WASHINGTON — For four years, Democrats and Republicans have routinely clashed over funding to curb the Covid-19 pandemic and prepare for future crises. Now, the Biden administration is engaged in an internal such fight, one that reflects a long-simmering debate about who should manage national strongholds of emergency medical equipment, and how.
The office within the Department of Health and Human Services that oversees national stockpiles of medical gear — known as the Administration for Strategic Preparedness and Response — saw its relatively narrow role as health officials’ frontline for natural disasters and biothreats blossom during the pandemic as states scrambled to stock protective gear, therapies, and tests. As Covid-19 cases plateaued, the 2022 mpox outbreak brought fresh demands for equipment and support. Now, with an avian flu strain spreading among dairy cows, at least five states have asked for goggles, masks, and other gear.
As one former ASPR official put it, “states went from not knowing how to access the stockpile to now having them on speed dial.”
But there have been increasing demands from congressional Republicans to explain how the office is spending money and why certain stockpile shelves are not replenished despite billions in emergency funding during the pandemic. The preparedness office showed a “lack of appropriate planning and urgency” in dispatching contracts for new protective gear and therapies in the past year, leading Congress to rescind $850 million, Republicans on the House Energy & Commerce Committee wrote this month to Dawn O’Connell, HHS’s assistant secretary for preparedness and response, who leads the office.
The problem, people familiar with the process say, is that the pandemic office tried to use those funds — and White House budget officials held up spending plans. The back-and-forth came amid a search for cash to save in a crackdown on emergency spending and budgets, the people familiar said. The Biden administration ultimately forked over roughly $27 billion in unused pandemic funds across federal agencies last year including roughly $4.5 billion from HHS.
STAT spoke with 10 people with current or previous experience in HHS, the White House’s budget office, and congressional budget talks who describe a longtime battle over emergency supply spending and who should spearhead federal efforts to provide essential medical supplies in emergencies.
The controversy comes at a pivotal time for the health department’s efforts to justify an expanded role for the preparedness office, advance its proposed 2025 budget, and advocate for new authorities suggested in a congressional reauthorization of the Pandemic and All-Hazards Preparedness Act. It also represents a continuing standoff between budget officials and the pandemic preparedness office that sharpened during the Covid-19 response.
Former senior officials from both ASPR and the White House Office of Management and Budget told STAT there have been long-running tensions between the agencies about a variety of issues. Some of it is par for the course: As the budget office, OMB is the gatekeeper for billions of dollars across federal agencies and regularly questions spending plans. But other health department moves, such as the Trump administration’s decision to shift the stockpile from the Centers for Disease Control and Prevention to ASPR and, more recently, HHS Secretary Xavier Becerra’s elevation of ASPR to an operating division, have strained the offices’ interactions further, those sources said.
The White House budget office does not rescind funds itself; Congress does. However OMB can identify unused funds for appropriators and apportion, or hold, certain spending plans.
The move to rescind $850 million from ASPR “does reveal a level of concern about mismanagement,” said one former senior OMB official, who like some others spoke on condition of anonymity to speak candidly. “This is not a budgetary move.”
“Congress identified these funds for recission and made the decision to rescind them,” an OMB spokesperson said.
ASPR and OMB “have worked closely together during a tight budget environment to ensure that the country is prepared for whatever comes next,” an HHS spokesperson said.
In the E&C letter, Republican committee leaders accused ASPR of “a pattern of fiscal mismanagement and a series of failed acquisitions” that have left the stockpile “dangerously under-resourced and likely underprepared to respond to future public health emergencies.”
That $850 million was part of a remaining pot of money dispatched with the American Rescue Plan, a broad $1.9 trillion relief package approved by Congress in 2021. Crucially, sources say, there were no spending deadlines attached to the cash that was later rescinded. For ASPR, that meant allotting time-bound funds first and finalizing the “no-year” funding for later needs.
Part of the controversy stems from Becerra’s elevation of the pandemic office to an operating division, a technical move that nevertheless gave the assistant secretary for preparedness and response more authority over stockpile contracts and the budget — and more direct contact with OMB. While some saw it as a small — and necessary — change that facilitated quicker deals for emergency supplies, HHS did not “clear” the change with OMB officials, multiple people familiar with the issue told STAT.
There are differing opinions as to whether HHS was required to take that step with White House budget officials. Either way, however, it strained their relationship, the sources said.
“Any reorganization is required to go through OMB. Agencies can’t just make themselves more important because they want to be,” said the former OMB official. “Are they now going to position themselves as needing more resources because they are an [operating division]? Maybe they should spend more time worrying about where their money is and less time worrying about the org chart.”
And with the elevated preparedness office came more scrutiny. In their letter, E&C Republicans questioned a number of stockpile contracts, in particular a nearly $400 million agreement with Genentech to provide brand-name Tamiflu to the stockpile.
The HHS spokesperson told STAT that the decision to award the contract was based in part on data Genentech submitted to drug regulators, showing its product could last on shelves for 20 years without losing efficacy.
At the same time, congressional Republicans were mounting a call for broad budget austerity, sending officials searching for funds to slash or eliminate to stay within new spending limits. In the budget President Biden proposed for next year, the stockpile would receive $965 million, unchanged from 2023 figures and a vast shrinkage from emergency funding levels at the height of the pandemic. What Congress ultimately awards to ASPR is still being hashed out in committees.
The office is “working diligently to refill supplies in the SNS and making these resources available to states during the Covid-19 and mpox responses, flu seasons, and the current H5N1 response,” Assistant Secretary O’Connell said in a statement provided to STAT.
Meanwhile, sweeping legislation reauthorizing a range of ASPR authorities along with other federal pandemic preparedness measures, the Pandemic and All-Hazards Preparedness Act, is languishing in committees as lawmakers hammer out provisions that could give ASPR more flexibility on contracts — and more conditions for spending.
“I wouldn’t put it past Congress being a little more prescriptive in what they want” from the office going forward, a former senior ASPR official said.
But the recent furor has also angered Democrats pressing for PAHPA’s passage amid packed agendas, deeply divided caucuses, and looming November elections.
“We worked with [Republicans] for a year, a year, and we were right on the brink of bringing it up with the committee. Then they started throwing sand in the gears,” said Rep. Anna Eshoo (D-Calif.), one of the sponsors of the original act and its reauthorization. “So for my Republican colleagues to be piling on with ASPR or any of the agencies that are a part of this really important reauthorization — it’s really rich.”
Republican members and staffers told STAT the letter is not about curtailing the agency’s authority but accounting for federal spending and the stockpile’s supplies.
“There needs to be more accountability,” said Rep. Cathy McMorris Rodgers (R-Wash.), the leading Republican on the letter and chairman of the E&C committee. “The first step is to get these questions answered.”