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| Asher Rubin |
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| Steve Abrams |
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| Lynn Mehler |
For life sciences and health care companies and regulators alike, responding to the coronavirus has meant the rapid advancement of science, identifying regulatory barriers to innovation, and adapting to virtual environments for everything from clinical development, to health care delivery, to deal making.
While we all hope for a return to normalcy in our everyday lives, adaptations to the challenges of 2020 will create opportunities in 2021 and beyond for those companies able to thrive in the new landscape. We explore the elements of these changes below.
U.S. Trends Toward Regulatory Adaptability
With the outbreak of COVID-19, there was no question that life sciences companies would need to be an active part of the solution, through the development of effective testing, treatments and vaccines and by rapidly producing and distributing the medical supplies and products to treat the influx of patients.
In response, we saw many governmental agencies offering an uncommon level of regulatory adaptability to the life sciences and health care industry.
Following in line, state and local governments were permitted to access U.S. Department of Veterans Affairs federal supply schedule contracts held by contractors that opted to participate in expanded contracting efforts for emergency and disaster recovery.
These emergency federal contracting tools were intended to streamline medical device and drug acquisition, and they demonstrate the trend in 2020 toward collaboration between the life sciences industry and regulators.
Meanwhile, the U.S. Food and Drug Administration issued over 60 guidelines on a range of issues from providing direction to industry in the development of products for treatment and prevention to enforcement discretion to permit life sciences and health care companies to adapt to the challenges of operating during the pandemic.
Both the FDA and U.S. Department of Health and Human Services' Office for Human Research Protections issued guidance providing for practical approaches to the challenges of conducting clinical trials during a pandemic.
The FDA issued guidance on post-marketing adverse event reporting for drugs, biologics, medical devices, combination products and dietary supplements and enforcement discretion for certain risk evaluation and mitigation strategy requirements.
Citing pandemic-related concerns, the FDA extended the enforcement discretion period for certain human cell, tissue, and cellular and tissue-based products, giving manufacturers more time to assess whether they need to seek FDA approval. The FDA also extended the delay in enforcement described in its Drug Supply Chain Security Act wholesale distributor verification requirement guidance by three more years.
Importantly, the FDA responded to the public health emergency by establishing a program to speed actions, including emergency use authorizations on relevant therapies and vaccines, the Coronavirus Treatment Acceleration Program.
The program has promoted collaboration between the FDA, companies, scientists and doctors to bring new therapies to patients as quickly as possible, while supporting research to further evaluate whether these medical countermeasures are safe and effective. As part of this program, the FDA committed to significantly expedited review times and has moved with unprecedented speed.
We think the silver lining to 2020 is an opportunity for the FDA to take the experience it has gained to take a critical look at prepandemic requirements and processes and incorporate those into regular practice leading to efficiencies in the development of medical products for life sciences companies in 2021 and beyond.
The FDA continues to struggle with how to address inspections of facilities during the pandemic, leading to delays in the approvals of a number of products that are unrelated to COVID-19, but 2020 has shown an FDA willing to act quickly and practically in other areas to address significant challenges faced by pharmaceutical and biotechnology companies.
While the FDA's coronavirus-related guidance are only in effect for the duration of the public health emergency, this trend toward enforcement discretion is likely to remain late into 2021 as pharmaceutical companies and laboratories attempt to resume normal operations.
The FDA was not the only HHS agency working to revise or modify regulatory obligations in response to the pandemic.
The Centers for Medicare & Medicaid Services announced in March a series of temporary regulatory waivers and new rules to equip the health care system with flexibility to respond to the COVID-19 pandemic, including a blanket waiver of the sanctions provision of the physician self-referral law for pandemic-related actions.
Simultaneously, the HHS Office of the Inspector General signaled its intent to minimize burden on health care providers, stating:
Advancement of TelehealthFor 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.
In response to the COVID-19 pandemic, Congress, 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 make it easier for individuals to receive treatment remotely during the public health 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.
On the legislative side, the Coronavirus Preparedness and Response Supplemental Appropriations Act granted HHS the authority to temporarily waive Medicare telehealth restrictions that limit Medicare payment for telehealth services based on where the beneficiaries live and where they receive care.
CMS also made over 80 current procedural terminology codes eligible for reimbursement under Medicare when provided via telehealth. In addition, CMS relaxed or waived many of its requirements for telehealth technology, such as stating that certain communication technology-based services, such as virtual check-ins and remote monitoring, can be furnished to both new and established patients.
Further, HHS waived the coverage requirement that physicians or other health care professionals hold licenses in the state in which they provide services, if they have an equivalent and unrestricted license from another state, for such purposes, and many states also waived their own in-state licensure requirements or expedited licensure for out-of-state physicians providing telehealth services.
Many of these telehealth accommodations will likely be made permanent in 2021 and beyond, as the industry shifts toward promoting virtual health care environments. In the final Medicare physician fee schedule for 2021 that was released this month, for instance, CMS finalized the addition of 60 more telehealth services to its telemedicine list that will continue to be covered by Medicare even after the current public health emergency ends.
Promotion of Virtual Environments
While HHS has been working to promote telemedicine, regulators have also advanced the use of virtual environments in 2020.
The FDA, for example, has been employing teleconferences, online town halls and virtual advisory committees as a substitute for in-person meetings, including its first ever online-only public meeting to kickstart the Medical Device User Fee Amendments negotiations.
In an effort to resolve the delays caused by the cancellation of in-person inspections, the FDA is aiming to launch a pilot program by which agency investigators will conduct facility inspections virtually in 2021. The FDA has said it is studying how to incorporate new technologies and tools to support its inspections, and assessing the use of live or recorded video as part of its visits.
In 2020, the FDA has also showed increasing tolerance for clinical trials to include alternatives to in-person study visits, monitoring, safety assessments and other in-person activities. As the regulators have gained experience with alternative methods, like using phone or virtual visits, technological solutions and alternative locations, it is likely that the acceptability of virtual strategies will remain.
Likewise, 2020 has seen the life sciences and health care industry further expanding the use of virtual environments for deal making, including management presentations with partners, nondeal road shows, investor conferences, site visits, due diligence and all other aspects of deals from initiation to consummation.
For years, deal making has been moving more towards virtual transaction initiation, negotiation and consummation, but 2020 has seen the use of technology for deal making increase exponentially.
In moving toward these fully virtual transactional environments, companies have found ways to stay connected with the entire deal team, counterparties, and the like, through the use of video conference technologies and other new and emerging technologies.
Indeed, as the industry has grown accustomed to teleworking, and companies have sold their brick-and-mortar office space to reduce overhead expenses, the trend toward remote business is likely to continue in 2021.
Conclusion
2020 was a year like no other, but the lessons learned from the U.S. government's response to the challenges of the pandemic have shown the government is increasingly open to collaborating with industries, and that door could stay open well beyond the pandemic.
Streamlined processes, rapid development of safety and efficacy data, lightning fast governmental review, coordination with industry to quickly evaluate data and plan next steps, and an enhanced understanding of the complexities of product distribution are all lessons that can translate into a post-pandemic regulatory approach that will benefit those life sciences and health care companies who can meet the continued challenges.
Asher Rubin, Steve Abrams and Lynn Mehler are partners at Hogan Lovells and global co-heads of the firm's life sciences and health care industry sector group.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
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