A Broad Emergency Use Authorization for Face Masks

On April 18, 2020, FDA issued a new Emergency Use Authorization (“EUA”) relating to non-surgical face masks with broad coverage and implications for recent industry participants manufacturing face masks. The EUA applies to the broad class of non-surgical face masks used to cover a person’s nose and mouth. Please see our prior blog post for summaries of previously issued enforcement guidance and other EUAs related to respirators.

The EUA describes this type of mask as follows: “a device, with or without a face shield, that covers the user’s nose and mouth and may or may not meet fluid barrier or filtration efficiency levels. It includes cloth face coverings. It may be for single or multiple uses, and if for multiple uses it may be laundered or cleaned. There are many products marketed in the United States as ‘face masks’ that offer a range of protection against potential health hazards.” FDA, Letter of Authorization for Face Masks (non-surgical) (April 18, 2020), available here.

Generally, these types of masks are regulated as Class I devices that are exempt from premarket notification requirements. Note that surgical masks, which are Class II devices that provide fluid barrier protection and are not exempt from premarket notification requirements, are not covered under this EUA. Continue Reading

CMS Lays Out Roadmap for Restarting In-Person Care Besides COVID-19 Treatment

As the White House looks to soon reopen parts of the United States, the Centers for Medicare & Medicaid Services (CMS) has released its first set of guidelines for healthcare providers in regions that have seen stabilizing COVID-19 trends. The guidelines relax prior CMS recommendations that facilities limit and postpone non-essential care and elective procedures.

CMS’s new recommendations, announced on April 19, specifically target regions that have reached Phase I of the Trump Administration’s Guidelines for Opening Up America Again. Phase I regions will have met certain “Gating Criteria,” including showing that within a 14-day period, there has been a downward trajectory in documented cases or positive tests, as well as a downward trajectory of influenza-like and COVID-19 cases. Regions must also show that they have adequate hospital capacity and a robust testing plan for at-risk healthcare workers.

While these regions would have relatively lower incidences of COVID-19, CMS still strongly encourages the maximum use of the expanded telehealth options. But where in-person care is needed, “Non-COVID-19 care should be offered to patients as clinically appropriate and within a state, locality, or facility that has the resources to provide such care and the ability to quickly respond to a surge in COVID-19 cases, if necessary.” CMS Administrator Seema Verma described the guidelines as providing “a gradual process for restarting non-COVID-19 essential care while keeping patients safe.” Continue Reading

COVID-19: EC Publishes Guidance on Allowing Limited Cooperation Among Businesses

COVID-19 outbreak has caused major disruption of supply chains and a steep rise in demand for certain products and services, notably in the health sector. These circumstances risk leading to shortages in critical medical goods used to treat COVID-19 patients, but also in other essential goods and services outside the health sector.

Tackling these exceptional general supply shocks and avoiding shortages in a timely manner may require the swift coordination of companies in order to overcome, or at least mitigate, the effects of the crisis to the ultimate benefit of citizens. However, some forms of cooperation are prohibited by EU competition law.

As a result, the European Commission (EC) has published a Temporary Framework Communication (Communication) to provide:

  • Guidance to companies willing to temporarily cooperate and coordinate their activities to increase production in the most effective way and avoid shortages of supply of, in particular, urgently needed hospital medicines, without breaching competition law; and
  • A temporary exemption for certain types of cooperation that would ordinarily amount to antitrust violations, but are deemed necessary to increase output and avoid shortages of supply in the current emergency situation.

Continue Reading

Shortages of PPE Drive FDA Guidance and Emergency Use Authorizations

Background

On January 31, 2020, the Secretary of the Department of Health and Human Services (“HHS”), Alex M. Azar II, declared a public health emergency due to a virus named SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), or coronavirus, which causes novel coronavirus disease 2019 (“COVID-19”).  In the weeks following the declaration of the public health emergency, the Food and Drug Administration (“FDA”) has issued numerous guidance materials, enforcement policies, and emergency use authorizations (“EUAs”).  Many of those materials are focused on medical devices, including personal protective equipment (“PPE”).  In this blog, we provide a brief overview of enforcement policies and EUAs that FDA has issued for three primary types of PPE: face masks, face shields, and filtering facepiece respirators.

As background, FDA regulates a product as a medical device, generally, if it meets the definition of a medical device in 21 USC § 321(h). For example, relevant to COVID-19, the definition of a medical device includes products that are “intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals.” FDA normally regulates surgical masks and respirators intended for medical use as Class II medical devices subject to special controls.  The applicable regulation is located at 21 CFR § 878.4040, and medical devices under this regulation ordinarily require FDA premarket notification.  Surgical N95 respirators or N95 filtering facepiece respirators that meet certain requirements, however, are exempt from the premarket notification requirement unless intended to treat specific diseases, infections, or labeled for specific tasks outlined in the regulation. Continue Reading

It’s Official: HHS Announces Hospitals and Medicare Providers to Get Immediate $30 Billion Disbursement of CARES Act Funding for Coronavirus Expenses and Lost Revenues

Following up on Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma’s statements on Tuesday, the Department of Health and Human Services (HHS) issued a press release announcing the immediate disbursement of $30 billion to Medicare hospitals and providers starting April 10. These payments have been or are already in the process of being made. The announcement states:

“Facilities and providers are allotted a portion of the $30 billion based on their share of 2019 Medicare fee-for-service (FFS) reimbursements. These are payments, not loans, to healthcare providers, and will not need to be repaid.

HHS is partnering with UnitedHealth Group (UHG) to deliver the initial $30 billion distribution to providers as quickly as possible. Providers will be paid via Automated Clearing House account information on file with UHG, UnitedHealthcare, or Optum Bank, or used for reimbursements from the Centers for Medicare & Medicaid Services (CMS). Providers who normally receive a paper check for reimbursement from CMS will receive a paper check in the mail for this payment as well, within the next few weeks.

UnitedHealth Group will donate all fees for the administration of the CARES Act provider relief fund.”

HHS further explained how Medicare FFS providers can estimate their payment:

“A [eligible] provider can estimate their payment by dividing their 2019 Medicare FFS (not including Medicare Advantage) payments they received by $484,000,000,000, and multiply that ratio by $30,000,000,000. Providers can obtain their 2019 Medicare FFS billings from their organization’s revenue management system.

As an example: A community hospital billed Medicare FFS $121 million in 2019. To determine how much they would receive, use this equation:

$121,000,000/$484,000,000,000 x $30,000,000,000 = $7,500,000”

While Administrator Verma had said these funds would have “no strings attached,” HHS’s announcement clarifies that, of course, there are some strings. Within 30 days after receiving payment, “providers must sign an attestation confirming receipt of the funds and agreeing to the terms and conditions of payment.” (A portal for signing the attestation will be open the week of April 13, 2020 and will be linked from hhs.gov/providerrelief). HHS has posted the “Relief Fund Payment Terms and Conditions,” which largely track those dictated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. They include:

  • A certification “that the Payment will only be used to prevent, prepare for, and respond to coronavirus, and shall reimburse the Recipient only for health care related expenses or lost revenues that are attributable to coronavirus.”
  • A certification that the provider “will not use the Payment to reimburse expenses or losses that have been reimbursed from other sources or that other sources are obligated to reimburse.”
  • Recipients are required to certify “that it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network Recipient.”
  • Recipients will be required to submit reports and maintain documentation, as HHS specifies to ensure compliance with the conditions imposed by the CARES Act for such payments.
  • Providers receiving more than $150,000 in total funds under the CARES Act, the Families First Coronavirus Response Act, the Coronavirus Preparedness and Response Supplemental Appropriations Act, or future laws primarily making appropriations for the coronavirus response and related activities will be required to submit a report to the HHS Secretary and the Pandemic Response Accountability Committee containing:
    • The total amount of funds received from HHS under the three laws;
    • The amount of funds received that were expended or obligated for each project or activity;
    • A detailed list of all projects or activities for which large [not defined] covered funds were expended or obligated (including an estimate of the number of jobs created or retained and a list of sub-contracts or subgrants awarded).

HHS’s announcement also confirms that the agency will follow up with additional disbursements for other providers: “HHS and the Administration are working rapidly on additional targeted distributions to providers that will focus on providers in areas particularly impacted by the COVID-19 outbreak, rural providers, and providers of services with lower shares of Medicare FFS reimbursement or who predominantly serve the Medicaid population.”

Lastly, HHS confirmed that “this supplemental funding [the remaining $70 billion] will also be used to reimburse providers for COVID-19 care for uninsured Americans.” On Friday, April 3, HHS Secretary Alex Azar announced HHS will “use a portion of [CARES Act] funding to cover providers’ costs of delivering COVID-19 care for the uninsured, sending the money to providers through the same mechanism used for testing. . . Providers will be reimbursed at Medicare rates.” The Kaiser Health Foundation has estimated that these payments could consume between $13.9 billion to $41.8 billion of the fund, depending on the severity of the pandemic-related case mix and including the 20 percent Medicare add-on included in the CARES Act for inpatient reimbursements for patients with COVID-19. HHS announced that, as a condition of receiving these payments for the uninsured at Medicare rates, “providers are obligated to abstain from ‘balance billing’ any patient for COVID-related treatment.”  Coupled with the restriction on charging out-of-network rates, HHS has essentially forbidden balance billing of COVID-19 patients for any provider receiving payment from the $100 billion emergency fund.

 

European Union Policy Update on the Healthcare Response to the COVID-19 Pandemic

Until most recently, Europe had been at the epicenter of the COVID-19 outbreak – which now has shifted to the United States. This crisis heavily impacted many European countries and triggered a coordinated response by the European Union (‘EU’) led by the European Commission (‘EC’) to tackle this severe public health emergency (i.e. a Member State competence) and mitigate the socio-economic consequences of the pandemic.

To begin with, the EU and individual Member States gradually put forward a series of financial stimulus packages that will help the economy and businesses in coping with this crisis. An overview of these measures is provided here. In the healthcare sector in particular, the EC promoted various instruments that focused on ensuring necessary supplies to national healthcare systems (e.g. PPE), while preserving the EU’s Single Market. An overview of these instruments is laid out in our client alert.

COVID-19: the EC extends the State aid Temporary Framework

The European Commission (EC) has recently adopted an amendment that extends the State aid Temporary Framework (described in our last blog post here) by adding five further types of aid measures that Member States may implement:

  • Support for COVID-19 related research and development (R&D) to address the current health crisis;
  • Support for the construction and upgrading of testing facilities for products relevant to tackling the COVID-19 outbreak, such as vaccines, medical equipment and devices, protective material and disinfectants;
  • Support for the production of those products;
  • Targeted support in the form of deferral of tax payments and/or suspension of employers’ social security contributions; and
  • Targeted support in the form of wage subsidies for employees.

With regard to aid for R&D and the testing and production of COVID-19 related products, companies can benefit from a bonus for cross-border cooperation projects, i.e., when their investment is supported by more than one Member State.

The Amendment also expands on the existing types of support that Member States can give to companies in need. For example, the Framework now enables Member States to give zero-interest loans, guarantees on loans covering 100% of the risk, or provide equity up to the nominal value of EUR 800,000 per company. This can be combined with de minimis aid to bring the aid per company to up to EUR 1 million and with other types of aid. This is particularly useful for SMEs that need to address urgent liquidity needs.

Moreover, the Amendment increases the flexibility on export credit insurance (already introduced by the original Framework) by having all countries listed in the annex of the Short-term export-credit insurance Communication (STEC) considered as temporarily non-marketable and by removing all countries from the list of “marketable risk” countries until 31 December 2020. As a result, state insurers will be able to step in and provide insurance for short-term export-credit risks for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non-marketable”.

The Amendment includes a number of safeguards, e.g., aid for COVID-19 related R&D can only be granted if beneficiaries commit to grant non-exclusive licenses on non-discriminatory terms to third parties in the European Economic Area.

The Amendment, like the original Framework, will remain in place until the end of December 2020.

The European Commission is Ready to Provide Ad Hoc Antitrust Guidance to Allow Cooperation Necessary in the COVID-19 Crisis

In a joint statement on the application of EU and national competition law during the coronavirus disease 19 (COVID-19) crisis, the European Competition Network (ECN) recognized that competitors, supplier and distributors may need to cooperate with each other to ensure the supply and fair distribution of scarce products to all consumers.

For example, a few days ago, several companies joined forces in a consortium (Ventilator Challenge UK) to manufacture additional ventilators in the UK.

In these circumstances, the ECN said that it will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply. Such measures are unlikely to be problematic from an antitrust perspective, since they would either not amount to a restriction of competition or they would generate efficiencies that would most likely outweigh any such restriction. Continue Reading

HHS OIG says “Ditto” to HHS Blanket Stark Waivers for Purposes of the Anti-Kickback Statute

On April 3, the Department of Health and Human Services Office of the Inspector General (HHS OIG) released a policy statement to align its enforcement of the federal Anti-Kickback Statute (AKS) with HHS’s recent Blanket Waivers of Stark (Blanket Waivers) during the COVID-19 pandemic. As previously reported, HHS issued the Blanket Waivers to allow for certain arrangements necessary to give hospitals and providers additional flexibility in providing care during the pandemic. The HHS OIG notes that “some financial relationships that implicate the physician self-referral law also may implicate, and potentially violate, the Federal anti-kickback statute.” Given the “unique circumstances of the COVID-19 outbreak,” HHS “OIG will not impose administrative sanctions . . . [for] the commission of acts described in the Federal anti-kickback statute, with respect to remuneration that is covered by section II.B.(1)-(11) of the Blanket Waivers.” This effectively aligns AKS enforcement with the relevant portions of the Stark Blanket Waivers during this period of public health emergency.

The HHS OIG stressed that its policy statement is intended to avoid the need any “separate legal review under the Federal anti-kickback statute for arrangements protected by the Blanket Waivers.” Thus, it does not apply to “arrangements that implicate the Federal anti-kickback statute that are not covered by the Blanket Waivers (e.g., … direct financial relationships between pharmaceutical or device manufacturers and physicians or between providers where there is no physician involved).” But “where an arrangement is covered by a Blanket Waiver, this Policy Statement extends to remuneration that relates to referrals for services furnished to all Federal health care program beneficiaries pursuant to the covered arrangement.”

Notably, the policy statement does not automatically extend protection to all of the types of arrangements described in the Blanket Waivers. The HHS OIG still wants parties to submit inquires with additional details for the arrangements numbered 12-17 in the Blanket Waivers. And, for arrangement number 18—which provides a waiver of the requirement of a written agreement or signature—the policy statement says nothing.

Financial Lifelines, Waivers and Other Support for Hospitals and Healthcare Systems Responding to the Coronavirus Pandemic

In just the past week, the federal government has issued a flurry of legislative and regulatory aid packages, programs and rule changes for hospitals and health systems responding to the COVID-19 pandemic. These measures are designed to give emergency financial support and to cut through regulatory roadblocks to delivering care during the crisis. The federal government’s work is not done; as the size and scope of the crisis expands, we expect further legislative and regulatory actions focused on assisting healthcare entities during this national emergency.

See our client alert here for a summary of these measures.  This alert serves as a guide to assist with the details of the various changes announced and to better understand the implications.

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