laissez faire government of the 19th century. So keep voting for the 1% and against your own self interest as well as the anti-science anti-reason party.

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27. NYTimes on November 1, 2011 11:21 PM writes...

"I never tell political jokes. Too many of them get elected."

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28. matt on November 2, 2011 2:41 AM writes...

@hibob #12 said "tinker with the Medicare Modernization Act's structure"

As I recall, the last time the shortage subject came up, it had several contributing factors and sounded like a controls problem:

1. Problems in (injectables, especially) production could require recalls, fixes, and recertification; for an entire manufacturing line this could have a lengthy timeline
2. FDA production certification process involved production quantity boundaries, which limited/slowed market adjustment to competitors' production troubles or market exit
3. The MPDIMA's limits on the price Medicare will pay, which is based on a price list which may be too infrequently updated, and which may need to be waived on a per-drug basis in the case of widespread shortage

Now, what can a President do if Congress is all locked up? He can try to address the recertification steps in 1 and 2, which is what this Presidential directive tries to do. #3 most likely requires congressional action, although increasing the frequency of collecting/publishing the price list data might be possible if not exactly authorized by the Act. (Lots of economic data is compiled and published monthly, why not this?)

With regard to "price gouging," I tend to agree with you. I think some concern SHOULD be directed toward "gray market providers." A hospital buying large quantities of a scarce drug from some Yahoo email account is a bit scary. Where did it come from? So, while having buyers arbitraging risk (NOT trying to corner the market) is useful or even needed here, there needs to be some way to verify that middlemen are reputable, or at least that the drugs they sell are legitimate. (Short of dosing up a bunch of patients with their wares and waiting to see if anything bad happens.)

However, if the MPDIMA limits on Medicare generic drug reimbursement prices misses the pricing data from these 3rd party resellers, it is deeply flawed and must be adjusted.

With regard to politics:
Derek, I think your assumption is the press release was intended to show what the President is accomplishing or can accomplish. I disagree. It is meant to show the President is handcuffed by the inaction of Congress to weak Presidential directives, to highlight what he cannot accomplish. I agree, however, that this is largely political posturing, and not very impressive either as policy or politics.

I think it would be more effective if he pushed the legal boundaries to accomplish what he wanted, to ask for forgiveness rather than permission, a little bit more. In this context, he could waive enforcing MPDIMA's reimbursement price limits for drugs in shortage, or authorize Medicare to pay avg-selling-price + 50% instead of just +6% in cases of shortage. He might not have the legal authority to make it stick, but who would sue? And even when someone did, by the time it crawled through the legal system, hopefully congress could crawl toward a more permanent solution.

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29. cliffintokyo on November 2, 2011 4:57 AM writes...

In this world of budget constraints, and in which everyone is watching the watchers, FDA needs the Pres to announce that it is OK for them to make this a priority issue, for the sake of the health of the nation, no less.
Common sense. No politics.

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30. alig on November 2, 2011 7:01 AM writes...

The problem with the current system is that generics with the lowest cost can drive other producers out of the market by charging a very low price. One of the reasons they have the lowest cost is the lack of redundancy in their systems, so they are more likely to have manufacturing issues which can cause shortages. Since the shortage has a greater impact on society than the manufacturer, the government should step in and monetize the externality. Requiring drug manufacturers to be bonded or carry insurance to reimburse society if they encounter manufactoring issues which cause shortages could effectively put the appropriate emphasis on reliability of supply.

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31. Anonymous on November 2, 2011 11:50 AM writes...

Want to make it political eh! Tamminy Hall said "Vote for who you want, I count the votes."

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32. andrew c on November 2, 2011 7:24 PM writes...

this is a huge problem in the pharmacy world. drugs like selenium, sodium phosphate, zinc, propofol, etc. are just dissapearing. Cysteine is in short supply.
What happens with these ancient drugs is that wholesalers buy all they can when a drug is on backorder. Then they jackup the prices or sell to "gray market" folks.
My hospital ends up spending 100 dollars/vial on things like sodium phos when just two years ago you could get 20 vials for the same price.
And this isnt just happening to a couple drugs. We are talking 800+.

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33. Adam Smith on November 3, 2011 9:49 AM writes...

What? Price ceilings lead to shortages... and the emergence of black markets? I am shocked... shocked, I say!

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