Drug Shortages – Here Now

This mornings NY Times had a headline article U.S. Scrambling to Ease Shortage of Vital Medicine which came a bit out of the blue for this writer.

Federal officials and lawmakers, along with the drug industry and doctors’ groups, are rushing to find remedies for critical shortages of drugs to treat a number of life-threatening illnesses, including bacterial infection and several forms of cancer.

The facts in the article are quite frightening and could have immediate consequences for any of us. The suppositions of the reasons for these shortages are also alarming as they fall right in line with the Times’ usual suspects. A scan of 100+ comments on the Times article reveals loyal readers screaming for the heads of free enterprise. Times readers howl about the scourge of high prices while missing the point that this article’s discussion is about shortages, rather than about prices.  This is a knee jerk reaction to a misunderstood systemic problem.

The FDA posts these reasons on their website. There is likely at least some truth to their allegations about quality of imports. Many writers see the FDA as a major part of the solution to this problem.

Perversely, the only shortage that previously surfaced in the NY  Times was that of the drugs used for lethal injections.

With but a bit of poking around I found this op-ed by Ezekiel J. Emanuel who is an oncologist and former White House adviser, excerpt below.

The underlying reason for this is that cancer patients do not buy chemotherapy drugs from their local pharmacies the way they buy asthma inhalers or insulin. Instead, it is their oncologists who buy the drugs, administer them and then bill Medicare and insurance companies for the costs.

Historically, this “buy and bill” system was quite lucrative; drug companies charged Medicare and insurance companies inflated, essentially made-up “average wholesale prices.” The Medicare Prescription Drug, Improvement and Modernization Act of 2003, signed by President George W. Bush, put an end to this arrangement. It required Medicare to pay the physicians who prescribed the drugs based on a drug’s actual average selling price, plus 6 percent for handling. And indirectly — because of the time it takes drug companies to compile actual sales data and the government to revise the average selling price — it restricted the price from increasing by more than 6 percent every six months.

The act had an unintended consequence. In the first two or three years after a cancer drug goes generic, its price can drop by as much as 90 percent as manufacturers compete for market share. But if a shortage develops, the drug’s price should be able to increase again to attract more manufacturers. Because the 2003 act effectively limits drug price increases, it prevents this from happening. The low profit margins mean that manufacturers face a hard choice: lose money producing a lifesaving drug or switch limited production capacity to a more lucrative drug.

I think Emanuel is holding the smoking gun, the problem is regulation and consequences  - what do you think?

Why Obama is so far behind the times

By Noemie Emery

Ruth Marcus of the Washington Post and others have noted that President Obama seems a few beats behind things; unable to anticipate things as they develop, and awkward when forced to catch up. When he responds, his answers seem lacking.

Good politicians are in tune with their times, great ones foresee them, but Obama seems out of step with his times, and behind them.

Coming apart at the Seams

Rich Lowery posted this article based mostly on material by Charles Murray, one of the authors of the Bell Curve.

The size of government threatens the American way of life as we know it. The solution is straightforward — cut government. A vibrant grass-roots movement insists that it happen, and Washington is lousy with rival plans for how to go about it.

The social threat to the American way of life is as dire, if not more so. But it is more insidious, and more complicated. No grass-roots movement has mobilized against it, and no high-profile bipartisan commission is suggesting remedies. Yet it proceeds apace, all but ignored except in the lives of Americans.

We’ve Become a Nation of Takers, Not Makers

This article by Stephen Moore poses the question, “where are the productivity improvements in government?” I believe this is a very good question.

If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

State Debt Crisis Coming?

The state and local debt crisis may be the next oncoming juggernaut.  Here is a chart of the credit ratings of countries and states of the US, scroll down to see the states. Note that CA and IL are just about the weakest. I believe these credit ratings have been inflated by giving greater weight to the likelihood of a federal bailout and less to the internal health. This in not a pretty picture, but it’s largely off the radar.

Is Democracy Overrated?

This article takes a fresh look at the roots of our current foreign policy and the underlying political views that form its foundation. Buchanan comments that as democracies come more under the sway of their populations, they move further from the US. He offers many examples. I believe that as our country comes more under direct democratic control it moves further away from our constitution and original ideas – and that this is not progress.

Chicago Gun Law Case

The decision of the Supreme Court on the Chicago gun law case is the second recent significant symbolic victory for gun rights advocates as it follows Heller by just about 2 years.

Most interesting is that the (conservative) majority opinion is based on constitional analysis while the (liberal) minority dissent is rooted in anecdotal statistics that are much in dispute and already discredited concepts of early American history.  The ideas in the majority opinion certainly are harder to follow than the unsupported “feel good” pleas of the minority.

How Did It Happen?

I believe that while many have profited from extreme distortions in the home mortgage market, it has been self-serving long-term government policy that fueled wildfire that has burned the American dream. The not-quite-stated goal of home ownership for those who cannot afford it is both blatant pandering for votes, as well as another hard elbow in the ribs of those who try to do things the right way. 

Surprise Crisis Threatens Liberal Benefits

Some of the subtlies of economics may still be up for debate, but I am quite amazed how the results and impact of long-term demographics can come as a surprise. This ugly situation has been building over our lifetimes and is simply reaching it’s inevitable conclusion.

The Fruits of Weakness

My understanding of uranium is that every refinement, for whatever reason is a step closer to a bomb. Our experts know this. Collectively, we seem to buy into this new agreement at face value as some type of step forward.

Charles Krauthammer makes the case that our entire foreign policy is not only not taking steps forward, its a total rout and tumble into 3rd world status.