Experts Agree – FDA causes Drug Shortages! Harbinger of Obamacare landscape.

The FDA is committed to swift, aggressive, and effective enforcement of FDA laws and regulations”. FDA Director Dr. Margaret Hamburg, August 6, 2009 to Florida Drug Law institute.


“A common sense approach to regulations must be restored at the FDA. Agency protocols should be revised so that the agency is required to consider the implications of its actions on the nation’s supply of critical drugs.”  FDA’s Contribution to the Drug Shortage Crisis, 6/15/2012, US. House of Representatives Oversight Committee.


 Our AMA urges regulatory relief designed to improve the availability of prescription drugs by ensuring that such products are not removed from the market due to compliance issues unless such removal is clearly required for significant and obvious safety reasons.” New AMA policy on drug shortages, 6/19/2012.


You suffer a brain injury after a car accident and your doctor wants to prevent a seizure with Dilantin.  The pharmacist says it is “out of stock” and a less effective alternative is used.  Your child develops leukemia and needs methotrexate chemotherapy to allow a 90% chance of long term survival – no drug available.  Your wife develops ovarian cancer and can’t get the “Doxil” chemotherapy needed to live a better life – no drug available.  These are common scenarios these days under President Obama’s new FDA director Dr. Margaret Hamburg and her team.  It turns out that it was their over aggressive regulation agenda that led to the shortages and causing suffering and earlier death. It is such a severe problem that the AMA has declared it a “public health crisis” in November 2011. Yet the FDA will not openly admit that their regulatory enforcement were the cause.  But, the FDA has revealed it to be true since every action they take to respond to notification of a drug shortage has been to exercise “regulatory flexibility” or to expedite a review they delayed in the first place.  The FDA story of government induced shortages, increased suffering and avoidable deaths is a harbinger of what is to come with all of Obamacare if it is not repealed or overturned by the Supreme Court. (continued below…)


fdawarninglettersFDA Induced DRug Shortages increased with FDA Enforcement activites and “Warning letters”.

The number of drugs in short supply reached 267 in all of 2011 and was still at about 226 in only March of 2012 according to the American Society of Health System Pharmacists (ASHP).  The reasons for the drug shortage boil down to a few factors, but the most important is that of overzealous enforcement of regulation. In August of 2009 the new FDA director, Dr. Margaret Hamburg proudly proclaimed as much when she stated that the FDA is committed to “swift, aggressive, and effective enforcement of FDA laws and regulation”.  Her promises were kept because within months the number of “warning letters” began to skyrocket. These are the letters that the FDA sends to those it regulates about alleged violations in compliance with regulations. In the drug sector along the number of warning letters increased 24% in 2010 and the total number of warning letters to all FDA targets was up to 1720 in 2011 compared to 445 in 2008, a 385% increase. The sorts of complaints were of no clinical significance to patients – unless the negative effect of not having drugs is included.  For instance, the FDA complained about blue particles that were present in barrels of product used to make Heparin in Puerto Rico for American companies. The company solved the problem by visually inspecting and removing those with blue particles. However the FDA was not satisfied and wanted more advanced and expensive inspections. The company stopped making drug. The FDA complained about production of methotrexate at Ben Venue labs in Ohio. The FDA demanded such an onerous upgrade in the facility, that the company simply shut down.  This is the common theme: the FDA demands more expensive production techniques, but the company can’t afford it and stops producing drugs. 

On June 15, 2012, Congress found that h “overzealous” regulation was the cause of the drug shortages.  At their Annual meeting last week, even the AMA (a group supportive of the Obama administration for years) urged “regulatory relief designed to improve the availability of prescription drugs by ensuring that such products are not removed from the market due to compliance issues”   

Many would say the drug companies are rich and merely should spend the money. The problem is that the 2003 Medicare Modernization act imposed price controls on the production of the drugs.  So the company cannot increase supply using the standard trigger present in markets for other products: raising prices. This is a common scenario that has played out in American history and certainly in socialist and communist countries. Richard Nixon imposed price controls (ceilings) on gasoline in the 70’s. That led to gas shortages and gas lines. The City of New York imposes “rent controls”, placing a ceiling on the cost of rental units in New York City. That has led to apartment shortages.  The Bush Administration urged Congress to impose a price cap on prescription drugs paid for by Medicare in 2003. The result shortages. Until now, the companies could keep up with the supply, but once the FDA started imposing unnecessary and onerous additional costs on production, the companies did what rational companies do: they closed down. The result was shortages. The problems was exacerbated by the lack of competition as the number of companies producing these medications has shrunk to about 3 producing 90% of the injectable generic medications in short supply. This “oligopoly” is another diversion from the type of market forces Americans need to get them the drugs they require to stay healthy and alive. The 6/15 Congressional report also recognized the direct impact of the 2003 MMA in causing drug shortages and the AMA also called for Congress to consider altering the 2003 price controls. (continued below).

The laws of economics are simple. When governments impose price controls, the supply of that service or product decreases.

 FDA-induced drug shortages will pale in comparison to the coming shortages of medical care that will be induced under Obamacare.  The law establishes national insurance coverage guidelines and essentially nationalizes the insurance industry, establishes federal benefit levels, premium prices and grants government rationing power to the companies. The only difference is that the few remaining nationalized health insurance companies will get $120 billion in tax subsidies to create profits off the backs of taxpayers and rationed care. They will get a bailout as needed to serve, as they will put it, “the common good”. The FDA story drug shortage story should teach us that centrally planned, highly regulated medical economies fail patients and should be abandoned in favor of true free markets with a private and public safety net to help the poor. If America continues to embrace government solutions to private problems, like health care, they should not be surprised when other things are in shortage like doctors, hip replacements, ICU care to save their lives, surgeries and medical care in general.