Editor's Note: Below is a brief excerpt from a complimentary Health Policy Unplugged note written by our Health Policy analyst Emily Evans.
As a rule, in government, it is best to not to assign to malfeasance that which can be explained by indifference, incompetence or both. Nothing makes that point now more than the saga of Emergent BioSolutions (EBS).
In the wake of the anthrax scares and the resulting emphasis placed on pandemic preparedness by President George W. Bush, EBS has been award about $6B worth of government contracts to develop and manufacture vaccine and other related products to protect vital functions like the U.S. military from biohazards. About $1B of that was used to construct, reserve and expand manufacturing capacity in Baltimore.
How EBS eventually spent all that government cheese, becoming fully prepared to manufacture vaccines at scale was not one of them. Last week the Food and Drug Administration released a report on their inspection of the Baltimore plant detailing lapses in manufacturing standards, sanitation and safety.
The first question is, of course, “why wasn’t EBS’s manufacturing facility up to standard?” After spending $1B, one would think the FDA would be just a tiny bit curious if the federal Treasury’s money was well spent. The answer, a theme across all levels of government, is it simply was not a priority.
After the FBI dismissed the anthrax scare as the action of one individual, Bruce Ivins, and not an international terror plot, the urgency demanded by President Bush was quickly pushed off the stage in favor of other priorities and interests. Public health was replaced by health insurance.
As luck, or good decision making – take your pick – would have it, the success of the PFE and MRNA’s research, development and manufacturing of alternative vaccines means the EBS’ lapses are not the disaster they could have been in the U.S.
Unfortunately, getting vaccinations into all the nooks and crannies of the globe requires as much manufacturing capacity for a one-shot vaccine as possible. Fortunately, the federal government sent EBS another $650M to Baltimore last month to get things fixed.
Great work if you can get it.
Buried in the JNJ earnings call script was the green shoots of a change we have been waiting on. In accounting for low knee volumes the company cites channel mix dynamics, suggesting some diversion of demand away from JNJ’s traditional customer base of large health systems.
We have also heard anecdotally from ambulatory surgery center vendors and physicians that ASCs have taken advantage of COVID-19 and the deregulation of many outpatient services by expanding services lines and running at increased capacity.
A market response of expanded capacity is not yet evident in the data. While new certification of ASCs increased in 2020 versus 2019 so far 2021 has been below historical levels. That may be related to the slow pace of business in the COVID era or the result of pull through in 2020.
In any event, based on JNJ’s comments, it is a trend worth watching.
As the Trump administration learned painfully, the last place you want to find yourself in a pandemic with your constituents clamoring for more testing, is trying to cajole the Coke and Pepsi of the laboratory business into expanding capacity and turnaround times.
DGX, which later earned the ire of Florida Governor Ron DeSantis, was rumored to be fast tracking high dollar university and employee testing past other clinical work.
The Trump administration’s solution, one that continues to be followed by the Biden White House, was to throw into reverse years of consolidation of the lab industry. It made the CLIA approval process easier and faster, created a blanket EUA for all COVID LDTs, and provided funding for acquisition of equipment and supplies, among other things. At the same time, it approved for use several Point of Care tests, most notably those manufactured by DHR.
The results of this policy have and continue to bear fruit. The share of COVID testing conducted by ACLA member labs like DGX and LH has fallen by half. Meanwhile the number of CLIA approved labs has grown dramatically. You can now find a certified lab not just in the hospital but at KIPP charter schools, Camp High Rocks in North Carolina and the Texas Rangers Stadium in Texas, to name just a few of the more interesting examples.
The testing many of these labs will do will largely be confined to discerning between the seasonal flu and COVID-19. For many, like physicians’ offices and other nonhospital providers, the federal government has provided both economic and regulatory support for testing that can follow technological advances at the Point of Care.
It is a good reminder that when the White House asks for something, especially in a pandemic, it is best to answer “yes.”