Hard on Drug Execs, Soft on Dictators

Hard on Drug Execs, Soft on Dictators
By Robert M. Goldberg on 5.3.11 @ 6:07AM

I was in Israel for two weeks hearing nothing but how the Obama administration is tougher (in action and language) on Israel than it has been on the Muslim Brotherhood (the White House seder included a Tahrir Square salad) and Syria's dictator Bashir al-Assad.

Now it turns out that Team O is tougher on drug company CEOs than it is on brutal dictators and a movement whose goal is wiping out Israel. The administration is applying a little used government approach to knee-capping executives it doesn't like by threatening that HHS won't allow Forest Laboratories to sell medications to Medicare, Medicaid, and other government health programs (which means every health plan under Obamacare) unless it tosses the company's CEO, Howard Solomon. According to news accounts, the action is being taken because government lawyers claim that just fining the company billions isn't stopping illegal behavior. But neither Mr. Solomon nor Forest has been found guilty of any wrongdoing. Here's the WSJ account:

The Health and Human Services department startled drug makers last year when the agency said it would start invoking a little-used administrative policy under the Social Security Act against pharmaceutical executives. This policy allows officials to bar corporate leaders from health-industry companies doing business with the government, if a drug company is guilty of criminal misconduct. The agency said a chief executive or other leader can be banned even if he or she had no knowledge of a company's criminal actions. Retaining a banned executive can trigger a company's exclusion from government business.

Can you imagine the administration using this tactic against health IT firms, unions, the New Black Panthers, ACORN, or investment banks? For different reasons for each, the answer is "No."

Health IT firms are the favorite sons of HHS, the New Black Panthers, of municipal officials who milk pension funds and funnel money to their pet projects, unions are -- well enough said -- and investment banks would never be touched because that would trigger panic in the bond markets upon which the administration relies to finance the mounting debt.

So picking on the CEO of a company that has already paid out $300 million in fines to avoid a government lawsuit regarding marketing practices makes political sense, even if Pharma supported Obamacare. My guess is that it will lead companies to be much less likely to make products available to government programs. Or maybe the administration will force sales at specific prices in exchange for a "promise" not to rough up CEOs. That is as close to government extortion as one can get. This, from an administration that promised to be more business friendly.

Meanwhile the threat against Forest and its CEO is more draconian than actions the Obama administration is taking against Assad. The dictator who has slaughtered his people, aided Iran, built a uranium-enrichment facility, staged the Hezbollah takeover of Lebanon, and whose country is soon to be part of the UN Human Rights Council has received a stern warning from the president but nothing more.

As for the administration's toothless response to Assad (well captured by the brilliant Barry Rubin), note how an administration official in quoted in the New York Times on these points:

Administration officials say that while they lack many effective economic tools, they believe Mr. Assad is sensitive to portrayals of his regime as brutal and backward. "He sees himself as a Westernized leader," one senior administration official said, "and we think he'll react if he believes he is being lumped in with brutal dictators."

Is this for real? How cannot one be sarcastic and hypercritical when leading U.S. officials think that a ruthless dictator -- in fact, the most cleverly ruthless dictator in the Arabic-speaking world -- really cares if people in the West say mean things about him."

The administration only picks on people and enterprises it can bully for show, without thinking through the consequences. Meanwhile it avoids taking on real evil or illegal activity when it suits the political goal of the moment and fits those naive narratives shaping the administration's actions. Forest and its CEO paid their debt in full. The effort to can Solomon is gangster government that serves a short-term political purpose while the administration's inaction towards Syria emboldens a chief executive of whom Rubin writes:

It would be impossible to find someone more eager to be a brutal dictator and who does not see himself as a Westernized leader. If this were the "Godfather," Bashar would be Michael, not Fredo.

If the Obama Administration doesn't understand this, it understands nothing. Yes, that's the point. It understands nothing.