HHS to Use Equity Financing for Long-Term Pandemic Investments

A new nonprofit partner will use venture capital methods to develop technologies and medical countermeasures for long-term pandemic preparedness on behalf of the HHS, according to a contract solicitation on the General Services Administration website.

The organization will use methods like equity financing—investing in a company and receiving an ownership interest—to help the Biomedical Advanced Research and Development Authority address “gaps in pandemic preparedness,” especially in response to new pathogens like SARS-CoV-2, the virus that causes Covid-19.

BARDA, part of the Department of Health and Human Services, helps develop countermeasures against emerging diseases. The agency regularly finances new technologies, drugs, and devices that can be used during a public health emergency or biohazard attack, but the new partnership would focus even more on future investments.

The agency said it is partnering with venture capital firms because there is a “noticeable lack of sustained long term investment, from the VC community, in technologies that can prepare the United States and the world for emerging infectious diseases and broader health security threats,” according to a Q&A on its website.

The partner will be responsible for addressing seven areas: tools to detect, identify, and prevent spread of agents and threats; methods to evaluate technologies; enhanced manufacturing processes; new ways of distributing health products; and improved administration of products and technologies.

The contract will be for a minimum of $10 million for 10 years, and the agency anticipates it will pay an additional $40 million for the first five years. The awardee could be paid up to $500 million over the entire term of the contract.

The agency was directed to partner with an organization to use venture capital practices to develop medical countermeasures and technologies by the 21st Century Cures Act, passed by Congress in 2016.

To contact the reporter on this story: Shira Stein in Washington at sstein@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com