The Daily Dish

About That Groundhog

Groundhog Day – Eakinomics’ favorite holiday, for the record – seems like the right day to discuss a baffling Special Advisory Bulletin (SAB) from the Office of Inspector General at the Department of Health and Human Services (HHS). After all, pharmaceuticals is the Groundhog Day of federal policy. And, as the saying goes, if HHS does something ridiculous, there will be six more weeks of winter. (Eakinomics’ HHS Tracker indicates there is currently a backlog of 45,673,326 weeks of winter.)

As it turns out, the SAB is quite dense and requires an actual expert to read and explain it. For that, see Michael Baker’s excellent piece. This is the haven’t-really-had-enough-coffee version. The topic of the SAB is how a pharmaceutical manufacturer can avoid getting caught by the federal anti-kickback statute when making a direct-to-consumer (DTC) drug sale. (The poster child of a DTC platform is the TrumpRX direct-sales platform.) About this, Eakinomics wants to make three main points.

Point 1: Are you friggin’ kidding me? This tells one just how lost in the wilderness is federal drug policy. Anywhere else in the economy, if you deliver a product and take payment in return, it is called commerce. In HHS it is called a potential “kickback” and the presumed guilty must endeavor to prove their innocence. Six more weeks of winter.

Point 2: HHS doesn’t recognize individuals as customers or even potentially self-reliant. The tiny rational part of the SAB is the desire to avoid running up the taxpayers’ tab by having individuals start using a drug on a DTC site, and then switching to a federal health program to pick up the tab (what they call seeding). But those are both decisions that individuals make. This is a SAB for manufacturers. Only the HHS (Home for Health Servitude) would make it the manufacturers’ responsibility to police the potential customer. 12 more weeks of winter.

Point 3: This will, shockingly, likely do more damage than good. The bulletin, by the way, is not legal guidance. It’s just a friendly word-to-the-wise from HHS to the drug industry. (“I’m from the government and I’m here to help.”) So how can you steer clear of trouble? Avoid selling drugs to people who will be using drugs in the future. That is, avoid at all cost people who need drugs, such as those with chronic conditions. Oh, and by the way, the added bonus will be that likely the entire bill will end up on the taxpayer tab or the individual will get no needed drugs. Spiffy. Way to go HHS marketing assistance. 18 more weeks of winter.

Bundle up. HHS is just getting started.

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Raising the tariff on South Korea from 15 to 25 percent would increase annualized tariff costs by an estimated $6 billion.

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