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As COVID-19 cases overwhelmed hospitals in 2020, the federal government moved with unprecedented speed to send trillions of dollars into the nation’s healthcare system. The money was intended to keep hospitals operating, expand treatment capacity and accelerate the development of vaccines, medicines and testing.
But the same financial machinery that helped hospitals survive the crisis also created a complicated web of incentives — linking government reimbursements, hospital treatment decisions, pharmaceutical contracts and emergency purchasing programs.
Federal agencies, hospitals and medical organizations have defended the programs, saying funding models were necessary to support an unparalleled public health response and that reimbursement structures reflected the higher costs of caring for critically ill patients.
Now — years after the height of the pandemic — some critics of the response are calling for deeper investigations.
Did a system built to encourage a swift answer to COVID-19 create monetary motivations that affected patient care?
Florida candidate for governor calls for investigation
Fiscal relationships among government agencies, hospitals and pharmaceutical companies require further review, according to critics. They point to emergency contracting authorities, expedited regulatory pathways and limited transparency around agreements.
The campaign of Republican gubernatorial candidate Rachel Rodriguez and her Florida law firm, Vires Law Group, said they sent letters to attorneys general and governors in all 50 states urging them to open or expand criminal investigations into Dr. Anthony Fauci, federal agencies and institutions involved in COVID-19 policies and treatment protocols.
Rodriguez is targeting what she calls the “COVID Criminal Enterprise,” alleging hospital administrators and other officials received financial incentives tied to COVID-19 treatment protocols that the law firm and families of patients claim resulted in preventable deaths and injuries.
“Thousands of victims injured or killed in hospitals through medical ‘standards of care’ COVID countermeasures and their family members deserve justice for the harm done to them,” Rodriguez told The Defender.
According to a petition Rodriguez sent to all 50 states:
“Hospitals are also specifically incentivized to administer as many COVID countermeasures on each patient they are able to diagnose with COVID due to layering bonuses from the federal government to the hospitals, specifically by CMS [Centers for Medicare & Medicaid Services].”
The latest builds on a 2025 petition the law firm sent to then-Attorney General James Uthmeier to investigate and prosecute COVID-19 patient abuse and “hospital homicide.”
The allegations have not been proven in court.
Multiple federal programs involved in COVID funding model
Federal records show that billions of dollars flowed to hospitals, pharmaceutical companies, laboratories, testing companies and other healthcare providers through programs created or expanded during the pandemic.
CMS, part of the U.S. Department of Health and Human Services (HHS), became one of the central distributors of COVID-19-related hospital funding.
Through the Coronavirus Aid, Relief, and Economic Security Act or CARES Act, the Coronavirus Response and Relief Supplemental Appropriations Act, and the American Rescue Plan, Congress authorized hundreds of billions of dollars in pandemic relief.
Hospitals received support through multiple programs, including reimbursement increases for COVID-19-related treatment.
CMS established a 20% add-on payment for certain COVID-19 inpatient cases under Medicare’s Inpatient Prospective Payment System. Additional payments were available for some treatments and hospital expenses connected to COVID care.
CMS explained that the increase was accomplished by multiplying the applicable diagnosis-related group, or DRG. The policy applied during the federal COVID-19 public health emergency.
CMS also established the New COVID-19 Treatments Add-on Payment, or NCTAP. The agency said the program was intended to reduce potential financial barriers for hospitals to provide new COVID-19 treatments.
The program began Nov. 2, 2020, and continued through Sept. 30, 2023. Qualifying cases could receive additional Medicare reimbursement when specified COVID-19 treatments were administered.
The result was a layered reimbursement system: A qualifying COVID-19 hospitalization could generate the standard DRG payment, the 20% CARES Act increase and, in eligible circumstances, additional treatment-related reimbursement.
CMS did not respond to a request for comment for this story.
Testing and vaccines generated big federal payments
COVID-19 testing generated another significant flow of public money.
CMS increased Medicare reimbursement for certain COVID-19 tests to $100 per test, compared with about $51 previously, under policies intended to encourage faster testing.
Federal agencies also purchased tests directly.
On Jan. 13, 2022, the U.S. Department of Defense (DOD) awarded iHealth Lab a $1.275 billion contract for COVID-19 rapid antigen tests, and gave Roche Diagnostics a $340 million contract for additional rapid antigen tests. The contracts were funded through the American Rescue Plan.
The DOD separately awarded Goldbelt Security a $51.6 million contract for COVID-19 antigen tests.
When reached for comment, a Pentagon official at the DOD — also known as the U.S. Department of War — told The Defender:
“The Department of War adheres to the Federal Acquisition Regulation (FAR) and Defense Federal Acquisition Supplement (DFAR) when executing contract and acquisition activities. Beyond that the Department doesn’t have anything to provide in response to the specific circumstances raised in your query.”
Vaccination also generated financial gains.
CMS also paid healthcare providers for administering COVID-19 vaccines. Beginning March 15, 2021, Medicare’s national average payment for administering a COVID-19 vaccine was approximately $40 per dose, with additional payments available in certain circumstances, including some vaccinations administered in patients’ homes.
The federal government also imposed vaccination requirements on staff at Medicare- and Medicaid-certified healthcare facilities. CMS said facilities that failed to comply could face enforcement actions, including civil monetary penalties, denial of payment and, ultimately, termination from the Medicare and Medicaid programs.
The economic pressure on hospitals was significant because Medicare and Medicaid participation is central to the finances of many healthcare facilities.
FEMA paid hospitals for pandemic expenses
The financial system extended to the Federal Emergency Management Agency (FEMA).
Federal records show that FEMA awarded millions of dollars to hospitals and health systems for pandemic staffing.
Among the awards cited in the source material were more than $4.6 million for Mass General Brigham in Massachusetts and nearly $11.5 million for Elliot Hospital in New Hampshire.
FEMA also awarded nearly $37 million for COVID-19 administrative expenses in Massachusetts associated with vaccination and testing programs.
FEMA did not respond to a request for comment.
Billions went to pharmaceutical companies
The federal government also committed billions of dollars to pharmaceutical manufacturers for COVID-19 vaccines and treatments.
A 2020 federal contract with Pfizer provided approximately $1.95 billion for the production of the company’s COVID-19 vaccine.
In June 2022, Pfizer and BioNTech announced a separate agreement under which the U.S. government agreed to purchase 105 million doses of their vaccine for approximately $3.2 billion, with options for as many as 195 million additional doses.
The federal government also entered into a contract with Pfizer for Paxlovid. The contract identified in the source material was valued at approximately $5.295 billion for 10 million doses.
Moderna received a federal contract valued at approximately $1.525 billion for COVID-19 vaccine production, according to the documents.
In 2022, Moderna announced a separate agreement with the U.S. government for 66 million doses of its bivalent COVID-19 booster, valued at approximately $1.74 billion, with options for up to 234 million additional doses.
Janssen, a Johnson & Johnson company, received a federal contract worth approximately $1 billion for the production of its COVID-19 vaccine.
HHS maintains a public repository containing COVID-19 contracts and records associated with Operation Warp Speed.
HHS did not respond to a request for comment from The Defender.
Federal funding for remdesivir totaled $162 million through December 2020
Remdesivir, an injection made to treat COVID-19, is a primary example of the relationship between federal spending and private pharmaceutical revenue.
The Government Accountability Office (GAO) reported that federal funding for remdesivir research and clinical trials totaled about $162 million through December 2020.
Gilead Sciences, which markets remdesivir as Veklury, reported $720 million in Veklury sales during the fourth quarter of 2023.
Some experts believe remdesivir has been both highly lauded and dangerous.
“Remdesivir (Veklury) was hyped to the extreme, and its history is very dirty,” Dr. Peter C. Gøtzsche said.
He added:
“Two weeks before Anthony S. Fauci announced at a White House press conference in April that the drug would be the new ‘standard of care,’ the investigators of a trial partly funded by the U.S. National Institutes of Health changed the primary outcome, which was the death rate, and replaced it with the time it took patients to recover. For obvious reasons, such outcome switching shortly before a trial is published is considered scientific misconduct.”
Dr. David Healy said he was in Canada and in the U.K. during the pandemic and “neither were using remdesivir.”
Rodriguez said she implored Florida Gov. Ron DeSantis to investigate remdesivir.
“Sadly, the offer to pursue those claims was turned down, and it would have uncovered hundreds of millions of dollars to return to the state of Florida from the hospital fraud,” she told The Defender.
Rodriguez cited approximate prices of $3,120 for a five-day course of remdesivir, $529 for Paxlovid, $5,000 for adintrevimab, $2,100 for sotrovimab and $707 for molnupiravir.
In her filing, she contrasted those figures with cited prices of approximately $1 for ivermectin, $5 for quercetin, $4 for fluvoxamine, $1 for zinc, $10 for metformin and $1 for hydroxychloroquine.
“There is a lot of corruption in healthcare, so when you have an expensive drug like remdesivir, many people — particularly doctors — will benefit financially,” said Gøtzsche.
A request for comment was sent to Gilead Sciences, but the company did not respond.
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Transparency questions remain
The financial relationships created during COVID-19 involving government agencies, hospitals and pharmaceutical companies spurred long-term changes.
A national study of 4,423 U.S. hospitals found that 75% had positive net operating income in 2020 and 2021, while 16.3% experienced new financial distress.
COVID-19 relief funding appeared to play a major role: Without it, 46.3% would have experienced financial distress. Operating margins reached an all-time high of 6.5%, compared with 2.8% before the pandemic.
Critics say these increases in funding did not result in better treatment.
Some medical experts also believe future investigations should examine contracts, patents and other financial connections involving individuals and organizations involved in pandemic policy decisions.
Gøtzsche said:
“Bribery is routine and involves large amounts of money. Almost every type of person who can affect the interests of the industry has been bribed: doctors, hospital administrators, cabinet ministers, health inspectors, customs officers, tax assessors, drug registration officials, factory inspectors, pricing officials and political parties.”
According to the GAO, the financial response accelerated vaccine development and helped deliver treatments and testing at a scale never before attempted.
The unresolved issue is how to structure emergency health spending in the future: quickly enough to respond to a crisis, but with enough transparency and oversight to maintain public trust.
As governments prepare for any subsequent pandemics, the financial lessons of COVID-19 may prove as significant as the medical ones.
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- Congress Asked Fauci at Least 111 Questions — Fauci Refused to Answer at Least 111 Times
- Watch: Sen. Ron Johnson and Mary Holland Peel Back ‘Saint’ Fauci’s True Legacy
- Did Fauci, Other Top NIH Officials Shut Down Inquiry Into COVID Vaccine Injuries?
- COVID-19 Spike Protein Sequence ‘100% Match’ to Sequence Patented in 2016 by Moderna, Study Shows
