Huge COVID-19 Emergency Bill Bolsters FDA, Healthcare Coverage

March 30, 2020

Jill Wechsler reports on the healthcare and regulatory provisions of the $2 trillion Coronovirus Aid, Relief, and Economic Security Act.

In addition to providing billions in support for U.S. industry and individuals suffering economic loss from the pandemic, the $2 trillion Coronovirus Aid, Relief, and Economic Security Act (CARES – HR 748) includes multiple less-noticed provisions to bolster healthcare programs and to advance the development of new treatments and preventives to combat the virus. 

The measure (H.R. 748), which was approved March 27, 2020, provides some $30 billion to federal health agencies to develop countermeasures and vaccines, including platform technologies to advance U.S. production of new therapeutics, diagnostics, vaccines and medical supplies. FDA gains an extra $80 million to support medical product development and approval, on top of a similar provision in the first COVID-19 emergency bill that gave the agency an additional $61 million. Congress again specifies that a portion of the added funds should promote adoption of advanced manufacturing systems for medical products, an initiative long supported by FDA officials and now gaining added prominence as important for accelerating access to any promising therapies and vaccines emerging from new R&D programs. 

Much of the added funding to support health-related funds ($27 billion) goes to support the development of countermeasures and vaccines by the Public Health & Social Services Emergency Fund, which is managed by the secretary of Health and Human Services (HHS). That includes $3.5 billion for the Biomedical Advanced Research and Development Authority (BARDA) and another $1 billion for the National Institutes of Health (NIH). 

Important for pharmaceutical manufacturers, the legislators specify that some of the added FDA resources should support monitoring of medical product supply chains to ensure access to medicines and active pharmaceutical ingredients (APIs) imported from abroad. Companies should provide FDA with additional information on where interruptions in supply affect APIs as well as drugs, and medical device makers need to report such information to FDA for the duration of the public health emergency. Firms also should maintain contingency plans for back-up supplies of critical products, and the National Academics of Sciences, Medicine, and Engineering (NASEM) gains $1.5 million to prepare a study on ways to strengthen the manufacturing supply chain for drugs and devices to avoid shortages. 

One big surprise is a separate legislative provision granting long-sought authority for FDA to collect new user fees to support a streamlined oversight program for over-the-counter (OTC) drugs. Similar language was approved almost unanimously by the Senate last year, with strong support from FDA officials and industry. The measure also calls for FDA to provide Congress with updated information on evaluating pediatric cough and cold medicines for young children, and offers extended market exclusivity to firms developing more innovative OTC therapies. The measure further updates rules governing standards for sunscreens to streamline the review of new applications for revised products, a provision long backed by sunscreen producers. 

Support for health programs & providers

In addition to providing $100 billion to help hospitals and health centers contend with the COVID-19 pandemic, this broad legislation includes a number of important healthcare provisions. The bill cancels certain rules and language that complicate Medicare reimbursement processes and supports wider use of telehealth systems and virtual patient visits during the pandemic. To ensure timely access to medicines, Medicare and Medicaid should provide longer-term prescription refills and drop utilization management requirements for now.

And wider testing of patients for the COVID-19 virus is promoted through provisions to reduce copayments and ensure reimbursement by insurers for such procedures. Health plans have to cover preventive services related to the virus, and insurers will waive co-pays for lab tests and cover tests developed by hospitals. The legislation also delays planned cuts to Medicare reimbursement to commercial diagnostic laboratories. However, Congress’ failure to authorize an added $5 billion sought by those firms prompted loud complaints from the clinical laboratory industry regarding its dire need for support to rapidly ramp up test capacity.

Pharma companies quietly applauded the decision to drop drug pricing measures from the final legislation. There’s language calling for products developed with federal funds to be purchased based on “fair and reasonable pricing,” and to be “affordable in the commercial market,” which industry finds acceptable. But manufacturers lost out on adding a measure providing added incentives for developing antibiotics. These initiatives and a long list of additional health-related proposals could make it into an anticipated fourth COVID emergency bill, which many analysts believe will be needed to further address economic dislocations and health care needs created by the pandemic.