Trump nominee could be ensnared in new conflict of interest

Mehmet Oz, president Donald Trump's nominee to Centers for Medicare and Medicaid Services, co-founded a health benefits company last year that could present a conflict of interest.

The Washington Post reports that the physician and former TV host co-founded ZorroRX, a program designed to connect patients to federal 340B Drug Pricing Program, with his son, Oliver Oz, according to source code and a blog post on the company’s website, and his role as CMS head would directly influence profits for companies like that.

“Because of his son’s affiliation with this entity, you wouldn’t want hospitals to be relying on the name of Mehmet Oz or his son to think somehow they wouldn’t be held accountable by Oz,” said Virginia Canter, chief counsel for the watchdog group State Democracy Defenders Fund. “I’m concerned about the use of public office for private gain.”

Oz did not disclose his involvement with ZorroRX in financial forms submitted to the Office of Government Ethics, and while "co-founder" isn't a required title for disclosure under the law, ethics experts say it violated the spirit of the law obligating nominees to reveal anything that might reasonably affect their judgment.

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Oz “should not touch anything having to do with this, because no one would believe he would be impartial,” said Kathleen Clark, a law professor at the Washington University in St. Louis School of Law.

Health care and government watchdogs have been warning for years about alleged abuse of the 340B program, saying that hospitals are exploiting the federal government program to boost their profits but not investing those profits into poor communities, as the program was intended to do when it was created in the 1990s.

“This type of cottage industry growing up around the 340B program wasn’t even contemplated when the program came into existence almost over three decades ago,” said Ashley Flint, a senior analyst focused on health pricing at Avalere.

It's not clear how Oz would handle the 340B program if confirmed, and the White House and a spokesman for the nominee declined to answer questions about his involvement with ZorroRX.

“The Office of Government Ethics has conducted a full review of Dr. Oz’s finances as part of the regular vetting process to resolve any conflicts of interest, and OGE has transmitted to the Senate a letter indicating that any potential conflicts have been resolved,” said Oz spokesman Christopher Krepich.