COVID-19: Daily Report for Life Sciences and Health Care Companies (30 March - 3 April)

Friday, 3 April 2020

• In response to the COVID-19 pandemic, the U.S. Congress, the Centers for Medicare and Medicaid Services (CMS), many state legislatures and state Medicaid programs, and private payers have implemented significant changes to restrictions on the provision and coverage of telehealth services. These changes are intended to make it easier for individuals to receive treatment remotely during the emergency in order to mitigate risk of exposure for both patients and health care workers, and reduce pressure on an increasingly strained health care infrastructure. These changes are analyzed in detail here. (Authored by Brooke Bumpers)

• Extraordinary measures have been quickly adopted in Italy in order to contain the contagion and treat COVID-19 patients. The approach that the Italian competent authorities are following is to ensure that new treatments are made available in a regulated context. This is essential in order to collect reliable data and to safeguard patients. New provisions have been enacted to speed up the approval process of clinical trials and compassionate uses concerning medicinal products and medical devices in Italy. In particular, the emergency regulation for clinical trials and compassionate uses is contained in Article 17 of the Law Decree No 17 of 18 March 2020. Read more here. (Authored by Riccardo Fruscalzo)

• With the anticipated disbursement of hundreds of billions of dollars in aid, the CARES Act is expected to produce new and enhanced compliance risks. The government has announced that it will closely monitor the use of its aid to businesses and investigate any fraud, waste, and abuse. Our Investigations White Collar and Fraud (IWCF) practice has extensive experience with the types of investigations that tend to come on the heels of stimulus bills similar to the CARES Act, such as the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP)’s investigation of financial fraud following the 2008 financial crisis, and the Office of the Inspector General of the Department of Transportation investigations into the use of financial assistance in response to Hurricane Sandy. The CARES Act similarly creates and funds specialized investigatory bodies charged with ensuring the proper use of funds disbursed under the Act, including the Special Inspector General for Pandemic Recovery and the Pandemic Response Accountability Committee. The IWCF practice group will continue to monitor developments in this area and provide updates on enforcement priorities under the Act. (Authored by David Bastian and Katy Bonesio)

Thursday, 2 April 2020

• The U.S. Food and Drug Administration (FDA) on March 31 announced the establishment of a special emergency program to help speed actions on possible COVID-19 therapies. FDA's Coronavirus Treatment Acceleration Program (CTAP) is intended to promote collaboration between FDA, companies, scientists, and doctors to “bring new therapies to sick patients as quickly as possible, while at the same time supporting research to further evaluate whether these medical countermeasures are safe and effective for treating patients infected with this novel virus.” One key element of the new program is FDA’s commitment to significantly expedited review and response times. Although it’s impossible to know the real-world impact, given the variations in facts and ever-changing environment, this announcement should be expected to provide processes that are clearer and faster progress for COVID-19 products. Read more here. (Authored by Philip Katz)

• Amid the fierce competition to develop COVID-19 vaccines and treatments, there may also be the need to collaborate. As companies develop testing kits, trial drugs, manufacture ventilators, and step up medical supply distribution, they may be concerned about whether their collaboration efforts could draw the scrutiny of competition law enforcers. The European Commission and EU Member State competition authorities have issued a joint statement on the application of competition law during the COVID-19 crisis in the context of the European Competition Network. While there is recognition that in these extraordinary times cooperation may be necessary, the competition rules remain relevant and fully applicable. Read more here. (Authored by Sabrina Borocci)

• The European Commission has issued three important guidelines in order to assist manufacturers in the production of useful products such as, 3D-printed medical devices and accessories, personal protective equipment as well as hand cleaners and hand disinfectants in the context of the COVID-19 pandemic. Read more here. (Authored by Fabien Roy)

• The General Administrator of Belgium's AFMPS issued a Decision on 1 April 2020 introducing urgent measures regarding specific medicinal products used in the context of the SARS-CoV-2 pandemic. The purpose of the decision is to prevent shortages in the event of a sudden increase in infected patients. The intended purpose of the decision is to address the uneven distribution of medicinal products that are indispensable for the COVID-19 epidemic by introducing measures of strategic stockpiling and controlled distribution. Read more here. (Authored by EA Wright)

• Following our discussion of U.S. FDA and FTC action to monitor and enforce against unlawful marketing of products for diagnosis, prevention, or treatment of COVID-19, these agencies issued two additional Warning Letters late last week to offenders. One of the companies, Corona-cure.com, had been selling a nasal spray with claims that the product could be used to prevent and/or treat this Novel Coronavirus. The other, Carahealth, was cited for selling its herbal products for the same types of intended uses. FDA and FTC reiterated their concern that the promotion or sale of unapproved drugs which claim to cure, treat, or prevent serious conditions – including COVID-19 – may lead consumers to delay or stop appropriate medical treatment, thereby causing serious harm. FDA and FTC thus stressed again that no treatment or preventative measure have yet been approved for COVID-19 (although, as our 31 March alert discussed, FDA subsequently issued an EUA for 2 drugs that “may be effective.”) Notably, one claim cited on Carahealth’s website was that its “natural antiviral herbs” could decrease the virulence of the virus and boost immunity as “no medical treatment” exists for the virus; FDA and FTC clearly deemed this still misleading, as any claimed treatment effect renders a product a drug (or device). (Authored by Suzanne Levy Friedman and Heidi Gertner)

Wednesday, 1 April 2020

• On 27 March, the U.S. Congress enacted into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), an unprecedented $2 trillion stimulus package intended to provide emergency assistance and support to individuals, families, and businesses affected by the 2019 novel coronavirus (COVID-19) pandemic. The CARES Act has special implications for the health care industry including hospitals, physicians, and other providers and suppliers; group health plans and health insurance issuers; and drug and device manufacturers. The CARES Act reforms are in addition to actions taken by the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) under existing authority to increase flexibility during the COVID-19 emergency — such as the OIG's 30 March announcement that it will exercise discretion and afford greater flexibility in evaluating non-safe harbored transactions by health care organizations that are in response to the COVID-19 crisis. Our alert, online here, summarizes key provisions of the CARES Act that involve the Medicare and Medicaid programs. (Authored by Sheree Kanner)

• The U.S. Food and Drug Administration (FDA) issued an emergency use authorization (EUA) allowing distribution of two decades-old malaria drugs — Chloroquine Phosphate and Hydroxychloroquine Sulfate — to treat COVID-19. As required by the governing statute, this specific EUA was preceded by a more general declaration from the Secretary of Health and Human Services (HHS) “that circumstances exist justifying the authorization of emergency use of drugs and biological products during the COVID-19 pandemic.” That declaration significantly expands the potential universe of treatments that may receive EUAs; the previous declarations were for in vitro diagnostics, personal protective equipment, and medical devices, including ventilators. Read more here. (Authored by Philip Katz)

• On Monday, March 30, the Centers for Medicare & Medicaid Services (CMS) announced an array of temporary regulatory waivers and new rules to equip the American health care system with maximum flexibility to respond to the COVID-19 pandemic. The temporary waivers will last as long as the public health emergency declaration is in place, and they include a blanket waiver of the sanctions provision of the physician self-referral law or Stark law (Section 1877 of the Social Security Act) for actions related to the pandemic. Simultaneously, Christi A. Grimm, Principal Deputy Inspector General for the Department of Health and Human Services’ Office of the Inspector General (HHS-OIG), released a message on minimizing burdens on providers, stating that, “[f]or any conduct during this emergency that may be subject to OIG administrative enforcement, OIG will carefully consider the context and intent of the parties when assessing whether to proceed with any enforcement action.” These developments offer significant flexibility for health care providers to provide goods and services necessary to respond to the pandemic without fear that their conduct will be subject to enforcement under the rules that would ordinarily apply. Read more here. (Authored by Thomas Beimers)

• The CARES Act contains a range of stimulus measures, including direct assistance to families and workers, expanded unemployment insurance, funding for hospitals and health care providers, financial assistance to small businesses, and loans and guarantees for other severely distressed sectors of the economy. Among the most consequential measures for many of our clients will be programs designed to bolster small businesses, including, and most notably, a significant expansion of the 7(a) Loan Guarantee Program facilitated by the Small Business Administration (SBA), as discussed in more detail here. SBA will soon issue regulations governing this expansion of the 7(a) Loan Guarantee Program, and Hogan Lovells will publish updated guidance at that time. (Authored by David A. Winter)

• Recent developments in Italy in response to the COVID-19 public health crisis: The Cura Italia Decree provides for public funds to support increased production of medical devices and personal protective equipment (PPE) and designates authority for clinical trial regulations and off-label use of drugs. More public funding to support medical device production and provide liquidity to life sciences companies is expected.  Additionally, a consortium of Italian authorities and the World Health Organization are reaching out to industry and academic researchers to find the best available digital solutions and technologies for telemedicine, home care applications, and active monitoring of the risk of contagion. Read more here. (Authored by Christian Di Mauro and Sabrina Borocci)

Tuesday, 31 March 2020

• In keeping with a trend toward relaxing enforcement to support increased access to urgently needed medical devices during the COVID-19 pandemic, on 30 March 2020 the U.S. Food and Drug Administration (FDA) released an immediately in effect guidance which describes the risk-based approach that FDA is taking to help expand the availability of surgical apparel for health care professionals, including gowns, hoods, togas, and surgeon’s and patient examination gloves, during the current public health emergency.  The guidance sets forth the regulatory requirements FDA intends to apply to these products, including associated indications and claims.  (Authored by Ted Wilson)

• Further to the European Guidance on the Management of Clinical Trials during the COVID-19 pandemic, the German higher federal authorities (the Federal Institute for Medicinal Products and Medical Devices (BfArM) and the Paul-Ehrlich-Institute (PEI)) have issued supplemental national guidance regarding required changes to clinical trial protocols, the supply of investigational medicinal products (IMP), and the conduct of site monitoring during the COVID-19 pandemic. It is indicated that BfArM and PEI are going to update their guidance soon. Read more here. (Authored by Joerg Schickert, Arne Thiermann, and Tina Welter)

• BfArM, the German Federal Institute for Drugs and Medical Devices, has issued a general notice on delivery quantities for medicinal products in order to prevent overstocking by individual market participants during the COVID-19 pandemic. BfArM observes that apparently some market participants excessively stockpile certain drugs and medical devices, resulting in uneven distribution of medicinal products. BfArM has ordered marketing authorization holders and wholesalers on 20 March 2020 not to supply medicinal products exceeding the usual requirements to ensure continuous and even supply. Deliveries to wholesalers must at least equal the average requirement for two weeks and deliveries to retail pharmacies must at least equal the average requirement for one week. In general, deliveries shall be made based on delivery quantities in the previous year. Quantities supplied to hospital pharmacies and pharmacies delivering to hospitals shall not exceed the average requirement for four weeks, unless the respective product is used in connection with COVID-19 treatment (then: eight weeks). Note that the requirement not to deliver an amount of products exceeding the previous year's quantities, does not apply here. (Authored by Joerg Schickert, Arne Thiermann, and Benjamin Goehl)

Monday, 30 March 2020

• On 29 March 2020 the U.S. Food and Drug Administration (FDA) released immediate in effect guidance for relaxed enforcement for sterilizers, disinfectant devices, and air purifiers during the COVID-19 public health emergency. The agency indicated intent to increase access to devices that may facilitate rapid turnaround of sterilized or disinfected medical equipment and reduce the risk of viral exposure for patients and health care providers to SARS-CoV-2. The scope of the policy covers a broad list of these devices and their accessories, and applies to devices with current FDA marketing authorization, as well as devices that are not currently authorized. The agency will not object to the modification of previously cleared or approved devices or the marketing of unauthorized devices without prior FDA authorization where this would not create an undue risk. The policy does not apply to devices that are intended to prevent or reduce the risks of hospital acquired infections or COVID-19. The new policy includes detailed guidance on performance and labeling. (Authored by Michael Heyl and Lina Kontos)

• Among the many provisions in the CARES Act, signed into law on 27 March 2020, are two that immediately impact medical device manufacturers responding to the COVID-19 pandemic: (1) manufacturers of personal respiratory protective equipment, such as masks and respirators, that have been cleared by the National Institute for Occupational Safety and Health (NIOSH) are provided permanent liability immunity when the Secretary of Health and Human Services determines the equipment to be a priority for use during a public health emergency (Section 3103); (2) Device manufacturers are required to notify the Food and Drug Administration (FDA), during or in advance of a public health emergency, six months prior to the date of a discontinuance or interruption of manufacture of a medical device that is likely to lead to a meaningful disruption in supply, and the give the reasons for the discontinuance or interruption. FDA is required to prioritize and expedite inspections and the review of submissions that could help prevent or mitigate a medical device shortage. (Section 3121)

• As the coronavirus (COVID-19) spreads across the world, creating new epicenters, this is perhaps an opportune moment to look back at the lessons learned from China, where it appears that the outbreak is under control, in terms of supporting the life sciences sector during the epidemic. Ever since the initial outbreak of COVID-19 in Hubei Province, China in January 2020, the Chinese government, at both the central and local levels, has been rolling out a series of support policies for the life sciences industry in order to contain the spread of COVID-19 as well as policies designed to punish those seeking to profit from the epidemic. (Authored by Andrew McGinty and Jessie Xie)

• Medical device companies are on the front lines in the response to the COVID-19 pandemic, working within a highly fluid regulatory environment. Members of our Government Procurement and Medical Device teams will lead a webinar on key regulatory and federal contracting developments for medical device companies, and provide critical information about the federal health acquisition programs that companies can expect to be interfacing with during the current COVID-19 environment and beyond. Please register for this event, which takes place on 31 March 2020, 11:00 AM – 12:00 PM (EST), and share any topics or questions for our speakers, Joy E. Sturm, Randy J. Prebula, and Annie D. Vanselow.

• The spread of COVID-19 is causing Europe to experience one of the greatest health crises in decades, the consequences of which are still unpredictable. Faced with this unprecedented situation, the governments of different European countries have been forced to issue a series of legislative measures to alleviate the social, economic, administrative, and health effects of the COVID-19 crisis. Among others, these measures include possible seizures, reporting and notification obligations, temporarily occupation of premises, duty to supply certain medical devices and drugs, or restrictions in the supply of specific products that may have a significant impact on the pharmaceutical and medical devices' industries.  Some of these measures may imply compensations to the affected companies where applicable, compensations which must be sought. Companies should also be aware that in certain cases they can bring court proceedings in order to challenge unjustified specific adopted measures. The legal framework is constantly evolving these days. Businesses shall keep abreast with the several developments. Click here to read in-depth article covering the specific legislative measures in place in Italy, Germany, Spain, and France.

Daily reports for the week of 23-27 March are online here.

Compiled by Aaron Armstrong and Judy Rein