House COVID package looks to make improvements to shortage reporting and the supply chain

After the passage of the CARES Act in March, legislators in Congress are still working on packages to respond to the COVID-19 pandemic. The House’s version—set to be voted upon on Friday—includes several provisions on device and drug shortage reporting, bolstering the supply chain, and preventive/surveillance measures.

 

By Laura DiAngelo, MPH, and Aaron Badida, JD

Executive IQ Brief

  • What’s New: On May 12, Rep. Nita Lowey (D-NY) introduced the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act). Although the bill focuses primarily on economic and workforce provisions, it also builds upon policies enacted under the previous COVID-19 legislative package, the CARES Act, including medical device shortage reporting and new requirements for emergency risk management plans for life sciences manufacturers. In addition, the bill would set up significant reporting requirements for manufacturers of COVID-19 products, streamline access to vaccines and emphasize domestic manufacturing for pharmaceuticals.

  • What’s Next: While the HEROES Act is unlikely to pass the Senate, several of the FDA-related provisions are bipartisan priorities and preview what could be coming in the next comprehensive COVID package. Manufacturers should keep an eye out for enforcement authority on shortage reporting, the construction of a national testing surveillance system, and increased Congressional interest in bringing more pharmaceutical manufacturing to the US.

Regulatory Context & Background

As the COVID-19 pandemic has spread across the US, it has exposed several holes in the FDA’s authority to regulate certain medical products and parts of the supply chain. For example, the agency had previously not had the statutory authority to require manufacturers of medical devices to report on shortages, but rather relied on a voluntary system for “essential” devices.

 

Under the Coronavirus Aid, Relief and Economic Security (CARES) Act, passed in March, Congress granted the FDA the authority to require manufacturers of certain devices to report on disruptions or interruptions during public health emergencies, a policy likely informed by reports of shortages of devices used to respond to the pandemic (e.g., nasopharyngeal swabs, Personal Protective Equipment (PPE)).

 

However, there are still outstanding legislative fixes and areas of interest. For example, CARES didn’t grant the FDA any authority to enforce the mandatory device shortage reporting measure, and certain information about the devices was left out of the mandatory reporting requirement. Additionally, both Congress and the administration have recently expressed concerns about the manufacturing capacity in the US and safeguards against disruptions in the global supply chain. With increasing shares of drugs and devices, as well as their materials and necessary components, imported from other countries, policymakers have been questioning if there are opportunities to bolster domestic production.

 

What’s New

On Friday May 15, the House of Representatives is expected to vote on the HEROES Act, a new COVID-19 response package. While the bill focuses primarily on economic and workforce protections, there are several provisions that relate to the life-sciences industry. These focus on improvements to the supply chain, shortage reporting and mitigation, and regulatory policies for therapies and preventive measures.


Supply Chain Improvement and the Strategic National Stockpile

The HEROES Act proposes to establish the role of Medical Supplies Response Coordinator, an appointed position that would work with HHS and the Federal Emergency Management Agency (FEMA) to oversee health care system capacity and supply distribution. The Coordinator would be the point of contact for industry on federal and coordinated state/tribal procurement of personal protective equipment (PPE), medical devices, testing supplies, drugs and vaccines, and would have the authority to require industry reporting on production and distribution of these products and set financial penalties for failure to comply.

 

To address longer-term planning and supply chain security, the HEROES Act incorporates a proposal by Rep. Anna Eshoo on potential drug supply chain reporting improvements, which AgencyIQ discussed alongside Senate analogs earlier this week. This bill calls for the National Academies of Science, Engineering and Medicine (NASEM) to conduct research on US dependence on foreign drugs and devices and make recommendations on opportunities to improve domestic manufacturing. Additionally, the HEROES Act would grant the FDA the authority to designate National Centers of Excellence in Continuous Pharmaceutical Manufacturing. The bill would appropriate $100 million for the operation of the Centers and direct the FDA to develop a national framework and issue guidance on advanced and continuous manufacturing.

 

Finally, the act includes provisions to update operations of the Strategic National Stockpile. This includes a new pilot program to diversify sourcing for the stockpile, as well as allowing for the Secretary to transfer products from the stockpile to other agencies, among other reforms.

 

Shortages

The HEROES Act builds upon the drug and device shortage reporting requirements created under the CARES Act, addressing several ambiguities in the statute.

 

For medical device sponsors, the bill would require additional information to be included in the shortage reporting, including the device’s Unique Device Identifier (UDI) or national product code. Additionally, the bill would grant the FDA new authority to extend the shelf life of devices for which reporting is required (i.e., essential devices under the newly established requirement) in order to help mitigate shortages. This means that sponsors of devices that meet the mandatory reporting criteria established under CARES would further be required to provide the FDA with evidentiary data on the safety and efficacy of the product after its original expiration date or face a civil money penalty for failure to comply.

 

For drug manufacturers, the HEROES Act would require new quarterly mandatory reporting on any foreign manufacturing, compounding or processing activities, including the manufacture of active pharmaceutical ingredients (API), for drugs intended to be imported to the US.

 

While the CARES Act required manufacturers to establish risk management plans in case of emergent or unforeseen circumstances, the HEROES Act would provide an enforcement mechanism. Under the bill, failure to submit required shortage reporting or develop a risk management plan would be “prohibited Acts” under the Federal Food, Drug and Cosmetics Act and subject to corresponding penalties. Specifically, these actions would be punishable by a $1,000 fine or one year in prison for failure to notify of discontinuance or interruption or failure to develop a risk management plan. If there is intent to defraud, the fine could be as high as $10,000 or three years in prison.

 

The legislation also would give new authority to the Secretary of the Treasury to destroy counterfeit device, which it defines as:

a device which, or the container, packaging, or labeling of which, without authorization, bears a trademark, trade name, or other identifying mark, imprint, or symbol, or any likeness thereof, or is manufactured using a design, of a device manufacturer, packer, or distributor other than the person or persons who in fact manufactured, packed, or distributed such device and which thereby falsely purports or is represented to be the product of, or to have been packed or distributed by, such other device manufacturer, packer, or distributor.”

 

Although most of the coverage and prevention provisions in the HEROES Act address coverage and insurance access to preventive or therapeutic products, there are several key provisions that address development and manufacturer reporting.

 

Under HEROES, the Advisory Committee on Immunization Practice (ACIP) would be required to meet and make recommendations on a COVID-19 vaccine no later than 15 days after it is licensed by the FDA. Streamlining this process would help ensure rapid market access for licensed vaccines. Additionally, the Act would increase funding for BARDA to support vaccine manufacturing, and direct an investigation into the supply, domestic manufacturing capacity, and future potential enhanced manufacturing strategies for vaccines and ancillary products (e.g., PPE, vials, syringes) to prevent COVID-19.

 

The bill would also establish a comprehensive centralized website on COVID-19 testing availability and capacity. To inform that website, manufacturers would be required to submit weekly reports to HHS outlining how many tests they distributed and to whom. Failure to comply with this reporting requirement would lead to warning letters issued by the FDA.

 

With recent concerns from Congress about the FDA’s lack of oversight over certain serological tests, the HEROES Act also calls for an investigation by the Government Accountability Office (GAO) on how COVID-19 tests were developed, evaluated by FDA, and deployed to the public. This includes an investigation of both the FDA’s oversight of the tests themselves and the standards by which laboratories or medical professionals are accredited to perform high-complexity tests (better known as CLIA).

 

Finally, the Act would establish a new Council to focus on Global Health Security, to engage with foreign governments on emerging threats and global public health.

 

What’s Next

Although the House is expected to vote on the bill on Friday, it is unlikely that the HEROES Act will become law as written. However, the provisions in the bill that are related to the FDA’s authority and manufacturer requirements could remain under consideration in future legislation. These include policies to shore up or bolster requirements under the CARES Act, such as medical device shortage reporting or risk management plan requirements. Already, both industry and the FDA have acknowledged that the medical device shortage reporting requirement is ambiguous as written, and without an enforcement mechanism it could be difficult to operationalize.

 

Several of the policies do have bipartisan support, such as an increased focus on domestic manufacturing of drug products. As AgencyIQ has noted, bringing manufacturing operations back to the US from oversees could result in increased costs for industry, although Congress is primarily concerned about increasing the reliability of the domestic supply chain.

 

A notable difference in the HEROES Act is the use of enforcement mechanisms to ensure compliance. Companies should make note of where Congress intends to enact these mechanisms, and operationalize systems to minimize costs and promote timely reporting.

 

To contact the authors of this analysis, please email Laura DiAngelo or Aaron Badida.

To contact the editor of this analysis, please email Alec Gaffney.

 

Key Documents and Dates

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