A step forward in the FY2023 appropriations process: Key proposals the life sciences sector should watch

Summer in Washington, DC typically means two things: a steady stream of action by the Appropriations Committees in Congress and an uncertain path ahead to the President’s desk for this must-pass  budgetary legislation.

1 to form, the House of Representatives is off to a fast start on FY2023 legislation, crafting proposals on pandemic preparedness, supply chain challenges, clinical trials, and an array of other areas important to the life sciences sector.  We expect the typically more deliberative Senate to begin its public-facing work this month as well.

Here are some House proposals the life sciences sector should watch as the appropriations process continues:

Pandemic preparedness and response

One of the most prominent questions among policymakers remains how to better prepare and respond to future pandemics. The House is attempting to answer that question for FY 2023 by proposing new programs and increasing funding for existing ones.

Among the FY 2023 highlights:

• The Department of Health and Human Services (HHS) Coordination Operations and Response Element (H–CORE), the functional successor to Operation Warp Speed and the Countermeasure Acceleration Group, would receive $132.8 million in dedicated, annual appropriations for the first time. Appropriators intend for H-CORE to synchronize medical countermeasure (MCM) efforts against current and future health threats.
• The Centers for Disease Control and Prevention (CDC) would receive $50 million for the new Center for Forecasting and Outbreak Analytics, also the first dedicated, annual appropriation for that center. This new entity started with COVID-19 emergency supplemental funding earlier this year and aims to improve outbreak responses by better leverage data, modeling, and analytics.
• The Biomedical Advanced Research and Development Authority (BARDA) at HHS would receive $845 million, a 13 percent increase over FY 2022. Appropriators provided significant guidance about their priorities for BARDA, among them long COVID, antifungal research, and immunomodulator therapeutics. Others are discussed in the sections below.
• BARDA’s parent division, the Office of the Assistant Secretary for Preparedness and Response (ASPR), would receive $382 million, a 27 percent increase in funding, to modernize research, expand MCM development, and stockpile vaccines for its Pandemic Influenza program. ASPR would also receive $855 million for the Strategic National Stockpile. This is a $10 million increase over FY2022, but falls well short of the $975 million requested by the President.

Supply chain challenges

COVID shocked global supply chains, greatly affecting the availability and cost of critical medical supplies, device components, and active pharmaceutical ingredients (APIs). Several noteworthy items from the FY 2023 House bills this year are closely related to items in the previous section and reveal a broad understanding of the status quo and a desire to shorten relevant supply chains.

Among the FY 2023 highlights:

• Appropriators propose up to $10 million to the National Institutes for Standards and Technology (NIST) within the Department of Commerce to create a national supply chain database. The database would help to improve communications between manufacturers and suppliers through NIST’s Manufacturing Extension Partnership Centers.
• The Food and Drug Administration (FDA) and the BARDA are encouraged to enhance domestic manufacturing capacity of pharmaceutical drugs, including heparin, and raw materials, including saline. NIST is also encouraged to consider projects to scale the manufacture of biosynthetic heparin.
• Similarly, the Department of Defense (DOD) is encouraged to ensure domestic sourcing of ingredients and production of novel antibiotics.
• The Committee further encourages the FDA and BARDA to maintain ample supply of critical medical devices and ensure a long-term, sustainable domestic supply chain for them.
• ASPR is encouraged to invest in domestic warm-base manufacturing of over-the-counter diagnostics, particularly those intended for the SNS, and to support novel pharmaceutical manufacturing technologies that utilize agricultural cell line development.

Clinical trials come into focus

Supplemental appropriations from Congress and a groundswell of private sector innovation to combat COVID-19 demonstrate the unprecedented speed with which MCMs can progress through clinical trials. While the high-risk and high-cost approach taken on clinical development since the start of the pandemic is not sustainable in the long run, Members of Congress are perhaps more focused on clinical trial processes than ever. House Members pay particular attention to trial design and participant diversity this year.

Among the FY 2023 highlights:

• The FDA is encouraged to advance clinical trial designs that better seek populations underrepresented in trials for Alzheimer’s disease and to address barriers to trial participation among patients suffering from inflammatory bowel disease.
• The FDA is also urged to work with industry to standardize potency testing requirements for cellular therapies used in combination with other therapies in clinical trials.
• The National Institutes for Health (NIH) is encouraged to proactively conduct outreach to improve clinical research awareness among women, racial and ethnic minority groups, underrepresented communities, and the health care organizations serving these groups.
• Within the NIH, the National Cancer Institute (NCI) would receive a $10 million increase, in part to study best practices for increasing participation of underrepresented populations in NCI-supported clinical trials.
• The Department of Defense and Department of Veterans Affairs are directed to enhance the diversity of participants in oncology clinical trials, particularly those focusing on metastatic cancer.

For more information on the importance of diverse representation in clinical trials, I encourage you to listen to the March 2, 2022 episode of our “At the Intersection of Science and Law” podcast hosted by DLA Piper’s Kirsten Axelsen, “Incentivizing diverse representations in clinical trials.”

Other items of note

• Advanced Research Projects Agency for Health (ARPA-H): This new agency would receive $2.75 billion for FY 2023, still housing the agency in the Office of the Secretary at the Department of Health and Human Services. This is a substantial increase in funding over the first $1 billion ARPA-H received in the final FY2022 appropriations bill just four months ago, but is well below the $5 billion requested in the President’s Budget. ARPA-H receives its first substantive directives from Congress, with Appropriators urging it to prioritize amyotrophic lateral sclerosis (ALS), serious mental illness, and nanovaccine research.
• Federal Trade Commission (FTC): The House would provide the FTC with a 30 percent funding increase over FY 2022, bringing its new total to $490 million. Appropriators urge the FTC to “proceed expeditiously” with its study of pharmacy benefit managers’ rebate practices.
• 340B: The Health Resources and Services Administration (HRSA) within HHS, which administers the 340B program, is encouraged to continue scrutinizing drug manufacturers’ participation in the program and to pursue civil penalties for violators.
• Biosimilars: The Centers for Medicare and Medicaid Services (CMS) at HHS is encouraged to prioritize policies to accelerate the adoption of biosimilars currently on Medicare Advantage and Part D formularies and to better educate beneficiaries on the benefits of biosimilars.
• Artificial intelligence (AI) and machine learning (ML): The FDA Center for Drug Evaluation and Research is encouraged to use AI and ML to enhance its review of drug repurposing candidates.
• Drug quality: CMS is urged to consider potentially increasing the chemical testing of medicines within the US and establishing quality rating systems for drug manufacturers.
• Obesity drug coverage: Appropriators encourage CMS to ensure FDA-approved obesity treatments are covered under Medicare Part D consistent with its coverage of behavioral therapy and bariatric surgery.

To learn more about any of the topics discussed in this publication, please contact the author.