The Democratic Convention kicked off last night with for the first time all speeches made online. The format will continue through the week with the Biden-Harris team officially accepting the Democratic nomination with speeches on Thursday night. Next week is the Republican Convention. This Saturday, the House is planning to reconvene to address the administration’s efforts to cut back US Postal Service (which has been struggling financially for years, long before Covid-19 ever hit the US) just as the states gear up for increased mail-in and absentee ballots for the November 3rd election. Prior to the August recess, the House passed two minibus pieces of legislation to fund the government in FY2021, while the Senate has remained gridlocked. Finally, the House and Senate leadership failed to negotiate a Covid-19 deal with President Trump before the August recess but both Speaker Pelosi (D-CA) and Majority Leader McConnell (R-KY) are both making moves to get a deal done next week to provide relief by September. Details on appropriations, Covid-19 specific updates, health, defense, economy and latest negotiations, STEM and innovation, and transportation are below.
The US Postal Service started to overhaul its organizational structure, reassigning or displacing 23 postal executives and centralizing power around Postmaster General Louis DeJoy, and Democrats have called for an investigation into whether these changes pose a threat to mail-in ballots for the November election. On August 14, DeJoy said the new structure, organized around three business units, will increase efficiency by reducing costs and boosting revenue and warned 46 states that it may not be able to deliver their ballots on time for the November election. President Trump has said repeatedly, without evidence, that voting by mail is subject to widespread fraud. However, on August 18, DeJoy said he is suspending changes until after the elections, but he will likely face some grilling when he testifies before Congress on Friday at the Senate Homeland Security and Governmental Affairs Committee and again on Monday before the House Committee on Oversight and Reform. At stake are votes in 34 states – including almost all of the presidential battlegrounds – that won’t count mail-in ballots unless they are received on or before Election Day, even if the ballots are mailed on time and subject to Post Office slowdowns. The Postal Service reported a quarterly net loss of $2.2 billion on revenue of $17.6 billion, compared to a net loss of $2.3 billion in the same period last year. Democrats have been working to add funding for the Post Office in negotiations over the stalled coronavirus relief package and are coming back to Washington, DC on Saturday for a special session to address these concerns and pass the Delivering for America Act.
Related to voting by mail, the Trump campaign and Republican National Committee sued Pennsylvania Secretary of State Kathy Boockvar and local election boards on June 29 over their plan for mail-in balloting for the November 3 elections. The lawsuit claimed the plan “provides fraudsters an easy opportunity to engage in ballot harvesting, manipulate or destroy ballots, manufacture duplicitous votes, and sow chaos.” The US District Judge J. Nicholas Ranjan in Pittsburgh, who just took his seat on the bench one year ago, has requested that the campaign produce previous examples of such fraud.
On July 1, 2020, the House passed the Moving Forward Act. The bill provides $494 billion over five years to make transformative infrastructure investments in surface and rail transportation as well as $411 billion over five years out of the Highway Trust Fund (HTF) for highway, transit, safety, and research programs, which is a 46% increase over current investment levels. Provides $319 billion for the Federal-aid highway program under the Federal Highway Administration, $105 billion for transit programs under the Federal Transit Administration, $4.6 billion for highway safety programs under the National Highway Traffic Safety Administration, $5.3 billion for motor carrier safety programs under the Federal Motor Carrier Safety Administration, and $60 billion for rail programs. It also establishes a new performance measure for transportation access that leverages modern data tools to improve the way states and MPOs assess safe, reliable and convenient access to jobs and services. It also creates the Office of Transit-Supportive Communities to coordinate Federal incentives to foster the link between Federal, state, and local planning policies and doubles to $20 million the Transit Oriented Development Planning Grants.
It substantially increases transit funding out of the Highway Trust Fund over current investment levels. Funding for buses and zero emission buses see significant funding increases to make up for cuts to bus funding in the last two reauthorization cycles. It also reframes the federal transit program to boost frequency and ridership and modifies the urban and bus formulas to incentivize frequent rail and bus service instead of low operating costs. It provides $100 million in annual grants to tackle larger city street congestion that slows down buses through support of items like bus only lanes and priority signaling, requiring a partnership between transit agencies and local/state roadway agencies. It also establishes new flexible rules for Mobility on Demand that integrate new technologies with transit as the backbone, retains basic requirements for safety, Buy America and labor protections, and data sharing between transit agencies, cities, and the private sector. It includes restrictions on single passenger trips and carbon and particulate emissions. Finally, it modifies rural formula grants to distribute a greater%age of funds based on actual transit service provided.
The bill addresses innovation in transportation with the following:
This legislation streamlines the program by raising the threshold above which projects are required to secure multiple credit rating agency opinions. It also clarifies that the proceeds of a secured loan under TIFIA shall be considered part of the non-Federal share of a project under title 23 or chapter 53 of title 49 if the loan is repayable from non-Federal funds. It allows territories to use funds made available under this section for the non-Federal match under the TIFIA program. In addition, it clarifies the criteria under which projects are eligible for the streamlined application process and provides additional funding to allow the Department to waive fees for small projects. It modifies reporting requirements to include information on whether a TIFIA project is located in a metropolitan or micropolitan area. The bill includes language G2G worked on with the House Transportation and Infrastructure Committee to advance innovative transportation technologies. This includes requiring the Secretary of Transportation to provide regulatory guidance and a framework for the safe deployment of hyperloop transportation.
The House and Senate leadership failed to negotiate a Covid-19 deal with Secretary Mnuchin and the administration to address the economic slump due to over 30 million people filing for unemployment and continuing challenges of managing the Covid-19 pandemic ranging from healthcare to online education. Democrats had offered to cut their original stimulus proposal called the HEROES Act that passed the House in May totaling $3.5 trillion by roughly one third, but insisted on funding assistance to states, cities, and other municipalities. The administration rejected the Democrats’ topline number and offered to put in no more than $150 billion for local assistance. Despite this failure, the FY2021 appropriations process moved forward in the House at the end of July. On July 24, the House passed a minibus that included: Agriculture/FDA, Interior, Environment, MilCon-VA and State. On July 31, the House passed a second minibus that included: Commerce Justice and Science, Defense, Energy and Water, Financial Services, Labor Health and Human Services and Transportation Housing and Urban Development. Some details of interest are below.
The House passed the Agriculture-FDA appropriations bill on July 24, 2020. This bill funds the FDA for FY21 at $3.21 billion, which is an increase of over $40 million from FY20 but over $8 million less than the administration requested. The House bill provides increased funding for medical product safety and includes new initiatives to advance a new influenza vaccine manufacturing technologies and funding to develop a framework for regulating CBD products. In addition, the bill includes a strong focus on continuing efforts to increase the safety and cybersecurity of medical devices. The bill also appropriates $70 million to accelerate medical product development as authorized in the 21st Century Cures Act. To modernize prescription drug development, it encourages FDA to expand its efforts to improve prescription drug manufacturing and quality.
To help combat antimicrobial resistance the House provided an additional $1 million for the Center for Veterinary Medicine (CVM) to support implementation of the FDA’s 5-year plan for supporting antimicrobial stewardship in animals. This plan includes steps to mitigate antibiotic resistance by ensuring that medically important antibiotics for use in food-producing animals have clearly defined durations of use. The agency is expected to issue draft guidance describing a strategy for clearly defining durations of use that are consistent with existing regulations and guidance by the end of FY 21.
This legislation also encourages FDA to examine the policies and regulations surrounding automated compounding to incorporate and incentivize the use of automation technology to enhance safety and improve accuracy in drug compounding. It encourages the FDA to understand how automated microbial detection systems in health care manufacturing technologies can increase the efficiency and safety of the domestic medical product manufacturing and supply chain to decrease US reliance on global supply chains. The bill also comments on FDA’s finalized guidance document on Bacterial Risk Control Strategies for Blood Collection Establishments and Transfusion Services. Congress is still concerned about the risk and encourages the FDA to ensure future approvals are consistent with this guidance and are supported by patient safety data.
Of course, Covid-19 is addressed in the bill. The FDA portion of bill provides funding and guidance for the Covid-19 pandemic and expresses concern with the delays at the beginning of the crisis. It instructs the FDA to contract with an outside entity to provide an assessment of its COVID-19 response, highlighting the failures and successes, to better understand how the agency can improve its response capabilities and enhance its ongoing activities to protect the public health.
G2G worked with the Committee to focus on rare cancer therapeutics and the underrepresentation of women and minorities in clinical trials that worsens health outcomes and hinders women’s health innovation. Both are included in the legislation. Building off of the first-time ever $5 million FDA allocation dedicated to rare cancer in FY20, the House included an additional $2.5 million to address gaps in the system, streamline resources, accelerate the development of rare cancer therapies and advance the field of cancer research overall, mirroring the efforts of the National Cancer Institute’s Developmental Therapeutics Program. Also, to improve cancer immunotherapy clinical trials, the legislation urges the FDA to work with the research community and pharmaceutical industry and provide guidance for standardizing clinical trial design for immunotherapy-based combinations in order to help clinicians better select optimal treatment options for their patients. The FDA is required to provide a report on its work to increase women and minority representation in clinical trials, female mice representation in pre-clinical trials, data on differences in male and female responses to medications, including sex-specific biomarkers in simulation models and transparency in addressing biological differences.
On July 31, 2020, the House passed an appropriations package that included funding and provisions for the Departments of Labor, Education and Health and Human Services. The entire package for FY21 totals $196.5 billion. This is $20.8 billion more than what the President requested and $2.4 billion more than FY20. Specifically, this includes $96.4 billion for the Health and Human Services, $73.5 billion for the Department of Education and $12.7 billion for the Department of Labor. It includes $4.5 billion in emergency supplemental appropriations for BARDA to support advanced research and development and advanced manufacturing of vaccines and therapeutics.
The bill provides additional funding to help fight the Covid-19 pandemic including:
Under the bill, HHS would be required to report weekly to Congress during the pandemic on the inventory of ventilators and personal protective equipment in the Strategic National Stockpile. The bill provides a total of $47 billion for NIH, which is an increase of $5.5 billion above the FY20 level with $5 billion of the funding categorized as emergency appropriations to avoid the current budget caps set long before the Covid-19 pandemic. The House bill increases funding for each of the Institutes and Centers under NIH by no less than 7%. Some of the targeted investments in high-priority areas, include:
This legislative package includes $9 billion in emergency supplemental funding for the following public health and emergency response activities:
The bill includes $7.2 billion for Health Resources and Services Administration (HRSA), an increase of $159 million over FY20. HRSA provides healthcare to people who are geographically isolated or are part of economically and medically vulnerable.
The bill directs NIH to transfer $195 million from the NIH Innovation Account to NCI to support the Cancer Moonshot initiative. G2G successfully secured language in the report to advance how the federal government addresses rare cancer, molecular diagnostics and advanced drug development; respond to radiation exposure through imaging technologies; and address racial bias in the delivery of healthcare.
On July 31, 2020 the House passed a package to fund the Department of Defense for FY21 (separate from the National Defense Authorization Act that passed the House on July 12). This includes operations and maintenance, readiness activities, research and development, equipment modernization, and health and quality-of-life programs for servicemembers and their families, as well as a 3% pay increase for our troops. This bill provides $694.6 billion for DoD, which is an increase of $1.3 billion above the FY20, and $3.7 billion below the President’s budget request.
The Military Personnel funding is $157.7 billion in base funding for active, reserve and National Guard military personnel, a decrease of $1.2 billion below the budget request and an increase of $7.5 billion above FY20. The bill provides funding for active duty end strength of 1,351,500, an increase of 12,000. The bill also funds our reserve component to the strength of 802,000, an increase of 1,200. This package also provides $323 million for Services’ Sexual Assault Prevention and Response programs at the DoD.
For the Operation and Maintenance accounts, the House provided a total of $254.5 billion for FY21. This includes an additional $116 million to upgrade childcare facilities for military families. The FY21 Procurement total is $140.1 billion. This includes a $4.1 billion increase for additional investments in ground vehicles, aircraft and ships. To assist the DoD during the pandemic, $450 million was provided for resupply and recovery for Covid-19.
For R&D, the House provides a total of $104.6 billion for Research, Development and Evaluation programs. It includes $3.51 billion for DARPA research programs. The R&D funding covers basic and advanced projects and includes focused funding and directives on everything spanning from military medical research to hypersonics to cybersecurity. The bill includes several specific investments to ensure that the US has the workforce trained and ready in cybersecurity and STEM fields to protect our national interests today and in the future.
G2G worked with the committee specifically to address cybersecurity workforce issues and to protect hardware and embedded systems. This includes language to address the widespread shortages in cybersecurity talent across both the public and private sectors. The bill also includes dozens of recommendations from the Cyberspace Solarium Commission, including the position of Under Secretary of Defense (Research and Engineering) to direct cyber-oriented units to collaborate with local colleges and universities on research, fellowships, internships, and cooperative work experiences to expand cyber-oriented education opportunities and grow the cybersecurity workforce. It also encourages the Under Secretary to prioritize collaboration with colleges and universities near military installations as well as the veteran population and state cyber ranges in executing these workforce training programs. The partnership of the Air Force Research Laboratory with the Center for Hardware and Embedded Systems Security and Trust is an example of such a collaboration that the Committee calls out in the bill.
Military medical issues are addressed in the Defense Appropriations bill. The Defense Health Programs received $33.3 billion and adds $512.5 million for cancer research in the bill. The bill continues the first-ever separate funding line for rare cancer that G2G advocated for and secured in last year’s bill in this year’s bill as well. G2G remains actively engaged in the Defense Health Research Consortium and worked to increase military medical R&D funding. The program funding levels include:
The House passed the THUD appropriations bill on July 31, 2020. This bill provides $107.2 billion for the Department of Transportation which is an increase of over $20 billion over FY20 and over $19 billion over what the President requested. This bill includes:
The House bill makes significant investments to improve our aging infrastructure. This includes a $100 million investment that G2G advocated for the Magnetic Levitation Technology Deployment Program that includes hyperloop technology. In addition, there were several provisions included in the package that seek to make changes within the DOT and to make Americans safer. The package requires Amtrak, airlines and public transit systems to require passengers and employees to wear face masks due to the COIVD-19 pandemic. The FRA would not be allowed to reallocate funding from a high-speed rail project in California until after lawsuits surrounding the project are finalized and would provide $5 billion for a MAGLEV train between Washington, DC and New York City.
OWS continues to lead the Covid-19 response in developing vaccines and therapeutics under the leadership of Moncef Slaoui, former GlaxoSmithKline (GSK) vaccine head, former member of the Board for Moderna and current partner at Medicxi, a venture capital firm that invests in biotech companies, several of which are developing treatments or vaccines against the coronavirus. The Department of Health and Human Services (HHS) received two more complaints just last week for not subjecting the Slaoui to financial conflict rules due to the enormous contracts awarded to these companies.
On July 31, GSK and its partner French drug maker Sanofi secured an agreement of up to $2.1 billion to manufacture 100 million doses of its experimental coronavirus vaccine while clinical trials are underway, the largest such deal announced to date and includes an option for the government to buy an additional 500 million doses. In the agreement, Sanofi would be paid $1.7 billion for the vaccine antigen and GSK would be paid $342 million for its adjuvant that boosts the immune response to the vaccine. Also, on July 31, the government awarded Moderna a $1.525 billion contract to manufacture 100 million vaccine doses with the option to increase the contract to cover 400 million doses, which is a follow-up to the previous $955 million BARDA contract – for a total of $2.48 billion. Of this total, $300 million depends on getting the vaccine either approved or authorized for emergency use by the end of January 2021. These announced contracts come less than two weeks after the government said it would pay Pfizer and BioNTech $1.95 billion to produce 100 million doses of their vaccine.
Some controversy surrounds Slaoui because while he is no longer employed by GSK and did sell about 155,000 shares in Moderna, worth an estimated $10-12 million in May, he remains a partner in Medicxi, which is investing in companies developing coronavirus vaccines and therapeutics. Also, he was hired for this role as a government contractor, and therefore, does not have to file ethics disclosures normally required of federal employees. Moreover, he is also allowed to keep his investments in drug makers, although any gain in GSK shares above an unspecified stock index will be donated to NIH research.
In any case, the OWS BAA is working to identify the best available projects focused on plasma and therapeutics. Specifically, for plasma states HHS-OWS is interested in state-of-the-art plasma collection within the US from people who have recently fully recovered from Covid-19 and are symptom free for at least 14 days to develop the rapid implementation of an FDA-approved plasma collection expansion capability IOT plan. Once the plasma is donated, it can be directly transfused into (up to three) patients or used to make potential plasma-derived medicines. NIAID Director Fauci recently touted the potential for monoclonal antibodies to serve as an early intervention to treat patients who are infected with COVID-19 but who have not gone on to have advanced disease where they require hospitalization.
The BAA for therapeutics states HHS-OWS is working on prophylactic/pretreatment and therapeutic pharmaceuticals that can be administered pre- or post-exposure. This will provide health care providers with appropriate pharmaceuticals, tools to diagnose and monitor response of casualties, and appropriate means to protect themselves from Covid-19. Overarching goal is the ability to demonstrate through human clinical trials, efficacy and safety of products that protect against COVID-19, including novel and previously unrecognized products. These tests would enable transition to the advanced developer with a decreased risk profile in taking these products through FDA licensure.
NIH launched two randomized controlled clinical trials to test multiple monoclonal antibody treatments for use against Covid-19. NIH’s two trials, both of which are part of the agency’s Accelerating COVID-19 Therapeutic Interventions and Vaccines (ACTIV) public-private partnership, test whether monoclonal antibodies can treat people with the virus in the inpatient and outpatient setting. FDA’s CDER Director Janet Woodcock is overseeing the studies. The first treatment tested in both trials, Eli Lilly’s LY-CoV555, is derived from an isolated antibody taken from the blood sample of a patient who recovered from Covid-19. The antibody was copied and then synthesized in a laboratory. The outpatient study, dubbed ACTIV-2, is a phase 2 clinical trial to determine whether monoclonal antibodies can shorten the severity of COVID-19 in patients who haven’t been hospitalized. Participants are randomly assigned to one of two groups; 110 volunteers will be assigned to the treatment group and 110 will be to the placebo group. Both groups will receive intravenous infusions of either the experimental treatment or saline placebo. Over a 28-day period, participants will attend clinic or at-home visits by clinicians to track their Covid-19 symptoms and give blood samples to help researchers understand how the therapy functions in the body. If there are no serious safety concerns and if the therapy meets other criteria, the trial will transition to phase 3 with up to 1,780 patients enrolled for a total of 2,000 trial participants.
The other NIH trial, known as ACTIV-3, is a master protocol designed to test multiple kinds of monoclonal antibody treatments in the inpatient setting. The primary endpoint is participants’ sustained recovery for 14 days after release from the hospital. The initial stage of ACTIV-3 will enroll approximately 300 volunteers who have been hospitalized with mild to moderate COVID-19 and have had fewer than 13 days of symptoms. Participants will be randomly assigned to receive an IV infusion of the treatment or a saline placebo. They also will receive standard care for COVID-19, including remdesivir. After five days, participants’ symptoms will be assessed along with their need for supplemental oxygen, mechanical ventilation or other supportive care. If the therapy appears to be safe and effective, the trial will enroll an additional 700 participants. It also will begin enrolling more severely ill participants, such as those with organ failure requiring mechanical support or COVID-19-associated dysfunction of organs other than the lungs.
NIH will also soon announce a third trial to assess monoclonal antibodies for prevention of COVID-19 in nursing homes. Eli Lilly issued a press release detailing the study for LY-CoV555, which will enroll residents and staff who live or work at facilities that have had recently diagnosed cases of COVID-19 and who are at high risk of exposure. The study will test whether a single dose of LY-CoV555 reduces the rate of SARS-CoV-2 infection through four weeks, as well as complications of COVID-19 through eight weeks. It is expected to enroll up to 2,400 participants.
Monoclonal antibodies are one type of passive immunotherapy that could be used against COVID-19. Convalescent plasma is another. Both are derived from the blood or plasma of recovered COVID-19 patients. However, monoclonal antibodies focus precisely on the neutralizing sites on the SARS-CoV-2 spike protein, whereas convalescent plasma contains a wide range of antibodies, according to a July 9 editorial in the journal BMJ. Some plasma antibodies are neutralizing, but many have off-target effects that can potentially contribute to tissue damage, the BMJ article says. During a JAMA interview NIAID Director Fauci said it’s still unclear whether convalescent plasma will work against the disease and still needs to be studied in clinical trials. Interestingly, four former FDA commissioners, Mark McClellan, Margaret Hamburg, Robert Califf and Scott Gottlieb together wrote a recent Washington Post op-ed stating that convalescent plasma, if it works, could help millions of patients with Covid-19, but there needs to be a concerted effort to collect plasma and study it in clinical trials. They also said there needs to be new pathways for quickly advancing promising therapies while clearly determining whether they’re safe and effective to avoid wasting time on therapies that do not work or miss opportunities to collect and use data that informs on when treatment is beneficial. Thousands of COVID-19 patients have already been treated with plasma and ACTIV is standing up trials of promising treatments, but only a small number of Covid-19 patients are able to participate in plasma trials thus far.
In other therapeutic news, an NIH-funded study found 21 existing drugs have potential in treating Covid-19 patients and four of them, coupled with remdesivir (for which FDA granted Gilead Sciences emergency use authorization (EUA) on May 1 for Covid-19 treatment), can be repurposed to help block coronavirus infections. Researchers first did a high-throughput screening of 11,987 drug compounds for their potential to block SARS-CoV-2 in cells grown in the lab, which narrowed the list to about 300. Next, they narrowed the list to 100 compounds that could reliably limit the virus growth by at least 40% by using lower concentrations of the drugs in cells exposed to a second strain of SARS-CoV-2 since an effective anti-viral drug shows greater activity as its concentration is increased. Finally, they narrowed the field to 21 therapies, 13 of which, including remdesivir, were found to be potentially effective at doses that can be safely given to patients. The findings prompted researchers to identify four medications that could be administered with remdesivir to fight SARS-CoV-2 infections, with some reducing the number of infected cells by 65% to 85%, including apilimod, an autoimmune therapy, and clofazimine, used to treat leprosy.
The FDA just approved its first emergency use authorization (EUA) for a saliva-based Covid-19 diagnostic test called SalivaDirect that was created by the Yale School of Public Health (and partly funded by the NBA) and does not require any special swab or collection device on August 15 in the hopes of increasing testing capacity and reducing the current strain on testing equipment. The new test, unlike other saliva diagnostic tests, does not utilize a separate step for nucleic acid extraction. This means performing a test without specialized materials, such as swabs and collection kits, removes the reliance on nasopharyngeal swabs and nucleic acid extraction kits that are facing shortages. Plus, it makes the test much more pleasant than the nasal swab. The test is also self-collected, potentially lowering the risk of infection to health care workers collecting samples. The new test can be used with different combinations of common reagents and instruments, which allows the test to be provided broadly to any high complexity lab nationwide if they follow the EUA protocol.
The CDC plans to combine some of the Coronavirus Aid, Relief, and Economic Security (CARES) Act funding allocated by Congress with funds from the Paycheck Protection Program to send $12.1 billion to states to enable modernization of their systems and improve their integration with national systems. The agency plans to invest in contact tracing with software that will help contact tracers manage their cases or opt-in proximity tracing and exposure notifications with people’s phones. CDC Director Robert Redfield claims these tools can reduce the burden of data collection on public health staff by automating workflow, allowing electronic self-reporting by cases and contacts, and facilitating daily symptom monitoring. CDC still has not provided more explanation as to why the administration took the unprecedented move to send coronavirus information directly to HHS as opposed to the CDC.
Despite reassurance of "excess" Covid-19 testing supplies from the White House, FDA revealed in its first medical device shortage list posted late on August 14 three shortage categories of Personal Protective Equipment, Testing Supplies and Equipment, and Ventilation-Related Products. Specifically, ventilators, surgical masks, testing swabs, gloves, gowns, and key testing chemicals called reagents are all on the list. The list is aimed at providing transparency to healthcare providers as the agency continues to monitor for disruptions to the US supply chain. The government is drawing up plans to distribute personal protective gear from its stockpile. The CARES Act added the requirement that the FDA provide an up-to-date, publicly available list of devices that are in shortage.
The DoD’s Joint Acquisition Task Force just awarded $104 million in contracts to procure syringes and safety needles for FDA-approved Covid-19 vaccine once one becomes available. Funded by CARES Act, in support of the HHS Strategic National Stockpile, the six companies awarded contracts include:
Medicare just announced it will boost reimbursements by 20% next month for beneficiaries with Covid-19. The payment bump takes effect on September 1 and will apply to all Medicare patients with Covid-19 who needed to be hospitalized, according to new guidance issued by CMS on August 17.
Scott Atlas is the new go-to adviser for President Trump on Covid-19. He is a conservative policy wonk and radiologist who was a fellow at Stanford’s Hoover Institution who did some eye-catching interviews on Fox before being plucked to join the administration in early July. He quickly established himself as a voice pushing for the resumption of daily activity. He advised, “Here’s the science … the risk to children from this disease for fatality, is nearly zero,” during a July 13 Fox News appearance, adding that kids don’t appear to significantly spread the virus. This contradicts several public health scientists. He also said, “Teaching is a young profession,” citing data that 90% of public school teachers are under age 60. Atlas has argued against expanded Covid-19 testing, including a proposal championed by White House coronavirus coordinator Deborah Birx to scale up home testing through methods such as saliva tests, and disagreed publicly with NIAID Director Fauci on universal wearing of face masks. As clashes and competition continue among Trump’s advisers and between Secretary Azar and CMS Administrator Verma, criticism from the Biden campaign, past Obama officials and their supporters is gaining momentum, attention and broader support. National polling is showing 9-10 point spread between Biden and Trump for the upcoming election. But the White House keeps working to regain control of the management and message regarding Covid-19 and the economy.
CMS announced it will resume all regular inspections of nursing homes, after postponing them earlier this year as nursing homes grappled with COVID-19 outbreaks and will give nursing homes an additional $5 billion for testing, staffing and protective gear as well as establishment of Covid-19 isolation wards with some of the new funding beiing performance-based, unlike previous distributions from the Congress-approved provider relief fund. Facilities will be evaluated based on the local Covid-19 infection rate and the nursing home’s ability to minimize infections and fatalities among residents. As of July 30, nursing homes and other long-term care facilities in 43 states reported 62,925 Covid-19 deaths, according to the Kaiser Family Foundation. That’s 44% of all Covid-19 deaths in those states. The first $2.5 billion will be distributed in mid-August, followed by additional performance-based payments throughout the fall. Linking payment to performance will be an effective means of holding nursing homes accountable, stimulating innovation, and encouraging them to reach beyond their own walls for infection control expertise and support is the thinking, according to Thomas Engels, administrator of the HHS’s Health Resources and Services Administration (HRSA).
This month, the Health and Human Services Office of Inspector General issued a report finding that total Medicare spending for clinical diagnostic laboratory tests increased in 2018, despite lower payment rates for most tests. Medicare spent $7.6 billion for lab tests in 2018, a $459 million increase from $7.1 billion in 2017. The increase was mainly driven by higher spending for genetic tests, which more than doubled from $473 million in 2017 to $969 million in 2018. Although payment rates for 75% of tests decreased in 2018 under the new payment system, savings that resulted from lower rates were overtaken by increased spending on other tests, including genetic tests and certain chemistry tests. Spending on genetic tests doubled because of new and expensive tests entering the Clinical Laboratory Fee Schedule (CLFS), as well as an increase in the volume of existing genetic tests. Spending on certain automated chemistry tests, such as cholesterol, glucose or potassium also increased by $82 million in 2018 following the end of the Protecting Access to Medicare Act of 2014 (PAMA) discount on these tests. Finally, a one-time spending increase on some tests occurred in cases in which the national rate was higher than the local payment rates that it replaced.
While the OIG report concluded genetic tests can provide valuable information to providers and help to identify appropriate treatments for Medicare beneficiaries, it also warned that even a small number of inappropriate tests could expose Medicare to extremely high spending. The report said that as the spending on genetic tests and the volume of these tests continue to grow, oversight of these tests becomes more important. To address the ongoing risk to cost savings, OIG recommended that CMS seek legislative authority to establish a mechanism to control costs for these tests. CMS has not responded on this recommendation but said the $82 million in higher spending for automated chemistry tests represents about 1% of Medicare’s overall spending for lab tests in 2018.
On August 6, the House Ways and Means Committee rural health task force led by Reps. Terri Sewell (D-AL), Brad Wenstrup, MD (R-OH) and Jodey Arrington (R-TX) called for extending telehealth flexibilities beyond the pandemic, and some members stressed a need to add guardrails against waste, fraud and abuse. Meanwhile, some stakeholders warned the task force that telehealth is not the solution to long-standing structural challenges in health care. The members are trying to tackle the lack of certainty in reimbursement for telemedicine in a post-COVID-19 world that is stopping many from investing in related innovations. Prior to the pandemic, Medicare telehealth coverage was very limited. Many stakeholders have pushed lawmakers to make permanent the Medicare telehealth flexibilities instituted during the current public health emergency. CMS recently took some steps in that direction following President Trump’s August 3 executive order calling on CMS to make permanent some telehealth provisions allowed during the Covid-19 pandemic as well as authorize the Center for Medicare and Medicaid Innovation to create a rural health payment model, emphasizing telehealth flexibility for beneficiaries and providers in rural areas.
In early August, CMS Administrator Seema Verma met with rural healthcare providers and said CMS is examining the audio-only telehealth policy and the proposed rule would not continue Medicare codes for audio-only telehealth services. However, she wants public input on developing coding and payment for these services and is very interested in addressing rural healthcare needs. Some key areas to clarify are prioritizing value in telehealth, easing restrictions on site of service and geography, expanding providers and services, expanding care across state lines, protecting health data, and closing the digital divide to address health disparities and not exacerbate them, leaving behind underserved communities. At a minimum, many agree that Congress must remove the geographic restrictions on telehealth as well as the originating site restrictions and avoid adding more barriers, such as requiring an existing relationship between providers and patients. A significant number of people, especially among low-income and transient populations do not have a primary care doctor.
On July 9, more than 20 leading biopharmaceutical companies announced the launch of the AMR Action Fund that aims to bring 2-4 new antibiotics to patients by 2030 due to the rapid rise of antibiotic-resistant infections or antimicrobial resistance (AMR). The companies have raised $1 billion to support clinical research of innovative new antibiotics that are addressing the most resistant bacteria and life-threatening infections. The AMR Action Fund includes pharmaceutical companies, philanthropies, development banks, and multilateral organizations. While the focus on the high death toll from the coronavirus pandemic dominates global attention, AMR has plagued patients for several years as it claims 700,000 lives per year with experts projecting that by 2050, AMR could claim as many as 10 million lives per year.
Many in the AMR Action Fund as well as PhRMA and BIO were disappointed with FDA’s new guidance on antimicrobial drugs released on August 5 due to the lack of detail in laying out a pathway to expedite antimicrobial drugs that treat serious or life-threatening diseases in limited patient populations. The Limited Population Pathway for Antibacterial and Antifungal Drugs (LPAD) guide is very similar to the draft published in 2018 and is required by the 21st Century Cures Act despite industry calls for additional clarity and flexibility on eligibility criteria and clinical trials. Some clarity was provided regarding broad population and rare disease. In its 2018 draft guide, FDA said it would not consider a population to be limited solely based on the fact the infectious disease rarely occurs, but in its final guide, FDA says an antibacterial drug that would help prevent disease in a select patient population with no other options, such as mechanically ventilated patients, may be considered for the LPAD path. In contrast, a drug intended for broad population-level prevention of a rarely occurring serious or life-threatening disease generally wouldn’t be appropriate for the LPAD path. The purpose of the LPAD pathway, established by Cures Act, is to speed development of certain antimicrobial drugs by easing clinical trial requirements and imposing new labeling requirements while offering incentives to encourage companies to develop therapies for antimicrobial diseases. Many are skeptical these aims can be maximized under this guidance.
In addition to the summary above on the Defense Appropriations bill, the DoD via DARPA is focused on cybersecurity and additional funding. The Defense Advanced Research Projects Agency (DARPA) is about to launch a new funding program as it seeks information on ways to secure billions of internet-connected devices against futuristic code-breaking tools, according to an August 11 sources-sought notice. DARPA envisions a future in which billions, perhaps trillions, of small electronic devices – security cameras, drones, self-driving vehicles, and even household appliances like toasters – are connected over 5G wireless networks, the “Internet of Things,” or IoT. Because these devices are simple in terms of built-in computing power, robust encryption is often an afterthought.
Moreover, quantum computers will render most forms of conventional cryptography now used to secure data obsolete over the next 15 years, according to the National Institute of Standards and Technology (NIST). This raises the risk that billions of devices may be at risk of cyberattack. DARPA will launch a new Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) program called Cryptography for Hyper-scale Architectures in a Robust Internet of Things (CHARIOT) and will award Direct to Phase 2 grants. The program will focus on prototyping encryption technologies that are “fast, efficient, and quantum-resistant on even the cheapest devices.” DARPA officials are especially interested in applications relevant to wearable devices and vehicle-embedded systems. The agency may issue multiple awards, each with a two-year base period of performance and maximum value of $1.5 million, and a 12-month option period worth up to $500,000. The deadline to submit proposals is September 29. Previously, DARPA requested $1.1 billion in unclassified funding for 70 projects related to cryptography or cybersecurity in its FY2021 Research, Development, Test & Evaluation budget and requested $171 million for nine projects related to quantum information sciences. DARPA’s total unclassified RDT&E budget request for FY2021 was $3.6 billion.
The Trump administration is also prioritizing AI R&D in the Defense budget. To buttress Artificial Intelligence efforts, the FY22 budget development efforts prioritize research investments consistent with President Trump’s executive order on Maintaining American Leadership in Artificial Intelligence signed in February 2019 and the 2019 update of the National Artificial Intelligence Research and Development Strategic Plan. Transformative basic research priorities include research on ethical issues of AI, data-efficient and high-performance machine learning (ML) techniques, cognitive AI, secure and trustworthy Al. The current pandemic highlights the importance of use-inspired AI research for healthcare, including AI for discovery of therapeutics and vaccines; Al-based search of publications and patents for scientific insights; and Al for improved imaging, diagnosis, and data analysis. Beyond healthcare, use-inspired AI research for scientific and engineering discovery across many domains can help the nation address future crises.
In addition, the administration is focused on Quantum Information Science. Consistent with the 2018 National Quantum Initiative Act and the 2018 National Defense Authorization Act, departments and agencies are encouraged to pursue quantum frontiers by prioritizing approaches for enabling and invigorating the nascent QIS ecosystem while deepening focused efforts, such as centers, core programs, and novel quantum networking collaborations. Opportunities to encourage collaboration between efforts and agencies are a priority as well as pre-competitive R&D through mechanisms such as consortia. Continued support for technology translation efforts, investment in critical infrastructure and testbeds in concert with work on future computing paradigms and advanced manufacturing to enable next-generation quantum devices are all supported by the administration.
Ellen Lord, Under Secretary of Defense for Acquisition and Sustainment has developed pilot programs to test the acquisition of and transform the process for software procurement across the military. The “Color of Money” tests will analyze how contracting officers purchase software under its own budget activity. The BA-8, a new budget activity line, has been designed for an agile procurement process. This follows up on Lord’s January interim policy memo on changes to software acquisition practices with the final guidance to create new pathways to buy code yet to be released but expected this fall. The policy will ensure that contracting officers are equipped with the best practices, including agile and DevSecOps. In addition, Lord stated that her office is working with the Defense Digital Service to expand the program to improve recruitment and retention of technical officials.
The House Transportation and Infrastructure Aviation Subcommittee Chairman Rick Larsen (D-WA) introduced bipartisan legislation with Rep. Ron Estes (R-KS) that aims to preserve aviation manufacturing jobs by providing up to 50% cost-share for employees at risk of being furloughed because of the pandemic. The bill also includes provisions to protect jobs and boost labor protections and prevent relief funds from being spent on stock buybacks or to pay dividends. The bill is supported by the Aerospace Industries Association, International Association of Machinists and Aerospace Workers, and General Aviation Manufacturers Association.
On August 10, Secretary DeVos announced $3.9 million in new grants to improve the science and engineering programs of 17 Historically Black Colleges and Universities (HBCUs) and other Minority Serving Institutions (MSIs). The initiative is part of the Department of Education’s Minority Science and Engineering Improvement Program (MSEIP), which aims to increase the number of minority graduates in science, technology, engineering, and mathematics (STEM) programs. The grants would go to private and public nonprofit institutions with more than 50% of minority enrollments, professional scientific societies, nonprofit science-oriented organizations, and higher education institutions that provide necessary services or special training to minority institutions.
Research institutes are experiencing unprecedented damage, estimating that the costs for 2020 alone will top tens of billions of dollars. As a result, institutions have joined forces and called upon Congress for economic relief to reopen labs, mitigate project delay costs, and alleviate the institutions’ strained resources. Projects that were years in the making have had to revert to the starting point and the pandemic has caused the cancellation of critical field work. Federal science programs are currently prioritizing funds and balancing project budgets to mitigate losses. Science advocacy associations requested $47 billion in the next stimulus package for financial assistance to universities and students, and $26 billion to help restart labs and project delays. While the third stimulus package enacted in March provided $14 billion to universities, it did not include enough funding to address losses of science researchers. Current proposals in Congress do address this need, with the Republican proposal including $10 billion for research recovery while the House bill that passed in May called the HEROES Act allocated $4 billion. Research groups, however, recommend that the next stimulus package include at least $25 billion for science issues, including $10 billion for NIH.
With over 16 million Americans unemployed and 30 million collecting jobless benefits and some still have not received their stimulus check authorized four months ago. Since March, the IRS has issued about 160 million economic impact payments approved under the CARES Act, distributing hundreds of billions of dollars in aid through direct deposits, paper checks, and prepaid debit cards. But there are millions of eligible people who haven’t received a payment of up to $1200 per individual and $2,400 for married couples. The hardest part about reaching those individuals is they don’t normally file a tax return because they don’t have enough income, so the IRS simply doesn’t know who they are.
Today Speaker Nancy Pelosi (D-CA) said Democrats might cut their stimulus proposal to secure a deal with Republicans and speed Covid-19 relief, then come back after the November elections with additional agenda items. She urged action before the September rush to push through appropriations bills as the fiscal year comes to a close. In response, Treasury Secretary Steven Mnuchin suggested they finalize a deal when the House returns this Saturday and Majority Leader McConnell (R-KY) plans to introduce a scaled-back stimulus bill that would include a $300 a week enhanced unemployment benefit, money for small business relief, additional US Postal Service funding and protection for workers against lawsuits stemming from Covid-19 infections.
In July, the stimulus discussions were focused on provisions for additional $1200 stimulus checks, a boost to unemployment benefits and a measure to de-escalate the eviction crisis. The House Democrats passed the $3.5 trillion HEROES Act with a partisan vote in May while the Senate Republicans introduced a $1 trillion proposal on July 27 that never reached the senate floor. In the end, Congress adjourned with talks stalled until September after President Trump signed four executive orders to address these gaps on August 8, but ultimately caused confusion. The orders extend the federal unemployment supplement to $400 per week but rely on states to kick in funds which many governors say they cannot do, create a payroll tax holiday for those who earn less than $100,000 annually, extend student loan relief through the end of the year and ask administrators to seek funds to curb evictions. There are legal challenges to the extent of his orders and whether they are constitutional.
The New Business Preservation Act is a $2 billion bill sponsored by Senator Amy Klobuchar (D-MN) that would provide a one-to-one government match for investments in high-potential, scalable startups outside the traditional VC belts that get a disproportionate amount of funding—that means 80% of funding would go to Midwest, Southeast, and Southwest. Returns from exits would then be reinvested in the next generation of new businesses, creating a sustainable funding resource. Klobuchar teamed up with Senators Chris Coons (D-DE), Angus King (I-ME) and Tim Kaine (D-VA) to introduce the bill last year before the Covid-19 crisis, but has amplified efforts in response to it to help re-start the economy primarily in the Midwest and southern parts of the country. One decade ago, 62% of venture capital was concentrated in the greater metro areas of Silicon Valley, Boston-Cambridge, and New York City, according to data from Pitchbook. While the "Rise of the Rest" and similar efforts to attract VCs have drawn attention, this access to capital remains a major challenge. Today, that number has increased to 80%. The New Business Preservation Act was submitted to the Appropriations Committee for consideration as part of the stimulus package and has several champions pushing behind the scenes, including G2G.
On July 31, 2020, the eviction moratorium provided by the CARES Act expired. Experts say that the expiration leaves 23 million out of the 110 million renters vulnerable to eviction by the end of September. The University of California in Los Angeles (UCLA) found that 120,000 households, including 184,000 children, in Los Angeles county alone face homelessness when evictions continue. In South Carolina, 52% of renters cannot afford their rent and 185,000 residents are expected to lose their homes by the end of the year. While President Trump implemented an executive order aimed at “protecting people from eviction”, housing advocates say that it does not provide any meaningful relief, nor protection again eviction. A measure is needed to extend the eviction moratorium and provide rental assistance in order to prevent mass evictions and a surge in homelessness by tens of millions.
On August 13, US stocks came close to making financial history, topping the benchmark index of 3,386.15 before dipping. Investors are starting to look toward an eventual recovery as economic data is starting to show signs of stabilization and earnings have been better than expected, thereby fueling investor optimism. Investors have focused on the aggressive actions by the Federal Reserve and the US Treasury, which are using more federal funding interventions than during the Great Recession. The Federal Reserve provided up to $2.3 trillion in lending to support households, employers, financial markets, and state and local governments and cut its target for the federal funds rate, the rate banks pay to borrow from each other overnight, by a total of 1.5%age points since March 3, bringing it down to a range of 0-0.25%.
In addition, using a tool honed during the Great Recession of 2007-2009, the Fed offered forward guidance on the future path of its key interest rate, saying that rates will remain low until it is confident that the economy has weathered this crisis. The Fed also resumed purchasing massive amounts of securities, a key tool employed during the Great Recession, when the Fed bought trillions of long-term securities. Between mid-March and mid-June, the Fed’s portfolio of securities held outright grew from $3.9 trillion to $6.1 trillion. Through the Primary Dealer Credit Facility (PDCF), a program revived from the global financial crisis, the Fed is offering low interest rate (currently 0.25%) loans up to 90 days to 24 large financial institutions known as primary dealers. The Fed is helping banks as well by lowering the rate it charges banks for loans from its discount window by 1.5%age points, from 1.75% to 0.25%, lower than during the Great Recession. These loans are typically overnight so they are taken out at the end of one day and repaid the following morning, but the Fed extended the terms to 90 days.
The coronavirus loan program for small businesses closed with almost $134 billion in remaining money. The Small Business Administration, which runs the Paycheck Protection Program with the Treasury Department, stopped accepting new applications on August 1. Over 5.2 million loans totaling $525 billion were approved since the program launched April 3, according to the SBA. The average loan amount was $101,000. A proposal from Senate Republicans calls for using $190 billion in leftover PPP money and new funding to extend the current program through December 31 while letting smaller and disadvantaged companies hardest hit by the pandemic get a second loan. Senate Democrats introduced a similar proposal that differs on some details; for example, it would restrict eligibility to companies that have 100 or fewer workers instead of 300 or fewer in the GOP plan. Democrats have also called for more money for the separate Economic Injury Disaster Loan program. However, negotiations have been stalled and no changes to this program are expected until this fall.
State and Local Governments are struggling with extreme budget problems as they pay rising unemployment and health costs with plummeting revenue from sales, corporate and personal tax payments. State Departments in transportation and public transit are continuing to ask Congress to infuse $37 billion immediately, or transportation of hospital supplies, food, and commuters will be impacted. Estimates expect at least a $555 billion gap in state budgets through FY2022, and that the damage from these gaps could prove to be even worse than the Great Recession. As states balance their budgets, they will need to cut costs and jobs, which the Federal Reserve Chair Jerome Powell predicts will hinder economic recovery. Disagreements on how to handle the problem have contributed to the delay of finalizing an economic stimulus package in Congress. Democrats have proposed as much as $1 trillion to state budgets, while Senator Mitch McConnell believes that more funds will hinder state budget management. Meanwhile the problem extends to local governments, as nearly 1.2 million local government jobs have been lost since February and researchers indicate 2.8 million could be next. Furthermore, 700 cities have halted critical infrastructure and road projects and equipment purchases since before the pandemic.