Two-faced regulators

I recently read Katherine Eban’s Bottle of Lies, an investigation into the generic drug industry. I found some familiar themes in the discord between de jure and de facto rules.

The FDA has a reputation as a tough enforcer. Stories abound of petty bureaucrats showing their authority. Every step of the manufacturing process has to be strictly documented, otherwise even if you can prove the result is perfect you can’t sell it. At the core there is a reason for the rules even if they seem to have gotten out of control. What I think of as the “Classic FDA” era followed drug safety problems caused by sloppy manufacturing processes.

That’s the tough regulator FDA. Then there’s the too-big-to-fail FDA.

In 2011 the FDA knew the Indian company that had applied for a license to manufacture generic Lipitor was corrupt and incapable of manufacturing drugs to American standards. Its test results were fraudulent. If the FDA acted according to its reputation Ranbaxy and most of the Indian pharmaceutical industry would have been banned from exporting to the United States.

But here comes too big to fail. Lipitor, a brand name Pfizer product, was an expensive drug for old people. Old people vote and often have their medical bills paid by the government. Politicians told FDA officials that it was essential to have a generic competitor to reduce drug prices. It was not necessary to have a safe or effective competitor. Cheap was all that mattered. So even as the Justice Department worked on a criminal and false claims case against Ranbaxy the FDA was instructed to keep them in business. The statins must flow.

As I read the book I thought about a story I heard of a Federal Highway Administration Division Administrator. He had some complaints on his desk about violations of traffic sign laws. Then word came from Washington. He was not to investigate. The state’s congressional delegation was too important.

I also heard directly from another state’s top traffic engineer, who didn’t have powerful protection in Congress. He had started deploying the then-new school bus stop ahead signs (MUTCD S3-1). Without official drawings from Washington his agency made up a design. It turned out one of the red dots was in the wrong place. That brought official action.

That false claims case against Ranbaxy was, ironically, another reason the government refused to bring the hammer down. The worse the fraud the more money the government could get in a settlement… but only if the company could keep selling unsafe drugs to make money to pay the fine. Do the right thing or lose fine revenue. Sound familiar?

On top of the political pressure the FDA had a conflict of interest that hadn’t existed in the classic era. Some revenue came from fees paid by generic drug makers. Shut down a company and they stop paying fees. Sound familiar? It’s like the settlement with Big Tobacco where the supposedly dangerous industry was kept around as a source of revenue.

Eban writes of boxes full of unread documentation submitted to the FDA, of a drug label which admitted the drug did not comply with standards. Which reminds me of the note I found in a similar box submitted to the US DOT. A magistrate was promising to find people guilty despite obeying the law if his town got federal grant money for enforcement. The grant required an actual law, not a promise of convictions. His town got the money anyway. NHTSA doesn’t care what happens as long as police write tickets.

As Eban tells it a tradition of government corruption has taught Indians to find ways around rules. Which is kind of like how Americans treat traffic rules. This stop sign means a resident called in a political favor. That speed limit sign means the mayor wants more revenue. And if you’re the mayor, there’s the aspirational rule “speed limits must be based on safety” and the reality that most state prosecutors will look the other way if you set up a revenue trap. Traffic rules here are a game. Break the de jure rules all you want. What matters is the de facto rules. Until the cops are after you, looking for money or drugs.

The Massachusetts Supreme Judicial Court recently sided with police against drivers. Four justices agreed that touching a white line allows police to make a pretext stop. But only if you don’t look important. Because too big to fail, aka “do you know who I am?”, still rules.

I dream of a day when traffic laws are related to safety and safety rules are enforced, but before that day comes we will all be driven around by remote control along whatever pothole-laden road the Council has designated for nonresidents.

The opinions expressed in this post belong to the author and do not necessarily represent those of the National Motorists Association or the NMA Foundation. This content is for informational purposes and is not intended as legal advice. No representations are made regarding the accuracy of this post or the included links.

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2 Responses to “Two-faced regulators”

  1. toly arutunoff says:

    in the silly days of the 55nmsl I read that Montana had a $5 energy wastage fee fine for up to 100mph. the article said they thought about making it $1 but they were afraid the feds wouldn’t stand for that. now, after the state chickened out on ‘reasonable and proper’ thanks to a citizen’s lawsuit and the limit is 75mph, going 99mph gets you something approaching a $1000 fine.

  2. Mikhael says:

    The Larose case, demonstrating that if the legislature passed a law that said “no blue cars on Mondays” the Court would not disturb a “public safety” regulation.