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Mitigating the risks of development, authorization, and marketing for new therapies following "new normal" created by COVID-related violations.
COVID-19 has shifted global enforcement priorities and required novel approaches to the regulation and inspection of pharmaceutical manufacturing facilities. In the midst of the pandemic, regulatory agencies have both expanded existing capabilities and added new tools to their arsenals. Likewise, criminal and civil enforcement authorities are actively pursuing cases involving COVID-related fraud, false advertising, and manufacturing issues. We expect that this “new normal” will continue to raise new risks for life sciences companies—particularly as new treatments and vaccines are developed, authorized, and marketed. Now is the time to proactively assess and take steps to mitigate those risks.
In March, the Food and Drug Administration (FDA) announced a suspension of all domestic and foreign routine surveillance inspections due to the pandemic. However, the Agency noted that it would continue for-cause and pre-approval inspections deemed to be “mission critical.” In determining mission criticality, FDA considers several factors that relate to the public health benefits of the product under review, such as breakthrough therapy designation, drug shortages, and the availability of appropriate substitutes.
Beginning in July, FDA resumed domestic inspections in areas with reduced COVID-19 infection rates. Even so, pandemic-related travel restrictions continue to significantly limit the Agency’s ability to conduct inspections. In light of these limitations, FDA has expanded the use of other tools and approaches to assess the quality and safety of drug products.
A number of regulatory authorities, including the EMA and MHRA, have responded to the COVID-19 pandemic by pivoting toward virtual inspection models. While FDA has not yet adopted such an approach, on November 2, an FDA official stated that the Agency is developing guidance on remote evaluations, indicating that FDA is considering virtual alternatives to on-site inspections.5 While the adoption of virtual inspections opens the door to efficiencies, companies should identify and prepare for corresponding risks.
To date, enforcement actions related to the COVID-19 pandemic have primarily involved unapproved and misbranded products with fraudulent COVID-19 claims. In March, FDA launched “Operation Quack Hack,” an initiative to identify and investigate fraudulent and unproven medical products related to COVID-19. FDA, in many cases jointly with the Federal Trade Commission (FTC), has issued close to a hundred Warning Letters to companies for marketing unapproved products for COVID-related uses.6
The investigation of pandemic-related fraud has also been an enforcement priority for the Department of Justice (DOJ). In a memorandum dated March 16, Attorney General William Barr directed all U.S. Attorneys “to prioritize the detection, investigation, and prosecution of all criminal conduct related to the current pandemic.”7 DOJ’s enforcement efforts have leveraged both criminal prosecution and civil enforcement actions, which have resulted in dozens of injunctions and indictments against individuals and smaller entities involved in COVID-related fraud.
We fully expect the DOJ, FDA, and FTC to remain vigilant in enforcing violations of consumer protection and safety laws across the industry, both during the continuing pandemic and in its wake. DOJ has repeatedly emphasized a priority on violations of current Good Manufacturing Practice (cGMP) regulations in its enforcement initiatives, and we expect this to be an increased area of focus as new COVID-19 treatments and vaccines are authorized and approved. Additionally, pharmacovigilance and safety data related to Emergency Use Authorization treatments and products will be intensely scrutinized—not only by regulators, but by products liability and class action lawyers.
Although COVID-19 False Claims Act qui tam cases may take time to work through the system, we expect significant activity in this regard as well. Based on our experience, qui tam relators are still continuing to push False Claims Act theories based on violations of Good Manufacturing Practices. This risk may be further heightened if compliance gaps develop during a period of reduced inspections and oversight. Moreover, we expect an increase in filings based on traditional theories of pricing, rebates, and kickbacks related to the reimbursement of COVID-19 treatments, as well as claims associated with CARES Act funding.
Recent changes to the enforcement landscape may continue even beyond the COVID-19 pandemic. Although the evolution of the government’s enforcement priorities cannot be predicted with certainty, manufacturers can minimize exposure to risk by taking the following steps:
This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and the receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers. The content therein does not reflect the views of the firm.
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