Update: On March 6, 2020, the President signed this bill into law.
Developments are moving rapidly in Washington, D.C., as week-long negotiations on how the country should fund efforts to control coronavirus have reached a pivotal milestone. The negotiations began the final week of February when the Trump administration requested $2.5 billion from Congress. That request was quickly met with frustration on Capitol Hill and a competing $8.5 billion proposal from Senate Minority Leader Chuck Schumer. Since then, the death toll in the United States has risen to 11, and 165 cases have been confirmed in 16 states1. On the afternoon of March 4, the House of Representatives passed a newly introduced, bipartisan emergency funding bill to support the United States’ fight against the coronavirus, HR 6074. The Senate followed quickly with a vote clearing the package with overwhelming support on March 5. If signed by the President, the spending package could benefit organizations in many industries.
Funding spans multiple federal agencies — including the Department of Health and Human Services, Department of State and the U.S. Agency for International Development — and supports new authorities to expand access to treatment and care. From vaccine development to small business impacts, the package is a far-reaching and robust attempt to confront the spreading disease.
The total funding package provides $7.8 billion in discretionary funding, including grants to states, purchasing and stockpiling power for the federal government, funds to spur vaccine development and funding to respond to coronavirus abroad. The additional $500 million is an estimated cost of mandatory funds necessary to fund the bill’s new authority to allow certain Medicare patients to use telehealth technologies to access care.
$2.2 billion will go to the Centers for Disease Control and Prevention (CDC) to support public health agencies nationwide. $950 million of those funds will be sent out the door to state and local governments, with $475 million being disbursed within the first 30 days of enactment. Each state should receive a minimum of $4 million to build preparedness capacity locally. These funds are intended to increase public health laboratory capacity, epidemiological investigation, surveillance, and infection control prevention and intervention methods.
Since January 20, states have had to ramp up their workforce, stock up supplies, and build capacity to effectively treat confirmed, suspected and quarantined patients. There is language in the legislation to reimburse states retroactively for these efforts. California, Texas and Florida have declared a state of emergency to loosen regulations to allow state agencies to respond more quickly to the public health threat.
The Infectious Disease Rapid Response Reserve Fund, the initial pot of money used to respond to the outbreak, has been replenished with $300 million.
Pharmaceutical Supplies and Health Care Capacity
The language authorizes $3.1 billion for the development and purchase of vaccines from manufacturers. It specifies that funding can even be used to expand manufacturing capacity through construction and renovation of non-federally owned facilities to improve preparedness. These products may be deposited into the Strategic National Stockpile, the nation’s largest repository of pharmaceutical supplies to respond to emergencies. Further, the package authorizes an additional $300 million in this fund should the Secretary deplete the $3.1 billion imminently.
To expand the surge capacity of community health centers and increase the procurement of medical supplies, $100 million will be allocated just before health centers’ funding is set to expire at the end of May. Considering the risk of exposure to health workers, the National Institute on Environmental Health Sciences received $10 million to train frontline health workers and first responders how best to protect themselves from exposure while treating patients.
Vaccine and Treatment
The Biomedical Advanced Research and Development Authority (BARDA), National Institutes of Health (NIH), and Food and Drug Administration (FDA) will get $2 billion, $826 million and $61 million, respectively, for research and development of a coronavirus vaccine and regulatory review and oversight of new therapies. At FDA, the funds will support reviewing new treatments, maintaining outreach with manufacturers to assist with supply chain disruptions, and identifying misbranded or fake products.
Language related to the actual pricing of any new therapies that are developed through this supplemental package is not clear-cut and definitive. On one end, to ensure that drugs or therapies funded out of this supplemental are not overpriced when they hit the market, “fair and reasonable pricing” language was included. This is likely compromise language following House Democrats’ push for price control mechanisms in the package. However, the criteria and metrics of what is considered fair and reasonable are not defined. Simultaneously the package deters postponement of drugs being brought to market due to affordability, which is a nudge to the private industry to not feel constrained by the government imposing caps on pricing, which could stifle their investment.
To reduce infection exposure by patient influx to hospitals and physician offices, certain statutory restrictions on Medicare telehealth reimbursement have been temporarily alleviated, allowing beneficiaries to freely contact their doctor remotely. The language is inspired by Section 9 of the bipartisan, bicameral CONNECT for Health Act, which would overhaul how Medicare covers telehealth services. The language included in HR 6074 is more limited than the CONNECT legislation, but it would allow the Secretary of Health and Human Services to waive telehealth restrictions, enabling beneficiaries to consult with their providers remotely from their homes. The telehealth industry would have preferred the language to lift this restraint for all emergencies; however, the flexibility is only valid for the coronavirus event, which was declared a public health emergency on January 31, 2020.
As the Administration and members of Congress continue to prioritize global health security and COVID-19 cases pop up across the globe, the legislation provides an additional $300 million for the CDC Center for Global Health and an additional $1.2 billion for the State Department and the United States Agency for International Development.
In an unexpected but forward-thinking action, the legislation includes $20 million for the Small Business Administration’s disaster assistance loans for small businesses that have suffered financial loss as a result of the emergency.
The legislation passed the House on the afternoon of March 4 with only two members of Congress opposing the package (415-2). The Senate took up HR 6074 on March 5 and quickly passed the legislation (96-1) allowing for the President to sign the legislation into law either late on March 5 or Friday, March 6. We anticipate federal agencies will begin using these new funds immediately, looking for ways to support state public health capacity and spur pharmaceutical innovation and manufacturing as soon as possible. The Trump administration has been criticized in recent days as the leadership baton has been passed from one senior official to another, leaving agencies and the American public confused about who is actually in charge of the country’s response. Now that Congress has allocated funding to particular agencies and initiatives driving toward a comprehensive response to this public health emergency, the administration must act quickly to confirm the COVID-19 response hierarchy, streamline their messaging, empower government officials and get resources out the door. Any further delays risk further disease transmission and place additional lives at risk.
As the dollars go out the door, organizations spanning large and small pharmaceutical companies, cities and localities, small businesses, technology companies, and manufacturers should monitor how these dollars and authorities could impact their industries and be best directed toward a comprehensive and coordinated COVID-19 response.
- Statistics accurate as of publication.
As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center provides information to help you understand and assess the legal, regulatory and commercial implications of COVID-19.