February 13, 2023
FY23 Appropriations—Health Highlights
Health-focused agencies, from the Food and Drug Administration to National Institutes of Health, showed growth in appropriations from FY22 to FY23 that is not likely to be repeated with a divided government. The “three corners” (Senate Democrats, Senate Republicans, and House Democrats) that negotiated the FY23 omnibus took steps to limit options for House Republicans in FY24. For example, they started several new health-related initiatives and approved funding increases for Congressional and administration priorities, such as the cancer moonshot and the Advanced Research Projects Agency-Health (ARPA-H).
Notable policy and funding directives in the FY23 Omnibus (P.L. 117-328) —all of which we will be watching for in the FY24 Biden budget next month—are highlighted below.
INDIAN HEALTH SERVICE (IHS)
For the first time, IHS received advance funding for health care, parallel to the way veterans’ health care is funded. That means that the omnibus provided both FY23 funding and FY24 funding for IHS, and IHS healthcare will be insulated from the consequences of a potential government shutdown or the uncertainty of a continuing resolution (CR). From a funding perspective, the omnibus provided $6.9 billion for FY23, a nearly $300 million increase compared to FY22. The advance appropriation for FY24 is $5.13 billion for clinical and preventive services and a portion of the health facility programs. This decision makes $5.13 billion the guaranteed “floor” for FY24 IHS appropriations. As with the Veterans Administration, we expect the President to seek additional funds for IHS in the FY24 President’s Budget.
For the IHS Electronic Health Records project, Congress provided $217.6 million, a $72 million, an increase of more than 50% over FY22. In report language, the appropriations committees direct IHS to provide updates on the modernization effort and detailed quarterly financial statements, and to assure interoperability with the VA electronic health record.
For the first time in history, we will also bring Indian Health Services into parity with all other healthcare providers. This historic provision helps fulfill the Federal Government’s trust responsibility to our tribes. We will provide more resources, healthcare coverage, and the dignity they deserve.
Senate Majority Leader Schumer (D-NY),
Congressional Record, December 20
CENTERS FOR DISEASE CONTROL AND PREVENTION (CDC)
The omnibus provided a total of $9.22 billion in CDC program level funding. A major cross-cutting initiative is Public Health Infrastructure Modernization, focused on rebuilding the core public health capabilities of the nation. The largest building block for the effort is $350 million for Public Health Infrastructure and Capacity, a $150 million increase compared to FY22. Infrastructure and Capacity funding is focused on state and local health departments, with Congress requiring that 70% of the funds go to state and local health departments for infrastructure, technology, and staffing investments. The $200 million in funding provided for this effort in FY22, along with $3 billion in pandemic funds, were the basis for the November 2022 CDC announcement of $3.2 billion in grants for state, local and territory public health departments.
The second component of the public health rebuild is the $175 million Data Modernization Initiative (DMI). The core DMI objective is collection and integration of state and federal data to get “better, faster, actionable insights for decision-making at all levels of public health.” Congress has funded this initiative since December 2019, and stresses the need for CDC and local collaboration in its report, directing CDC to “work with representatives from [state, local and territory] STLT health departments through a regular convening mechanism to establish a public health data sharing process to ensure that notifiable case data are reported to CDC during an emergency response event in a timely and efficient manner.” Finally, the omnibus also provided CDC with: $71 million for “rebuilding and sustaining” the public health workforce; $293 million for global health protection, including capacity development; and $50 million for the new Center for Forecasting and Outbreak Analytics.
At CDC and throughout public health, we are in a pivotal moment for data and surveillance — one marked by opportunities, challenges, and the need for change.
NATIONAL INSTITUTES OF HEALTH (NIH)
The FY23 omnibus included $47.5 billion for NIH, including $1 billion in Cures Act funding. This is a $2.5 billion, or 5.6% increase compared to FY22. Within NIH, Congress addressed the use of Artificial Intelligence and Machine Learning (AI/ML) in biomedical research. It provided $135 million for building AI/ML capacity, including $50 million for specific AI/ML-focused investments, $85 million to launch an NIH/Department of Energy pilot to “study the potential for quantum computing for biomedical sciences.” The omnibus also includes $3 million for building AI-based analytical tools to help NIH optimize investments in biomedical research “by identifying emerging topics and predicting which ones will produce transformative breakthroughs” and to gain insight into return on investment.
Within NIH, the National Center for Advancing Translational Sciences received “up to $70 million” in funding and is directed to focus on diagnostic technologies, gene therapy vectors, and AI/ML-enabled chemistry for drug development. Congress is also interested in generating data “to demonstrate the efficacy and cost effectiveness of precision medicine.”
ADVANCED RESEARCH PROJECTS AGENCY FOR HEALTH (ARPA-H)
The FY23 funding agreement included $1.5 billion for ARPA–H, in addition to the $1 billion in multi-year funding provided in FY22 that mostly remains unspent. Congress has encouraged ARPA-H to learn from the high-risk, high-reward Defense agency, DARPA, which spawned the ARPA-H concept and avoid making ARPA-H a replica of NIH. The Biden Administration seems to be in line with that direction. The first ARPA-H Director, Renee Wegrzyn, is a former DARPA research director. Expect a Congressional battle over the future physical location of ARPA-H. In part, the Congressional language states “ARPA–H will require a very different culture and mission than NIH’s other 27 Institutes and Centers. To foster the development of an entrepreneurial culture, the agreement expects ARPA–H to be physically located away from the main NIH campus,” and directs that “ARPA–H consider recruiting from industry, academia, and think tanks” rather than from within NIH.
OFFICE OF THE ASSISTANT SECRETARY FOR PREPAREDNESS AND RESPONSE (ASPR)
The FY23 appropriations bill and report included several important policy directives for ASPR, many of which focus on data analysis and use of AI. ASPR is an office within HHS that is responsible for the medical and public health aspects of preparing for and responding to public health emergencies and disaster recovery, including pandemic response, logistics and treatments, and emergency preparedness. Congress wants ASPR to consider how AI can improve its work, directing that ASPR study AI-enabled pandemic preparedness and response, how AI can aid in biosecurity, and using AI “to develop and deliver capabilities of high value in the areas of accelerated vaccines, rapid therapeutics, global bio-threat surveillance, and rapid fielding.”
The omnibus pushes ASPR to fully address supply chain risk for pharmaceuticals and to assess resilience of the drug supply chain, directing that ASPR pursue “the ability to leverage integrated data analytics from a range of data sources to identify key risk indicators and improve both demand forecasting and capacity management” as well as continuous assessment of the global supply chain. Further, Congressional language requires ASPR to prioritize the medical distribution supply chain, with establishment of an industry-government task force “to proactively prepare for the next public health emergency.” Also stemming from the lessons of the COVID emergency, and the reliance on telemedicine, the congressional direction for the National Emergency Telecritical Care Network (NETCCN) is to “continue clinical deployments for the NETCCN.” Congress provided $6.5 million and wants this network to be available for future public health emergencies/disaster response.
Regarding ASPR’s preparedness, Congress stresses the need for real-time hospital capacity data and analytical tools “to improve overarching capacity issues experienced by hospitals and providers in all 50 States and the territories during community, State, regional, and national emergencies” from all hazard types.
FOOD AND DRUG ADMINISTRATION (FDA)
FY23 funding for FDA includes a $228 million increase with directed funding for several supply chain and data modernization initiatives. Highlights include $5 million for medical device shortage and supply chain analysis, $800,000 for veterinary medical product supply chain issues, $20 million for Data Modernization and Enhanced Technologies, $5 million for a medical device cybersecurity program, and $1 million for use of ML in the food program. Congress endorses domestic manufacturing of drug and biological products and “urges the agency to increase efforts to encourage the pharmaceutical industry to adopt advanced manufacturing technologies.”
In addition to the roll-out of FY23 health agency funding, key decisions for these agencies include obligation of unspent COVID funds for NIH, CDC, ASPR, and others, plus new FY24 priorities for these agencies that are likely to emerge in President Biden’s FY24 Budget. Anticipate questions from Appropriations Committee members, particularly in the House, regarding unobligated COVID balances when FY24 budget hearings commence in March.
Expect House Republican spending bills to include rescissions of unused pandemic funds along with proposed cuts from FY23 funding levels for many non-defense discretionary accounts—a category that includes all of the agencies covered by this analysis. As President Biden signaled in his State of the Union address, we expect the Administration and the Democrat-controlled Senate to resist those reductions.
Keep in mind that if Congress is unable to get spending bills enacted by the start of FY24 (Oct. 1), there is a possibility for a full-year CR for FY24. In that scenario, government funding levels will likely be held to current law levels by program, project, and activity (unless the CR includes an exception). This situation makes the FY23 new starts and funding increases enacted in December 2022 more important. They effectively raise the program planning level for both FY23 and FY24.