Contention over COVID-19 & Ukraine Invasion Shape New Spending Bill

On March 10, 2022, the US Congress rapidly passed a $1.5-trillion spending bill that substantially increases funding for domestic programs and for national security programs. All government activity through September 2022 is covered by the 2,741-page bill, but two issues in particular loomed large: the country’s response to Russia’s offensive against Ukraine ($13.6 billion have been allocated for emergency aid for Ukraine) and the Biden administration’s continuing work around the COVID-19 pandemic.

The Bad News for Biotech, Medtech, & Healthtech

Congress did not pass the White House’s request for $22.5 billion for continued COVID-19 work. While some funding remains for the Biden administration’s COVID-19 programs, the total allocation for COVID-19 activities in the new spending bill is $0.

How did that happen?

In the days before Russia invaded Ukraine, the Biden administration gauged the willingness of Congress to allocate funding for its continued effort to deal with COVID-19. After members of Congress bristled at the White House’s $30-billion proposal, the White House requested $22.5 billion in funding. Ranking Democrats in Congress negotiated with Republicans skeptical of the administrations COVID-19 spending and settled for a proposal to allocate $15.6 billion for the pandemic. Over $10 billion of this funding would have been designated for the Public Health and Social Services Emergency Fund, and some of that would have been dedicated to R&D aiming to protect against future variants. Ultimately, a feud among the two parties, however, led to deadlock which would have delayed passage of the entire spending bills, and House Speaker Nancy Pelosi (D-CA) struck all funding for the pandemic. Still Senate Republican Leader Mitch McConnell (R-KY) and Senate Majority Leader Chuck Schumer (D-NY) praised the bipartisan effort that led to the bill’s passage.

The Good News for Life Science R&D

The bill does provide more funding for biomedical research:

• The NIH stands to receive $45 billion – an increase of $2.25 billion.
• This includes $1 billion to establish the Advanced Research Projects Agency for Health (ARPA-H) – more on that in our next post.
• The CDC will be allocated $8.5 billion – an increase of more than half a billion dollars over last year’s allocation.

The increase in funding for the NIH, including ARPA-H, will mean new non-dilutive grant and contract opportunities for life science R&D and companies in the biotech, medtech, healthtech, and biopharma spaces. (Read more about ARPA-H here.)

In addition, Congress allocated $782 billion for defense spending, an increase of 5.6%. This too may lead to new non-dilutive funding opportunities for life science R&D.