Thursday, May 05, 2011

The Forest Labs Mugging

It didn't get a lot of coverage, but HHS recently intimidated Forest Labs by refusing to do any more government business with the firm so long as CEO Howard Solomon remains in that position.

According to a Wall Street Journal editorial, neither the firm or the CEO did anything improper after a plea agreement was reached in September. According to the Journal, Forest Labs, as many firms do, settled the charges, rather than litigate, in order to save money. However, having that in her pocket, HHS Secretary Kathleen Sebelius then engaged in coercion.

The editorial notes that, at a minimum, Sebelius' action will drive up costs for everyone, as firms learn to litigate, rather than tacitly admit guilt, only to have that used against them in ways never intended nor imagined.

This is yet another example of how this administration continues to behave in ways which retard private investment and create more uncertainty than is warranted.

All the lose monetary policy in the world- and surely we've seen way too much already- won't overcome this sort of federal thuggery.

As the Journal's editorial noted, it's a federal version of Eliot Spitzer's unwarranted and, ultimately, unproven crusade against AIG's former CEO, Hank Greenberg. Ironically, many have opined that Spitzer's tantrum which led to Greenberg's coerced resignation was, in large part, responsible for AIG's later federal bailout, because Greenberg was absent to rein in excessive risk taking leading up to the financial sector crisis.

In this case, Sebelius continues to try to muzzle health care sector dissent from ObamaCare by any means.

The of unintended consequences remains unrepealed......

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