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September 01, 2022

Federal Legislative Update

Last Updated: September 01, 2022

OVERVIEW

With the Senate returning right after Labor Day and the House returning a week later on September 13, Congress is gearing up for a frenzied three weeks of legislative activity before recessing for the month of October through election day on November 8. While there is lots to watch for, several items rise to the top of the list. See these and other quick highlights of what is happening within FY23 Appropriations, Health, Defense and Economic Development in this month’s report. We also share some upcoming events, such as our What’s Happening in Washington with the experts on September 7, our MHSRS Report following the September 12-15 conference on military bioscience innovation, and our Nonprofit Advocacy Planning Webinar on October 5.

Legislation to Watch in September:

Energy permitting measures, a Covid-19 funding bill, Food and Drug Administration (FDA) user fees, and a variety of other provisions could be added into a stopgap measure needed to fund the government beyond September 30, when the current fiscal year ends. ARPA-H authorization, Cures 2.0 and the FY23 Appropriations measures are also key bills aiming to complete by year’s end. Some specific programs with expiring authorizations on the last day of September include:

  • National Flood Insurance Program
  • Maternal, Infant, and Early Childhood Home Visiting grants
  • Temporary Assistance for Needy Families
  • Food and Drug Administration user fees
  • Department of Agriculture livestock price reporting program
  • Small Business Innovation Research grants
  • Small Business Technology Transfer grants
  • National Defense Authorization Act

APPROPRIATIONS

On July 20, the House passed a minibus bill called the FY2023 Consolidated Appropriations Act that has yet to be considered in the Senate as that chamber recently unveiled draft measures crafted by the Democratic majority with little input from the minority party. Details can be found here and highlights include:

T-HUD—Transportation, and Housing and Urban Development, and Related Agencies
$90.9 billion, an increase of $9.9 billion (over 12%) above 2022. This includes an increase of $8.9 billion for HUD and $833 million for the Department of Transportation (DOT). In total, the bill provides $168.5 billion in total budgetary resources, an increase of $11.5 billion above 2022.

Highlights:

  • 140,000 new housing vouchers targeted to individuals and families experiencing or at risk of homelessness and approximately 5,600 new units for seniors and persons with disabilities
  • Public housing safety, maintenance, and improvement investments, such as the remediation of lead paint and radon and installation of energy and water efficient systems
  • Skilled and growing workforce programs to conduct inspections, mitigate hazards, and study emerging threats and innovative solutions
  • $2.6 billion to reduce emissions, increase resiliency, and address historical inequities in transportation and housing programs
  • 331 Community Project Funding requests from Members of Congress for airports, highways, and transit systems as well as housing, businesses, and community infrastructure

Ag-FDA—Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
$27.2 billion, an increase of $2.075 billion (8%) above 2022. This includes $195 billion for both discretionary programs funded on an annual basis and mandatory programs such as the Supplemental Nutrition Assistance Program (SNAP).

Highlights:

  • Increased funding to address maternal and infant nutrition, including resources for the ‘Closer to Zero’ initiative to reduce exposure to toxic elements in babies’ and young children’s food, emerging food-related chemical and toxicological issues, drug safety oversight, as well as providing additional resources for in-person inspections of one of the largest foreign drug manufacturing countries, and drug and device supply chain monitoring and surveillance.
  • Funding to modernize FDA’s data infrastructure to better ensure the safety and security of the food and medical supply chain
  • Healthy food access funding for 6.2 million people through WIC and benefits for 43.5 million SNAP-eligible families
  • Continued investments for rural broadband, a new 1 percent loan program for water programs for rural areas, and a record investment of $1.5 billion in single family home loans
  • Increases for extension, research, and capacity grants at 1890 land grants, 1994 land grants, and Hispanic serving institutions to help strengthen the pipeline for the future of agriculture. It also provides increased funding to improve outreach and program access to historically underserved communities and more than doubles funding for Tribal relations activities
  • Provides full pay costs for both USDA and FDA, which is the first time in years such costs have been provided

E&W—Energy and Water Development and Related Agencies
$56.275 billion, an increase of $3.4 billion above 2022.

Highlights:

  • Energy independence programs and incentives
  • Job creation of tens of thousands with a focus on deploying clean energy technologies and the green jobs of tomorrow
  • $16 billion for transformative investments in clean energy and science, which will help develop clean, affordable, and secure American energy
  • Water infrastructure funding to protect communities from more frequent and severe storms and address the worsening western drought
  • Nuclear deterrent measures and funding for legacy nuclear cleanup work

FS—Financial Services and General Government, includes the Small Business Administration (SBA)
$29.8 billion, an increase of $4.3 billion (17%) above 2022.

Highlights:

  • Funding for assistance programs for small businesses and entrepreneurs through the SBA and Community Development Financial Institutions, including recognition of women and minority health innovation companies addressing critical gaps in care
  • Election Security Grants to ensure the integrity and safety of our elections
  • Internal Revenue Service enabled to crack down on insufficient payments from big corporations and the wealthy and to provide better customer service
  • Increased funding for the Consumer Product Safety Commission and Federal Trade Commission
  • Funding to transition the Federal vehicle fleet to electric and zero emission vehicles

Interior, Environment, and Related Agencies
$44.8 billion, an increase of $6.8 billion (18%) above 2022. There is also an additional $2.55 billion of funding provided under the fire suppression cap adjustment.

Highlights:

  • Investments in Native American families and tribal communities through education and health care programs
  • Job creation in environmental workforce through investments in renewable energy development
  • Expansion of environmental enforcement efforts with a focus on land and water conservation
  • Public land and biodiversity protection programs
  • Investments in historically underserved communities overburdened by disproportionate impacts from pollution
  • Highest-ever level of funding to the arts and humanities

MilCon-VA—Military Construction, Veterans Affairs, and Related Agencies
$314.1 billion, an increase of $29.5 billion (over 10%) above 2022. Of this amount, discretionary funding for programs such as veterans’ health care and military construction totals $150.5 billion, an increase of $23 billion above 2022.

Highlights:

  • Increased funding for health care, including advancing women's health, mental health, and homelessness assistance
  • Construction dollars for critical facilities on military installations, including family housing and childcare centers, and build, repair, and retrofit Veterans Affairs facilities
  • Cyber response to Russian and Chinese aggression
  • Increased climate change and resiliency funding to help military installations adapt to rising sea levels and worsening natural disasters

Health

FDA User Fees
FDA employees could start receiving layoff warnings by early September if there’s not a deal to reauthorize FDA user fees, according to Commissioner Robert M. Califf. Leaders in Congress are still working on a compromise after one of the key negotiators seemed to walk away from months of negotiations on the user fee package. User fees from the drug and medical device industries make up almost half of the agency’s funding. Manufacturers of prescription drugs, medical devices, generic drugs, and biosimilar products pay user fees to the FDA to help speed up product reviews. In exchange, the agency agrees to meet specific performance goals, including adding staff and releasing guidance to help companies develop more complete applications.

Obamacare
The Biden administration will invest nearly $98.9 million in grant funding—up from $80 million last year—to 59 returning “navigator” organizations that help connect consumers with health coverage through the Obamacare marketplace, Medicaid, and the Children’s Health Insurance Program. It will allow the organizations to retain staff and add to the 1,500-plus navigators who helped consumers find coverage in nearly every state and county that used the federal HealthCare.gov website last year. Marketplace open enrollment for 2023 coverage starts November 1 and ends January 15, 2023. A record 14.5 million people signed up for Affordable Care Act coverage in 2022 using HealthCare.gov and state-based marketplaces, which includes nearly 6 million new enrollees.

CDC Reorg
CDC recently launched an overhaul of its structure and operations to modernize the agency and revive its reputation. Director Rochelle Walensky wants to boost transparency by releasing data more quickly and improve communication with the public. The changes also include working better with other agencies and public health partners and training and incentivizing the agency's workforce to respond better to public health emergencies. Former HHS Deputy Secretary Mary Wakefield will lead the team overseeing the overhaul, which includes creating a new executive council that will determine agency priorities and track progress. These actions follow two reviews conducted in recent months by Health Resources and Services Administration (HRSA) official Jim Macrae into the CDC’s pandemic response and another by CDC Chief of Staff Sherri Berger into agency operations.

NIH Leadership
Anthony Fauci announced he will depart in December, which gives the Biden administration an opportunity to install the next generation of US leadership in biomedical research, but it must move quickly as the Senate has several retirements of key NIH allies (e.g. Appropriations Ranking Senator Dick Shelby, Health Appropriations Subcommittee Chair Roy Blunt, and HELP Committee Ranking Senator Richard Burr). With 50 years in government, advising seven presidents in his 38 years as director of the National Institute of Allergy and Infectious Diseases (NIAID) on outbreaks ranging from HIV to Covid-19, he has big shoes to fill. Meanwhile, the overall NIH director position remains open. At the National Cancer Institute (NCI), President Biden nominated the first woman, Harvard cancer surgeon Monica M. Bertagnolli, to take the helm. Back at the White House, he selected Arati Prabhakar to serve as his science adviser and head up the Office of Science Technology Policy (OSTP). Prabhakar would be the first woman, immigrant, or person of color confirmed to lead the OSTP if the Senate approves her nomination.

ARPA-H
The House passed Health Subcommittee Chairwoman Anna G. Eshoo's bipartisan legislation, H.R. 5585, the Advanced RESEARCH Projects Agency-Health (ARPA-H) Act with a vote of 336-85 in June. The legislation creates an independent health agency focused on accelerating transformative breakthroughs to find cures and treat the deadliest diseases, such as pancreatic cancer, Alzheimer’s disease, ALS, and glioblastoma. The House Appropriations Committee voted on June 30 to spend $2.75 billion on ARPA-H, which is $1.75 billion more than was allocated last year. Through FY2022 appropriations (P.L. 117-103), Congress provided $1 billion to the Department of Health and Human Services (HHS) to establish the Advanced Research Projects Agency for Health (ARPA-H). The law provided funding to a new ARPA-H account at HHS, available until September 30, 2024, and allowed the HHS Secretary to place the new agency anywhere within the department within 30 days of enactment. On March 30, 2022, HHS Secretary Xavier Becerra submitted a notice to the appropriations committees that ARPA-H is to reside within the National Institutes of Health (NIH), while the ARPA-H Director is to report directly to the HHS Secretary.

Absent additional legislation, the FY2022 appropriation gives HHS considerable flexibility to design and structure the new agency. As proposed by the Biden Administration, ARPA-H is modelled after other “ARPAs,” especially the Defense Advanced Research Projects Agency (DARPA) and the Advanced Research Projects Agency-Energy (ARPA-E). The “ARPA model” involves an organizational structure designed to be flat and nimble, staffed by tenure-limited program managers with a high degree of autonomy to select and fund research projects using a milestone-based contract approach. In contrast, NIH relies predominantly on the scientific peer review process to award most of its funding. Some evidence suggests that this investigator-driven and consensus-based process is less likely to fund transformative or “high-risk, high- reward” projects. Supporters of the proposal argue that high-risk, high-reward biomedical research may lead to health breakthroughs on a faster timeline and is critical to ensuring U.S. competitiveness and addressing societal challenges.

Several bills are being considered in the 117th Congress that would codify and further delineate ARPA-H's goals, structure, placement, activities, and authorities. A Senate proposal, S. 3819, was incorporated into the PREVENT Pandemics Act (S. 3799), in an amendment in the nature of a substitute, and ordered to be reported by the Senate Committee on Health, Education, Labor, and Pensions (HELP) on March 15, 2022. As Congress continues its deliberations on ARPA-H, several policy debates remain. Such debates include (1) where to place ARPA-H within the federal government and how to facilitate its independence and autonomy, (2) what the appropriate goals are for ARPA-H and how to prevent its activities and programs from duplicating the efforts of other federal agencies and the private sector, and (3) what the appropriate current and future appropriations levels are for ARPA-H.

HHS Funding
On June 30, the House Appropriations Committee passed the Labor, Health and Human Services, and Education Appropriations bill, but it has not reached the floor yet. The HHS spending bill is accompanied by a report that encourages the Health Resources and Services Administration (HRSA) to stop drug companies from restricting 340B discounts, and encourages CMS to boost access to biosimilars, ensure safe dispensing of oral coronavirus treatments, and improve Medicare coverage of obesity drugs. The bill would allocate $9.6 billion to HRSA, of which $13.2 million would go to the Office of Pharmacy Affairs that administers the 340B drug discount program. The committee expressed concern over the trend of drug companies limiting 340B discounts to a single contract pharmacy per hospital. As of March, 16 drug makers limit 340B discounts to hospitals.

The bill would allocate $4.3 billion to CMS. Regarding Medicare Part D, the accompanying report tells the agency to implement policies that boost biosimilar uptake, and it urges CMS to educate doctors on biosimilars and their savings potential for beneficiaries. Lawmakers also want CMS to review recent guidance on oral COVID-19 treatments that suggests Part D plans “consider paying a dispensing fee for these drugs that may be higher than a sponsor’s usual negotiated dispensing fees given the unique circumstances during the public health emergency.”

Additionally, to maintain the viability of pharmacies in rural communities, the committee requests a report from CMS 180 days from the bill’s enactment that reviews and assesses reimbursement and payment options for rural pharmacies. The committee also urges CMS to ensure that treatments for obesity are available in Part D by distinguishing “weight loss” drugs from FDA-approved drugs that target obesity. Finally, the committee also recommends that $30 million be allocated for the Administration of Community Living’s Alzheimer’s program, which provides competitive matching grants to a limited number of states to boost program innovation and coordination between public and private services for Alzheimer’s patients and their families

ECONOMIC DEVELOPMENT

Small Business Grants
SBIR/STTR authorization expires on September 30. Small businesses depend on the SBIR/STTR programs to address the research needs of our federal agencies and as they advance their innovations, they grow their businesses, create jobs, and contribute to the economy. Despite a Defense Department assessment showed the SBIR/STTR Program has generated a 22:1 return for every federal dollar spent, and a study by the National Academy of Sciences found a commercialization rate of between 50-60% for SBIR/STTR investments-a win-win for the U.S. economy and taxpayer, the reauthorization of this program hangs by a thread. There is strong bipartisan support for maintaining it and an agreement to include it in an appropriations stopgap measure is expected in September, but the letters to Congress and Appropriators continue to flow in from constituents and make an impact.

Defense

Military Support
Biden Announces Tranche of $2.98B Aid to Ukraine, the US’s biggest tranche of security assistance to date. Approximately $2.98 billion of weapons and equipment will be provided through the Ukraine Security Assistance Initiative to allow Ukraine to acquire air defense systems, artillery systems and munitions, counter-unmanned aerial systems, and radars to ensure it can continue to defend itself over the long term. Also, US forces carried out airstrikes in Syria against groups tied to Iran’s Islamic Revolutionary Guard Corps, according to US Central Command, a move that comes as Washington and Tehran weigh a new nuclear agreement. The strikes at Deir ez-Zor in eastern Syria were intended to defend and protect US forces from attacks like the ones on August 15 against US personnel by Iran-backed groups. An aerial assault occurred near the Al-Tanf garrison, an American military base near a key border crossing in Syria. There were no casualties at that time. The recent airstrikes targeted infrastructure facilities used by groups affiliated with the Guard Corps.

Covid-19
Senator Roger Wicker (R-MS), a senior member of the Senate Armed Services Committee, sent a letter to Secretary of Defense Lloyd Austin calling for an end to the Department of Defense’s Covid-19 vaccine mandate, which has already resulted in thousands of military service members being expelled amid a nationwide recruiting crisis. “The Department is simultaneously bleeding its best and brightest while desperately trying to recruit new talent,” Wicker wrote. “This is not a blueprint for success.”

The letter follows an announcement from Army officials that more than 60,000 national guardsmen and reservists are no longer allowed to conduct their military duties after declining to take the Covid-19 vaccine. Multiple senior defense officials also identify recruitment as a serious challenge for the Armed Forces.