LS&HC Horizons 2023 - Flipbook - Page 68
Hogan Lovells | 2023 Life Sciences and Health Care Horizons | United States
U.S. life sciences procurement outlook for 2023
Looking ahead into 2023, a number of
key issues are top of mind for life sciences
sector companies that contract with the U.S.
government. Some considerations link up
to the wind-down of the mechanisms
supporting contracting during the COVID-19
pandemic, while others concern recent
legislation and expected legislative and
administrative developments.
the pandemic, the Department of Defense
(DoD) stepped in to “first-chair” or co-lead
many HHS pandemic-related efforts. In FY
2023, DoD is turning back to its standard
contracting portfolio, and Federal contracting
staff is requiring industry support to facilitate
transition of existing contracts for pandemicrelated therapies, vaccines, and medical
supplies to HHS.
COVID-19 Emergency Declarations
Sunset: Contractors that received pandemicrelated contracts were able to benefit from
limitation of liability provisions in the Public
Readiness and Emergency Preparedness
(PREP) Act and the related declaration by the
Department of Health and Human Services
(HHS). These provisions generally allowed
contractors supplying pandemic-related
products to be insulated from product liability
claims in the U.S. With the COVID-19 national
emergency and public health emergency
declarations expected to be withdrawn effective
11 May 2023, contractors with ongoing PREP
Act-covered contracts will need to consider
how the withdrawal of those emergency
declarations might affect their PREP Act
liability protections.
IRA Federal Contract Impact: Of
importance to pharmaceutical manufacturers,
pursuant to the Inflation Reduction Act of
2022 (IRA), enacted in summer 2022, the U.S.
government will be taking steps to contain
pricing paid under the Medicare Federal
health program for certain prescription drugs.
Per the IRA statute, pricing is to be set at
“a maximum fair price” (MFP), established by
leveraging “Non-Federal Average Manufacturer
Prices” (non-FAMPs), which are average
commercial wholesaler prices reported by
drug companies in connection with Federal
government contracts. While use of this
benchmark is required, many open questions
remain as to whether and to what extent
existing government contract negotiation
and disclosure frameworks will be adopted to
establish the maximum fair price. Contractors
in this sector will benefit from following
statutory implementation closely to ensure they
appreciate the intersection between the new
pricing program and established frameworks.
Agency Transition: Relatedly, as the
COVID-19 pandemic winds down, contractors
are experiencing a deliberate shift in terms
of the administration of their contracts
for pandemic-related items. Early on in
Joy E. Sturm
Partner, Washington, D.C.
Allison D. Pugsley
Partner, Washington, D.C.
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