Pandemic Relief Legislation Provides Economic Assistance, Boosts Federal Budgets

President Trump signed the critical year-end COVID-19 package on Dec. 27, 2020, appropriating $2.3 trillion to finance the federal government through September 2021 and providing critical support for individuals and entities suffering from the economic crisis wrought by the pandemic. The $900 billion relief provisions extend subsidies and unemployment benefits to millions, while also approving hundreds of less visible tax breaks and pet programs.

Important for pharma, the 5000-page measure furthermore authorizes $20 billion for the additional purchase of COVID-19 vaccines, $9 billion to support state and local vaccine distribution programs, and $22 billion more to help states bolster testing, contact tracing, and virus mitigation efforts. The complex measure also extends the pediatric priority review voucher program at FDA, which was about to expire, and it closes certain loopholes in the Orphan Drug Act. At the same time, the bill omits reforms designed to limit spending on prescription drugs, as well as changes in drug rebates paid to pharmacy benefit managers (PBMs) or revisions in patent “ever-greening” policies.

FDA may be affected also by a measure requiring in-person age verification for the purchase of e-cigarette and vaping products. And the legislation implements a policy to update drug labels for certain generic drugs where the original innovator product is no longer marketed, a change endorsed by the cancer research community anxious to maintain access to older therapies only available in generic form.

On the health care front, providers and insurers were hit by a “surprise” billing provision that aims to protect patients from exorbitant charges for receiving care from hospitals and physicians outside covered networks. Health plans, employers, and insurers opposed the measure strongly, likening it to price controls and government rate-setting. But the legislators agreed on the need for some kind of safety net for patients caught in this coverage loophole, here through a new dispute-setting process for high, unexpected medical bills. At the same time, physicians had an important win in the approval of a provision delaying planned cuts in Medicare fees and other changes.

Budget increases

The omnibus spending bill for 2021 included in the larger legislation was approved just in time to avoid a federal government shutdown this week. The measure provides $42.9 billion for the National Institutes of Health (NIH) and $7.9 billion for the Centers for Disease Control and Prevention (CDC) as part of multiple funding provisions for the Department of Health and Human Services (HHS).

FDA gains a $42 million net increase on its $3.2 billion in appropriated funds plus $2.7 billion in authorized user fees for a funding total of $5.9 billion for 2021. About half of the added $42 million is allotted for medical product safety, specifically $9 million to upgrade systems for overseeing medical devices, $5 million to modernize influenza vaccine production, $3.5 million to expand foreign drug inspections, $2.5 million in support of developing rare cancer therapeutics, and $2 million for drug compounding oversight.

The budget agreement also instructs FDA to support regulatory and policy development, notably research for cannabis-derived substances, treatments for neurodegenerative diseases, nutritional labeling requirements, expedited approval of complex generics, and oversight of orphan drugs. Congress wants FDA to consult the diabetes community on designing clinical studies to assess potential diabetes biomarkers related to islet autoimmunity. And agency experts should work with glass packaging suppliers and pharmaceutical manufacturers on developing innovative glass packaging technologies to reduce product recalls and related drug shortages.

The COVID-19 relief measure further provides $55 million to FDA to support continued development and review of medical countermeasures, devices, therapies, and vaccines to combat the virus. The measure also adds funding for the CDC, the Biomedical Advanced Research and Development Authority, and other HHS offices to support broader coronavirus testing and tracking and vaccine procurement and administration.

It may take some time for analysts to assess the multiple funding provisions, some from appropriated funds and other from the COVID-19 relief/stimulus legislation. And the new administration and new Congress will be looking to put its own stamp on these programs, particularly in the area of health and medical relief.