Regulatory Accumulation

There are certain regulatory agencies where it is clear from the outset that most of the agency's activity is merely aimed at protecting their own jobs and power.

The one such agency I run up against are Alcoholic Beverage Commissions in various states, from whom one must obtain a liquor license.  In the type of small store we run, there are really only two things the state should care about, and even the second is a bit weak

  • That we don't sell alcohol to underage kids
  • That we don't allow alcohol consumption on the premises

But the liquor licensing process can be interminable.  In Arizona, for example, I have had my applications kicked back to me, which resulted in 2-month delays in the process, because I wrote an address as 1313 48th Pl.  rather than 1313 48th Place.  They spend incredible man-hours looking for nit-picky mistakes like this, and then kick it back so that the whole review process must begin again.  Many states and counties have a second layer of review, to make sure that your new competition is "needed" - after all, we wouldn't want to upset the position of incumbent businesses who are entitled to their market share and who make nice campaign contributions.

Each application has to have a drawing of the store layout and where one plans to put the beer.  If you want to move the beer at a later date, you have to get the state's approval.  (Bizarrely, the drawing in most states has to be by hand -- they will kick back an application with a CAD drawing or architect's drawing).  And don't get me started on the fact I have to be finger-printed by the FBI (so they can be sure I am not Al Capone) before a store I own can sell beer.

All this being said -- and I didn't mean to run on so long but liquor licensing just drives me nuts -- it is nothing to this example from the pharmaceutical manufacturing business. I won't repeat it all, but take this example:

a drug manufacturer must get approval for how much of a drug it plans to produce, as well as the timeframe. If a shortage develops (because, say, the FDA shuts down a competitor’s plant), a drug manufacturer cannot increase its output of that drug without another round of approvals. Nor can it alter its timetable production (producing a shortage drug earlier than planned) without FDA approval.

They have to get their production schedules approved?  What possible justification can there be for this?  But even more outlandish is the apparent drive to regulate drugs that have been on the market for over 70 years and have to date been relatively unregulated because they were on the market before the FDA got its current powers.   Why should a bureaucrat lose her job when there are still unregulated items out there?  Besides, some uneducated American might use these examples of safe, unregulated drugs to question the who regulatory mission!

Several drug shortages (e.g., concentrated morphine sulfate solution, levothyroxine injection) have been precipitated by actual or anticipated action by the FDA as part of the Unapproved Drugs Initiative, which is designed to increase enforcement against drugs that lack FDA approval to be marketed in the United States. (These drugs are commonly called pre-1938 drugs, referring to their availability prior to passage of the Food, Drug, and Cosmetic Act of that year.) Some participants noted that the cost and complexity of completing a New Drug Application (NDA) for those unapproved drugs is a disincentive for entering or maintaining a market presence.

I have heard several medical people joke that it would be tough to get aspirin through the FDA today if it were a new drug and not grandfathered.  Don't know if that is true, but it feels believable.

  • Bob Smith

    The gastrointestinal side effects of aspirin consumption would likely by themselves cause the FDA to refuse approval. I don't suffer them, but the FDA doesn't care about that.

    Imagine that you had a cure for a 90%+ fatal disease, like pancreatic cancer, but that cure killed 25% of patients. Now, sane people would prefer a 25% chance of death to a 90% chance of death, but to the FDA that's an unacceptable risk. The risk of the disease itself is, naturally, ignored.

  • caseyboy

    This kind of stuff makes my heart break and head spin. Man, we've allowed things to really get off track.

  • http://space4commerce.blogspot.com/ Brian Dunbar

    They have to get their production schedules approved?

    I'm trying to imagine how that would affect my employer (electronics manufacturing).

    For starters, the guts of all of our electronic toys would be more expensive. Also cars, soda machines, computers, etc etc.

    This may not be -the- reason medical stuff is so expensive, but I'm sure it's not helping.

  • elambend

    Aspirin is a cox-2 inhibitor; no way it would be approved today

  • Sean

    The FDA can regulate anything but the price which the governments is mandated to pay in many circumstances no what the cost. My guess this got through so expensive treatments would not be regulated away by bean counters but it has resulted in some incredible margins for drug makers with a patent. In many cases, like Nexium and Prylosec the performance differential between the two is 3 or 4 percent but the cost differential is more than 3 or 4 times because the manufacturer managed to get a patent extension on a purified optical enantiomer vs. a mixture of optical enantiomers.

  • Dr. T

    "... They spend incredible man-hours looking for nit-picky mistakes like this..."

    The same happened to me when I applied for a medical license in Delaware, a state with a reputation for being friendly to corporations. Unfortunately, it is not friendly to the scores of different professions that require licensure, and its Division of Professional Regulation is a nit-picking bureaucrat's wet dream.

    By the way, the FDA also regulates medical devices, including laboratory test components. The FDA, in the late 1990s, shut down the only factory making the hepatitis and HIV screening tests used by more than half the labs in the USA. The FDA did this not because of quality problems (the tests worked quite well), but because the vendor had not fully complied with documentation requirements. For over six months, patients had to wait an extra 2-5 days for those test results, which extended hospital stays, delayed treatments, and cost tens of millions of dollars. The FDA itself should be banned because it is harmful to human health.

  • John Moore

    40 years ago I worked for a consulting firm that, among other things, did statistical analysis for drug companies.

    One absurdity we ran into was an FDA requirement that the sterilization procedure for a large autoclave (room sized) required putting petri dishes into every slot in the whole room, and growing out every one to see if any pathogens survived. Getting the concept of statistical sampling into the FDA's collective brain was difficult.

    And that was 40 years ago, when they had only about 10 years of heavy regulatory power in their experience.

    The FDA routinely and in large numbers kills Americans, through its hobbling of the pharmaceutical industry.

    It should be relegated to an information-only role - they can tell us what they learn, but we don't have to listen.

    Let Darwin sort out the consequences - to hell with the nanny state.

  • http://griffin3.com Griffin3

    I thought I remembered, earlier in some programming contract, running up against the USPS address validator that always subbed in the abbreviations for the spelled out street suffix. It still exists at http://zip4.usps.com/zip4/ --> every time you type in and address with "highway", it returns "HWY". And indeed,

    4-98 Pembroke Place
    Rome, Georgia 30161

    becomes

    4 PEMBROKE PL NE # 98
    ROME GA 30161-5848

    Abrreviations preferred every time. It's also implied that you will get mail delivered faster at http://pe.usps.com/text/pub28/pub28c3.html, especially section 341, put it also mentions spelling everything out exactly. Doesn't really matter, I imagine the greatest possible way to pain is to point out to one section of the Bureaucracy that another section is doing it differently. Wasn't "Brazil" actually a documentary?

  • Jeff

    For real fun, try state pharmaceutical manufacturing licensing. We are a company that never touches a single drug (vendors produce and distribute it for us) but we are required to get licensing in over 20 different states, a number growing every year. It requires fingerprints from all corporate officers, and some of the board. Two states (CA, FL) require someone at the company take a detailed training course and/or test to show they've memorized dozens of state distribution laws. Two states (FL, NY) refuse to grant a license until after you have a drug approved, meaning you have a delay where it is impossible to sell the drug in a state, despite the fact that you have full FDA approval. It regularly takes +2 weeks to get anyone on the phone, and most states have employees that will do nothing except read you the regulation... no interpretation, no flexibility. They do tend to cash the application checks ($250 - $3000 depending on the state) within a day or two. A couple states require we keep $100,000 in surety bonds they can draw on automatically if they decide to fine us for some reason.

    Keep in mind, we never touch a single drug, ever. All this is required simply because our company name is on the FDA application and the drug bottle.

  • Paul F. Treder

    Much of what you point out is life imitating art, as portrayed in Atlas Shrugged by Ayn Rand. I just finished reading it for the second time. None of these kinds of things surprises me much, but that does not take away the frustrations they cause.

  • DensityDuck

    As people point out, aspirin has some nasty side effects if you take too much of it. It's routine for college students to end up in the hospital after trying to fix their hangover with eight aspirin. Liver stress due to alcohol poisoning + hepatotoxic aspirin = liver failure and a trip to the emergency department.

  • el coronado

    oh c'mon now, SOMEbody's gotta stick up for poor ol' aspirin. take the 'liver damage' issue mentioned above. i'm not a doc, or in any kind of medical bidness, but i'm willing to bet a fair bit of money that aspirin's nowhere near as bad about that as acetaminophen and ibuprofen are. are there any kind of studies out there viz "aspirin OD's frying livers/kidneys vs. acetaminophen/ibuprofen OD's doing same" since tylenol/advil came into wide usage?

    for extra credit, google the name "kenny easley" and see what pops up. see how well megadoses of advil worked out for *him*.

  • Colin

    Over here in the UK, ALL drug products have to be licenced to be marketed - it's been that way since the 1970's. What happened was that the product on the market at that time were granted licences, and the licence holders are expected to update the bare details as time went by.
    It did (and still does) require a degree of discretion from the Authority assessors.
    maybe it's a model to follow?

  • Long Time Manufacturing Guy

    Gatekeepers, people who review applications of any type for approval, look for reasons to reject applications, not to accept them. I have seen and experienced scores of examples. A leading example these days in many countries are the HR staffers reviewing resumes. What mental processes do they really exercise when they reject resumes of clearly competent applicants? Another example, in cash-strapped companies, are the accounts payable clerks and QA inspectors looking for ways to reject material so they do not have to pay suppliers yet. Defeating the gatekeepers, who are very likely rather lowly paid and undertrained staffers, requires legions of experienced professionals. I see no easy solutions, unfortunately. The hard solutions include abbreviating nothing, repeating often, explaining everything, checking applications for 100% consistency from beginning to end, and using a few different people to check applications several times before submitting.

  • caseyboy

    The downside for public bureaucrats is approving something and then having it cause damage. There isn't much downside in denying a drug, product, etc.