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August 07, 2020

Health Law Weekly

COVID-19 Updates and Developments (Week of August 3)

  • August 07, 2020

President Trump signed August 6 an executive order that aims to shore up the nation’s medical supply chain by requiring the federal government to buy certain critical drugs from American manufacturers.

The COVID-19 pandemic has underscored the need to reduce the United States’ reliance on foreign sources for essential medicines and supplies, according to the executive order. During the pandemic, health care providers have faced shortages for some drugs and supplies like masks and other protective gear that are mostly produced overseas.  

In remarks at a Whirlpool factory in Ohio, Trump said the new executive order requires federal agencies to “buy American” and “will also sweep away unnecessary regulatory barriers to domestic pharmaceutical production and support advanced manufacturing processes.”

Under the order, the Food and Drug Administration (FDA) must compile an initial list of “essential medicines, medical countermeasures and critical inputs” that the government should buy domestically, with exceptions if the product isn’t available in sufficient quantities or is too expensive.

The order also calls for the FDA to prioritize approval or clearance for domestic producers of essential medicines and supplies.

The Pharmaceutical Manufacturers and Research and Manufacturers of America (PhRMA) blasted the “Buy American” directive, which follows a series of executive orders last week intended to curb drug prices.

“The ‘Buy American’ executive order could disrupt the global pharmaceutical supply chain, jeopardizing our ability to respond to the current crisis and potentially leading to major long-term supply chain disruptions, including shortages. Rather than government mandates, we should look for policies that enable more domestic manufacturing without putting the stability of pharmaceutical supply chains at risk,” said PhRMA CEO Stephen J. Ubl.

Agency Action

Department of Health and Human Services (HHS)

August 5—HHS and the Department of Defense (DOD) announced a $1 billion agreement with Janssen Pharmaceutical Companies, a unit of Johnson & Johnson, for 100 million doses of its COVID-19 vaccine. The agreement is the latest in a series of moves by the administration under its Operation Warp Speed initiative to deliver COVID-19 vaccines to the American public by as soon as the end of the year. The manufacturing demonstration project will take place while clinical trials are underway to expedite the traditional vaccine timeline HHS said. The government has the option to acquire up to an additional 300 million doses under the agreement.

July 31—HHS is extending the deadline for eligible Medicaid, Children’s Health Insurance Program (CHIP), and dental providers to apply for provider relief funds under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). HHS announced in June that it would distribute $15 billion in aid to Medicaid ,CHIP, and dental providers that had not yet received any payments from the $175 billion in funding that Congress set aside to help ease the financial strain on health care providers in the wake of the COVID-19 pandemic. The initial July 20 deadline to apply for the funds was initially extended to August 3. HHS is further extending the application deadline until August 28. HHS said it moved the deadline again “recognizing the constraints on smaller practices already operating on thin margins with limited administrative staff.” The agency plans to soon provide a more simplified application form. HHS also is allowing Medicare providers who missed out on applying for an additional round of general distribution funding to do so starting the week of August 10 through August 28.

July 31—HHS and the Department of Defense announced a $2.1 deal with Sanofi and GlaxoSmithKline to support clinical trials and manufacturing and to secure 100 million doses of a COVID-19 vaccine they are developing. The agreement also is part of the administration's Operation Warp Speed initiative. Under the deal, the United States has the ability to acquire up to 500 million additional doses.

July 31—HHS released COVID-19 Lab Data Reporting Implementation Specifications ahead of new data reporting requirements that started August 1. HHS issued guidance in June for standardizing what laboratories report to public health officials along with COVID-19 test results, including relevant demographic data. The agency said the new data reporting requirements will help improve the monitoring of disease trends, contact tracing, and identifying supply chain needs. The CARES Act requires labs that perform COVID-19 or SARSCoV-2 tests to report the results to HHS. 

Centers for Medicare & Medicaid Services (CMS)

August 4—CMS is temporarily exercising enforcement discretion to allow health insurers to offer temporary premium reductions in the individual and small group markets, when consistent with state law, for one or more months for 2020 coverage. CMS said the new policy will maximize flexibility for consumers who may be struggling to pay their premiums as a result of the COVID-19 pandemic. Under current federal requirements, insurers are prohibited from changing premiums after the start of the benefit year. The temporary policy is in effect until the end of 2020.

Food and Drug Administration

August 4—The FDA issued guidance for health care providers that are considering extending the “in-use time” of certain injectable drugs used to treat COVID-19 patients because they may be in short supply. As an outer limit, FDA said in-use times—the maximum time a sterile drug product should be used after its container-closure system is punctured or after a lyophilized drug product is reconstituted—should not extend beyond four hours for refrigerated storage or two hours for room temperature storage. The guidance applies to ten specific drugs. According to FDA, health care providers have reported that care of ventilated patients can be complicated by the need to discard medications before they are fully administered because of the specified in-use time.

National Institutes of Health (NIH)

July 31—NIH awarded $248.7 million in contracts to seven biomedical diagnostic companies to develop new technologies for lab-based and point-of-care tests. NIH said the new technologies developed under the contracts, part of the agency’s Rapid Acceleration of Diagnostics (RADx) initiative, are expected to significantly expand the nation’s testing capacity as early as September. “RADx moved incredibly quickly to select promising technologies through its ‘shark tank’ approach, investing in technologies that could boost America’s best-in-the-world COVID-19 testing capacity by millions more tests per day,” said HHS Secretary Alex Azar. “These technologies will help deliver faster results from labs and more and more test results within minutes at the point of care, which is especially important for settings like schools and nursing homes.”

Other Developments

August 6—Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ) plans to investigate reports that some insurers may be denying coverage for COVID-19 tests. “Large scale testing is the only way we can get beyond this crisis, and insurers who are imposing restrictions on coverage of COVID-19 testing are making this task harder,” Pallone said in announcing the probe. He also raised concerns that insurers aren’t doing enough to help enrollees and providers such as offering premium reductions, eliminating cost-sharing for COVID-19 treatment, and extending low or zero interest loans to community providers. The Committee plans to send oversight letters to a number of insurers. “I want to know if they‘re in compliance with existing statute requiring COVID-19 testing be free of consumer cost-sharing for all patients and how they intend to use their profits to help the American people during this time of crisis,” Pallone said.

August 3—The American Hospital Association (AHA) is urging CMS “to allow periodic interim payment (PIP) hospitals to carry out their accelerated payment repayment at cost settlement, as was initially communicated by the agency.” In a letter to CMS Administrator Seema Verma, AHA also asked that “the agency make alternative repayment approaches available, such as direct payments to the Medicare Administrative Contractor (MAC), for all hospitals.” CMS extended eligibility for accelerated payments to PIP hospitals during the COVID-19 public health emergency and indicated that the accelerated payment reconciliation process would happen at the final cost report process, the letter said. “However, MACs recently shared with hospitals that, based on CMS directives, the process for PIP hospital repayment will be the same as non-PIP hospitals,” the letter said. “That is, PIP hospitals would have their biweekly Medicare reimbursement recouped until their repayment is completed. The result is that PIP hospitals will go several months without any Medicare inpatient reimbursement, which is contrary to the entire purpose of the PIP program—to provide hospitals with a steady and predictable revenue stream,” the group argued. In addition to asking CMS to allow PIP hospitals to carry out their accelerated payment at final cost settlement and to make alternative repayment approaches available, AHA also urged the administration and Congress to grant full forgiveness of accelerated payments for all hospitals.