In the latest in a flurry of executive actions, the Obama Administration has directed the FDA and the Justice Department to reduce shortages in prescription drugs, a growing problem over the last decade. The order is being sold as part of the Administration’s “We Can’t Wait” campaign to push economic actions in the midst of gridlock in Congress on jobs measures, but actually this looks more like a regulatory enforcement action to stop unnecessary bottlenecks in the drug pipeline.
This is from the fact sheet:
Early notification of potential drug shortages can help FDA work with drug manufacturers, hospitals, doctors, and patients to prevent or mitigate a shortage before it becomes a crisis. Currently, Federal law requires drug manufacturers to notify FDA when production of critical drugs provided by only one manufacturer is being discontinued. The President’s order directs FDA to broaden reporting of potential shortages of certain prescription drugs. Additionally, the Executive Order requires FDA to expand its current efforts to expedite review of new manufacturing sites, drug suppliers, and manufacturing changes to help prevent shortages.
While additional manufacturing capacity is necessary to fully address the drug shortage problem, early disclosure can have a significant, positive impact on the incidence and duration of drug shortages. This year alone, voluntary early notification by manufacturers allowed FDA to successfully prevent 99 drug shortages [...]
The President’s Executive Order also directs FDA to work with the Department of Justice to examine whether any secondary drug wholesalers or other market participants have responded to potential drug shortages by illegally hoarding medications or raising prices to gouge consumers. For example, the ranking member of the House Committee on Oversight and Government Reforms, when announcing his investigation into so-called gray markets, expressed concerns about a report that a leukemia drug whose typical contract price is about $12 per vial was being sold at $990 per vial – 80 times higher. A Premier healthcare alliance report released in August estimated that the typical gray market vendor marks up prices by an averaged 650 percent. At the extreme, a drug used to treat high blood pressure that was normally priced at $25.90 was being sold at $1,200 due to a shortage.
Amy Klobuchar in the Senate and Diana DeGette in the House have bipartisan legislation to reduce prescription drug shortages through increased disclosure and additional authority to the FDA on enforcement. This executive order moves in that direction, and the FDA will set up what they can do on a statutory basis, which is a voluntary notification process on drug shortages.
I saw something about this being a jobs measure, and I don’t really know what that means. This is mostly a technocratic action to make sure that life-saving prescription drugs aren’t being artificially stopped from getting to market so that pharmaceutical companies can raise prices. I suppose that additional manufacturing of drugs in shortage will have some effect on jobs, but that’s not really the goal of this initiative. It’s to stop artificial bottlenecks created by market monopolies or moving all the production facilities to China and India.
This is just a carrot-and-stick approach to make sure drugmakers are getting their goods into the hands of people who need them. It’s a solid if modest approach, and one wonders why this step was not taken sooner, if drug shortages are indeed a growing problem. This is, however, the first executive order affecting FDA operations since 1985.
Gardiner Harris has more for the New York Times.