The order offers drug manufacturers and wholesalers both a helping hand and a gloved fist in efforts to prevent or resolve shortages that have worsened greatly in recent years, endangering thousands of lives.It instructs the F.D.A. to do three things: broaden reporting of potential shortages of certain prescription drugs; speed reviews of applications to begin or alter production of these drugs; and provide more information to the Justice Department about possible instances of collusion or price gouging. Such efforts are included in proposed legislation that has been pending in Congress since February despite bipartisan support for its provisions. The order, the first since 1985 by a president to affect the functions of the Food and Drug Administration, is part of a series of recent executive orders involving such disparate issues as mortgage relief and jobs for veterans. They are intended to show that the president, plagued by low approval ratings, is working to resolve the nation’s problems despite a Congress largely paralyzed by partisan disagreements.
“The president’s action is a recognition of the fact that this is a serious problem, and we can and should do more to help solve it,” said an administration official who asked to remain anonymous to avoid upstaging the official announcement on Monday. “We can’t wait anymore.”
So far this year, at least 180 drugs that are crucial for treating childhood leukemia, breast and colon cancer, infections and other diseases have been declared in short supply — a record number. Prices for some have risen as much as eightyfold, and clinical trials for some experimental cures have been delayed because the studies must also offer older medicines that cannot be reliably provided. Patients with entirely curable diseases have been forced to take medicines that may not be as effective, adding anxiety to an already terrible ordeal.
The president’s order is a modest effort that, while possibly helpful, is unlikely to resolve the problem soon or entirely. Administration officials characterized it as one step in a long and complicated effort. Indeed, Mr. Obama eschewed more ambitious proposals — like government drug stockpiling or manufacturing — that would have injected the government more directly into the nation’s drug market and cost more but that might have been more effective.
Still, Mr. Obama’s order and others he has issued recently reflect his belief in the power of government to improve people’s lives. By contrast, top Republican legislators and presidential candidates have almost uniformly argued that resolving the nation’s economic and other problems depends mostly on scaling back or ending government regulations to allow the free market to function more effectively. No regulatory agency touches people’s lives more thoroughly than the F.D.A., which regulates 25 cents of every dollar spent by consumers.
Along with Mr. Obama’s order, on Monday the administration will release two government reports that mostly blame a dysfunctional marketplace for drug shortages, directly contradicting assertions by some commentators that government rules are to blame. The analyses found that 74 percent of the medicines in short supply in 2010 were sterile injectibles, the kind of drugs delivered in hospitals or clinics to treat cancer or anesthetize patients before surgery.
The economic and technical hurdles to participating in this market have made it exceedingly inflexible, the analyses found. Just five large hospital buying groups purchase nearly 90 percent of the needed medicines, and only seven companies manufacture the vast majority of supply. In most cases, one company produces at least 90 percent of a drug’s supply, and crucial ingredients — many of them made in mammoth plants in India and China — are often difficult to find, verify and approve, so years are needed to create new capacity. While demand has grown steadily in recent years, supply capacity has remained largely unchanged.
With so much supply dependent on so few companies and facilities, safety problems that arise anywhere in the system can result in enormous disruptions. Nearly half of the shortages followed inspections that found serious quality problems, including injectibles that had glass shards, metal filings and bacterial and fungal contamination, the reports found.
Even the generic drug industry is calling for more regulation. The industry recently agreed to provide the F.D.A. with nearly $300 million annually to bolster inspections and speed drug applications. That amounts to about 1 percent of the industry’s revenues and about 5 percent of its profits in the United States, an extraordinary vote of confidence in the government’s ability to improve the situation.
This money and an industry campaign to build more capacity may eventually resolve much of the supply disruptions. In the meantime, Mr. Obama will promise Monday to strengthen the staff of the drug agency’s shortages team to deal with what are expected to be far more and detailed communications with manufacturers about events that could affect drug supplies, officials said.
The administration will also send letters to manufacturers reminding them of their legal responsibility to report pending supply disruptions of certain drugs and to encourage them to notify the drug agency of events that could possibly lead to disruptions even when not required to do so.
The rules needed to expand required notifications will take time to finalize, but the president’s order will speed that process, administration officials said. The president will also announce his support of legislation proposed in both the House and Senate to expand even further reporting requirements from manufacturers.
Mr. Obama’s order that the F.D.A. report to the Justice Department possible instances of price gouging or collusion is largely directed at the shadowy and fading world of small wholesalers that buy drugs from one set of users and in times of shortage sell them at huge markups to another. In one case, a leukemia drug that normally sold for $12 per vial was being sold for $990 per vial — 80 times higher. A survey found that small wholesalers typically increased prices by 650 percent during shortages
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