Capital Conversations: Eric Hargan, Deputy Secretary of the Department of Health and Human Services (HHS)

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Join us as the U.S. Department of Health and Human Services Deputy Secretary Eric Hargan discusses the role of his agency. Likely topics include COVID-19, as well as the agency's regulatory reform efforts.


Eric Hargan, Deputy Secretary of the Department of Health and Human Services (HHS)


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Event Transcript

Operator:  Welcome to The Federalist Society's Practice Group Podcast. The following podcast was hosted by The Federalist Society's Practice Groups, and was recorded on April 1, 2020, during a live teleforum conference call held exclusively for Federalist Society members.     


Dean Reuter:  Welcome to The Federalist Society's Practice Group teleforum conference call as today we discuss the Department of Health and Human Services. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society.


      As always, please note that all expressions of opinion are those of the expert on today's call.


      Today we’re very pleased to welcome Eric D. Hargan. He’s the Deputy Secretary of the U.S. Department of Health and Human Services. He’s going to speak to us initially with some opening remarks, then I might have a question or two. But as always, we’ll leave a little bit of time for questions from the audience so please be thinking of those for when we get to that portion of the program. With that, Deputy Secretary Hargan, the floor is yours.


Hon. Eric D. Hargan:  Great. Thank you. And thank you so much to The Federalist Society for having me join you all today. It’s a pleasure to address all of you on behalf of HHS and Secretary Azar, knowing how many friends and colleagues he and I have among those of you who engage with FedSoc. I’m happy to discuss some of the other legal and policy topics in the call. But as noted, I’m going to begin with the prospective on how HHS and the Trump administration have been creatively using our legal authorities to confront the COVID-19 pandemic. In this, our goal above all is and has been to give our frontline healthcare providers, the state and local governments, and private industry the flexibility and the freedom to contribute to what we’re calling an all-of-America or whole-of-America response.


      I’ll begin by noting just how early and aggressive HHS’s response has been at Secretary Azar’s direction. On January 17th, which is two weeks after China had notified WHO about the virus and three days after WHO had noted that China had evidence that there was no human-to-human transmission, no evidence of that, with just 45 cases in China, the CDC and Customs and Border Protection began enhanced screening of travelers from Wuhan at the U.S. airports that receive significant numbers of travelers from there. Four days later, January 21st, before any cases appeared in the U.S., CDC activated its emergency operations center. And then on January 31st, with just seven cases of the virus in the U.S., Secretary Azar declared a nationwide public health emergency under Section 319 of the Public Health Service Act.


      And as many of you know, that declaration by itself, and alongside the National Emergency Declaration the President signed, under the National Emergencies Act on March 13th, gives the Secretary a number of important authorities. We’re going to mention three ways in which those authorities have supported our response so far: first, to provide flexibility to our healthcare system. Second, to support innovation, which we need. And third, to ensure that supplies are getting to our frontline healthcare providers.


      Now, one important step we took to free up healthcare capacity, was a significant expansion of Medicare telehealth benefits. These changes allow Medicare to pay for clinicians to provide telehealth services to beneficiaries residing across the entire country rather than just in shortened areas, which is traditionally the case in Medicare with regard to telehealth. We’ve also worked to open up telehealth options in ways that can benefit all Americans. So not just those that are in Medicare.


      On the same day we announced the Medicare telehealth expansion, our Office for Civil Rights announced it would exercise enforcement discretion with respect to potential HIPPA violations involving the good faith use of every day technologies, such as FaceTime, Skype, and so on for telehealth during the emergency, which means easier access to telehealth for all patients and all providers regardless of how your insured.


      Our Office for Civil Rights by some many of you know, Roger Severino, and I want to recognize he’s also been active in laying out OCR’s authorities to protect Americans from experienced discrimination and access to care during the pandemic. And this is whether because of disability age, limited English, need for religious accommodations as well.


      Second, our Office of Inspector General announced flexibility for healthcare providers to reduce or wave cost-share for telehealth visits payed by federal healthcare programs, which many of you know could otherwise be potentially viewed as inducements under our antifraud statutes, particularly the Anti-Kickback Statute.


      We’ve also been granting Medicaid waivers to states allowing them to waive prior authorization requirements, streamline provider enrollment processes, and allow care in alternative settings in the event patients must be evacuated to an unlicensed facility. I think as of yesterday, 40 states had received these waivers.


      On top of that, on Monday, CMS unveiled dramatic, new, regulatory reforms. And these are oriented towards providing hospitals with options for emergency flexibility to respond to the pandemic. Hospitals are going to temporarily be able to make use of dorms, hotels, or gyms to expand their capacity, allowing them to separate patients infected with the virus from those who have other medical issues. That’s the concept called “Hospitals without Walls.” This work will complement what FEMA’s doing in concert with HHS to deploy mobile and temporary hospitals to hot spots.


      We’re also going to make sure that hospitals can provide maximum support to their workers by offering services like childcare or meals, which isn’t always possible under our existing regulations.          


      Finally, on capacity, we’ve been encouraging states to go as far as possible in providing flexibility. Last week, Secretary Azar sent a letter to governors requesting that they allow healthcare professionals licensed in another state to practice in their state, whether in person or by telemedicine. And to look at breaking down a range of other state-level barriers that may be impeding care.


      The second topic I want to mention are ways that we are using emergency authorities to spur innovation. On February 4th, the Secretary issued a public health emergency determination under Section 564 of the Federal Food, Drug, and Cosmetic Act. That determination allows manufacturers to begin applying for FDA emergency-use authorization for unapproved drugs, biological products, or devices that can assist in responding to the emergency.


      That first EUA, emergency-use authorization, was granted the same day for CDC’s diagnostic test. Since then, FDA has been granting EUAs at a rapid clip, usually within 24 hours, including, as we’ve seen for point-of-care diagnostics that can now deliver results in minutes rather than days.


      To provide further support for innovation, on March 10th retroactive to February 4th, Secretary Azar signed a declaration under the PREP Act to provide liability protections for products used to combat the pandemic: under emergencies, authorizations such as vaccines or therapeutics. And I’ll mention a few areas of work on vaccines and therapeutics. We’re supporting work to expand the understanding of some potential off-label options that currently have antidotal, sometimes more than antidotal evidence of promise including chloroquine and hydroxychloroquine. And we secured large donations of those drugs for U.S. patients over the past weekend.


      We also have an investigational anti-viral, remdesivir, being delivered under compassionate use and in an NIH clinical trial in Nebraska. HHS, through the Biomedical Advanced Research and Development Authority, or BARDA, is also supporting the Phase II/III clinical trial for Kevzara, which is a rheumatoid arthritis drug.


      On top of that, NIH and FDA are now working with scientists, physicians, and patients to evaluate other potential products, such as human hyperimmune globulin and potentially convalescent plasma. We’ve also seen, obviously, NIH proceed incredibly rapidly with work on a vaccine candidate.


      On January 10th, literally the evening that China shared the virus’s genetic sequence, and 12 days before we even had a case in the U.S, NIH scientists began work on a vaccine. On January 14th, still before we had a case in the U.S., NIH shared the vaccine sequence with the manufacturer. And on March 16th, the first human patient received the vaccine in an NIH supported clinical trial in Washington State, which is a record-breaking timeframe.


      Finally, I’m going to mention the efforts to help American healthcare providers get the supplies they need. Our healthcare supply chains are, as we all know, private-sector driven. The main federal role is to support that work, coordinate it if necessary, and work through the federal contracting process—which is never a straightforward matter—to drive manufacturing demand as we can. Those efforts have been going on for months now.


      In late January, HHS’s Office of the Assistant Secretary for Preparedness and Response, ASPR, which runs and makes purchases for the strategic national stockpile, began conversations with manufacturers of N-95 masks and other personal protective equipment, as we all know now, PPE, to alert them to increase production. Manufacturers began expanding production, reopening facilities and running factories around the clock. In late January, HHS began drafting a supplemental funding bill necessary to support large purchases of N-95 masks and other PPE, eventually allowing a March 4th notice of procurement to purchase 500 million N-95s. These orders are now being executed for around 600 million masks. By early March, we had seen manufacturing of N-95s on U.S. soil rise from a rate of approximately 250 million masks a year to 640 million masks a year. We’re also working to ensure providers have the regulatory flexibility they need to make best use of these supplies.


      On March 2nd, FDA issued an EUA that allows millions of general-use N-95 masks, such as those for construction, be used in healthcare settings. Now hospitals can now purchase those respirators directly to, thanks to legislation the President signed to provide manufacturers with liability protection. Over this past weekend, we also authorized new technology that can sterilize these masks for reuse up to 20 times.


      Now with FEMA working to coordinate the entire federal response, they have stood up an entity to help oversee the supply chain efforts and HHS plays a key role in that as you can imagine.


      Finally, as many of you know, the President has signed an executive order delegating authority under the Defense Production Act to Secretary Azar to order, if necessary, the production and distribution of healthcare supplies as they are most needed. More specifically, the President signed an EO last week directing us to take our first step with that authority in conjunction with DOJ, laying out how we would use it to go after price gouging and hording if necessary. On top of that, the President signed a memorandum directing HHS to use the Defense Production Act to give HHS authority to require General Motors to support the production of ventilators as well.


      So we at HHS have been working very hard to execute on the President’s vison for this pandemic response. It’s a whole-of-government, whole-of-America approach. Such a response only comes at the direction of, to quote Federalist Papers, “a vigorous executive.” A vigorous execution requires quick and creative legal thinking, so I want to encourage any of you who work in areas like healthcare law to come to us with ideas you have about flexibilities we can offer. I said this same thing to another sort of legal organization last week. We do pay attention to the issues that we are brought, for those of you who have creative ideas for things that we should be doing in the area of healthcare law particularly.


      Well, with that, I’m glad to now engage, have a conversation about this, answer questions about this or other topics.


Dean Reuter:  Very good. Thank you so much, Deputy Secretary. Let me get -- maybe I have a couple questions I can get to and then we’ll open the floor to questions from the audience. You mentioned some reg. reform efforts. We’ve had administration folks talking before about reg. reform efforts within their agencies, which is a major priority of this administration. I’m wondering while we have you on the phone, if you could give us an update on your agency’s efforts concerning regulatory reform?


Hon. Eric D. Hargan:  Sure. So what we’ve oriented around at HHS is developing better, cheaper, more accessible healthcare choices. So the general idea is to transform the healthcare system from one that pays for procedures and sickness to paying for outcomes and better health, which sounds kind of obvious, but it’s not as obvious how to get from here to there as you might think. Part of that effort is my “Regulatory Sprint to Coordinated Care,” which is examining four sets of regulations in healthcare related to the Stark Law, or the physician anti[self]-referral statute; the Anti-Kickback Statute, HIPPA, and a privacy statute called 42 CFR Part 2.


      Now, 42 CFR Part 2 actually in the Cares Act that was passed at the end of law week, it was significantly aligned with HIPPA, which had been one of the outstanding issues. I just got a briefing from our Assistant Secretary, McCance-Katz, on the issue about how much we further need to align Part 2. We’ve put out a significant effort; been working with Congress on it. And then they’ve now come in with legislation that actually goes where we were going on the regulatory point of view, which is interesting seeing that develop.


      With regard to the “Regulatory Sprint,” we deliberately chose each of those words. It’s regulatory because it’s regulatory, not legislative. It is a sprint, and I use that word advisedly given that I’m working in the government, but we want to gather the necessary information and move to rulemaking as soon as possible. And each of these is about coordination of care. It’s understanding how regulations are impeding coordination among providers so that they can deliver better, lower-cost patient care while remaining consistent, making sure those regulations remain consistent with the laws underlying them and their intents.


      Two of the regulations, Stark and Anti-Kickback Statute, deal with partnerships and affiliations. Those are how do you structure relationships between different kinds of providers, between hospitals and doctors or nursing homes and nurses or what have you. We want to enable providers to be able to affiliate and create value without potential criminal violations and huge fines. We ask people to produce value and then we threaten them with time in jail if they work in those areas, in some ways.


      The other two laws, HIPPA, and 42 CFR, are about information sharing, which is also crucial to coordination. There is also -- some of the other things that we’ve done here that we think are sort of stepping forward creatively is that I had all of our regulations at HHS put into an artificial intelligence. And we then kind of trained the AI to look for issues with our regulations. So all of our regulations, whether it’s Medicare, Medicaid, FDA, anything, was fed into it. And then we looked for things that were wrong with the statutes, many of which hadn’t been reformed in decades. And we found that there were all kinds of things in it that were leftover that no one had even noticed among the agencies. Things like mentions of telegraph and telegrams to deliver information to the Department or posting things at the general post office, or triplicate and quadruplicate carbon copies being delivered to the agencies.


      We’re trying to scrub out those requirements that are technically still in place. But the AI was good at taking hundreds of thousands of pages of regulation and being able to look through it quickly. It would’ve taken lawyers—no offense to the current audience—it would’ve taken lawyers years to get to reading those regulations and trying to match them up against each other.


      We also had orphan regulations that had never actually been put in place that no one had ever been assigned an agency for. And old regulations that are not enforced anymore in addition to regular things like typos and broken cross references or references to laws that don’t even exist anymore. So that’s all being scrubbed out of there.


      And I will say one of the things that’s gratified me most is the fact that HHS, two years in a row, has been found to have lowered regulatory burden the most of any cabinet department in the federal government. So two years in a row we have won, and that is very gratifying to me as a regulatory reform enthusiast, that we have been able to stand forward on deregulation at Health and Human Services more than any place else in the federal government. I don't know if we’ll win this year, but we have won the two full years that the Trump administration has been in place, which is, as I say, very gratifying to me in my role.


Dean Reuter:  That’s terrific. I have one other question I want to get to. I’m curious -- before I ask my final question, who’s the judge of which agency is winning the prize for having the most success in terms of regulatory reform? And I have to make one observation: the fact that it would take lawyers years to read the regulations that the artificial intelligence scanned through sort of speaks to the regulatory burden in the first place. If it would take lawyers years to read through, the regulated community must struggle to keep up.


Hon. Eric D. Hargan:  Oh yeah. Well, I would say who judges it? We actually get numbers on these things from OMB. So the OMB does it. Now does OMB tout who wins? They do not, but you know American Action Forum actually does this work and makes announcements. So I pay close attention to Douglas Holtz-Eakin and his crew over at AAF who watch our regulatory system like hawks and try to keep us on our toes about regulation and over-regulation.


Dean Reuter:  Very interesting. Well, it’s good to see that sort of competition actually, in government agencies -- between government agencies.


Hon. Eric D. Hargan:  I have said that exact thing. The fact that, like, last year Labor was winning the regulatory reform competition, and we actually had a regulation published on the last day of the fiscal year. On September 30th that got approved and took us over the line, which I think very much agitated DOL. But those are the breaks.


Dean Reuter:  Nice. I have read a little bit about your new interoperability rules, which I understand give people the ability to access and control and share their own medical records, which seems particularly relevant in this era. Maybe you can talk about those a little bit more if you would.


Hon. Eric D. Hargan:  Yeah. So on March 9th, HHS announced that we were putting these new rules in place. There’re two of our agencies announced the rules, one of which, Office of the National Coordinator of Health IT, sent out its interoperability rule. That deals with health IT programmers, more or less, and health information networks, health information exchanges. It sets out the parameters of whether -- some technical standards -- basically setting out technical standards so that programmers will know how to program in the new interoperable world. And then what’s called information blocking, which say that these fines that are set out by the Cures Act four years ago, basically say it’s a million dollar fine per incidence of holding information back from patients looking for it.      


      The essence of the law, or the essence of the rules, are that Americans are given their information from any source; that means any hospital, physician’s office, clinic, anything. They get that information in an app on their smart phone for free. So basically you can pull all of your health records and health claims data no matter what provider they're from into a single app for you and your doctor to use. So the companion CMS rule to the rule from the Office of the National Coordinator applies certain requirements to plans, meaning insurers. So insurance companies.


      And we’re going to wait for the Inspector General’s Office to formulate other, sort of, issues dealing with enforcement of these rules. But we’ve sort of now launched a new era, we think, in terms of competition in new business models to provide novel services and new choices while addressing patient-privacy concerns. But the ultimate goal is that everyone has access to all of their own healthcare information from whichever provider in a single place on their phone. That’s the ultimate goal that was promulgated by Congress and the President three plus years ago. And now we’re moving into making it a reality.


Dean Reuter:  Well, that does seem to be a sort of fundamental requirement in this day and age, especially if you're caught away from your home and you're in need of healthcare. So congratulations on that.


Hon. Eric D. Hargan:  Yeah and we’re looking -- in this case, we’re not trying to promulgate. One of the things that was always a temptation in government is to have a government solution for these things. But in this case, we are just providing standards. And we are looking to the private sector to promulgate these apps and these new ways of orienting the healthcare information system, to provide these to the patients directly. So we’re sort of adopting that role as just facilitating standards and seeing those standards and letting the private market act to provide these to patients.


Dean Reuter:  We’ve got one question pending. Let’s move to our first caller now.


Megan Brown:  Hi there. Thanks so much. This is Megan Brown at Wiley Rein. I’m not a healthcare specialist. I have some folks at my firm who are helping tech companies with some of these regulatory issues that you’ve been dealing with. As you put out the call for folks to identify issues or bring problems to you that require, or would suggest, beneficial regulatory relaxations, are there particular parts of the sector or adjacent sectors that you’ve been wanting to hear from but surprised you haven’t been? I mean, are you getting enough uptake across the private sector to come in and talk with you about these issues? Or is there something more that you're looking for from the private sector to help you with these issues?


Hon. Eric D. Hargan:  Well, we have heard a great deal of outpouring in, say, the telehealth world. There has been a lot of ferment in suggestions from outside in those areas. Some areas we’ve gotten a good amount of uptake, which is in rural health. So wherever people were orienting themselves, they are bringing these forward. In some ways, I could’ve answered that question probably a month to two months ago with some degree of specificity. But in the middle of this coronavirus outbreak, we are really looking to the private sector and to the private bar to bring to us questions that they have.


      I would say some of the areas are HIPPA. While we’re working very quickly on a lot of HIPPA issues, I have been sort of surprised if there aren’t even more suggestions for how information is flowing in this area and whether people are concerned about OCR or HHS entering into an area. We have gotten a lot of suggestions, and OCR is working on them. But I would say if I had to say one area where I would’ve thought there would be more in this space, that would probably be one area.


Dean Reuter:  How would people reach out? What is the mechanism for making suggestions, or raising concerns, or bringing something to the attention of the agency? It’s a mammoth, mammoth agency.


Hon. Eric D. Hargan:  Yeah, well, you can always send a letter. Sending letters, we do read the letters. Believe it or not, we do go through and read the letters. You can send us a letter. You can send me a letter. You can send the Secretary a letter. They get opened and we read them or the staff reads them to vet through these things.


      For particular issues regarding products that people want to bring to our attention, FEMA has a “how you can help” or “how to help” website set up for a lot of those kinds of things, when people bring forward -- you know, they come and they say, “We have a new product. We have a new way of doing vaccines. We have a new device, a new diagnostic test, or a therapeutic or something.” That goes through a regular process that’s triaged in FEMA there. So that’s one way of getting those kinds of things in.


      But we literally do get letters and emails suggesting legal issues, sending us memos, and those get put in and sorted out to figure out exactly what we should be doing and orienting ourselves on. And while we have been sending out a lot of regulatory reform in short order, at some point, God willing, this crisis will start on the downslope. And at that point, we’re going to be looking to see exactly what lessons learned are from this crisis, what we think should become a permanent part of the regulatory order in healthcare, and what is more likely to have been an emergency-only change that happened to our system. So that’s going to be something that we’re going to have to have a thoughtful conversation about.


      In some cases, this crisis has really brought to the fore needful reforms that probably could or should have been undertaken anyway. An example would be the fact that one of the four elements of the Regulatory Sprint, which had to do with 42 CFR Part 2, ended up last Friday being mostly obviated. Now that was partially when you do a regulatory reform and then you see the legislators kind of took your regulatory reform and put it in legislation, you go, well, was that a good idea or a bad idea? It’s a good idea. Basically, we stood out on the issue. Legislators picked up on it and, essentially, put our reform into law. So that was great. That reform has become, now, a permanent -- will become a permanent part of how we do business.


      I think when you see some of the things that are happening on the regulatory and reimbursement front in our Department, we’re going to have lots of conversation with this among people who have interest in these things—healthcare lawyers, regulatory lawyers—about where we need to go. That these things were called into being; these are permanent. These, probably not so much.  


Dean Reuter:  We have time for a final question. While we wait to see if anybody rings in, Deputy Secretary, you mentioned the system, the artificial intelligence system you used to scrub some regulations. I’m intrigued by that. Are you aware -- I mean, how did you guys come upon that, number one, and are you aware that any other agencies are doing that? It seems to me like a very useful exercise and not very necessarily expensive.


Hon. Eric D. Hargan:  Right. It turns out that we had a consultant -- this was in late 2017. We were talking about issues of regulatory reform and how we could get a survey. So we had done already, in response to the President’s call for regulatory reform -- you know, he has been very adamant on this issue from the beginning. So we had first kind of asked all of the agencies to huddle up and figure out what they had and start looking at areas that they thought they could reform. And we started up a regulatory reform task force, and people were bringing thing in weekly, right? So we were evaluating them, “Yes, we can take this out. No, we can’t. What’s the cost? What’s the benefit?” and so on.


      While we were in the middle of that—and we had been doing some, you know, as you do in the government, some sort of slow and careful look at these things—one of our consultants came in with that interesting idea. What if, instead of having these read end to end by the agencies and them bringing these things forward—which they were doing and they were doing a very good job of it—what if we just had an AI do it? Because this is going to take forever, right? We’re going to be in this for four years of looking through shelves and shelves of regulations. In the meantime, the regulations change, so maybe we should be doing that as well.


      And sure enough, they put it in. It was not expensive. We’ve already passed this system on to other agencies here who are doing the exact same thing. So, yes, the answer is yes, particularly for those agencies that have a pretty high count of regulatory pages. They were obviously the ones who were most interested in it to start off with. And those who had -- usually my level, which is Deputy Secretary, so the number twos often take a lot of the management roles are often interested in these kinds of initiatives. So that’s been a great thing.


      In fact, the consultant who brought it to our attention has now, I think, packaged that success with us into something that they are offering any number of potential clients. So you can expect to see that, just a more -- I would say a more informed approach and a quicker approach to regulatory reform than we’ve been able to achieve so far, as we the first ones to stand out on this. But I know that there’s at least two other departments that are already undertaking this process.


Dean Reuter:  Very interesting. Well, Deputy Secretary, you’ve been very generous with your time. We don’t have any questions pending. Let me, though, turn to you and see if you have a final thought before we adjourn.


Hon. Eric D. Hargan:  Well, I would just say for those of you who are looking at these issues, I’m obviously, and you may not know this, I'm kind of a regulatory geek. I was Deputy General Counsel for Regulations at HHS under Bush. I was a professor of administrative law at Loyola. And a regulatory lawyer at my old law firm. And I’m Chief Regulatory Officer here at HHS. Those of you who are interested in these things, this is the time to bring creative ideas. Not just only related to COVID-19 and these issues, but regulatory reform overall. It’s an important issues. There’s an enormous amount of backing for it. And as noted, there’s even sort of a low-level informal competition among the departments to bring forward regulatory reform ideas. And we’re having a lot of success in this space. It’s the first time that you’ve had actual rollback of regulations by any administration, where you see numbers actually going down rather than just slowing.


      That was the old paradigm: one administration supercharges regulation, the next one slows it down. Then supercharge, then slow. We’re actually rolling it back. So those of you who have interesting, creative solutions, as I say not just regard to public health or COVID-19 but other things under the sun, bring them forward. At some point, God willing, this crisis will go down and we will be resuming normal order. And that means, again, a high desire for creative ideas on regulatory reform. Things that we can do to unlimber the economy, unlimber, in HHS’s case, the healthcare sector. So you could do everyone a favor, if you have good ideas, please bring them to us.


Dean Reuter:  And bring them the old-fashioned way. As we learned write the Deputy Secretary a letter. Deputy Secretary Hargan, you’ve been very generous with your time, as I mentioned. Thank you so much. This is a great, terrific forum and a great catchup for your agency. Appreciate hearing from you. So thank you so much for joining us.


Hon. Eric D. Hargan:  Thanks for the outreach. I’m glad to do it. I’m a long-time member of The Federalist Society. I’m glad to do it.


Dean Reuter:  Proud to have you. And, again, to our audience, thank you for joining us as well and for your questions. A reminder to our audience to check your emails and check in with The Federalist Society’s website for future teleforum conference calls. But until that next call, we are adjourned. Thank you very much, everyone.


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