National Security

Smart Sanctions

Actually, Obama's Iran policy is working great.

Critics of U.S. policy toward Iran have long claimed that Iran's nuclear progress remains unimpeded, while the United States continues "fruitless" negotiations with the Islamic Republic.

Diplomacy with Iran may not be the silver bullet that many would wish for, but the critics have it wrong. The U.S.-led sanctions regime against the Islamic Republic, along with deft U.S. handling of the Arab uprisings, has put Iran's leaders into a corner.

Not until the Obama administration had Iran faced sanctions with serious bite. The administration has managed to build a wide and deep international coalition against Iran: The European Union has ceased imports of Iranian oil, while major Asian economies such as Japan, India, and South Korea, have substantially reduced their purchases. Iran is now largely shut out of the global financial system. Even Russia and China have moved away from their longtime partner: Russia has cancelled important weapons contracts, and China has backed out of major oil and gas projects with Iran. These developments had had a major impact on both Iran's economy, and potentially its nuclear decision-making.

The success in building this coalition is due in large part to U.S. diplomacy. The Obama administration has been able to convince much of the world that a nuclear-armed Iran is not only a U.S. or Israeli problem, but one that endangers international security. In addition, America's willingness to pursue engagement with Iran, despite persistent obstacles, has enhanced its leverage. It is the Iranian regime, not the United States, that increasingly appears as more the intransigent party in the eyes of the world.

So far sanctions have reduced Iran's oil exports by as much as 40 percent. Iran's currency, the rial, has depreciated sharply, raising the price of everyday goods. Yes, Iran's economic woes have not resulted in the cessation of the nuclear program -- in fact, the regime has installed additional centrifuges in its heavily protected Fordo facility, near the holy city of Qom. But for Iran's leadership, the price of acquiring a nuclear weapons capability is steadily rising.

Public dissatisfaction with the Iranian regime is at an all-time high. Iran's rulers, including Supreme Leader Ayatollah Ali Khamenei, are still reeling from the 2009 uprising that followed the contested presidential election. In addition, political divisions within the regime highlighted by the 2009 uprising have intensified, apparently due to U.S. policies. Former President Ali Akbar Hashemi Rafsanjani has warned the regime not to ignore sanctions, and emphasized the U.S. ability to inflict still greater pressure on the Islamic Republic. Abdullah Nouri, a former government minister, prominent reformist, and potential presidential candidate, has said that sanctions are a "trap" Iran has fallen into and called for a national referendum on the nuclear program -- directly contradicting Khamenei's call for "national unity" on the issue. These divisions could serve as an important backdrop to the upcoming presidential election scheduled for June 2013.

The Islamic Republic has also lost influence in the Middle East since the Arab uprisings. Much of this is due to Iranian support for President Bashar al-Assad's brutal response to the Syrian uprising. However, U.S. support for democracy in the Middle East has also played a part.

The removal of Egyptian President Hosni Mubarak from power has led to a more independent and assertive foreign policy in Cairo. Not all Egyptian policies shaped by the newly empowered Muslim Brotherhood will suit U.S. interests in the region. But a more autonomous Egyptian foreign policy can serve as a better counterweight to Iranian influence in the Arab world than Mubarak's often lackluster opposition to Iranian ambitions. This was on prominent display during President Mohamed Morsi's Aug. 30 visit to Tehran for the Non-Aligned Movement summit -- the first by an Egyptian head of state since the establishment of the Islamic Republic. In his speech, Morsi explicitly denounced the Assad regime, embarrassing his Iranian hosts and punching a hole in their claims of Islamic unity.

Iran's "axis of resistance" against Israel is slowly crumbling, and not just in Damascus. The Palestinian group Hamas has distanced itself from Tehran, and Iran's major partner in the region, Hezbollah, finds itself increasingly isolated from the Arab world.

America's diplomatic arsenal has included promoting democracy in Iran. The Obama administration supported the establishment of the U.N. Special Rapporteur on human rights in Iran and has increasingly highlighted the regime's human rights abuses. In addition, the United States has helped Iranians beat government restrictions on the Internet by easing restrictions on technology exports to Iranian dissidents. Social media is a major tool for communication in Iran and could be used to organize and solidify future opposition to the Islamic Republic.

Granted, the Iranian regime has not made any major concessions on the nuclear program -- yet. But the regime's power and influence, and its ability to challenge U.S. interests in the region, have been deeply degraded by U.S. policies. Iran's continued progress on the nuclear program cannot make up for lost influence. And ultimately it is the regime itself that is the fundamental problem, and not merely the nuclear program.

Critics may portray the Obama administration as "soft" on Iran. But the Islamic Republic has not felt such intense pressure, and so many setbacks, since the early days of the revolution. Previous U.S. administrations were not able to create such a large coalition to pressure Iran. Indeed, Iran's political elite increasingly speak of a national crisis greater than any since the Iran-Iraq War, which raged from 1980 to 1988.

There is, however, one surefire way to reverse all this progress: An Israeli military attack against Iran would set U.S. diplomatic accomplishments back to square one. The international coalition against Iran could fall apart, many Iranians would rally around the flag, and Iran's isolation in the Arab could lessen.

The Iranian regime may indeed have fallen into a "trap," and the continuation of current U.S. policies could seal the escape routes. Obama's critics are wrong: The White House's efforts have made important strides in preventing the Islamic Republic from acquiring a nuclear weapon. Given the economic toll, the Iranian regime is less likely to weaponize its program, especially as it would further alienate it from the rest of the world. Meanwhile, the Islamic Republic is becoming weaker at home and abroad. Khamenei's regime may not be able to continue on its current path for much longer.


Democracy Lab

The Great Pharmaceuticals Scam

India has a problem with substandard drugs -- and American regulators are allowing them to be imported into the United States.

Eight years ago, I was emailed by a whistle-blower at the big Indian pharmaceutical company Ranbaxy who claimed that the company had falsified data on drugs destined to be purchased with U.S. tax dollars. Most of the problems were with HIV medication sold to Western donors for use in Africa. But the more I probed, the more problems I found.

I was obviously not alone in my concerns. In 2010, after several years of investigations, the U.S. Food and Drug Administration (FDA) restricted the sale of some 30 Ranbaxy pharmaceuticals in U.S. markets. This was embarrassing for all concerned because Ranbaxy had been granted the exclusive six-month generic license to produce Lipitor, Pfizer's blockbusting anti-cholesterol drug, when it came off patent last November.

Ranbaxy says it has cleaned up its act, and perhaps it has. But the case raises a broader question -- one likely to become increasingly troubling as emerging-market pharmaceutical companies that manufacture generics expand their market shares in both developed and developing countries: How can we know for certain?

The question is particularly apropos for India, which is becoming a global powerhouse in generic drugs and depends on their regulatory watchdog, the Indian Central Drugs Standard Control Organization (CDSCO), that has been labeled corrupt by India's own Parliament. So while India is home to a number of reliable pharmaceutical manufacturers, a regulator known for unsavory collusion with less reliable ones continues to cast doubts on the quality of Indian-made drugs.

Even in the United States, and despite FDA regulation, there is evidence that quality control in imported generics is a significant problem. Consider the experience of Dr. Harry Lever of the Cleveland Clinic, who (like all cardiologists) uses diuretics, including furosemide, to help prevent heart failure. Some of my patients, recalls Dr. Lever, "were taking the brand medication [Lasix], then under cost pressure from insurers; I switched them to a generic and they reacted very badly. Only when I switched them back did they recover."

Dr. Lever, and virtually every other practicing physician in America, used to assume that generic drugs were as reliable and effective as the brand-name versions. After all, before generics can be sold in the United States, manufacturers must prove to the FDA that their medication works the same as the original drug.

However, my own field research suggests that in emerging markets (including India and China), companies capable of making high-quality drugs do not always do so. In a recent peer-reviewed paper on antimalarials sold in Africa, I concluded that companies were selling lower-quality medications to markets with weaker regulatory structures. Importing nations like Ethiopia or Angola ended up with a higher percentage of substandard doses than richer markets like Brazil or Thailand, where regulators do check for quality.

But why should the problem affect the United States? After all, the FDA built its reputation for policing new-drug quality by rejecting the anti-nausea medicine thalidomide in the late 1950s. Thalidomide was later shown to have caused horrific birth defects across Europe, where it had been approved. The agency has always concentrated efforts in ensuring the safety of new drugs, and has largely succeeded.

But the FDA does very little surveillance of products already on the market. It is assumed that once a manufacturer has attained the required standard, it will be maintained. The FDA does monitor production plants, inspecting U.S.-based producers every two years. But FDA monitoring in India or China, the biggest emerging-market producers, is extremely limited. At best, the agency shows the flag once a decade. This is partly because FDA staff must volunteer to undertake inspections abroad; it is not a mandated part of the job. Traveling to India and China is tiring and stressful -- and, unlike in the United States, inspectors are not given unfettered access to production facilities so their inspection reports have to be more qualified. Moreover, if a plant manager is given several days' notice of an FDA visit, many problems can probably be covered up.

Note, too, that the FDA took several years to restrict sales of Ranbaxy's products and probably devotes too few resources in responding to complaints after drugs have been approved. It's not surprising that Dr. Lever's complaints have so far not led to the removal of any drug from the market.

Indian companies make some of the best, and undoubtedly cheapest, generic drugs in the world. But with over 100 hundred medium-to-large manufacturers, competition can be cutthroat. Even a small cost advantage can mean winning a large tender for government hospitals at home, or a $100 million-plus order overseas.

Earlier this summer, the Indian Parliament published a report concluding that CDSCO officials illegally colluded with domestic and foreign pharmaceutical firms to speed up the medicine approval process. In one chilling finding, the report found that the CDSCO approved at least 31 drugs that had never undergone adequate clinical trials. The report also cited several examples of bogus product letters recommending CDSCO approval. These letters were purportedly written by independent experts thousands of miles apart, yet were "word to word identical."

Such exposure may do some good, but it would be naive to think that the airing of this scandal will reduce corruption by much (or for long) in a culture that has always tolerated corruption -- and in an agency in which the opportunities for corruption are everywhere and the payoffs can be enormous.

The CDSCO's first priority should be removal of dangerous drugs from both the domestic and export markets. But its own "Report on Countrywide Survey for Spurious Drugs," published two years ago, denies the problem exists. It found only 11 fakes from a sample exceeding 24,000.

My research team's work over the past five years, sampling from 90 pharmacies in four Indian cities, found that around 6 percent of the drugs on the Indian market were of substandard quality. Some were outright fakes with no active ingredients, but most were legal products that had been manufactured poorly. My results echo the Indian government's own yearly assessments through the 1990s and 2000s, which found failure rates of 5 to 10 percent.

Yet if the CDSCO is to be believed, India's drug quality problems suddenly vanished in 2010. Vijay Karan, former chief of police in Delhi who made combating dangerous drugs a priority, explains the discrepancy: Pharmacists had apparently been warned in advance, so they knew to offer only the best when the inspectors arrived.

But, as noted above, India is not alone in lacking effective oversight. Most governments, including Washington, focus on monitoring a drug at the approval stage rather than systematically assessing quality coming off the production line. Not surprisingly then, manufacturers put their resources into passing muster before production begins.

Occasionally, administering substandard drugs to very ill patients leads to fatalities. A larger problem, though, is that low-potency antibiotics and other anti-infective drugs don't heal infectious diseases -- but do drive the offending microbes to adapt. That's one reason India faces a large and growing problem with antibiotic resistance (notably to tuberculosis medicines), forcing health officials to accelerate use of more expensive alternates that should be husbanded. Sometimes doctors have to acknowledge that there are no treatments left. Patients often remain quarantined until they die.

Emerging markets -- in particular, India and China -- have the potential to produce most of the generic drugs in the world at the least cost, leaving rich countries to specialize in inventing new ones. It would thus be in the collective interests of the national industries (and their governments) to set high standards and to enforce them.

But corruption has a way of triggering races to the bottom, in which the failure to control quality undermines the reputation of all and reduces the incentives of high-standard producers to maintain quality. However quality-control issues play out among regulators and politicians in emerging markets, it is increasing obvious that, with 40 percent of generics used by Americans being produced elsewhere, the FDA can no longer afford to leave the job of quality control to the exporting countries.

Voluntary foreign-inspection trips by FDA staff will have to change. When staff join the Foreign Service at the State Department, they know that they will have to spend some time abroad, often on two-year rotations. The same should be expected of those who work for the FDA.

Photo by AFP/Stringer/Getty Images