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<br />Janssen Pharmaceutical Company of Johnson & Johnson. As state and federal actions in response to COVID-19 are
<br />far-reaching and rapidly changing, management of the Corporation cannot predict how government responses may
<br />impact the COVID-19 outbreak.
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<br />In addition, the COVID-19 outbreak has affected, and is expected to continue to affect, travel, commerce and
<br />financial markets in the United States and globally and is widely expected to affect economic growth worldwide. The
<br />COVID-19 outbreak has resulted in volatility in the U.S. and global financial markets, and significant realized and
<br />unrealized losses in investment portfolios. Financial results, generally, and liquidity, in particular, may be materially
<br />diminished. Access to capital markets may be hindered and increased costs of borrowing may occur as a result. The
<br />impact of the outbreak on the Corporation’s operations, business and financial results cannot be predicted at this time
<br />due to the dynamic nature of the outbreak, including uncertainties relating to its duration and severity, as well as what
<br />actions may be taken by governmental authorities and other institutions to contain or mitigate its impact. The continued
<br />spread of COVID-19 and containment and mitigation efforts could have a material adverse effect on the operations of
<br />the Corporation and on the national, and global economies and the economies of the state in which the Corporation
<br />operates.
<br />CPRSAA. The Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 (the
<br />“CPRSAA”) was enacted on March 6, 2020. The CPRSAA provides $8.3 billion in emergency funding for federal
<br />agencies to respond to the COVID-19 outbreak. Of this amount, $6.2 billion was designated for the US Department
<br />of Health and Human Services (“DHHS”) for research and development of vaccines, therapeutics, and diagnostics.
<br />The CPRSAA also included a waiver removing restrictions on Medicare providers allowing them to offer telehealth
<br />services to beneficiaries regardless of whether the beneficiary is in a rural community while DHHS’s declaration of a
<br />national public health emergency in response to the COVID-19 outbreak remains in place. Management of the
<br />Corporation cannot predict when DHHS’s declaration will be lifted or how the regulatory landscape around telehealth
<br />services may otherwise change over time.
<br />FFCRA. A variety of federal, state and local government efforts have been initiated in response to the recent
<br />COVID-19 outbreak. The Families First Coronavirus Response Act (the “FFCRA”) was adopted on March 18, 2020,
<br />and provides additional support for the domestic COVID-19 response. The FFCRA includes provisions for
<br />establishing a federal emergency paid leave program for individuals unable to work as a result of COVID-19,
<br />expanding state unemployment benefits, requiring employers to provide paid sick leave, providing SARS-CoV-2
<br />diagnostic testing free of charge to consumers, and providing liability protection for “respiratory protective devices”
<br />used as part of the COVID-19 response. The FFCRA also increased the Federal Medicaid Assistance Percentage for
<br />state Medicaid programs by 6.2%. In December 2020, the Consolidated Appropriations Act, 2021 extended FFCRA
<br />leave and tax credits through March 31, 2021. Under the Consolidated Appropriations Act, 2021, FFCRA leave is no
<br />longer mandatory; instead, the law permits employers to take advantage of federal tax credits for providing FFCRA
<br />leave from January 1 to March 31, 2021.
<br />CARES Act. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) adopted on
<br />March 27, 2020, provides temporary and limited relief to health care providers during the COVID-19 outbreak,
<br />including the appropriation of $100 billion under the Public Health and Social Services Emergency Fund (“Provider
<br />Relief Fund”) to reimburse providers for expenses and lost revenue associated with the treatment of COVID-19
<br />patients, expanding the Medicare Advanced and Accelerated Payment Program, providing employee retention tax
<br />credits to employers affected by COVID-19, and eliminating the 2% reduction in Medicare payments from
<br />sequestration during the period of May 1, 2020 through December 31, 2020. It is not clear whether these provisions
<br />and the increased funding to health care providers provided in the CARES Act will be adequate to cover the significant
<br />costs borne by health care providers treating patients with COVID-19 or the shortfall in revenues that is anticipated
<br />from reductions in elective and other procedures during the COVID-19 outbreak, or the decreased occupancy for
<br />senior living providers.
<br />Medicare Accelerated and Advance Payment Program. In addition to CARES Act funding, the Centers for
<br />Medicare & Medicaid Services (“CMS”) has expanded and streamlined the process for its Accelerated and Advance
<br />Payment Program, pursuant to which providers can receive advance Medicare disbursements. The advance and
<br />accelerated payments are a loan that providers must pay back. CMS has announced that it will begin to offset the
<br />accelerated/advance payments 120 days after disbursement. Offsets will be processed for up to one year after the
<br />disbursement date, at which time the providers will have to repay the outstanding balance without interest, or to the
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