For more information, contact Michael DiMaria at [email protected] or (602) 717-3891.
The overriding subjects consuming Washington are COVID-19, the shutdown that has caused economic distress and hardship for millions of Americans, the development of vaccines that will lift us out of this fog, and the upcoming elections.
Steve Gordon and Erik Paulsen cover the beginning of negotiations for the next legislative response to COVID-19 and the first important election in the race for control of the U.S. Senate in Heard on the Hill.
Ramona Lessen covered Tuesday’s hearing before the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee entitled ‘Efforts to develop a safe, effective, and accessible COVID-19 vaccine’, and she’s included key portions of the three-hour hearing in her report.
We are pleased to introduce Patrick Robertson to Arizona, though he travels to Arizona each year. He is new to the Total Spectrum family, but he is not new to Washington, D.C. Patrick is a licensed attorney who served on the staff of former Senator Jay Rockefeller (D-WV) for nine years, the last five as the Senator’s Deputy Chief of Staff. Patrick has now been in Washington’s private sector for more than 12 years representing a range of clients including Fortune 50 companies, small associations, the government of a U.S. territory, and other companies and entities. He is an expert on tax, commerce, trade, telecom, and transportation issues, and we asked him to write his first article for This Week on independent restaurants – and a way to help them.
Dana Marston has included perspectives on demographics across Covid-19 cases of late, plans toward reopening of public schools, and a couple of “what you need to know” documents on cryptocurrency regulation and the Boeing 737 MAX grounding.
Steve also shares a short note on new features you will soon see in future issues.
We will be back in two weeks with the next issue of This Week.
Heard on the Hill
By Steve Gordon, Total Spectrum Managing Partner and
Former Congressman Erik Paulsen (2009-2019), Total Spectrum Strategic Consultant
The Battle against COVID-19
It is exceptionally hard for us to believe that the national party conventions – both Republican and Democratic – will be held (in some form) next month. It is equally hard for us to believe that the November elections will be held in about 3½ months, and early voting in some states will start even earlier.
This is the time in a normal campaign cycle when incumbents and challengers would be interacting with voters in all sorts of ways, but this year and this campaign cycle is not normal. But make no mistake – politics and the upcoming elections will cast a wide shadow on congressional activity in the next three weeks.
Legislative activity between now and Congress’s adjournment for their annual August recess (scheduled for August 6 or so) will focus on the next response to COVID-19 and the economic shutdown.
The White House prefers a stimulus bill including a payroll tax cut, which would give another shot of adrenaline to the economy. But the President’s idea for a payroll tax reduction appears to be a nonstarter with Senate Republicans.
Senate Majority Leader McConnell wants a targeted bill that is capped around $1 trillion. First and foremost, Senator McConnell and the Republican Senate Caucus want liability relief for large and small businesses, nonprofits, and educational facilities. A draft of bill language began circulating last week. The Leader also supports significant money – as much as $105 billion – for schools as they struggle to deal with COVID-19.
Senate Republicans are also looking at additional direct payments and new flexible ways to use the $135 billion remaining in the Paycheck Protection Program account. Key Republican Senate Appropriators are pushing for significant additional funding that the states can use for testing. They also want to pay for additional personal protection equipment as well as appropriate additional funds for vaccine production. There is significant discussion about help for hard-hit segments of the economy, such as the hospitality and restaurant industries. Senate Republicans as well as most House Republicans are opposed to renewing the boosted unemployment benefits that run out on July 31. They prefer a reward for returning to work, but they may be open to continuing the benefit at a reduced level.
Speaker Pelosi and House Democrats passed on May 15 their preferred program. H.R. 6800, the Heroes Act, would authorize over $3 trillion dollars. Minority Leader Schumer is supporting the House bill.
The U.S. Chamber of Commerce sent a letter to The President, Leader McConnell, and Speaker Pelosi on July 16th and recommended their approach to this upcoming legislation.
The White House and Senate Republicans are not in agreement as of today. Leader McConnell and Speaker Pelosi are $2 trillion apart. This much I know – Senators who are up for reelection and those Members of the House who are running for reelection have already made some or most of their August campaign plans. A very good bet is that Congress will complete their work on this legislation and send it to the President by the end of the first week of August.
Battle for the Control of the U.S. Senate starts in Kansas
Senate Republicans currently hold a five-seat majority. Senator McConnell has said that the odds of holding that majority are about “50-50”. We will all get an early indication of how well Republicans will do in November in Kansas on August 4.
Senator Pat Roberts, current chair of the Senate Agriculture Committee, is retiring. Kansas has only sent three Democrats to the U.S. Senate, and none since 1939. Republicans have their primary on August 4, and the person who has the inside track to win the primary is John Marshall, a physician and the Congressman who presently represents the Kansas 1st district – the same district that Bob Dole represented before being elected to the U.S. Senate.
Dr. Marshall’s main opponent is former Kansas Secretary of State Kris Kobach, who lost his race for governor in 2018. Polls show Dr. Marshall ahead of Kobach by a few points, and also show that Dr. Marshall would be favored to defeat the democratic nominee, State Senator Barbara Bollier. The same polls show Kris Kobach would be a significant underdog in a race with Senator Bollier.
Political observers will surely say that a win by Kris Kobach in the August 4 Kansas Republican Primary would be a sure sign of trouble for the Republican majority in the Senate. Dr. Marshall has a sizable cash-on-hand advantage, but the key will be each candidate’s ability to get out their voters. Marshall has a small lead as of yesterday. To be continued.
This Week joins with millions of Americans in mourning the passing of John Robert Lewis.
Mr. Lewis participated in early civil rights sit-ins, marched on Selma’s Edmund Pettus Bridge, was a Freedom Rider and helped integrate the interstate system, was one of six people who organized the March on Washington in 1963, was elected to Congress in 1986, became the Dean of the Georgia Congressional Delegation, and was awarded the Medal of Freedom in 2010 by President Obama.
At 23 years old, Mr. Lewis was the youngest speaker at the March on Washington. He was also the only speaker that day who lived to see America elect, and re-elect, an African American President.
John Lewis was born in Troy, Alabama, and he died 80 years later as ‘the Conscience of the Congress’. Congressman Lewis’s life shows that it is not where you start in life that counts, but it is where you end up and what you accomplished in between that really matters.
Services are pending.
A Look at the Restaurant Sector – and a Way to Help
By Patrick Robertson, Total Spectrum Strategic Consultant
Independent restaurants employ about 11 million people across the country and represent the largest share of employees on the unemployment rolls since March. The restaurant industry employs more than one million single mothers, employs more minority managers than any other industry, and is the first job for many Americans. If all restaurant employees went back to work, it would reduce the unemployment rate by 2.4%.
Beyond employing great numbers of people, restaurants also support their suppliers and so many other parts of the food ecosystem. Restaurants operate very efficiently and on thin margins. In fact, 90 percent of the money a restaurant takes in goes back out to workers, suppliers, landlords, and other vendors.
Independent restaurants also support the tourism industry and draw millions of tourists from around the world. Imagine planning a trip to Chicago, San Francisco, Las Vegas, Seattle, or Washington, D.C. without visiting the great restaurants in each city. In 2019, total spending by domestic and international travelers on food services in the United States was $279 billion—more than double the amount spent on either recreation or retail.
The restaurant industry is uniquely reliant on social gathering to generate most of their revenue. That is one of the main reasons why the pandemic and public health shutdowns have affected this sector perhaps more than any other business. Unlike airlines or big retailers, independent restaurants do not have access to debt or capital markets. As a result, independent restaurants face the perfect storm that will force more than 85 percent of them to close without intervention. This would be disastrous for our nation’s roughly 500,000 independent restaurants and the millions of workers they employ.
There are reports that 100,000 or more restaurants have already closed their doors permanently. All of us know one of our favorite places — in every state and across the country — that will not be there when dining out is again permitted. Whether it is Barrio Café Gran Reserva in Phoenix, Athens on 4th Avenue in Tucson, favorite spots in Flagstaff, Sedona, Wilcox, or elsewhere, the face of restaurants will never be the same.
There is a larger issue at play, and that is safety. Many people do not think it is safe to eat in a restaurant, and some people will not think it is safe until a vaccine is available. Restaurants will have a hard time surviving if people do not think it is safe to eat there.
Restaurants certainly are not alone. Many businesses face similar circumstances, including live music venues, hotels, sports leagues, and others. As a result, with Congress returning to Washington, D.C. this week, the House and the Senate are working toward a compromise that will allow the hardest hit industries to get relief, provide some protection from legal liability for those who follow local rules, provide funding to Americans in need, and potentially provide additional money to state and local governments.
Independent restaurant owners, their suppliers, and friends applaud and thank the bipartisan group of Senators and Congressmen who are supporting the Restaurants Act (S.4012 and H.R.7197). This proposed legislation would provide a new grant program for independent and small bars and restaurants to help them stay afloat during the pandemic.
Senate supporters of this bill include Roger Wicker (R-MS), Chairman of the Senate Commerce, Science, and Transportation Committee; Cory Gardner (R-CO); Lindsey Graham (R-SC), Chairman of the Senate Judiciary Committee; and Senator Kyrsten Sinema (D-AZ). Members of the House who are supporting this bill include Greg Stanton (D-AZ 9), Tom O’Halleran (D-AZ 1), Ruben Gallego (D-AZ 7), Brian Fitzpatrick (R-PA 1), and Peter King (R-NY 2), among many others.
Congress has spent the last couple of months holding off on a new legislative package to respond to the COVID-19 health and economic crises. But as COVID-19 cases have increased across the country and many states have begun to delay reopening or even re-close, Congress is working to provide more relief.
The Senate, the House of Representatives, and the White House still have a lot of work to do, but most observers generally expect a deal within the next few weeks to set the stage for November’s election. Restaurant operators hope Congress provides industry specific help for their hard-hit sector.
House Energy and Commerce Oversight and Investigations Subcommittee Virtual Hearing
“Pathway to a Vaccine: Efforts to Develop a Safe, Effective and Accessible COVID-19 Vaccine”
Tuesday, July 21, 2020
By Ramona Lessen, Executive Director, Total Spectrum
Our goal is to provide vital and current information on key subjects, and few things so completely fit that description than does a hearing about covid-19 vaccines. This is not intended to be a transcript, but rather these are my notes from the three-hour hearing trimmed to fit available space.
Democrats: DeGette (Chair); Schakowsky; Kennedy; Ruiz; Kuster; Castor; Sarbanes; Tonko; Clarke; Peters
Republicans: Guthrie (Ranking Member); Burgess; McKinley; Griffith; Brooks; Mullin; Duncan
Rep. Diana DeGette (D-CO-1) Subcommittee Chair
Today we will hear from representatives of the entities working on a vaccine. We are six months into this crisis. Covid-19 case numbers continue to climb at a staggering rate; 140,000 Americans have lost their lives. We can’t contain COVID-19 in the U.S. without a safe and effective vaccine. We currently have millions of Americans unemployed. Parents are making tough decisions about education and childcare. We also have some optimism; vaccine development is headed in the right direction at a great speed. It is possible that we will have a vaccine by the end of 2020 or beginning of 2021. Determining vaccine safety and effectiveness is essential. While we await clinical trials, capacity and distribution needs to be confirmed. We also need the supplies required to distribute the vaccine. Lack of supplies limits our progress. Personal protective equipment (PPE) is critical in the process. These decisions need to be made now regarding rollout, public education, etc. We need willingness for people to be vaccinated and have appropriate distribution throughout the country. We must make sure it is safe, effective, and affordable for everyone.
Rep. Brett Guthrie (R-KY-2), Ranking Member
We have three Members present, Messrs. Upton, Rogers, and Carter, who are not on the subcommittee but wanted to weigh in during this hearing. We are on a promising path to solutions. Companies are using their own funds at their own risk in the development of a vaccine. The government has put billions into vaccine development. Operation Warp Speed (OWS) was developed to produce a safe and effective vaccine as soon as possible. These companies represent a diverse response to the vaccine development. The University of Oxford may complete by end of September. Leading candidates are required to enroll 30,000 participants in Phase 3 trials. The Food and Drug Administration and the National Institutes of Health have verified that no shortcuts will be made on the development of the vaccine. Supply concerns are an issue; we need an adequate supply once we have an approved vaccine. If each company’s vaccine is successful, they do not want the cost of the vaccine to be a barrier.
Sir Menelas Pangolas, Ph.D.
Executive Vice President, BioPharmaceuticals R&D
Dr. Macaya Douoguih
Head of Clinical Development & Medical Affairs, Janssen Vaccines
Johnson & Johnson
Dr. Julie L. Gerberding
Executive Vice President and Chief Patient Officer
Dr. Stephen Hoge
Mr. John Young
Chief Business Officer
Rep. DeGette: What would be the accessibility and availability if your vaccine is chosen? Please be brief with your remarks.
AstraZeneca: We want to have the first phase by this fall.
Rep. DeGette: Is this probable and do you believe it is available by the end of the year?
AstraZeneca: Difficult question to answer. We are encouraged by data in Phases 1 and 2 and hope to have it available by year’s end.
Moderna: Yes, we do. We are encouraged by progress. The Phase 3 trial is a little difficult. We hope to have millions developed by end of the year.
Pfizer: We hope to develop 100 million doses by the end of 2020 and 300 million by January 2021.
Johnson & Johnson: It is difficult whether our sites are in the right places, but we are targeting to have results by early 2021.
Merck: We don’t expect to have a licensed product until early 2021.
Rep. Guthrie: Because of the speed needed for development of this vaccine, is safety and efficacy affected? Please provide a timeline for each of your organizations.
AstraZeneca: We can accomplish this in delivering a safe and effective vaccine. We are working 24/7 on this vaccine. No standards will be lowered.
J&J: We believe it is possible. We have experience with expedited programs. It can be done safely. There may be a need for post-marketing surveillance. It will be an effort, but we will continue to monitor safety.
Merck: We have long experience in this. However, there is a much we don’t know about this particular virus. We are prepared to move quickly and gear up for manufacturing.
Moderna: We believe it is possible. We are working around the clock. We follow the FDA guidance with a 30,000-participant Phase 3 program.
Pfizer: Yes, we can move quickly. We leveraged some basic science and apply it to the learning of our covid platform. The American public should have great confidence in the FDA guidance for safety and efficacy.
Rep. Jan Schakowsky (D-IL-9): I want to talk about pricing so that drug makers cannot take advantage of the situation. We have seen price gouging in the past. Pfizer has said that there will be no profit for that company if they are approved. Will you sell your vaccine at cost and provide contact transparency?
Moderna: We will not sell at cost.
AstraZeneca: Our agreement is at no profit.
Merck: Yes about transparency regarding pricing. No, not selling at cost. J&J: We will be providing at a not-for-profit during the pandemic crisis.
Rep. Schakowsky: For companies receiving government funding, are there any contracts or agreements in place with the government?
Moderna: We don’t have a supply agreement only R&D.
AstraZeneca: The Biomedical Advanced Research and Development Authority (BARDA) is funding the 30,000 program and the 300 million doses.
Merck: We are not receiving funding from Operation Warp Speed. We have no procurement agreements at all.
J&J: Our funding covers R&D and no supply agreements.
Rep. Schakowsky: From Pfizer, I’m concerned about price gouging. We need full transparency.
Pfizer: We didn’t accept government funding. We wanted to move quickly. We recognize these are extraordinary times. We believe that the covid vaccine should be free to the public. It is worthless to have a vaccine that people cannot afford.
Rep. Morgan Griffith (R-VA-9): Regarding Mr. Guthrie’s questions, you said that regulatory guidelines are sufficient to be safe and effective.
Pfizer: FDA should be commended for their very clear guidelines with a high standard. The clinical trial profile for Phase 3 is appropriate. We have great confidence in following FDA guidelines. Americans should be confident.
Rep. Griffith: What is FDA requiring from your companies to not cut corners and that speed has not affected the outcome?
Merck: The way to think about this is that the FDA is not loosening any standards. When we were prosecuting our Ebola study, it took five years for approval. We are familiar with the expectations and will be fully transparent.
AstraZeneca: The guidelines by FDA are absolutely normal and if we are able to meet them, they will be safe and effective. They have not lowered standards.
J&J: We agree that the standards are appropriate and more stringent from some of our other clients.
Moderna: The FDA standards are the gold standard.
Rep. Griffith: Have the companies learned anything that might develop future flu vaccines to be more efficient and more effective?
Pfizer: We have been able to speed up our development through this process which will help in future vaccines.
Rep. Raul Ruiz (D-CA-36): I am cautiously optimistic after listening to all of you. However, I am very concerned about the health equity plan regarding the distribution. We need a distribution plan based on public health principles. Where is the highest risk and the highest risk of transmission? Who is more affected? Seniors and seniors in nursing homes are at high risk of dying. People of color are at a higher risk. Testing is still difficult – example of a nurse having trouble getting tested, but a for player with the Washington Nationals baseball team has it readily available. It needs to be in the hands of the people who need it most. What is your company doing that it is getting to those at high risk?
Merck: It is the CDC’s responsibility and ICIP’s responsibility. The National Academy of Medicine should develop a plan.
Pfizer: I support Dr. Gerberding. CDC has clear priority and I look forward to working with the federal government and agencies.
Rep. David McKinley (R-WV-1): From what we have heard, a vaccine is months away at best. Parents don’t want to send their children to school without a vaccine. Would you send your children back to school without a vaccine? We need leadership from you.
AstraZeneca: I will be sending my children back to school.
Moderna: I don’t know the answer yet for my children. We are discussing that tonight at dinner.
Merck: There is a great deal of local variability. We need pediatric assistance regarding that decision.
Rep. McKinley: Difficulties with China – will anything come from China?
Pfizer: None of the materials will involve the China supply chain.
AstraZeneca: We want to resolve this pandemic globally. All of the manufacturing will be done in the U.S.
Rep. McKinley: Are you worried about the perception some have that a vaccine may come to market before it’s been sufficiently tested?
AstraZeneca: Given the speed we are working, people will ask questions about cutting corners. But you are hearing from all of us, that that isn’t happening with any of us. That would never occur.
J&J: We are working around the clock, but we are not cutting any corners. We will continue to develop a safe and effective product.
Rep. Ann McLane Kuster (D-NH-2): Confidence – could you articulate the notion that you are taking a risk on the manufacturing, but you are not taking a risk on the safety and efficacy?
AstraZeneca: What is different is that we are manufacturing at a risk, but regulators agree that we are safe and effective. Funding from BARDA gives us that assurance.
Rep. Kuster: How much does that take off the clock?
AstraZeneca: A lot – you wouldn’t make these investments otherwise. It is a huge help.
Rep. Kuster: On the task of ramping up: HR 7104 requires planning now so that we can assure that all Americans have access to the vaccine and we can reopen safely. This was in the HEROES Act. AstraZeneca will produce 300 million doses. Does that include 150 million to supply around the globe?
AstraZeneca: The 300 million is for the U.S. and independent supply chain around the world for the 150 million.
Rep. Kuster: What steps is Pfizer taking for any shortages or distribution issues?
Pfizer: Since recent acquisitions, we have helped our production issues.
Rep. Markwayne Mullin (R-OK-2): We are in a situation we have never experienced before. We are testing more, developing more. Can each of you speak to your manufacturing capacity demand?
Pfizer: We have a dedicated supply chain and work with the EU for their supply chain. Facilities in Missouri, Massachusetts, and Michigan do all of our manufacturing. Our manufacturing work is underway even before we have a vaccine.
AstraZeneca: I am confident about our supply chain.
Moderna: We have been working on a dedicated U.S. supply chain and have partnered with Lonza Ltd. to use their facility in Massachusetts.
Merck: We are manufacturing at risk and expect to have many millions of doses by early 2021.
J&J: We are setting up global supply. We are targeting 150 million doses by early 2021 and 1 billion by the end of 2021.
Rep. Mullin: Anything manufactured in China?
Pfizer: Ours will be from the U.S. supply chain.
AstraZeneca: Our U.S. supply chain will be from the U.S., but around the world, it will be elsewhere.
Merck: We committed to building out our supply chain within the U.S.
J&J: Half of the supply chain will be from the U.S. and the other half from other places.
Rep. Mullin: Do you have plans to expand your supply chain?
Rep. Kathy Castor (D-FL-14): My concerns include the CDC and public health officials, and how we distribute vaccines. Success will rely on our public health professionals. We must build on that health infrastructure. The HEROES Act would build on that investment. State and local immunization leaders wrote to OWS leaders and said that we have a track record of facilitating vaccines delivery. The Trump administration hasn’t relied on health officials. Their dismissal of our health leaders is bad. Dr. Gerberding, you were at CDC – would you agree the CDC and the longstanding health professionals have been critical to our vaccine distribution effort? How will the CDC play in the upcoming vaccine plan?
Merck: We cannot do this without the CDC. We need to strengthen their support, their rights. Need to get behind them with the appropriate resources. They are our front line.
Rep. Castor: That system has been very successful in the past.
Pfizer: I endorse everything Dr. Gerberding said. None of us are safe until all of us are safe. Everybody needs to be protected.
Rep. Castor: Is Operation Warp Speed doing this now?
Moderna: They have brought in NIH and CDC to plan on how to execute.
Rep. Buddy Carter (R-GA-1): There is a difference in knowing something and realizing something. We know we are too dependent on other countries for supplies. How much of the material in your product comes from overseas?
AstraZeneca: Our U.S. supplies come from the U.S. All of it. However, I will check and confirm that.
J&J: 99% of our materials come from U.S. or Europe. We have very little coming from China. Manufacturing – half will be produced in the U.S.. There will be a number of facilities assisting around the world.
Merck: We are localized to the U.S. and Europe, but I will have to get back to you with exact details.
Moderna: Our manufacturing is within two facilities in the U.S. There may be some in China, but it’s very very small.
Pfizer: All manufacturing in the US.
Rep. Tom O’Halleran (D-AZ-1): You witnesses are doing so much to educate the American public about the vaccine. Lack of PPE is still a problem in the U.S. What is your company doing to ensure a diverse, broad representation of people?
AstraZeneca: Our vaccine is tested by as diverse participants as possible to represent all of the populations around the world – both ethnic and age diversity.
J&J: We are in the planning stages of Phase 3. We will include diversity. We have a community outreach program. We have a longstanding HIV program. We want to partner with those programs we already have in place. We will rely on our past experience.
Rep. Michael Burgess (R-TX-26): Regarding availability, is it the case that price hasn’t been the big determinate, but rather vaccine hesitancy?
AstraZeneca: Ultimately, people need to be vaccinated to be protected. FDA has committed to show that the review process will uphold the highest levels regarding safety and efficacy.
J&J: We agree that vaccine hesitancy is a bigger challenge over time. We would support efforts for solid education programs to understand the vaccine and share everyone’s concerns. People need to have confidence in the vaccine.
Merck: I couldn’t worry about this issue more. It is not enough to have a government spokesman; we need to have doctors speak out. We need to engage the medical community and have their confidence in what we are doing.
Moderna: It will take a broad effort. There is a trust deficit. Pfizer: We fully support the work of the CDC. Should we be successful, we need confidence based on data that the FDA will approve a vaccine.