COVID-19: Update on the Federal Government’s Healthcare Response

Rick Weissenstein, Cowen Washington Research Group’s Health Care Services & Pharmaceutical Policy analyst and Eric Assaraf, Cowen Washington Research Group’s Health Care & Medical Devices analysts speak with Michael McCaughan, Founding Member, Prevision Policy, Adriel Bettelheim, Health Care Editor, POLITICO and David Lim, Health Care Reporter, POLITICO.

They speak about the latest on the federal government’s healthcare response to COVID-19, recent administrative and legislative actions along with agency initiatives at HHS, CDC, and CMS and the potential impact of COVID-19 on FDA drug reviews and the elections.

Press play below to hear the full discussion.

Transcript

Recorded Voice:              Welcome to Cowen Insights, a special look at the coronavirus and it’s effects on sectors across the economy, as well as the policy arena. You will hear the latest insights from leading experts about where things stand and what’s around the corner.

Rick:                                 [00:00:30] I’m joined by my colleague Eric Assaraf and we actually have two members of the media and one ex-reporter on our panel today, that is going to look at recent administrative and legislative actions, along with agency initiatives at HHS, CDC, [Mass 00:00:49], and then look at the potential impact of COVID-19 on drug reviews and other related to email. So, with that, I’m going [00:01:00] to turn it over to Eric who is going to introduce…

Eric Assaraf:                     Thanks, Rick. So we have Adrian Bettelheim, who’s the healthcare editor at POLITICO Pro, and has covered government and politics from Washington since 1994. He previously held senior editing and reporting positions at CQ Roll Call, Bloomberg, PolitiFact, and the Denver Post.

                                         Also, from Politico, we have David Lim, who is a healthcare reporter focused on regulatory and legislative policy concerning the medical device industry and the [00:01:30] FDA. He’s recently been focused on the Trump administration’s efforts on COVID-19 testing. Last but not least, we have Mike McCaughan, who is a founding member of Prevision Policy, where he focuses on regulatory and policy developments affecting the BioPharm industry.

                                         Previously, he was editor in chief of FTC [inaudible 00:01:51] BioPharma group, which included Pink Sheet, In Vivo and RPM report. I’ll turn it back to you, Rick.

Rick:                                 Well, thank you. So we’re gonna kick [00:02:00] it off with Adriel Bettelheim. Adriel, I know you’re on top of this stuff and it’s changing by the minute, but it seems we have a bit of one-upsmanship going on with the democrats looking at somewhere in the range of 750 billion for a third package, and Republicans looking at something above that. So maybe the place for you to start would be where we are there, and then what we’ve actually done so far.

                                         This would be the third package, there were two ahead of it. So maybe you can bring people up to speed with [00:02:30] what you know about where we are on the third one, and then maybe [inaudible 00:02:33] quick…

Adriel Bettelhe…:            Yeah. Well, [inaudible 00:02:36] and Eric, and everyone. Right now, where we are, the Senate is poised to pass house relief bill, what we’re calling Phase Two. And this is Congress moving as close to warp speed… And basically the story, when once they do that, and they’re expected to do that, will [00:03:00] quickly turn to how fast they passed the next much bigger rescue package.

                                         As Rick mentioned, there’s already dueling proposals and a lot in play. And because of that, we’re certainly not expecting to see the legislative texts on that today. A couple of just general things. Mitch McConnell, the majority leader is going to need 50 votes in the Senate, so he’ll need some democratic help. [00:03:30] And that will test his relationship with Chuck Schumer, the Democratic leader, which is… it’s never been a great relationship.

                                         It’s maybe not as toxic as McConnell’s relationship with Harry Reid, the previous Democratic Leader, who really hated each other. But this one [inaudible 00:03:47] good. So we’ll see if there’s… Some of this is democrats who are skeptical about the B-word, bailouts for some industries, particularly airlines. [00:04:00] And also, I think the larger political question of who gets the credit, there’s feeling among the democrats that Pelosi, Nancy Pelosi, the speaker, may have blown it by let republicans come up with the idea of giving $1,000 in cash to Americans when democrat originally throwing around similar ideas like that.

                                         And a little bit of skepticism, whether she’s man enough, [00:04:30] or whether she gave in too much to Steve Mnuchin in the negotiations on paid leave and some of the other things in this second pack pass. So against that backdrop, there’s already asks that are coming out in administration wish lists that came out of OMB, and we can talk about more about that, but one of the main highlights of that, an $8.3 [00:05:00] billion total for Centers for Disease Control, which is about 500 million by our calculation above [inaudible 00:05:09].

                                         They’re looking to plus up the public health and social services emergency fund by more than $5 billion. That’s where the vaccines, the therapeutics, the diagnostics, and the purchases for the National Strategic Stockpile. That’s what that money… $1.3 [00:05:30] billion to expand triage and capacity for HHS person specific. So this is addressing some of the anticipated capacity crunch and the efforts to expand the use of telehealth dramatically, really, to keep patients’ exposure down and to keep them out of facilities and clinics that they might need in areas where there’s going to be just a surge of Coronavirus.

                                         [00:06:00] One big unknown right now is how much, if at all, drug pricing surprise going, and the Medicare extenders will be part of next package. That seems to be consuming and increasing with. Republicans have already killed attempts to limit what [inaudible 00:06:24] charge for fees associated with testing. Employers are [00:06:30] very pissed [inaudible 00:06:32]. They think it opens the door for emergency docs, many of whom are part of physician staffing firms, which are owned by equity firms, to rack up big costs [inaudible 00:06:42].

                                         There’s talk about adapting some of the things in the stalled Senate drug pricing bill, the [inaudible 00:06:51] bill, into this next package, and of course, the extenders. And surprise billing in general. So [00:07:00] those are some of the big, big issues in play, and obviously heightened attention to that, and whether this just becomes a Christmas tree.

                                         Tough calls for a lot, not just for the Democrats. I think a lot of us, the Tea Party Republicans who came to power, opposing bailouts in 2008. In the aftermath of the 2008 crash, we’re suddenly having quite a record year. So there’s some interesting psychology, there’s desire for political credit, [00:07:30] and just huge packages that we guess, and will be exceeding $1 trillion. So I’ll shut up.

Rick:                                 Okay. Thank you for that. David, maybe you can bring us up to the hour with testing, paying for testing, all those kinds of things that we have going, and when we might actually see. We had our first person enrolled in a trial for a vaccine. But I suspect that that probably doesn’t tell us if there’s going to be an [inaudible 00:07:57] quickly, and where we are funding [00:08:00] for those things.

David Lim:                       Yeah, sure. Thanks for having me, Rick and Eric. Let’s start with the last thing first, since it’s the thing to answer. We are starting phase one trials. But Dr. Fauci has made it clear that actual completed vaccine is probably at least a year to 18 months or more away. So no news on that front. In terms of testing, we’re seeing a lot of commercial manufacturers getting [00:08:30] emergency use authorization from the FDA for diagnostics in recent days.

                                         Hologic, Thermo Fisher, [Roche 00:08:37] Diagnostics, and others. So the commercial tests are going to expand the capacity in the United States. However, it’s probably still going to be bottlenecked by basic materials needed to run the test. A lot of my reporting has been focused on the supply chain, so RNA extraction kits to get samples prepared for the actual COVID [00:09:00] test, as well as swabs.

                                         So medical swabs to actually take the samples. There are shortages in several states. Governors are saying that that’s a limiting factor, to the point where they’d told people. So it’s a multifaceted… What else can I say? The FDA has been taking several actions to reduce the amount of material [inaudible 00:09:27] test. They put out guidance, [00:09:30] saying that patient samples can be combined, so nose and throat samples can be combined into one test to cut down on the amount of supplies needed.

                                         They’ve also been trying to look at personal protective equipment supply for lab workers as well as [inaudible 00:09:47]. That’s another factor that commercial laboratories have raised as a potential issue for being able to carry out that. Some public health experts are saying that United [00:10:00] States [inaudible 00:10:02]…

Rick:                                 Okay. Last but not least, as Eric said earlier, Mike McCaughan. What do we have going on at the FDA? And obviously, you’ve got… A few announcements came out earlier today on ADCOMS, among other things. And you’ve got a bunch of interesting drugs pipelined. What’s the FDA up to in the middle of all this?

Michael McCaugh…:       Well, I mean, there’s a lot of ways to answer that question. You heard some of it, clearly. They’re very much mobilized to look at reviews and things like tests and other immediate action [00:10:30] items in the COVID-19 response. I think one of the areas where, from my viewpoint of following the BioPharm industry, there’s a great deal of interest, is just what about all the rest of the drugs?

                                         Everything was not for COVID-19. And the review process and the review functions, and I think we are at an interesting moment where, officially, everything is running kind of business as usual with a couple of [inaudible 00:10:59]. [00:11:00] FDA as filled, essentially, all in person meetings as would be expected at this time. They’ve also canceled all “babble”.

                                         And as different communities start to impose much stricter restrictions, I would assume you will very quickly get to no travel, by FDA officials. And sooner or later, I assume we’ll have some sort of compulsory work at home, [00:11:30] take hold in the DC area as well. For now, kids are out of school. FDA and the rest of the government has been very flexible on tele work. And presumably a lot of people, by desire or necessity, were home.

                                         There is no, at this point, policy that FDA has adopted about giving themselves any added flexibility on user fee goals and reviews. But I think it’s time for [00:12:00] everybody to recognize that there will almost certainly be a period of time where there is. And I guess what I would focus people’s attention on, is kind of three time windows as I would look at it. There’s the immediate, near-future products that have deadlines coming up in the next couple of weeks, where probably everything’s fine.

                                         There’s very little certainty on the drug side, when you’re wrapping up an application. Typically, there’s very little on, simply by email, and maybe [00:12:30] the occasional phone call. You’re you’re working out the label, you’re working out the final post marketing commitments. It’s a lot of wordsmithing, but you’re not doing inspections. You’re not summoning teams of reviewers together to discuss important decisions or issues. And so, if those price in that near term window are probably fine.

                                         It’s as you get into April, May, June, July, where I wouldn’t be surprised if you start seeing some routine delays taking [00:13:00] hold. If you’re needing an inspection prior to approval, and that inspection is supposed to be happening in the April, May timeframe, well, that’s pretty unlikely to stay on schedule. If you absolutely need an advisory committee, at least FDA thinks you need a public advisory committee, logistically, it might be difficult to schedule in the next couple of months.

                                         So you’re gonna see some products start to get delayed. And to me, that’s kind of a best case scenario, which assumes there’s not actually a more significant [00:13:30] disruption to FDA’s at work. Staff working remotely is one thing, staff becoming widely ill and unable to work and or staff being called up. There are Public Health Service officials at FDA, who will be called up and put into other more immediate response activities.

                                         So the disruption could be sort of mild in the next couple of months or more significant in the next couple of months, depending. [00:14:00] And then you’re left with guesstimating when do we kind of declare this? You know, last week, I was certainly of the view that we’re looking at a couple of months of disruption, and maybe that turns out to be rosy eyed [inaudible 00:14:16].

                                         But I do think, from the standpoint of getting back to routine operations that may look different than today, like for example, having all advisory committees by video conference for [00:14:30] the future, working out ways to do inspections, where you are able to operate in zones with some restrictions on who goes and when and so forth. You could, I would think, be getting back to normal within six months. And those products with deadlines in that six months and beyond period will probably be more or less okay, particularly if they’re important breakthrough type therapies where FDA can catch up on a time.

                                         So that’s kind of how I was thinking [00:15:00] through for people where to be looking at the risk of near-term applications being delayed and that kind of thing. In the much longer run, there’s also going to be the inevitable challenges that sponsors will face with trials that are underway now, that are disrupted by COVID-19. FDA just issued guidance today. And they did sort of a direct to final guidance in light of the emergency, really underscoring to sponsors of [00:15:30] clinical trials that, obviously, patient safety comes first, and you have to adjust to the realities of this outbreak.

                                         And then, I think appropriately reinforcing the message that that does not mean the trial is ruined. But it does mean there’s going to be a lot of conversations about how to interpret data during this next period of however long disruption, normal routine medical care last. So I think a lot of sponsors [00:16:00] will be looking to that guidance very carefully. And that will be a very important thing to watch for, as some of the products that maybe we’re hoping to be filing at FDA in 2021, 2022 have to go back and sort out whether the… how bad their own trial was disrupted along the way.

                                         So I can stop there. And of course, answer any more specific questions.

Rick:                                 Question for you. Where to start here? Adriel, maybe… and Eric [00:16:30] Assaraf covers this for us on our side of things, but maybe between the two of you, could you flesh out a little more on the telemedicine? There’s a couple questions here, but just what exactly they’re letting people do, how big this is going to be. One questioner seems to say that they’re just basically going to allow anything under telehealth. Is that actually true? So maybe you can flesh that out a bit here.

Adriel Bettelhe…:            I mean, what we’re seeing in general; it’s Adriel Bettelheim speaking; this is a sort of a liberalization of some of the Medicare [00:17:00] payment policies and also the prescribing of certain controlled substances. There was sort of a twofold move where the DEA also dropped some restrictions. That may enhance things like medication assisted treatment, but essentially, the goal here in simple language, and articulated by the President himself, was trying to keep patients who might be vulnerable [00:17:30] out from longer being exposed to community spread.

                                         And they’re also trying to keep them out of clinics and hospitals that they expect will be swamped. So the thing here, is by adapting the Medicare policies, loosening the restrictions under what circumstances you can even allow telehealth. The question is how quickly might private insurers follow that? And if that happens, do virtual consultations and check-ins become [00:18:00] totally the norm long after the virus lifts? Eric, jump in with specifics, please.

Eric Assaraf:                     Yeah, I would just echo what you said. You know, when the first bill passed, first response bill passed, I don’t think it was clear if telehealth was going to be limited to just patients who may have contracted COVID-19. And yesterday, the administration made it pretty clear that it’s, as Adriel mentioned, it’s not limited to that. [00:18:30] It’s everything, to broad range of health care services to avoid transmission.

                                         They also took some steps to waive the established patient requirement for telemedicine, which means that new patients have access right away, loosening some of the privacy restrictions. And also, as Adriel mentioned, the one sticking point, I think, for the industry is that this is for the current outbreak only. I think the industry will try to lobby for [00:19:00] some of those other follow-on pieces of legislation, and try to make it for all national emergencies.

Adriel Bettelhe…:            Yeah, I mean, what they’re seeing, I mean, this could be quite a boom for tech. Like, if you’re having now routine chats with clinicians on the consumer platform like Google Hangouts or FaceTime. So it’s not just kind of the specific companies that arrange telehealth, and app developers and stuff like that. This is a [00:19:30] big tech issue for sure.

Rick:                                 And have they explained how they intend to pay for all this?

Adriel Bettelhe…:            There’s been… not, I mean, not all offsetting or worries about that right now, that I’m aware of. I mean, I think we’ve been focused on who’s getting what crammed into which package, so I might not be the most authoritative, but that is not going to

in a lot of the decisions right now, from what I’m [00:20:00] hearing.

Rick:                                 Well, I wish I could get more on the side of… Are Medicare plans gonna have to pay for this? Is Medicare going to pay? Is Medicaid gonna pay?

Adriel Bettelhe…:            Yeah, I mean, I think that some of that’s to be TBD. But I do think that they’re eventually going to… Yeah, the insurers are gonna pick up some sort of a cost of this, of course. Yeah. But a little bit fuzzy on those details, at least at the level of reporting [00:20:30] where we’re at right now. We’re admittedly keeping kind of broad scan going, but I’m not aware that’s been fully fleshed out.

Eric Assaraf:                     There was an estimate from the first bill, that the government’s tab for that specific policy would be 500 million.

Rick:                                 Question here, which I think is probably one for David. There seem to be critical shortages of ventilators and other medical… medical machinery is what it says. What can the government [00:21:00] do there?

David Lim:                       I think one thing we heard just this morning, was that they’re looking at invoking The Defense Production Act. As to if that specifically is going to be used for ventilator production, that’s a little unclear. The DOD said that they would, I believe it was 5,000 ventilators with 1,000 immediately available, being sent to hospitals around the country. And the National Stockpile has over 10,000 ventilators, but depending on the models that you look at, that’s woefully inadequate for [00:21:30] potentially what hospitals will need to address the COVID crisis. Eric, do you have anything?

Eric Assaraf:                     Yeah, so another question for David. What is the next catalyst on testing? I know that there’s been a lot of headlines on drive through testing becoming available. You know, I think there was also talk of Google or Verily sponsored website. So when do you think, or first of all, when is the next catalyst, and when do you think we will be at [00:22:00] capacity?

David Lim:                       That’s a difficult question to answer, given the state of the supply chain. Every country in the world wants to get the same materials at the same time right now. Kaigen announced yesterday that they’re ramping up production capacity for RNA extraction reagents, to support about 6.5 million patient tests a month by the end of April, and hopefully 10 million by the end of the June month this year. I mean, those [00:22:30] are the targets that they’re setting. But in terms of actual tests performed in the United States, I think it’s really difficult to tell right now.

Adriel Bettelhe…:            We [crosstalk 00:22:38] heard the President just a little while ago talking about this self-swab that he’s now touting this as a way to break this logjam. But he’s pushing for speedy FDA approval, but there’s… Didn’t elaborate on the timeline, or who’s producing it, and whether it would indeed [00:23:00] free up anything.

David Lim:                       Yeah, I think there’s some question as to their scientific validity to the idea. So at this point, these swabs that we’re talking about aren’t necessarily Q-tips. They’re medical swabs that go back pretty far into the nasal cavity.

Rick:                                 Great. Eric, do you have another one?

Eric Assaraf:                     Yeah. So I think this one is probably for Mike McCaughan. There has been talk about Scott Gottlieb, former FDA Commissioner, being sort of shadow czar. [00:23:30] You know, what has he been up to? Is he actually helping or is he a distraction?

Michael McCaugh…:       Yeah, interesting question. I mean, he’s been obviously very out in front on this outbreak since it emerged. And probably… well, but reportedly will say has been in more recently directly consulting with the White House on some of these steps. And, I think, some of the tone of his comments also reflects that. It’s rumored that [00:24:00] at some point he might have been the choice to be the new Coronavirus czar. Mike Pence was put in charge, even though Alex Azar is still chair of the task force.

                                         If anyone has figured that one out yet, we can discuss that later. But I think it has set up interesting dynamic, obviously, probably, of all people who have been speaking publicly on this. Tony Fauci relatively recently has become, I think, recognized [00:24:30] as a credible resource from within the government. And then probably Scott Gottlieb is now second on the list, which is odd in that he’s not officially part of the government.

                                         And certainly, his successor is FDA Commissioner Stephen Hahn, who has joined the agency just in December. And talk about a baptism by fire, someone who was kind of an outsider, unknown quantity coming in, no real kind of base of constituency [00:25:00] that was already in place for him, was put in a very tough situation.

                                         And honestly, I think, has actually done a frankly reasonably good job in terms of his own communication in public statements and persona, but completely in the shadow of his predecessor, which certainly sets up an unusual dynamic for people who follow the agency as closely as I do. You know, I think at some point, we will be in a much better place if the credible source of where we are in the epidemic, [00:25:30] is someone who is actually in the administration and responsible from the government side for the public health.

                                         Whether that involves Scott going back and accepting a new post or more probably, more likely, someone else really taking the reins. And it’s difficult when the President, as we all know, likes to have the spotlight on himself. And unfortunately, this is definitely, whatever his strong suits may be, this is not one of them, when it comes to [00:26:00] clear and consistent communication.

Rick:                                 I’ve got one or two, maybe kind of necessary follow on to that, but at least in the same general vein anyway. If they’re canceling the ADCOMS are tele-ADCOMS a real thing? Is that something they could actually do? And wouldn’t that come together faster than an ADCOM?

Michael McCaugh…:       Interesting question. So they actually do… They actually have a number of advisory committees that they sort of routinely do by teleconference already. [00:26:30] But they tend to be ones where, for example, the CBER, the biologic side has a almost regular check in for oversight of internal research in the Center for Biologics, and it’s a public Advisory Committee, but it’s held by teleconference. Thing is, the only participants are the committee members in the FDA, and anyone who wants to dial in and listen can do so.

                                         And if you really want to get a slot to speak in the open [00:27:00] public hearing, you can, but it’s a little different than the conventional Advisory Committee where a whole sponsor team comes in, they do a full presentation, FDA does a presentation or questions, people like to create new slides at lunch, and so forth. It can absolutely be done technologically, it’s not difficult at all. And if, in this period have an inability to convene large gatherings is prolonged beyond a couple of months, I would [00:27:30] assume that is exactly what advisory committees will become.

                                         I doubt it’s the top priority for FDA to get that technology going in the next three weeks, to try and get an advisory committee meeting in that they couldn’t just postpone. But it can absolutely be done if they want to do it. Just for folks to bear in mind, an advisory committee is almost always discretionary for FDA. Handful of exceptions, including any new opioid formulation by [00:28:00] law has to go to an advisory committee.

                                         But for the most part, it’s because FDA wants to have a public event, and there are a whole host of reasons why they might want to do that before they act. And so, they’ll work out a way to keep them going if in person meetings are no longer possible after a prolonged period of time. But it’s, I doubt, the most urgent item they’re going to work on with their IT. They have to get their own employees set up to work remotely and to exchange data [00:28:30] securely and all that good stuff.

Rick:                                 Well, this one definitely plays on to that one then. [inaudible 00:28:36] says I’m still unclear if Intercept has an ADCOM or not. Does this solve that? And what does it mean for the [crosstalk 00:28:45]…

Michael McCaugh…:       Yeah, that’s a good one. For the application, right? This is a case where the sponsor, the company, has announced that there is an advisory committee, and I get the date wrong, and believe April 22. FDA has never [00:29:00] formally announced that via the Federal Register, which is the official way these things are scheduled. They have a meeting that was announced for the 21st and a meeting that was announced for the 23rd. But not that one.

                                         And in light of the current reality, it would be very surprised if there is in fact being on the 22nd for Intercept at this point. It just seems like April is not going to be a good time to have an advisory committee meeting. Obviously, as an outsider, it’s unclear whether [00:29:30] something else has come up that FDA decided they didn’t need the meeting. And if so, what that was. Or if it’s just they didn’t get, for example, the division that handles that application has been in transition as part of a broader reorganization.

                                         So it might literally just have been paperwork not being done in time to have the meeting formally announced. But at this point, I would be shocked if there’s actually an advisory committee meeting on April 22 for anything, much [00:30:00] less that product, that we’ll see, obviously, in the next few weeks. The sponsor would be notified if something meaningful has changed from FDA standpoint, or when FDA makes up its mind that something has been changed.

                                         And given that they announced the meeting in the first place, I assume they would announce that it’s no longer happening, once they’re so told.

Eric Assaraf:                     I have a question. It’s Eric. I have a question here, I think for Adriel, but Mike, you can pick up on this as well. Adriel, you mentioned that on [00:30:30] the legislative side, surprise billing, drug pricing reforms might fall by the wayside. On the administrative side, what do you see now going on the back burner, is it [IPI 00:30:41] officially on the shelf for the foreseeable future? Any other things that are no longer a priority?

Adriel Bettelhe…:            Yeah, I mean, we had always, for a long time thought that international pricing was sort of a cudgel that the administration was holding over the industry, but we [00:31:00] were a little skeptical about their appetite for actually using it. And now I would think this crisis would shove that off for the foreseeable future. At the same time, if they really feel they need to make a political statement, and a lot of what they’re doing is taking political credit for this and that. If they need to make a statement on what they deem to be unreasonable price increases, they [00:31:30] could incorporate some of the Grassley-Wyden material from the stalled Senate Bill.

                                         Of course, that would fragment the Senate Republican caucus, which has always had the problem with these inflation penalties. So it’s a political calculation of McConnell’s. All of a sudden this is not a question of whether to bring that bill up a standalone, but part of this huge package. If he really feels that he wants to make a statement on this and have some sort of maybe political [00:32:00] cover, should there be profiteering, maybe he rolls with it.

                                         I still… It’s very fluid right now. I would be slightly inclined to think that it doesn’t get in at least this next package. We have to consider though the magnitude of this crisis, economic, and you’re seeing what the markets are doing right now. And there’s going to be the stimulus five, six, seven, part eight. And you wonder how often these [00:32:30] ideas will get recycled, especially if they’re seeing instances of profiteering. Still a lot of raw nerves about surprise billing too, and private equity’s role, the role of corporate medicine in the health system.

                                         If they see some abuses or things get blown out in a particular region or hospital or something like that, Congress always can react and over-correct. So [00:33:00] it really bears watching, nothing is totally off the table. But I think IPI is off and little skeptical whether that’s the Grassley bill will make it in this next tranche.

Michael McCaugh…:       And this is Mike. I’ll just add, just from a workload standpoint, thinking about particularly the import policy, but to a lesser extent, the IPI as well. I would suspect that, especially given FDA’s, I think, inherent lack of enthusiasm [00:33:30] for that import policy to start with, that has… Like reading through all the comments they received and beginning to work on the potential final rule, final policy is probably way down the priority list all of a sudden, and so I would be…

                                         Before all this happened, I was pretty confident that President Trump was going to demand some kind of import policy that at least allowed Florida to claim it was doing something before election day. I think the odds of that [00:34:00] happening have gone way down, if only because everyone’s priorities have changed.

Rick:                                 Adriel

Sorry, go ahead, Adriel.

Adriel Bettelhe…:            No, I just, I definitely agree. That was being driven by certain governors, [DeSantis 00:34:14] particularly, who had a line into Trump, and like I said, the whole, every priority, everything has been scrambled now.

Rick:                                 You mentioned profiteering. When the first bill went through, Pharma was worried that there would be some sort of language in there trying to control the prices of [00:34:30] vaccines, et cetera. And now they still talk about maybe something on profiteering in the… potentially in this third package. Mike or Adriel, maybe either one of you could talk about what kind of thing that might be and what are the chances of it happening?

Adriel Bettelhe…:            Not aware of everything that’s in play, but again, some sort of acceptable threshold for what an increase would be, for what pricing would be, and a penalty above that, [00:35:00] a la what Grassley had proposed. I defer to Mike, who might be a little more in the details.

Michael McCaugh…:       Sure. And I mean, from the standpoint of what actually passed in that first bill, there was language added essentially saying that any product of the response effort on COVID-19, in particular, would have to be purchased at a… would have to be available [00:35:30] at a “fair and reasonable price”, following standard government contracting practices. And you can read that language, basically, however you want, pretty much permits any price to be fair and reasonable if you want it to be. Or no price to be fair and reasonable, if you want it to be.

                                         And I do think that was an interesting sort of symbolic action driven by the House Democrats to keep that political issue alive. I think we saw that the political issue is still alive in some quarters [00:36:00] during the most recent Democratic presidential debate, when Bernie Sanders suggested the pharmaceutical industry is rubbing its hands with glee or something over this outbreak. I guess from where I sit, the palpable sense of hope, and maybe unreasonable hope, that the pharmaceutical industry is going to come up with something that treats this virus, will [00:36:30] trump; no pun intended; the desire to put in some kind of punitive or price control language in the short term.

                                         And then we’ll see where we are when the dust clears. You know, I do think to the extent that there is a significant disruption at FDA and in clinical research, you might have a very interesting dynamic of the pharmaceutical industry looking for its own form of bailout. There’s already been [00:37:00] some speculation that there should be some patent restoration for trials that have to be delayed or interrupted. I certainly don’t think the climate is great for getting that thrown into any bills right away, either. But it does, I think, maybe start to move the needle away from using this outbreak as a vehicle to impose something that the industry would view as price controls.

Rick:                                 A question for anyone who wants to jump in, honestly, on this one, because the public faces

[inaudible 00:37:30]

, but [00:37:30] all of you. Is there any chance that any of the packages would give incentives to move manufacturing of drugs back to the US, or at least, the ingredients?

Michael McCaugh…:       I can start on that. That’s interesting as something that was a bipartisan priority, least for people who follow kind of the regulatory and manufacturing process on Capitol Hill. It was already [00:38:00] kind of a rare point of bipartisan agreement that maybe something should be done to start to shift more critical manufacturing back to the US. And all of this has only reinforced the energy behind that. Easier to say than to do, and the kind of thing where I would be totally not surprised to find language that encourages and incentivizes [00:38:30] that, included in some of these response bills.

                                         Maybe more surprised to find language that necessarily makes it happen. That could be a more challenging thing, just given all the various dynamics that already exist around the world, that explain why manufacturing is where it is. But absolutely, I think a theme of this response for the near-term, and really the long-term as well, the kind of subject that will bear further attention once the immediate [00:39:00] crisis is over.

Adriel Bettelhe…:            Yeah, I think it syncs up well with Trump’s America first view. And I mean, early on in this week, we heard comments from the Commerce Secretary encouraging companies to come back and… but I don’t see that it takes so long, even if one were, how would you get manufacturing… a plant turned around or purposed for addressing this crisis, or ingredients [00:39:30] in time, given the 18 month window or something that people are hoping a vaccine would be developed.

                                         So it’s out of sync, the politics is out of sync with the reality, but hard to imagine they wouldn’t, at some point, try to use this as a way to… And companies are looking at their supply chains. I mean, this was already on a smaller scale, during the hurricanes in the Caribbean few years back, brought to bear, and now it’s a [00:40:00] much, much bigger issue. So yeah, I would agree, it could seep into one of the next packages.

Michael McCaugh…:       And I guess just to follow on that very quickly, just say as you watch this, to me it would be if the kind of definition of epidemic or pandemic preparedness, as a national security issue, really takes hold, it would be even broader, I think, than just pharmaceutical manufacturing.

                                         The announcement today [00:40:30] about using some of the defense department authorities, you’d be looking at a situation where a whole lot of medical product production would suddenly be… whether it’s nationalized or at least heavily incentivized to become US based, would become a major topic, and I don’t know if that feeling that exists today, to get immediately necessary supplies to people, is actually going to linger once the immediate crisis is over.

Rick:                                 [00:41:00] Didn’t we used to make drugs in Puerto Rico? I think we killed those [crosstalk 00:41:08], didn’t we?

Michael McCaugh…:       Yeah, but just remember, the President doesn’t necessarily know that’s part of the US.

Rick:                                 I was going to make that joke, and then I just decided against it, so I’m glad you did.

Michael McCaugh…:       I know. You think… Yeah. You [inaudible 00:41:19].

Rick:                                 Quick question for you, Adriel. And this will be the last one I have, and see if Eric has anymore. Can you give us a timeframe of when you think [00:41:30] this third package will be done?

Adriel Bettelhe…:            I think pretty quickly. I mean, if we see the legislative text come out before the end of this week, then we’ll see it go to the house and conceivably, I can see it within a week, especially if things like the market keeps taking a header. The specter, already, of huge jobless [00:42:00] reports are coming out.

                                         I think the political pressure is going to be more than these folks have ever dealt with, and it will come down to what I said in the initial remarks, kind of who can take as much political credit as possible? But I could see a scenario where it sort of becomes a grab bag, the price swells easily over a trillion dollars, and they kick something out, a week to 10 days.

Eric Assaraf:                     My last question, [00:42:30] also for Adriel or anybody else who might want to answer. What do you think is the impact on the election? I know it’s still a little early, things could change, but is there any initial polling or any sort of clues as to how this might affect November election?

Adriel Bettelhe…:            The early polling was before the NBA shut its season, before Tom Hanks and his wife revealed that they were ill, which [00:43:00] were two events, that I think actually got the public really focused on how serious this was. The more recent polling is kind of starting to trend mixed for Trump. They don’t view him, not surprisingly, as a credible source of information on the virus. The overall performance of the administration, I saw something this morning that’s sort of starting to trend a little bit in its favor, the more…

                                         The [00:43:30] more press conferences they do, the more measures they roll out, whether they have any real or perceived effect. I think, they sort of crawl their way back. I mean, the playbook for them, if I were to guess, given this President’s authoritarian tendencies, is using the crisis to make the case. I mean, he referred to himself today as kind of a war [inaudible 00:43:56] and to keep banging on that, that in order to ensure safety [00:44:00] against this invisible foe, you need to invest a great deal more power, war-like powers, and it’s kind of a question of who’s buying at that point.

                                         But I see this kind of maybe syncing up with medium-range political strategy for his reelection campaign, in an odd way.

Rick:                                 [00:44:30] Well, they just… the Dow just momentarily dropped to below where it was on the day he was inaugurated, so that is a stunning three-week turn of events, that’s for sure. Right, well thank you everybody for joining us. (silence)

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