BHO And The Medicine Cabinet: Workin’ Hard, Tryin’ To Understand That There ‘Economics’ Stuff

Posted on | November 1, 2011 | 27 Comments

by Smitty

This morning [31 October, 2011] President Obama signed an executive order intended to combat a wave of prescription-drug shortages in the United States.

How can there be a wave of something not being there? But I quibble. The whole point of the article is to excite some feeling of unexpected calamity. That calamity is being met by decisive action from a firm leader. So it’s snarky to compare the lede to the sound of one hand clapping to a chorus of dogs that don’t bark, and we shouldn’t do that.

Drug shortages have tripled since 2006.

No telling from what orifice that fact emerged.

“I’ve been tracking these issues for a decade now, so to see the president bring it up is important to us,” says Kasey Thompson, vice president for policy at the American Society of Health-System Pharmacists. “The fact that multiple agencies are on task and working on this is very encouraging to me.”
An even bigger challenge is figuring out why, exactly, drug shortages are happening. The number of shortages has surged in recent years, and although a number of possible explanations have been floated, there’s little consensus on why.

Do any thinking readers in the audience, who have maybe had an inkling of Sowell somewhere, doubt that the lion’s share of the problem is the government itself? Does anyone doubt that further government queering of the market via executive order will only worsen the problem?

The only question in my mind about this whether these people in the administration are stupid, or diabolical. In either case, the only remedy is a free market enema.

Update: linked at The Rio Norte Line.

Update II: linked at The Daily Pundit.

Category: Barack Obama, Health Care

Comments

27 Responses to “BHO And The Medicine Cabinet: Workin’ Hard, Tryin’ To Understand That There ‘Economics’ Stuff”

Michael Smith
November 1st, 2011 @ 9:59 am

Got a couple of post that would be of interest:

http://therionorteline.com/2011/11/01/yes-government-policy-did-cause-the-mortgage-crisis/

http://therionorteline.com/2011/11/01/3919/

The upshot of them is the same as your assertion – of the Republican candidates, I said this about my post on economics:

Let’s review:

Capitalism is the best system to spread economic well being.Economic freedom goes hand in hand with political freedom.Don’t put the cart before the horse –get the order of events right.Capitalism is self regulating.Distributed capitalism mitigates risk and can absorb a lot of bad decisions.Economies can’t be “managed” on a large scale – at least not by humans.

Any candidate who articulates this to the American people is miles ahead of the Law Lecturer in Chief.
Road to 2012: Episode I – The Economy « The Rio Norte Line
November 1st, 2011 @ 10:02 am

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Norman Invasion
November 1st, 2011 @ 10:24 am

I think he could do more by declaring “war” on prescription drugs.
Joe
November 1st, 2011 @ 10:41 am

Didn’t Barack Obama say Bush’s Drug Expansion was bad, bad, bad? Why not just reverse that with an executive order?
AngelaTC
November 1st, 2011 @ 10:48 am

Sure, capitalism is best, but it isn’t perfect. The corrupt system of government we have today is probably best called corporatism, which seems to be the natural evolution of capitalism.

Capitalism requires liberty as well as individual responsibility, and nobody really seems to want that.

Another power grab – where does he get the power to control anything except the military?
Edward
November 1st, 2011 @ 10:49 am

You get what you pay for. Aren’t willing to pay for it? You don’t get it. Are you willing to pay for it? You get plenty of it. Bullshit, binoculars or medicine.

What we are seeing is the result of downward pricing pressure on drug makers, increased costs due to over-regulation and the lack of depth in production because having that depth costs money. And if the money isn’t there in profits then you can’t have the depth of supply.

The same thing happens in a smaller way in areas hard hit by bad weather. The grocery stores only maintain a couple days worth of groceries because to have more on hand requires higher overhead costs. So when bad weather moves in the existing inventory is quickly depleted and it takes time to replenish.
Anonymous
November 1st, 2011 @ 10:53 am

Yep. And since he runs the car companies, he could force them to make drugs.

Banks, too. What the hell.

Then we get to argue over which drugs get made, in which priorities.

Could be some fun times on the ol’ GM test track.
Anonymous
November 1st, 2011 @ 10:59 am

Shortages have tripled!

Let’s see. A “shortage” means that in too many places, there’s zero of something.

So you can multiply that zero by any number you like, and still have zero. Kind of like how we’re stuck with a SCOAMF.

Anyway, the thing I want to know is, why use “tripled?” Was it focus-group tested to have the most impact? Why not “octupled?”

“Octuple” just doesn’t get enough use.
Edward
November 1st, 2011 @ 11:07 am

I like sextuple. Anything with “sex” in it will at least get the attention of the younger boys.
Anonymous
November 1st, 2011 @ 11:18 am

If somethings not functioning in this country one can safely assume there a regulator’s hand pushing that string.
ThePaganTemple
November 1st, 2011 @ 12:08 pm

No surprise, add a touch of Marx to any aspect of an economy and one of the things you have to deal with is shortages. It will get worse. What is really infuriating as these people have to know what’s going to happen, but they don’t care, as long as they can blame the shortages on the greedy capitalists and conservatives, they’ll keep right on and even ramp it up. After all, all those democrat votes aren’t going to just fall into their laps, they have to work for them, and nothing says vote for me than a fistful of dollars.

And people wonder why I put these scum buckets on a lower order than Islamic fundamentalists.
Anonymous
November 1st, 2011 @ 12:32 pm

I think there are 2 major causes. First, of course, the FDA. If you read the actual executive order, it basically says, “Hey, FDA, work faster!” It shouldn’t surprise anyone that one effect of having an FDA is to reduce the supply of prescription drugs.

The other big cause is the 3rd party payer system in US health care. It reduces market incentives. Of course, the EO rails against a market in prescription drugs, too.

Why does the FDA even need to know about shortages in prescription drugs? Are they also critical players in reducing arugula shortages?
Anonymous
November 1st, 2011 @ 12:57 pm

In other news . . .

. . . the Politburo signed an executive committee order today to combat a wave of food shortages. Unlike some other parts of the Politburo’s “Do What We Say, Or Else” agenda, which may not produce sweeping changes without the cooperation of the masses, advocates say, this new order could make a difference.
ThomasD
November 1st, 2011 @ 1:12 pm

You are entirely correct. It is laughable to think that you could improve or increase market supply by adding additional regulatory burden to current or potential producers.

The sad part is that Kasey Thompson either should, or does know better. I am a pharmacist, with experience in retail, hospital, and long-term care, and have been dealing with these supply issues for years. The source of the problems is not hard to find.

Unfortunately many in ‘leadership’ positions are ignorant of how a market economy functions on a general level, or blind to the specific forces operating within their field, or simply enamored with the notion of benevolent technocrats solving all of the world’s problems with the stroke of a pen.

The only upside to all of this is that one more petty emperor will be revealed as wearing no clothes.
ThomasD
November 1st, 2011 @ 1:18 pm

Third party payers do create significant downward forces on retail prescription prices,and -to a certain extent- hospital reimbursement rates, so are a part of the problem.

But it is the ubiquitous practice of contract pricing that locks producers into ultra low margins (and prevents entry of alternate producers) that tends to be the major source of shortages, particularly the ‘critical’ drug shortages being experienced by hospitals.

We (in the hospital business) have effectively slit our own throats, and now want the FDA to somehow bail us out , even though they are part of the problem.
Daily Pundit » Yet Another Obama Scam: Much Ado About Nothing
November 1st, 2011 @ 1:19 pm

[…] BHO And The Medicine Cabinet: Workin’ Hard, Tryin’ To Understand That There ‘Economics’ Stuf… An even bigger challenge is figuring out why, exactly, drug shortages are happening. The number of shortages has surged in recent years, and although a number of possible explanations have been floated, there’s little consensus on why. […]
Bob Belvedere
November 1st, 2011 @ 1:33 pm

The government already has…or, at least, on those doctor’s who distribute them to people in chronic pain.
Anonymous
November 1st, 2011 @ 2:21 pm

As in “Herman Cain sextupled some ‘unnamed sources’ and all Romney got was lower numbers in the polls!”
Anonymous
November 1st, 2011 @ 3:00 pm

Why does this remind me of how people ended up get Heroin from street dealers instead of pharmacutical morphine from their doctors?
Anonymous
November 1st, 2011 @ 3:14 pm

The shortages are the result of a bottleneck wherein certain ingredients are in short supply due to regulation. The pharmaceutical companies prioritize the production of their more profitable medications requiring the artificially scarce ingredients. This story has been popping up from time to time in the news lately unfortunately I haven’t paid that much attention to all the details.
ThomasD
November 1st, 2011 @ 3:34 pm

Actually it is not the more profitable agents where the scarcity occurs. The scarcity hits the extreme low cost items – eg. Magnesium Sulfate for injection, or other things that have been around since about the stone age (atropine for injection is another recent problem item.) Which are only ‘scarce’ in the sense that it is expensive to produce pharmaceutical grade product that meet ever exapnding FDA standards.

But rather than sink more monies into such minimally profitable lines the manufacturers do switch their efforts to other items with no such problems (with accompanying better margins.)
ThomasD
November 1st, 2011 @ 3:41 pm

Look at it this way – if you had a couple billion dollars lying around
and wanted to get into the generic drug manufacturing game (these
shortages almost wholly involve generics) which drug would you rather
produce:

Potassium chloride for injection

or

Atorvastatin tablets (Lipitor – one of the top selling brand drugs, goes off patent this year)

The cost for creating either FDA approved production line is about the
same (bulk KCl is dirt cheap compared to bulk atorvastatin, but that is
chicken feed compared to where the real expenses lie.)

The key difference is that, at least in the near term, the atorvastatin
product offers the potential for significant profit margin, while KCl
simply does not.
Anonymous
November 1st, 2011 @ 4:48 pm

Hillary did that nearly 20 years ago. OZero is just finishing the job. Want proof? The pharma industry in the US is how nearly nonexistent. My hubs is one of thousands of pharma scientists out of work because of the severe contraction and consolidation of the industry. Most recently, Merck, Pfizer, and Amgen have announced mass layoffs. Again.

When the government makes it impossible for a pharma company to conduct business and profit from it, the government should not be complaining about drug shortages. It got what it regulated.
Anonymous
November 1st, 2011 @ 5:53 pm

He has exactly as much power as Congress and the judiciary are willing to let him have. Taking the House in 2010 brought the flow of damaging legislation to a halt, and as for the judiciary, it’s long been true that the Supreme Court follows the election returns.
AngelaTC
November 2nd, 2011 @ 1:45 pm

He’s only supposed to have as much power as the constitution specifically assigns to him.

It’s also long been true that neither party has any real interest in reining in the power grabs of the executive branch because they actually want to assume that power later. And it’s certainly easier to get reelected if you don’t actually have to make the tough decisions.
Combine that with a SCOTUS that repeatedly rules that nobody actually has standing to sue for these transgressions, and we end up the the unmanageable, dysfunctional monstrosity we’ve got.
AngelaTC
November 2nd, 2011 @ 1:51 pm

“Drug shortages have tripled since 2006.”

Gee, what happened in 2006? Which party took control of the federal government again?
FUTURECRUSH.COM » Blog Archive » Price controls on medicine don’t control costs. One way or the other, you still pay.
November 3rd, 2011 @ 5:37 pm

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