The shift in Project BioShield Act of 2004 funding from its original 10-year appropriations cycle to year-by-year funding has posed challenges for the program by creating an uncertain climate for private-sector firms investing in developing medical countermeasures (MCM) against chemical, biological, radiological or nuclear (CBRN) agents, former Sen. Tom Daschle (D-SD) said Wednesday.
During a Capitol Hill forum releasing the Bipartisan Policy Center report Budgeting for Medical Countermeasures: An Ongoing Need for Preparedness by Daschle and former U.S. Sen. Judd Gregg (R-NH), Daschle noted that there is no commercial MCM market for the firms that rely on the federal government’s commitment to funding MCM development, “a costly and risky endeavor.”
Daschle and Gregg offered budgeting strategies that they believe could lend stability to the MCM arena, some of which would call for changes to statutory processes and congressional procedures that have been implemented since the Project BioShield Act’s 2004 enactment.
“Advance appropriations offer the greatest stability for the private sector to invest in a high-risk area in which the government is the sole purchaser,” Daschle and Gregg asserted in the report. “Advance appropriations also allow the federal government to better plan for procurement over a longer period of time.”
In the event of a CBRN attack, a new mechanism could be adopted for automatic emergency appropriations, the report said. Emergency funds are not subject to caps. Daschle and Gregg observed that Congress is generally reluctant to designate funds as “emergency.”
Forward funding, making funds available late in the budget year that could be carried over to the next, is in limited use today, the report said. However, the funds would be counted against restrictive caps.
“I am delighted” that the Trump administration has “recently come out in support of restoring the original funding mechanism” of a 10-year appropriation for Project BioShield, Daschle said during the forum. “As part of the administration’s request for FY 2019, taking into account the new resources made available by last week’s budget deal, the administration has proposed an additional $4.99 billion for Project BioShield.
“These funds would be used to move from an annual appropriations process back to a 10-year advance appropriation,” Daschle added. “I want to commend the administration for their leadership on this issue which is so essential to our country’s safety.”
Congress passed the Project BioShield Act in 2004 to encourage the development of MCMs by private manufacturers against CBRN threats. The Biomedical Advanced Research and Development Authority (BARDA), managed by the Assistant Secretary for Preparedness and Response (ASPR) at the U.S. Department of Health and Human Services (HHS), has so far successfully transitioned 27 MCMs to Project BioShield for late-stage development and procurement, Daschle said. Those include products for smallpox, anthrax, botulinum and other types of threats.
Project BioShield originally received an appropriation of $5.593 billion for fiscal years 2004 through 2013, according to the report. Daschle pointed out that this enabled the U.S. Secretary of Health and Human Services to obligate funds for developing MCMs, thereby creating a guaranteed government market for private manufacturers. Congress shifted part of the advance appropriation to BARDA and the National Institutes of Health for MCM development and influenza preparedness.
The Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (PAHPA) extended the Project BioShield procurement program through FY2018, authorizing appropriations of up to $2.8 billion for fiscal years 2014 through 2018. However, no advance appropriation was provided.
Given that PAHPA is due for reauthorization this year, “a discussion of the most appropriate funding mechanisms for Project BioShield is urgently needed,” Daschle and Gregg wrote.
Sen. Richard Burr (R-NC) introduced both Senate versions of PAHPA; the original bill that became law in 2006, and the Pandemic and All-Hazards Preparedness Reauthorization Act (PAHPRA) of 2013, which became law that same year.
“PAHPA gave us a predictable pathway of an accelerated process” for funding MCM trial and approval,” Burr said during the forum.
Burr pointed out that MCM development “does not look like the historic FDA model” for development of drugs and biologics. Instead, the model is that of a public-private partnership involving “new innovative companies that create new technology platforms” that could potentially foster treatment for cancer or other diseases as well as MCM development.
“If we don’t allow innovators to innovate in this country at the pace they can anywhere else in the world, they will leave here,” Burr added. Project BioShield is “bigger than a biodefense issue,” Burr said. “This is about creating the framework for how over the next 10 to 20 years the United States partners with private innovators” to benefit Americans. He added, “I think part of the government’s responsibility to taxpayers is to leverage federal money where we can leverage it.”
Rick Bright, director of BARDA, pointed out to the forum that Project BioShield “is a commitment to have an established marketplace for companies that will put other profitable things aside” to benefit the nation. Bright added that under multi-year appropriations, BARDA was able to offer firms “a full path forward to development,” including late-stage development with the marketplace at the end. Multi-year funding is more than about money, Bright said. “It is about the technical skills and the ability to work unencumbered in a comprehensive way from start to finish” to develop MCMs.
Breaking up that continuum due to “fragmented funding” increases risk and may drive less than optimal technical decisions, Bright said. “We need that continuity” to ensure companies are willing to undertake development. “When we changed to the annual appropriation it introduced so much more risk in working with industry partners.” Bright added, “So many people walked away from the table” because it was too risky.
In that vein, the report said, “An authorization subject to annual appropriations can cause companies to question whether the government is a reliable customer committed to a long-term contractual relationship.
This is particularly true in an environment where the federal government has increasingly relied on short-term continuing resolutions to fund the government rather than the traditional appropriations process. Similarly, some manufacturers have stated that an advance appropriation makes it easier to obtain capital from investors.”
Daschle and Gregg’s report noted that Project BioShield’s Special Reserve Fund (SRF) will fund procurements through FY 2020 for high-priority threats and for broad-spectrum antimicrobials that treat multiple biological threats, as well as diagnostics for biological and radiological/nuclear threats.
Optimizing funding
“The most significant restriction” is the automatically enforced discretionary budget authority cap with automatic enforcement procedures that was created in the Budget Control Act of 2011 and in effect through 2021, the report said.
Limits on advance appropriations imposed by several congressional budget resolutions since 2001 were also cited as a factor in the unstable MCM-development funding climate.
Daschle and Gregg noted in the report that the Concurrent Budget Resolution for FY 2018 passed in October 2017 reestablished Senate budget enforcement procedures for taking up legislation that would grant advance appropriation to any discretionary spending account. Three-fifths of the Senate, 60 senators, would have to vote in favor of waiving or suspending a budget point of order enforcing the limitations so that advance appropriations could proceed, the report said.
Certain agencies are exempted from limitations, including the Corporation for Public Broadcasting, and some Department of Veterans’ Affairs programs. Other agencies have advance appropriations limits on some programs. Project BioShield would need to be made exempt. As an alternative, a budget resolution or other legislation in absence of one could add Project BioShield to accounts receiving advance appropriation, the report said.
Daschle and Gregg also noted that PAHPA reauthorization would have to facilitate multiyear funding because if funds are made available over a delayed period of time it could violate House and Senate appropriations rules.