President Obama couldn't wait to trample over the legislative process again. This week, he issued his 98th executive order on an irresistibly exploitatable policy issue: prescription drug shortages. Soon, "One a Day" won't just be a multivitamin. It'll be the rate of White House administrative fiats.
Federal officials darkly suggest that selfish industry "stockpiling" is endangering Americans' lives. "If we find out that prices are being driven up because shortages are being made worse by manipulations of companies or distributors," the White House further threatened, "agencies will be empowered to stop those practices. And the FDA and the Department of Justice will be investigating any kinds of abuses that would lead to drug shortages."
As usual, the underlying reasons for these marketplace conditions are gobsmackingly complicated. As usual, a significant portion of the fault lies with the government -- not evil corporate "abuses." And as usual, Obama's unilaterally imposed "solutions" promise to do more harm than good.
There's no question that drug shortages exist and that they have been on the rise. According to the U.S. Food and Drug Administration, 246 drugs are now scarce. It's a record. Why? I've rounded up just a few of the reasons:
-- DEA rules. In some cases, manufacturers have been ensnared by federal Drug Enforcement Administration regulations. Take Adderall, the attention-deficit hyperactivity disorder medication. As ABC News reported earlier this year, Shire Pharmaceuticals makes Adderall "and is under contract to provide the generic form of the drug to Teva Pharmaceuticals and Impax Laboratories, which mass produce the generic." According to Shire, their supplies have been hampered by DEA restrictions on the amphetamine-based medications, which are tightly monitored controlled substances.
-- FDA rules. According to the American Society of Health-System Pharmacists and other professional organizations, "several drug shortages (e.g., concentrated morphine sulfate solution, levothyroxine injection) have been precipitated by actual or anticipated action by the FDA as part of the Unapproved Drugs Initiative, which is designed to increase enforcement against drugs that lack FDA approval to be marketed in the United States." These industry experts point to additional new drug manufacturing approval processes that are "lengthy and unpredictable, which limits their ability to develop reliable production schedules."
-- Manufacturing problems and generic drug status. Sterile injectables such as Propofol, a widely used anesthesia drug, are notoriously difficult to make. The timeline is long; interruptions in manufacturing one drug can affect multiple products. Sterile injectables can be contaminated easily. Several batches have been recalled in recent years because of dirty particulate matter found in vials.
Recall and liability headaches have led manufacturers to get out of the business. Moreover, as low-priced generic drugs, sterile injectables just aren't as attractive to pharma companies already weathering tough economic times. When drugs go off patent, the prices decrease. The rest is elementary.
"If the costs associated with making a drug begin to outweigh the profits," the New England Journal of Medicine explained, "companies may wish to discontinue production of the drug in favor of a newer, more profitable product. If the number of companies making an older drug decreases, and there is a delay or problem in manufacturing, shortages can and do occur."
-- Bush-era Medicare price controls and Obamacare price controls. Everyone from the free-market Wall Street Journal editorial board to renowned death panelist Ezekiel Emanuel agrees that low prices yield inevitable shortages. President Bush and Republicans imposed a 6 percent cap on cancer drug price increases that took effect six years ago. Health care analyst John Goodman adds that Obamacare exacerbated a separate federal price distortion, which requires drug companies to provide rebates to certain hospitals and clinics "of 23.1 percent for brand drugs; and 13 percent for generic drugs off of their average manufacturer's price on qualifying outpatient drug use."
Emanuel, the controversial former Obama health care guru, provided an unexpected shot in the Democrats' market-bashing arm in a recent New York Times op-ed: "You don't have to be a cynical capitalist to see that the long-term solution is to make the production of generic cancer drugs more profitable."
But instead of a sober debate about the wildly divergent reasons for some of these shortfalls, Obama's perpetual campaign machine gave us taxpayer-funded videos that yank the heartstrings and smear pharmaceutical companies. Instead of an honest assessment of the proposed government "fixes," Washington bureaucrats are using patients as human shields to disguise new power grabs.
Unfortunately, the only cure for Team Obama's overdose of toxic demagoguery lies at the ballot box. We can't wait.
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