Congress, Obama playing with dynamite, CEOs say of “fiscal cliff”

BOSTON (Reuters) – Corporate America is raising the volume of its plea that the U.S. government avert a year-end “fiscal cliff” that could send the nation back into recession, but chief executives aren’t pushing the panic button just yet.

With a heated election season in the rear-view mirror, executives are calling on the White House and congressional leaders to head off a self-imposed deadline that could bring $ 600 billion in spending cuts and higher taxes early in 2013 if they are unable to reach a deal on cutting the federal budget deficit.

The Business Roundtable on Tuesday kicked off a print, radio and online ad campaign on which it plans to spend hundreds of thousands of dollars featuring the chiefs of Honeywell International Inc , Xerox Corp and United Parcel Service Inc calling on lawmakers to resolve the issue.

In an opinion piece published on Tuesday evening on the Wall Street Journal’s website, Goldman Sachs Chief Executive Officer Lloyd Blankfein urged the business community and the Obama administration to compromise and reconcile so as not to derail the fragile recovery.

One of the more dramatic warnings of the consequences of allowing the U.S. economy to go over the fiscal cliff came from Honeywell CEO David Cote.

“If the last debt ceiling discussion was playing with fire, this time they’re playing with nitroglycerin,” Cote said in an interview. “If they go off the cliff, I think it would spark a recession that’s a lot bigger than economists think. Some think it would just be a small fire. I think it could turn into a conflagration.”

The nonpartisan Congressional Budget Office (CBO) estimates that the U.S. economy would contract 0.5 percent in 2013 if the government fails to stop the budget cuts and tax increases – far below the 2 percent growth economists currently forecast.

A failure in Washington to solve the crisis by the year’s end could prompt major companies to curtail investment plans, said Duncan Niederauer, CEO of NYSE Euronext , operator of the New York Stock Exchange.

“We simply won’t be investing in the United States. We will be investing elsewhere where we have more certainty of the outcome,” Niederauer said in an interview.

About a dozen top U.S. CEOs, including General Electric Co’s Jeff Immelt, Aetna Inc’s Mark Bertolini, American Express Co’s Ken Chenault and Dow Chemical Co’s Andrew Liveris are scheduled to meet with President Barack Obama on Wednesday to discuss the issue.

The four are members of “Fix the Debt,” an ad-hoc lobbying organization that this week launched an advertising campaign that advocates long-term debt reduction.

UNCERTAINTY FACTOR

Bank of America Corp CEO Brian Moynihan said on Tuesday that worries about the cliff have companies holding off on spending.

“That uncertainty continues to hold back the recovery,” Moynihan said, speaking at an investor conference in New York.

Sandy Cutler, CEO of manufacturer Eaton Corp , shared his concern.

“Until we solve the fiscal issues (in the United States and Europe), you’re not going to get back to normal GDP growth,” Cutler told investors on Tuesday.

CEOs are not alone in this worry. The CBO report warned that failure to reach a deal could push the U.S. unemployment rate up to 9.1 percent, the highest since July 1991. It is currently 7.9 percent.

Obama and the Republican leadership of the House of Representatives have signaled a more conciliatory tone since last week’s election, when Obama soundly defeated Republican challenger Mitt Romney, whose party retained a majority in the House.

Wilbur Ross, an investor known for taking stakes in distressed companies, is bracing for higher tax rates in 2013.

“We, like many people, have been trying to utilize gains this year. It does seem that the probability is that rates will go up,” Ross said in an interview with Reuters Insider. “We don’t have a “for sale” sign on anything. But we are mindful that there is a benefit to concluding things this year rather than next.

NO SIGNS OF PANIC

Concerns about the cliff have not prompted customers to cancel orders, though they have added to an overall level of uneasiness that has companies wary of making large capital purchases or hiring significant numbers of new workers.

“We haven’t seen the panicking, like, ‘I’m not going to order something because of the fiscal cliff,’” said Steve Shawley, chief financial officer of heating and cooling systems maker Ingersoll Rand Plc . “Customers are being very judicious with their orders.”

Likewise, JPMorgan Chase & Co CEO Jamie Dimon last month told investors he did not expect the negotiations to hurt lending in the fourth quarter.

“The fiscal cliff isn’t going to change us,” Dimon said, referring to JPMorgan’s commercial bank, which loans money to businesses. The bank’s investment banking side could be more vulnerable if the debate makes investors jittery, he allowed.

WEAPONS, MEDICINES IN THE CROSS-HAIRS

The defense and healthcare sectors are the most vulnerable to the fiscal cliff, as they face the threat of sequestration — automatic, across-the-board cuts to their funding.

Makers of weapons systems note that they have long been preparing for declining sales as the United States winds down two long wars in Iraq and Afghanistan. The industry has already shed tens of thousands of jobs and closed facilities.

Lockheed Martin Corp’s new president and chief operating officer, Marillyn Hewson, told analysts on Monday her company had been preparing for tighter defense budgets for years, even before the sequestration deal.

“We aren’t going to see a major change,” said Hewson. “We’ve been very proactive as a leadership team in taking actions in recent years to address our cost structure, to look at how we can make our product more affordable.”

Automatic cuts to the federal budget could reduce federal health spending by $ 21.5 billion in 2013, potentially affecting everything from Medicare to the Food and Drug Administration, according to an analysis by PwC’s Health Research Institute.

Vincent Forlenza, the CEO of Beckton Dickinson & Co , said the labs he supplies have held off on buying new instruments because of the threat of spending cuts.

“If we don’t get to a deal we will have another year of paralysis and putting off research,” Forlenza said. “The impact of uncertainty on the (National Institutes of Health) budget is causing our research customers to put off research.”

(Additional reporting by John McCrank, Nick Zieminski, Caroline Humer, Jed Horowitz, Sharon Begley and Daniel Wilchins in New York, Rick Rothacker in Charlotte, North Carolina, Nichola Groom in Los Angeles, Andrea Shalal-Esa in Washington, Debra Sherman in Chicago and Anna Driver in Houston; Editing by Patricia Kranz and Steve Orlofsky and Carol Bishopric)

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General investigated for emails to Petraeus friend

PERTH, Australia (AP) — In a new twist to the Gen. David Petraeus sex scandal, the Pentagon said Tuesday that the top American commander in Afghanistan, Gen. John Allen, is under investigation for alleged “inappropriate communications” with a woman who is said to have received threatening emails from Paula Broadwell, the woman with whom Petraeus had an extramarital affair.

Defense Secretary Leon Panetta said in a written statement issued to reporters aboard his aircraft, en route from Honolulu to Perth, Australia, that the FBI referred the matter to the Pentagon on Sunday.

Panetta said that he ordered a Pentagon investigation of Allen on Monday.

A senior defense official traveling with Panetta said Allen’s communications were with Jill Kelley, who has been described as an unpaid social liaison at MacDill Air Force Base, Fla., which is headquarters to the U.S. Central Command. She is not a U.S. government employee.

Kelley is said to have received threatening emails from Broadwell, who is Petraeus’ biographer and who had an extramarital affair with Petraeus that reportedly began after he became CIA director in September 2011.

Petraeus resigned as CIA director on Friday.

Allen, a four-star Marine general, succeeded Petraeus as the top American commander in Afghanistan in July 2011.

The senior official, who discussed the matter only on condition of anonymity because it is under investigation, said Panetta believed it was prudent to launch a Pentagon investigation, although the official would not explain the nature of Allen’s problematic communications.

The official said 20,000 to 30,000 pages of emails and other documents from Allen’s communications with Kelley between 2010 and 2012 are under review. He would not say whether they involved sexual matters or whether they are thought to include unauthorized disclosures of classified information. He said he did not know whether Petraeus is mentioned in the emails.

“Gen. Allen disputes that he has engaged in any wrongdoing in this matter,” the official said. He said Allen currently is in Washington.

Panetta said that while the matter is being investigated by the Defense Department Inspector General, Allen will remain in his post as commander of the International Security Assistance Force, based in Kabul. He praised Allen as having been instrumental in making progress in the war.

The FBI’s decision to refer the Allen matter to the Pentagon rather than keep it itself, combined with Panetta’s decision to allow Allen to continue as Afghanistan commander without a suspension, suggested strongly that officials viewed whatever happened as a possible infraction of military rules rather than a violation of federal criminal law.

Allen was Deputy Commander of Central Command, based in Tampa, prior to taking over in Afghanistan. He also is a veteran of the Iraq war.

In the meantime, Panetta said, Allen’s nomination to be the next commander of U.S. European Command and the commander of NATO forces in Europe has been put on hold “until the relevant facts are determined.” He had been expected to take that new post in early 2013, if confirmed by the Senate, as had been widely expected.

Panetta said President Barack Obama was consulted and agreed that Allen’s nomination should be put on hold. Allen was to testify at his confirmation hearing before the Senate Armed Services Committee on Thursday. Panetta said he asked committee leaders to delay that hearing.

NATO officials had no comment about the delay in Allen’s appointment.

“We have seen Secretary Panetta‘s statement,” NATO spokeswoman Carmen Romero said in Brussels. “It is a U.S. investigation.”

Panetta also said he wants the Senate Armed Services Committee to act promptly on Obama’s nomination of Gen. Joseph Dunford to succeed Allen as commander in Afghanistan. That nomination was made several weeks ago. Dunford’s hearing is also scheduled for Thursday.

___

Associated Press writer Slobodan Lekic in Kabul, Afghanistan, contributed to this report.

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Man who accused Elmo puppeteer of teen sex recants

NEW YORK (AP) — A man who accused Elmo puppeteer Kevin Clash of having sex with him when he was a teenage boy has recanted his story.

In a quick turnabout, the man on Tuesday described his sexual relationship with Clash as adult and consensual.

Clash responded with a statement of his own, saying he is “relieved that this painful allegation has been put to rest.” He had no further comment.

The man, who has not identified himself, released his statement through the Harrisburg, Pa., law firm Andreozzi & Associates.

Sesame Workshop, which produces “Sesame Street” in New York, soon followed by saying, “We are happy that Kevin can move on from this unfortunate episode.”

The whirlwind episode began Monday morning, when Sesame Workshop startled the world by announcing that Clash had taken a leave of absence from “Sesame Street” in the wake of allegations that he had had a relationship with a 16-year-old.

Clash, a 52-year-old divorced father of a grown daughter, swiftly denied the charges of his accuser, who is in his early 20s. In that statement Clash acknowledged that he is gay but said the relationship had been between two consenting adults.

Though it remained unclear where the relationship took place, sex with a person under 17 is a felony in New York if the perpetrator is at least 21.

Sesame Workshop, which said it was first contacted by the accuser in June, had launched an investigation that included meeting with the accuser twice and meeting with Clash. Its investigation found the charge of underage conduct to be unsubstantiated.

Clash said on Monday he would take a break from Sesame Workshop “to deal with this false and defamatory allegation.”

Neither Clash nor Sesame Workshop indicated on Tuesday when he might return to the show, on which he has performed as Elmo since 1984.

Elmo had previously been a marginal character, but Clash, supplying the fuzzy red puppet with a high-pitched voice and a carefree, child-like personality, launched the character into major stardom. Elmo soon rivaled Big Bird as the face of “Sesame Street.”

Though usually behind the scenes, Clash meanwhile achieved his own measure of fame. In 2006, he published an autobiography, “My Life as a Furry Red Monster,” and he was the subject of the 2011 documentary “Being Elmo: A Puppeteer’s Journey.”

He has won 23 daytime Emmy awards and one prime-time Emmy.

___

Online:

http://www.sesamestreet.org

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Hospira says FDA blocks import of Symbiq infusion pump

(Reuters) – The U.S. Food and Drug Administration has prohibited Hospira Inc from importing its Symbiq medication infusion pumps, which are manufactured in Costa Rica, into the United States, the company said Tuesday in a regulatory filing.

Hospira in the filing did not say why the FDA imposed the restriction. A Hospira spokesperson could not be immediately reached.

The company said the FDA’s action does not restrict importation of its other medication management products, and the company does not expect it will have a material impact on its ability to achieve its 2012 financial projections.

In August, Hospira announced it received a warning letter from the FDA over quality problems at the Costa Rica plant where it makes most of its infusion pumps. Among the issues cited were alarm failures on the company’s Plum brand of infusion pump.

At the time, the company said it was switching alarm components for the Plum pump, which was recalled in February 2011, and expected to complete that process by early 2013.

Hospira on November 7 said it had placed a voluntary hold on shipments of the Symbiq pumps to new U.S. customers. A day later, the FDA notified the company of the import restriction, Hospira said.

Last month, the FDA said some Symbiq models were recalled due to software issues after Hospira received reports from customers of touch screens that were not responsive, delaying therapy.

The Lake Forest, Illinois-based maker of medical devices and injectable specialty drugs said it will support the repair and replacement of Symbiq pumps to existing customers.

Hospira has been working for several years to resolve manufacturing issues at some of its plants. In February, it resumed production of injectable drugs at its Rocky Mount, North Carolina, plant after a maintenance shutdown. Manufacturing problems at that plant had let to shortages of anesthesia and other drugs for its customers.

Hospira shares were little changed in after-hours trading from Tuesday’s close of $ 29.60 on the New York Stock Exchange.

(Reporting by Susan Kelly in Chicago; Editing by Leslie Adler and Phil Berlowitz)

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Best Buy CEO sets goals; Wall Street begs for more details

(Reuters) – Best Buy Co Inc hopes to triple its operating margins over time, the company said on Tuesday, though investors and analysts were left wanting for details on how – and how soon – the new chief executive would turn around the world’s largest consumer electronics chain.

The aggressive new targets come as Best Buy faces cut-throat competition from online and discount retailers like Wal-Mart Stores Inc and Amazon.com Inc .

CEO Hubert Joly got a difficult reception at an investor day in New York, as people questioned whether management was focusing too much on wringing higher sales out of existing customers rather than attracting new ones. Joly was named CEO on August 20.

“I still think I am a little bit mixed on digesting the take-aways of the presentation. I think they said a lot of good things, but I think people were looking for a little bit more of a playbook and the next steps,” said John Tomlinson, an analyst with ITG Investment Research, in New York. “There’s a lot of pieces to the fixing story that seemed a little opaque and vague.”

Best Buy’s stock closed nearly 1 percent lower at $ 15.70 on Tuesday, continuing a slide that has knocked off a third of the company‘s market capitalization this year. The stock touched a 10-year low of $ 14.39 a week ago.

Dimitri van Toren, senior portfolio manager at Dutch asset manager Syntrus Achmea, which holds about 200,000 Best Buy shares, said he was worried about structural issues and a “management vacuum” at the retailer, but that he would stay in the stock despite concerns about the upcoming holiday season.

The meeting took place against the backdrop of a potential buyout offer from founder and former CEO Richard Schulze, who is expected to make an offer as soon as next month.

“I spend no time worrying about what our corporate structure will be,” Joly told reporters after the event. “I tend to focus on decisions I can influence rather than decisions I can’t influence.”

A representative for Schulze did not immediately respond to a request seeking his thoughts on Joly’s plan.

Joly said “it would have been ridiculous” to offer more concrete details after only a few weeks on the job. He said this meeting was more about setting the record straight and reassuring investors about the company’s future.

“The perception was that Best Buy was dying,” Joly said.

MARGIN TARGETS

In a statement on Tuesday, the company said its short-term goal will be “to stabilize and then begin increasing its comparable-store sales and operating margin.” Over time, it is aiming for a return on invested capital of 13 percent to 15 percent, in addition to a 5 percent to 6 percent operating margin target.

In the last fiscal year, Best Buy had an operating margin of about 2.1 percent. The last time that margin exceeded 5 percent was in the fiscal year that ended in early 2008.

Joly said a mixture of excessive costs and price competition hurt margins, and that the retailer would turn to a wider variety of higher-margin, private-label products to boost results. One example is the company’s own Insignia-brand electronics.

Best Buy has been struggling to combat a phenomenon known as “showrooming,” where people visit its stores to look at products and then buy them online for less.

Joly acknowledged the company has suffered from a “price perception issue” among customers that it needed to address, as well as weakness in its online operations.

The head of the company’s digital business said its online conversion rate – which measures how successfully Best Buy translates customer visits into actual sales – was only about half of what it should be.

“Many of these problems are a result of our own making,” Joly said during the investor presentation.

HOLIDAYS COMING

Best Buy also said on Tuesday that it would pursue a plan to “optimize its store footprint on an ongoing basis,” which suggested the company may look at ways to shrink or close stores, as some other big-box retailers have done. In late March, the company said it would close 50 large U.S. stores.

Joly warned that merely closing stores would not boost operating income, as most of the big-box stores are already profitable. Relocation to smaller space may be an option, however; he said 71 percent of the large-format stores have leases expiring within the next six years.

The details of Joly’s long-awaited plan came roughly a week before the unofficial start of the year’s biggest selling season.

The retailer, which has posted declines in same-store sales in eight of the last nine quarters, warned last month it expected earnings and same-store sales to fall again in the third quarter.

“I am already sick and tired of negative comps,” Joly said, referring to same-store sales figures.

The CEO also admitted a number of past investments have not paid off and promised the new leadership would be “prudent” about that in the future, a nod to Wall Street’s lingering concerns about spending by past management.

(Reporting by Dhanya Skariachan in New York; Writing by Ben Berkowitz; Editing by Maureen Bavdek, Phil Berlowitz, Matthew Lewis and Jan Paschal)

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TSX drops to two-month low on U.S., Europe fears

TORONTO (Reuters) – Canada‘s main stock index slipped to a two-month low on Tuesday, dragged down by resource and financial shares, as investors fixated on fears of a fiscal crisis in the United States and economic turmoil in Europe.

The Toronto Stock Exchange‘s S&P/TSX composite index <.GSPTSE> unofficially closed down 56.80 points, or 0.47 percent, at 12,134.66.

(Reporting by Claire Sibonney; Editing by Jeffrey Hodgson)

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Engineers of the Future Design Star Trek-Inspired Tricorder Device

A group of college and high school students has designed a Star Trek-inspired sensing device that can beam environmental data to a smart phone. The team developed their project during a summer internship program run by the Wright Brothers Institute and the Air Force Research Laboratory. and shared their results at this fall’s World Maker Faire in New York City–a showcase of DIY ingenuity. The Summer at the Edge program gives student teams ten weeks to work on science and engineering projects. The tricorder device is the team’s response to a challenge from the U.S. Environmental Protection Agency: “Is there an effective way to integrate external sensors with smart phones and can we globalize this information?” Applications could range from data collection for research to educational hands-on activities to disaster-zone assessment. The description reminded the students of a Star Trek gadget. In the sci-fi television series, the tricorder is a hand-held device used to diagnose illness, scout alien planets and more. Several real-life tricorders have been developed or proposed and the 15-member student team decided to take a crack at designing their own. The device itself looks like a clear brick filled with computer parts and batteries. It is built around an open-source computing platform called an Arduino microcontroller and transmits data via Bluetooth. An environmental sensing pod connects to the controller and collects measurements on variables like temperature, wind speed and radiation levels. Users can view data collection in real time via Google maps or an interactive graph and monitor changes and search for patterns. The tricorder’s modular design lets the team swap functionalities while still using the same Arduino controller and software. To demonstrate, the team built an additional pod equipped with an infrared beam and motion detector–a security sensor. Along the way, the team faced some challenges. Getting the sensors and the tablet to talk to each other involved a lot of troubleshooting. “We were having a lot of trouble with the Bluetooth communications,” says Lujack Prater, a junior studying electrical engineering at Ohio State University, who worked on the software design. “It was a few days that we didn’t get it. We were working on it and working on it.” Then a breakthrough: “It was really exciting–I remember the first time we started getting data streaming to the tablet,” says Grace Crumrine, part of the hardware sub-team and a sophomore in electrical engineering at Ohio State University. “But it was completely corrupt and didn’t mean anything.” The team needed to iron out software glitches and calibrate their sensors. Crumrine explains that the wind sensor was just “spitting out analogue values and we didn’t know what they meant.” So they took the sensor for a ride. While her teammate drove, Crumrine stuck the sensor out the car window. They were able to determine which values corresponded to specific speeds by rolling down the road at five, then 10 miles per hour and so on. The EPA was impressed, says Rob Williams, head of the internship program and research director of the Air Force Research Laboratory‘s Discovery Lab. “The tricorder was one of the more ambitious research projects,” he adds. “I think it validated the model that we’ve been an advocate of–bringing together motivated students and giving them the opportunity to have fun learning while doing projects that have potential.” Other notable projects include a tablet-based virtual walkthrough of medical techniques to train physicians and a device that can detect the brain’s electrical signals to give quadriplegics control over robots. What’s the next step for Project Tricorder? Williams would like to find teachers and students around the country who want to use the team’s design. He says middle school students could use the device to see how technology can help protect the environment. The military could use it to download information to virtual command centers and guide decision-making during a search and rescue based on current conditions. The device’s multi-functionality and connection to a smart phone would be key advantage. Sensor pods could even be installed in remote or dangerous locations and still report via Bluetooth.

Lujack Prater and Grace Crumrine with their team's device at the World Maker Faire. Credit: Grace Crumrine

Both Prater and Crumrine say the program is hard work. Prater spent the first two weeks learning how to code and program Android devices. “You get so involved in the project that you forget what you are doing,” says Crumrine. “Then when you present it to people you see their face with all the excitement and astonishment. It is worth it.”

Follow Scientific American on Twitter @SciAm and @SciamBlogs. Visit ScientificAmerican.com for the latest in science, health and technology news.
© 2012 ScientificAmerican.com. All rights reserved.

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U2′s Bono to urge U.S. politicians not to cut aid programs

WASHINGTON (Reuters) – Irish rocker and anti-poverty campaigner Bono will appeal to Democrats and Republicans during a visit to Washington this week to spare U.S. development assistance programs from cuts as Congress tries to avert the looming “fiscal cliff” of tax hikes and spending reductions early next year.

The U2 lead singer’s visit comes as the Obama administration and congressional leaders try to forge a deal in coming weeks to avoid the economy hitting the “fiscal cliff” – tax increases and spending cuts worth $ 600 billion starting in January if Congress does not act.

Analysts say the absence of a deal could shock the United States, the world’s biggest economy, back into recession.

Kathy McKiernan, spokeswoman for the ONE Campaign, said Bono will hold talks with congressional lawmakers and senior Obama administration officials during the November 12-14 visit.

During meetings he will stress the effectiveness of U.S. foreign assistance programs and the need to preserve them to avoid putting at risk progress made in fighting HIV/AIDS, tuberculosis and malaria, she said.

Bono, a long-time advocate for the poor, will argue that U.S. government-funded schemes that support life-saving treatments for HIV/AIDS sufferers, nutrition programs for malnourished children, and emergency food aid make up just 1 percent of the U.S. government budget but are helping to save tens of millions of lives in impoverished nations.

The One Campaign would not elaborate which lawmakers and senior Obama administration officials Bono will meet.

On Monday, Bono will discuss the power of social movements with students at Georgetown University. He will also meet new World Bank President Jim Yong Kim for a web cast discussion on Wednesday on the challenges of eradicating poverty.

(Editing by W Simon)

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Meningitis-linked U.S. firm not a drug maker in 2003 -report

WASHINGTON (Reuters) – Government health regulators in 2003 told the pharmacy now at the center of a deadly meningitis outbreak that its drug compounding activities did not constitute a manufacturing operation that would merit strict federal safety standards, a congressional report said on Monday.

The report by the Republican staff of a U.S. House of Representatives committee, said the Food and Drug Administration and Massachusetts state officials decided to leave oversight of the New England Compounding Center to a state pharmacy board, despite evidence of health problems linked to two drugs in 2002.

One of the drugs was methylprednisolone acetate, the same steroid treatment health officials have identified as the source of a current U.S. fungal meningitis outbreak that the U.S. Centers for Disease Control and Prevention says has grown to 438 cases, including 32 deaths, in 19 states.

Where to draw the line between drug manufacturing and drug compounding is a central question for U.S. lawmakers, who will hold separate House and Senate hearings this week as part of two investigations to determine whether the FDA should be given stronger authority to regulate compounding operations.

The House Energy and Commerce Committee, which produced the Republican report, is scheduled to hold its hearing on Wednesday with testimony expected from FDA Commissioner Margaret Hamburg, interim Massachusetts health commissioner Lauren Smith and NECC co-owner Barry Cadden, who has been subpoenaed to appear.

A separate hearing before the Senate Health, Education, Labor and Pensions Committee is scheduled for Thursday with a similar roster of witnesses expected.

A handful of Democrats have called for new legislation to strengthen federal oversight of the compounding industry, in which pharmacists traditionally alter or recombine drugs to meet the special needs of specific patients.

Drug compounding has evolved in recent decades to include large-scale production that some experts view as drug manufacturing that should be subject to FDA regulation.

But the compounding industry is currently overseen mainly by state authorities that are often ill-equipped for the job.

Up to now, compounding pharmacies have waged long legal and lobbying battles to stave off federal regulation. And some in Congress worry that failure to act before the end of the current lame duck session could postpone legislation in 2013 and risk losing momentum driven by the growing number of cases.

The advocacy group Public Citizen earlier this month called on the Obama administration to launch an independent probe into FDA’s lack of action against NECC. The group alleges that FDA already has the authority it needs, but that agency officials failed to take steps that could have prevented the current outbreak

Responding to a Reuters query about Public Citizen’s claims, the Department of Health and Human Services, which oversees FDA, said the agency has limited powers over compounders and urged Congress to strengthen its authority.

SERIOUS CONSEQUENCES

The House Republican report does not say how health officials determined NECC to be a pharmacy instead of a manufacturer. But the decision came after NECC had doubled its production space and begun pursuing a marketing strategy that called for selling compounded drugs to customers in all 50 states.

“It was decided that ‘current findings supported a compounding role’ and that ‘the state would be in a better position to gain compliance or take regulatory action against NECC as necessary’,” said the report.

The decision came at a February 5, 2003 meeting between FDA and state officials that ended with federal regulators emphasizing the potential for “serious public health consequences” if NECC’s compounding practices, in particular those relating to sterile products, did not improve.

“It is noteworthy that after closing out the inspection … FDA’s primary NECC investigator and her supervisor recommended that the ‘firm be prohibited from manufacturing until they can demonstrate ability to make product reproducibly and dependably’.”

Cadden was informed soon after the meeting that FDA did not consider his company to be a manufacturer. On February 26, 2003, he responded in writing to an FDA document calling for corrective measures at NECC by saying: “We are not subject to (nor are we voluntarily subjecting ourselves to) current good manufacturing practices as promulgated by FDA, since we are a compounding pharmacy, not a manufacturer.”

The decision to leave oversight largely to state officials also followed an April 2002 encounter between FDA investigators and Cadden in which the report said the NECC executive challenged the FDA’s authority to be at his pharmacy and refused to provide information or records to the federal agency.

But problems continued at NECC, and the FDA finally issued a warning letter in 2006 warning that the company’s compounding operations had begun to resemble manufacturing operations and still posed potential health risks from the compounding of sterile drugs.

“NECC has a long history of very similar, if not identical, underlying misconduct,” said the congressional report.

“Some of the violations observed by regulators as early as 2002 include the company’s failure to maintain adequate safeguards for sterile injectable products — the very issue at the center of the current meningitis outbreak.”

On Monday, FDA said it discovered insects, a flying bird and other unsanitary conditions at NECC’s sister company, Ameridose LLC. [ID:nL1E8MCDDH]

(Reporting by David Morgan; Editing by Michele Gershberg and Tim Dobbyn)

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How To Tell If Gadgets Are Needlessly Complicated: The Mom Test

This is a rant, of the grumpy-old-man variety.

Two weeks ago I was staying at my parents’ apartment because my home in New Jersey was without power, thanks to Hurricane Sandy.

“Oh, Sonny, I’m glad you’re here,” my mother told me when I arrived. “I need you to help me set up the DVD player.”

I love my mom to bits and pieces, but sometimes it’s like a bad sitcom with her: The tech writer son tries to help his mother (who still refers to the refrigerator as the “icebox,” by the way) do something he thinks is the easiest thing in the world but to her is akin to landing the Mars Rover.

We went into her bedroom. She had a television that was connected to a cable box and a DVD player—simple. Even the universal remote that came with her cable box was already programmed to work with the TV and DVD player. Miracle of miracles.

“See, Mom, you’re going to want to change inputs when you switch from cable to DVD,” I said.

“Change inputs?” she replied. “Can’t I just have it set to channel 3?”

This is what I’m talking about: My mother has that Reagan-era notion that you can set a channel of the TV to be an auxiliary input, like I used to do when I wanted to fire up the VHS and watch The Last Starfighter. Again.

“No, Mom. It’s really simple. Let me show you.” This is where things fell apart. But not because of my mom. “OK,” I began, “you’re going to use the cable box remote. Remember to push ‘DVD’ at the top of the remote to send commands to the DVD. You’ll then have to push ‘STB’ when you want to go back to cable, but to change the TV’s input, push ‘TV.’”

The cable box remote did have a “video source” button on it. And pushing it did call up the TV’s video source menu. And pushing “video source” repeatedly did allow one to cycle through the available sources. I reached “DVD,” selected it, and then looked for the “exit” button to close out the source menu.

Except my remote didn’t have an “exit” button. Or, it did, but it wasn’t mapped to the TV’s exit function. So the TV’s source menu just sat there—on top of my mother’s DVD of The Thin Man playing underneath.

“OK, Mom, looks like this remote can’t access all the functions on your TV, so we’re going to get the TV’s original remote,” I said. Even as the words were coming out of my mouth, I knew this wasn’t going to work.

“Seriously?” my mother asked. “Lemme get this straight: If I want to watch the goddamn Thin Man on the DVD, I have to first get the TV remote, find the source menu, switch to ‘DVD,’ then go back to the cable remote, select ‘DVD,’ press ‘play,’ but don’t forget to switch the remote back to ‘STB’ when I want to control the cable box? Something like that?”

“Um. Yeah, Mom.”

“What the hell happened to channel 3?”

Here’s the thing about my technophobic mother: She’s absolutely right. The tiny hoops we are asked to jump through give lie to the idea that technology is going to make our lives easier. In some cases it does (I never get lost in my car anymore, thanks to GPS; I’m never bored anymore, thanks to my smartphone), but there are glaring omissions.

TV manufacturers, can you please get it together? Can there be some common standards so my TV knows when I’ve put a disc in the DVD player, and it can ask me if I’d like to watch it now? Can remotes and devices talk to each other automatically, with full functionality, without the need to program them? Can someone please let me access any and all on-demand, streaming, or downloaded video without having to switch from my set-top box to Netflix (NFLX) or iTunes? Can I have a TV setup that I don’t have to explain how to use to house guests and babysitters? (“… sometimes the sound bar will turn itself off because it gets confused by a signal from the remote to the TV. Just use this remote to …”)

Face it, TV people: Your products are commodities. No one cares about your hardware. One display is virtually indistinguishable from another. But if one of you actually made it easier to use your product? Let me tell you something—it wouldn’t just be 65-year-old Jewish women on the Upper West Side of Manhattan who would be interested. We’d all line up for that.

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