DealBook: Former SAC Trader Is Indicted

A former SAC Capital Advisors portfolio manager was indicted on Friday on securities fraud and conspiracy charges in a case that federal prosecutors have called the most lucrative insider trading scheme ever uncovered.

A federal grand jury in Manhattan indicted the former portfolio manager, Mathew Martoma, a month after the government arrested on him charges that he used inside tips about a clinical drug trial to help SAC earn profits and avoided losses totaling $276 million.

While Stamford, Conn.-based SAC has been touched by several insider trading cases in recent years, there is heightened attention surrounding the Martoma prosecution. For the first time, the government has tied questionable trades to Steven A. Cohen, the billionaire owner of SAC.

“Though disappointing, today’s events come as no surprise,” Mr. Martoma’s lawyer, Charles A. Stillman, said in a statement. “The simple fact is that Mathew Martoma did not trade on inside information, is innocent of all these charges, and we look forward to his ultimate vindication.”

Before Friday’s indictment, there had been speculation that the government, before formally presenting evidence to a grand jury, was trying to gain Mr. Martoma’s cooperation in building a case against Mr. Cohen. Mr. Martoma has rebuffed several earlier efforts by the authorities to enter into plea talks and implicate his boss.

Mr. Cohen has not been charged with any wrongdoing, and a spokesman for SAC has said that he believes that he and SAC have at all times acted appropriately. The Securities and Exchange Commission, which brought a parallel civil action against Mr. Martoma, has warned SAC that it is likely to filed a fraud lawsuit against the firm related to the Martoma case.

Hedge Fund Inquiry

Mr. Martoma, 38, is set to appear in Federal District Court in Manhattan on Jan. 3 for his arraignment, at which time he will enter a plea. The case was assigned to Judge Paul Gardephe, a former federal prosecutor who assumed his seat on the bench in 2008 after an appointment by President George W. Bush.

The government says that Mr. Martoma obtained secret, negative information from a doctor about clinical trials of an Alzheimer’s drug being developed by the pharmaceutical companies Elan and Wyeth. He then, prosecutors say, had a 20-minute telephone conversation with Mr. Cohen.

A day after the phone call, SAC sold $700 million in Elan and Wyeth stock and made a large negative bet on the companies. The companies’ shares plummeted after they announced the disappointing trial results, and SAC booked big profits.

The doctor, Sidney Gilman, is cooperating with prosecutors and has agreed to testify against Mr. Martoma. The government gave Dr. Gilman a non-prosecution agreement, meaning they will not bring criminal charges against him. Such an agreement is highly unusual, legal experts say, and is being used as a pressure point on Mr. Martoma in an effort to get him to “flip” against Mr. Cohen.

Before coming to New York for his arraignment, Mr. Martoma will be spending the holidays with his wife and three young children at home, in Boca Raton, Fla.

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Boehner rejects Democrats' push for immediate vote on gun bill









WASHINGTON -- House Speaker John A. Boehner rejected calls from Democrats to schedule a vote on new gun restrictions before the end of the year, saying he wants to wait for recommendations from a newly formed White House task force before committing to a legislative response to the mass shooting at a Connecticut school.

“When the vice president's recommendations come forward, we'll certainly take them into consideration,’’ Boehner (R-Ohio) said Thursday in his first public comments on calls for new gun legislation since the slaying of 20 students and six adults at Sandy Hook Elementary School. “But at this point I think our hearts and souls ought to be to think about those victims in this horrible tragedy.”


President Obama on Wednesday said he had asked Vice President Joe Biden to lead a task force to come up with initiatives to stem gun violence by the end of next month. House Democratic Leader Nancy Pelosi of San Francisco and fellow Democrats have pressed for an immediate vote on a long-stalled bill that would ban ammunition magazines containing more than 10 rounds.





Obama has outlined a slightly slower pace for action, urging Congress to hold a vote “in a timely manner” in the new year.


Both Obama and Democrats on Capitol Hill say they are trying to seize on what appears to be a burst of momentum behind gun legislation in the wake of the Newtown, Conn., tragedy. Similar efforts initiated after other high-profile shootings faltered after national attention veered elsewhere.


Biden held the first meeting of the task force Thursday, gathering several cabinet members and White House officials with a group of local law enforcement leaders. In remarks before the meeting, the vice president noted his work on the 1994 crime bill, which banned the sale of some assault weapons, and said he would again be working closely with police groups to craft proposals.


“What I think the public has learned about you is you have a much more holistic view of how to deal with violence on our streets and in our country that you’re ever given credit for,” Biden told the law enforcement officials. “I want to hear your views because, for anything to get done, we’re going to need your advocacy.”


richard.simon@latimes.com


Twitter: @richardsimon11


kathleen.hennessey@latimes.com


Twitter: @khennessey





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Boeing Uses Potatoes to Improve Inflight Wi-Fi











If you need to test Wi-Fi signals on an airplane, Boeing has discovered potatoes are a secret to success.


More and more airliners are equipped with Wi-Fi, but as anybody who has tried using it can tell you, not every seat gets the same experience. One passenger can have four bars showing, while the guy wedged into the seat next to him has one, or none. Boeing has an obvious interest in helping airlines provide a better experience for passengers, so a team of engineers at the company’s test and evaluation center in Seattle employed sacks of potatoes to develop a new method of ensuring wireless signals are as reliable as possible.


Boeing’s test and evaluation center has gained recent attention for the 787 flight test program, but its engineers test just about everything related to the company’s airliners, including inflight wireless. The company isn’t saying much about how the test is performed or the kind of equipment is used, but it says the new evaluation methods measure the propagation of signal quality throughout the cabin more efficiently and effectively.


So a bit about those taters.


Much of the testing was done aboard a parked airliner, and engineers needed extras to play the role of the passengers. Sacks of spuds are cheap, they don’t need bathroom breaks and it turns out water-logged tubers interact with electronic signal properties in a manner similar to humans.


The method was originally developed by Boeing to ensure radio signals transmitted within a cabin were safe and did not interfere with aircraft electrical systems. Now it is being used to test wireless signals in a matter of hours. The result is better signal tuning to safely propagate a stronger Wi-Fi signal throughout the cabin.


With any luck, this means those of us crammed into 18E for a cross-country flight to Newark will exceed the speed of a 2400 Baud modem so we can download that attachment before beginning our final approach.






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Putin offers French tax row actor Depardieu a Russian passport






MOSCOW (Reuters) – President Vladimir Putin offered French actor Gerard Depardieu a Russian passport on Thursday, saying he would welcome the 63-year-old celebrity who is embroiled in a bitter tax row with France‘s socialist government.


Weighing into a dispute over a hike in taxes, Putin heaped praise on Depardieu, making the offer of citizenship in response to a question during his annual televised press conference.






“If Gerard really wants to have either a residency permit in Russia or a Russian passport, we will assume that this matter is settled and settled positively,” Putin said.


French daily Le Monde reported on Tuesday that Depardieu had told his close friends he was considering three options to escape France’s new tax regime: moving to Belgium, where he owns a home, relocating to Montenegro, where he has a business, or fleeing to Russia.


“Putin has already sent me a passport,” Le Monde quoted the actor as jokingly saying.


Depardieu is well-known in Russia where he has appeared in many advertising campaigns, and in 2012 he was one of several Western celebrities invited to celebrate the birthday of Ramzan Kadyrov, Chechnya’s Kremlin-backed leader.


He also worked in Russia last year on a film about the life and times of the eccentric Russian monk Grigory Rasputin.


He has already inquired about how to obtain Belgian residency rights and said he plans to hand in his French passport and social security card.


In what has become an ugly public dispute, France’s Prime Minister Jean-Marc Ayrault criticized Depardieu’s announcement as “pathetic” and unpatriotic. The actor hit back, accusing France of punishing success and talent.


But Putin said he thought the feud was the result of a “misunderstanding”.


The 60-year-old former KGB spy said he was very friendly with Depardieu, saying he thought the actor considered himself a Frenchman who loved the culture and history of his homeland.


Belgian residents do not pay a wealth tax, which in France is now levied on those with assets over 1.3 million euros ($ 1.7 million). Nor do they pay capital gains tax on share sales.


Hollande is also pressing ahead with plans to impose a 75-percent super tax on income over 1 million euros.


Russia has a flat income tax rate of 13 percent.


(Reporting by Alexei Anishchuk; Additional reporting by John Irish in Paris; Writing by Gabriela Baczynska; Editing by Alissa de Carbonnel and Andrew Osborn)


Celebrity News Headlines – Yahoo! News





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The Consumer: Grapefruit and Drugs Often Don't Mix

The patient didn’t overdose on medication. She overdosed on grapefruit juice.

The 42-year-old was barely responding when her husband brought her to the emergency room. Her heart rate was slowing, and her blood pressure was falling. Doctors had to insert a breathing tube, and then a pacemaker, to revive her.

They were mystified: The patient’s husband said she suffered from migraines and was taking a blood pressure drug called verapamil to help prevent the headaches. But blood tests showed she had an alarming amount of the drug in her system, five times the safe level.

Did she overdose? Was she trying to commit suicide? It was only after she recovered that doctors were able to piece the story together.

“The culprit was grapefruit juice,” said Dr. Unni Pillai, a nephrologist in St. Louis, Mo., who treated the woman several years ago and later published a case report. “She loved grapefruit juice, and she had such a bad migraine, with nausea and vomiting, that she could not tolerate anything else.”

The previous week, she had been subsisting mainly on grapefruit juice. Then she took verapamil, one of dozens of drugs whose potency is dramatically increased if taken with grapefruit. In her case, the interaction was life-threatening.

Last month, Dr. David Bailey, a Canadian researcher who first described this interaction more than two decades ago, released an updated list of medications affected by grapefruit. There are now 85 such drugs on the market, he noted, including common cholesterol-lowering drugs, new anticancer agents, and some synthetic opiates and psychiatric drugs, as well as certain immunosuppressant medications taken by organ transplant patients, some AIDS medications, and some birth control pills and estrogen treatments. (The full list is online; your browser must be configured to handle PDF files.)

“What drove us to write this paper was the number of new drugs that have come out in the last four years,” said Dr. Bailey, a clinical pharmacologist at the Lawson Health Research Institute, who first discovered the interaction by accident in the 1990s.

How often such reactions occur, however, and how often they are triggered in people consuming regular amounts of juice is debated by scientists. Dr. Bailey believes many cases are missed because doctors don’t think to ask if patients are consuming grapefruit or grapefruit juice.

Even if such incidents are rare, Dr. Bailey argued, they are predictable and entirely avoidable. Many hospitals no longer serve juice, and some prescriptions carry stickers warning patients to avoid grapefruit.

“The bottom line is that even if the frequency is low, the consequences can be dire,” he said. “Why do we have to have a body count before we make changes?”

For 43 of the 85 drugs now on the list, consumption with grapefruit can be life-threatening, Dr. Bailey said. Many are linked to an increase in heart rhythm, known as torsade de pointes, that can lead to death. It can occur even without underlying heart disease and has been seen in patients taking certain anticancer agents, erythromycin and other anti-infective drugs, some cardiovascular drugs like quinidine, the antipsychotics lurasidone and ziprasidone, gastrointestinal agents cisapride and domperidone, and solifenacin, used to treat overactive bladders.

Taken with grapefruit, other drugs like fentanyl, oxycodone and methadone can cause fatal respiratory depression. The interaction also can be caused by other citrus fruits, including Seville oranges, limes and pomelos; one published case report has suggested that pomegranate may increase the potency of certain drugs.

Older people may be more vulnerable, because they are more likely to be both taking medications and drinking more grapefruit juice. The body’s ability to cope with drugs also weakens with age, experts say.

Under normal circumstances, the drugs are metabolized in the gastrointestinal tract, and relatively little is absorbed, because an enzyme in the gut called CYP3A4 deactivates them. But grapefruit contains natural chemicals called furanocoumarins, that inhibit the enzyme, and without it the gut absorbs much more of a drug and blood levels rise dramatically.

For example, someone taking simvastatin (brand name Zocor) who also drinks a small 200-milliliter, or 6.7 ounces, glass of grapefruit juice once a day for three days could see blood levels of the drug triple, increasing the risk for rhabdomyolysis, a breakdown of muscle that can cause kidney damage.

Estradiol and ethinyl estradiol, forms of estrogen used in oral contraceptives and hormone replacement, also interact with grapefruit juice. In one case in the journal Lancet, a 42-year-old woman taking the birth control pill Yaz developed a very serious clot that threatened her leg several days after she started eating just one grapefruit a day, said Dr. Lucinda Grande, a physician in Lacey, Wash., and an author of the case report.

But Dr. Grande also noted that the patient had other risk factors and the circumstances were unusual. “The reason we published it as a case report was because it was so uncommon,” she said. “We need to be careful not to exaggerate this.”

Some drugs that have a narrow “therapeutic range” — where having a bit too much or too little can have serious consequences — require vigilance with regard to grapefruit, said Patrick McDonnell, clinical professor of pharmacy practice at Temple University. These include immunosuppressant agents like cyclosporine that are taken by transplant patients to prevent rejection of a donor organ, he said.

Still, Dr. McDonnell added, most patients suffering adverse reactions are consuming large amounts of grapefruit. “There’s a difference between an occasional section of grapefruit and someone drinking 16 ounces of grapefruit juice a day,” he said.

And, he cautioned, “Not all drugs in the same class respond the same way.” While some statins are affected by grapefruit, for instance, others are not.

Here is some advice from experts for grapefruit lovers:

¶ If you take oral medication of any kind, check the list to see if it interacts with grapefruit. Make sure you understand the potential side effects of an interaction; if they are life-threatening or could cause permanent injury, avoid grapefruit altogether. Some drugs, such as clopidogrel, may be less effective when taken with grapefruit.

¶ If you take one of the listed drugs a regular basis, keep in mind that you may want to avoid grapefruit, as well as pomelo, lime and marmalade. Be on the lookout for symptoms that could be side effects of the drug. If you are on statins, this could be unusual muscle soreness.

¶It is not enough to avoid taking your medicine at the same time as grapefruit. You must avoid consuming grapefruit the whole period that you are on the medication.

¶In general, it is a good idea to avoid sudden dramatic changes in diet and extreme diets that rely on a narrow group of foods. If you can’t live without grapefruit, ask your doctor if there’s an alternative drug for you.


Readers may submit comments or questions for The Consumer by e-mail to consumer@nytimes.com.

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RIM Posts Smaller Than Expected Loss as Subscriber Base Slips



(Reuters) - Research In Motion reported a smaller-than-expected quarterly loss on Thursday, but recorded the first-ever drop in its subscriber base barely a month before the crucial launch of the new BB10 smartphone line.


Excluding one-time items related to restructuring and other issues, the struggling BlackBerry maker reported a loss of $114 million or 22 cents a share.


Analysts, on average, had forecast a loss of 35 cents a share, according to Thomson Reuters I/B/E/S.


Waterloo, Ontario-based RIM, which hopes to reinvent itself and revive its fortunes with the launch of the Blackberry 10 line next month, reported fiscal third-quarter net income of $9 million, or 2 cents a share. That compared with a year-ago profit of $265 million, or 51 cents.


The company said its subscriber base in the quarter fell to about 79 million from about 80 million in the period ended September 1.


(Reporting by Euan Rocha; Editing by Janet Guttsman)


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Army seeks death for Sgt. Robert Bales in Afghan shooting rampage









SEATTLE -- The commanders at Joint Base Lewis-McChord have decided to refer the case against Army Staff Sgt. Robert Bales for a general court-martial on charges that he murdered 16 civilians in a late-night shooting rampage outside a remote Army outpost in southern Afghanistan.


Army officials also announced they would seek the death penalty against Bales, a veteran of four combat deployments who is also charged with wounding six other civilians after a night of drinking on top of steroid use at what defense lawyers say was a dysfunctional special operations outpost.


The report from investigating officer Col. Lee Deneke was not made public, but attorneys said the commanding officer’s referral matched Deneke’s own recommendation after a weeklong preliminary hearing in November, during which a parade of witnesses testified about what happened in the early morning hours of March 11 outside Camp Belambay.





DOCUMENT: Court martial statement


Bales allegedly was seen returning to the base after the shootings with his clothing, boots and weapon covered with blood; DNA evidence provided a match between that blood and blood found at one of the shooting scenes.


Additionally, Bales’ fellow soldiers testified that the 39-year-old staff sergeant as much as admitted that he had killed people that night outside of the base, though they initially didn’t believe him.


"He said he’d just been to Al-Kozai, shot some people ... shot some military-age males. And I said, "No you didn’t,' " Sgt. Jason McLaughlin testified, adding that Bales told him he was heading to the second village where attacks occurred, Najiban, and would be back at 5 a.m.


Defense lawyers say Bales clearly wasn’t in his right mind. He had not only suffered a concussive head injury in an earlier incident, but was suffering from post-traumatic stress disorder from several previous emotional incidents in which he had been involved -- a colleague’s legs were blown off by a homemade bomb shortly before the shootings.


In addition, they said, Bales was called to duty at the remote special operations base and found a culture of widespread alcohol use. He had, with the encouragement of special forces troops at the base, been taking steroids, which have been linked to incidents of aggression, and was also supplied with alcohol by the special forces troops.


"I think the general's decision is understandable, but totally irresponsible. I think the Army is not taking responsibility for the soldiers in general, and ... is trying to take the focus off the considerable errors they made as far as Sgt. Bales is concerned, as far as a lot of other soldiers are concerned: It's a system failure," Bales' civilian defense lawyer, John Henry Browne, told the Los Angeles Times.


"The Army is trying to deflect criticism by not taking responsibility in my view, and it's a shame," Browne said.


Bales’ wife, Kari, said her wish from the start was for her husband to obtain a fair trial, and emphasized that he must be presumed innocent until all the evidence comes out.

“I no longer know if a fair trial for Bob is possible, but it very much is my hope, and I will have faith,” she said in a statement.


“My husband is an American soldier. He is a citizen of the USA, and he is very much loved by me and by our children,” she added. “I am so happy that my children and I can visit Bob every weekend and that for a few hours, I can see and feel the love that flows between my children and their father.”


A legal dispute has delayed an official mental health evaluation for Bales, known as a sanity board. His civilian defense team is challenging standard military legal procedures in which Army prosecutors are given access to the psychiatrists’ report, even before the defense announces any plans to assert an insanity defense.


“The military system is very unique in the way they do that. That’s not the way it’s done in the civilian world. It is extremely damaging to his due process rights, and it’s a big problem,” said Emma Scanlan, civilian co-counsel for Bales.


The defense team still has not decided whether it will attempt to have Bales found not guilty by a military jury by reason of insanity -- a verdict that is almost never returned in military cases.


Instead, they may seek to raise Bales’ mental health issues as mitigation during sentencing in order to take the death penalty off the table.


But Scanlan said it may not get that far.


“The [prosecution] team has to prove beyond reasonable doubt that he acted with premeditated intent,” she said. “That’s a high burden, considering the situation here.”


Military prosecutors do not comment on ongoing cases. Lt. Col. Gary Dangerfield, spokesman at Joint Base Lewis-McChord, said the next step is for Bales to be arraigned on the charges. No date has been set.


ALSO:


Sandy Hook: Firefighters salute Daniel, 7


FBI stays mostly mum about Sikh temple shooter


Authorities identify suspect, victims in Colorado shootings





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Forget JavaScript, It's Time for Browsers to Speed Up Images



The average webpage is now 1.2 megabytes and around 60 percent of that rather large payload comes from images. That’s a lot of data, whether you’re handling images responsively or just trying to speed up a desktop site.


You might think, if images are the bulk of what your browser is downloading, that browsers would be working hard to speed up the image downloads, perhaps trying alternate, space-saving image formats, but you’d be wrong.


You might also think that, as Google’s Ilya Grigorik writes, “innovating on better image formats would be a top agenda item” for the web. But again you’d be wrong. The web is still using the same image formats it’s been using virtually since the first images appeared online.


Grigorik thinks it’s high time that changed and we agree.


In a recent post looking at what it would take to deploy new image formats on the web, he writes, “if we really want to make an impact on web performance, then image formats is the place to do it… there is absolutely no reason why we shouldn’t have dozens of specialized formats, each tailored for a specific case and type of image.”


Of course no web developer wants to deal with dozens of specialized image formats. Nor should they need to — that’s a job for servers. “In a world with dozens of image formats,” continues Grigorik, “the human solution does not scale — read, markup does not scale… whereas computers are fantastic at doing exactly the kind of optimization work required to solve the problem.”


Grigorik isn’t alone in calling for new image formats, nor is he the first to suggest handing these tasks off to the server. Developer and responsive images proponent Matt Wilcox has argued for a similar solution, as have others.


The basic premise of these arguments is that deciding which image to serve up to which device and browser should be a server-side problem. And in fact there’s already a way to solve this problem with HTTP headers, namely the Accepts header, which tells the server which image formats the browser supports. Based on that information the server could then “re-encode, recompress, resize, strip unnecessary metadata and deliver the optimal format.”


The problem is that web browsers (with the exception of Opera) don’t actually send useful information in the Accepts header.


Thus, the first step in creating a server-side solution for smaller images is to get other browsers to send useful Accepts headers.


The Accepts header isn’t a magic bullet by any means, but it’s a problem that’s not hard to solve provided browser makers prioritize it. But to really get server side image solutions working the web would also need new server tools (fortunately, several already exist). There are other stumbling blocks as well. Grigorik addresses half a dozen potential problems and objections that you can read through in his post.


Even if browser makers come around to the idea and do start improving Accepts headers, bringing better image formats to the web is going to be an uphill battle. But Grigorik is determined to chase the idea. “Some uphill battles are worth fighting,” he writes in a comment, “I think this a good one. Wish me luck.”


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“Ai Weiwei: Never Sorry,” “Bully” first theatrical releases to win duPont awards






LOS ANGELES (TheWrap.com) – Two documentary films were among the 14 winners of the 2013 Alfred I. duPont-Columbia University Award, making them the first theatrical releases to be honored with the prize. USA Today also won its first duPont award.


“Ai Weiwei: Never Sorry,” Alison Klayman‘s profile of the Chinese artist-activist, and Emmy-winning filmmaker Lee Hirsch‘s tale of schoolyard torment, “Bully,” won alongside reporting from Current TV, CBS News, NPR, PBS’s “Frontline” and USA Today.






USA Today was honored for multimedia reporting on abandoned lead factories, and NPR’s “StoryCorps” will win its first silver baton.


Five awards will go to local television and radio stations: KCET in Southern California, KLAS-TV in Las Vegas, WVUE-TV in New Orleans, Detroit’s WXYZ-TV and partnerships with WHYY and NPR.


“This exceptional group of journalists represents the best of broadcast, documentary and digital news reporting today,” Bill Wheatley, the outgoing duPont Jury chair and the former executive vice president of NBC News, said in a statement. “These groundbreaking stories set the standard for excellent reporting; journalists gained access and insight into critical issues in the public interest, and they are telling these important stories in new ways.”


Christiane Amanpour, CNN’s chief international correspondent and a global affairs anchor for ABC News will present the awards with CBS News’s Byron Pitts on Tuesday, January 22, 2013 at Columbia’s Low Memorial Library.


Movies News Headlines – Yahoo! News





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F.D.A. and States Meet About Regulation of Drug Compounders


Mary Calvert/Reuters


Margaret Hamburg, the F.D.A. commissioner, testified on the fungal meningitis outbreak before Congress in November. Dr. Hamburg addressed the need for greater federal oversight of large compounding pharmacies, which mix up batches of drugs on their own, often for much lower prices than major manufacturers charge.







SILVER SPRING, Md. – The Food and Drug Administration conferred with public health officials from 50 states on Wednesday about how best to strengthen rules governing compounding pharmacies in the wake of a national meningitis outbreak caused by a tainted pain medication produced by a Massachusetts pharmacy.




It was the first public discussion of what should be done about the practice of compounding, or tailor-making medicine for individual patients, since the F.D.A. commissioner, Dr. Margaret Hamburg, last month testified in Congress about the need for greater federal oversight of large compounding pharmacies. So far, 620 people in 19 states have been sickened in the outbreak, and 39 of them have died.


Pharmacies fall primarily under state law, and the F.D.A. convened the meeting to get specifics from states on gaps in the regulatory net and how they see the federal role. Large-scale compounding has expanded dramatically since the early 1990s, driven by changes in the health care system, including the rise of hospital outsourcing.


“It is very clear that the health care system has evolved and the role of the compounding pharmacies has really shifted,” Dr. Hamburg said in a telephone interview on Tuesday. She said the laws have not kept pace. “We need legislation that reflects the current environment and the known gaps in our state and federal oversight systems.”


Under current law, compounders are not required to give the F.D.A. access to their books, and about half of all the court orders the agency obtained over the past decade were for pharmacy compounders, though compounders are only a small part of the agency’s regulatory responsibilities.


The F.D.A.'s critics argue that the agency already has all the legal authority it needs to police compounders. They say many compounders have been operating as major manufacturers, shipping to states across the country, and that the F.D.A. should be using its jurisdiction over manufacturers to regulate those companies’ activities.


“There should be one uniform federal standard that is enforced by one agency – the F.D.A.,” said Michael Carome, deputy director of Public Citizen’s Health Research Group, a nonprofit consumer organization, who has been a critic of the agency’s approach. “They have been lax in enforcing that standard.”


But Dr. Hamburg contends that the distinction is not so simple. Lumping large compounders in with manufacturers would mean they would have to file new drug applications for every product they make, a costly and time-consuming process that is not always necessary for the products they make, which may include IV feeding tube bags. Dr. Hamburg has proposed creating a new federal oversight category for large-scale compounders, separate from manufacturers.


“What concerns me is the idea that we could assert full authority over some of these facilities as though they were manufacturers, as though there were an on-off, black-white option,” Dr. Hamburg said. “That is a heavy-handed way to regulate a set of activities that can make a huge positive difference in providing necessary health care to people.”


Large-scale compounders play an important role in the health care supply chain when they produce quality products, F.D.A. officials say. They fill gaps during shortages and supply hospitals with products that can be made more safely and cost-effectively in bulk than in individual hospitals. Officials said they wanted to make sure the products made by such suppliers were safe, but were also concerned about disrupting that supply.


Carmen Catizone, head of the National Association of Boards of Pharmacy, said states are not equipped to regulate the large-scale compounders and that the F.D.A. needs to find a middle path for regulating them.


“Either hospitals are not going to like the solution, or the manufacturers aren’t going to like the fact that these guys get a shorter path,” he said. “But something’s got to give.”


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