Obama Issues Executive Order To Ease Drug Shortages

Oct. 31, 2011 — -- While many advocates say President Obama's executive order to reduce a dire shortage of life-saving hospital medications is an essential step, others say the order is not enough to stop price gouging by some pharmaceutical companies.

Essential cancer drugs have arguably taken the hardest hit. Hospitals have reported the worst shortage in nearly a decade of chemotherapy agents like doxorubicin. Drugs for heart patients, some antibiotics, and intravenous drugs have also been hard for hospitals to find.

The new order instructs the Food and Drug Administration to broaden reporting of potential drug shortages, expedite regulatory reviews that can help prevent shortages, and examine whether potential shortages have led to price gouging. The drug shortage has compromised or delayed care for some patients and may have led to otherwise preventable deaths.

Christopher W. Hansen, president of the American Cancer Society's Cancer Action Network, applauded today's order, saying in a statement that it would "allow government, industry, providers and the public to more systematically analyze and understand the causes of specific drug shortages as they occur, and to develop real-time solutions that are also needed to address the acute problems that cancer patients live with daily."

Limited manufacturing, lagging production time, and lack of profits from these drugs contribute to the shortages. The production costs for some drugs can outweigh the money that companies can make from them, since many drugs now have cheaper generic alternatives. So manufacturers stop making the drugs.

"The Executive Order allows us to really reinforce our critical activities and extend a very clear message from the Administration of the priority we're giving it," FDA commissioner Peggy Hamburg said at a press conference before the president's signing.

But while the FDA can oversee imports of drugs that are in short supply, it cannot regulate how much a company can make. In fact, manufacturers are not required to report shortages to the FDA.

The amount of a drug made available within a hospital is set by an agreement between the hospital and the manufacturer.

The executive order does not grant new authority to the Department of Health and Human Services or the FDA. Rather, it "advances" and "enhances" the FDA's oversight on a growing shortage of important chemotherapy drugs, anesthetics and antibiotics, Secretary of Health Kathleen Sebelius said.

Some pharmaceutical vendors have responded to the shortage by stockpiling vital drugs and offering to sell them to hospitals and clinics at inflated prices.

"Sometimes we run out of or run low on certain types of drugs, and that drives up prices and it increases patient risk," President Obama said today at the signing in the Oval Office.

The executive order calls on the FDA to work with manufacturers to notify the agency about manufacturing problems or if a drug will be discontinued.

But Dr. Sidney Wolfe of the public watchdog group Public Citizen said these new orders may be difficult to implement since manufacturing companies have little incentive to do so.

Wolfe said price gouging may continue "unless there are large financial penalties for companies failing to report anticipated shortages to the FDA."

The FDA has prevented 137 shortages in the last year and a half, but 178 drugs are still in short supply, Sebelius said.

"We can't wait," said Sebelius, echoing the president's repeated health care battle cry.

Under the new orders, the FDA will add six people to the five who are assigned to its drug shortage program. The agency will also add two staff members to its Center for Evaluation and Research.

"Obviously, this will put new additional pressures on the FDA in terms of personnel and time demands and financial demands," Hamburg said. "We will not be able to prevent all future shortages and fully remediate in the near term the existing shortages, but we can make a difference by expanding our net of early warnings and getting in there before the shortage occurs."

Twenty-one out of 23 medical centers surveyed by ABC News' Medical Unit say they still have significant drug shortage problems.