It Is Not All About the Coronavirus Part 2: The CARES Act Brings Reforms to the Medical Device Industry

President Donald Trump signed the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) into law on March 27, 2020, to help mitigate the economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic.¹ In addition to providing substantial resources to combat the sharp economic decline due to the COVID-19 pandemic, the CARES Act also includes a number of provisions to further healthcare preparedness and response, including provisions aimed at the medical device industry.

We provide a high-level overview of these provisions below. Given the depth and breadth of the CARES Act, we will not discuss in detail every medical device-related change included in the CARES Act. In addition, we prepared Part 1 of this series, It is Not All About the Coronavirus: The CARES Act Brings Long-Awaited Over-the-Counter (OTC) Monograph Reform, in a separate Bulletin. The Bulletin is available here.

Discontinuance or Interruption in the Production of Medical Devices (Section 3121)

In an effort to help prevent future medical device shortages, the CARES Act creates a reporting system for medical device shortages to provide added transparency concerning the medical device supply chain.  The reporting requirements apply to the following types of manufacturers:

• manufacturers of medical devices that are critical to public health during a public health emergency, or
• manufacturers of medical devices for which the Department of Health & Human Services (HHS) determines reporting is needed for a public health emergency.

Except for discontinuances as a result of an approved modification, manufacturers of such devices must notify the HHS Secretary during, or in advance of, a public health emergency declared under section 319 of the Public Health Service Act of:

• a permanent discontinuance in the manufacture of the device or an interruption of the manufacture of the device that is likely to lead to meaningful disruption (as defined in the CARES Act) in the supply of the device in the U.S.; and
• the reasons for the discontinuance or interruption.

The notice must be submitted at least 6 months prior to the date of discontinuance or interruption or, if that is not possible, as soon as practicable. HHS is required to distribute information on the discontinuance or interruption to appropriate organizations, and the agency may choose not to make the information publicly available if it determines the disclosure would adversely affect the public health.

If a manufacturer fails to adhere to the reporting requirements, HHS will issue a letter to the manufacturer. Within 30 calendar days of issuance of the letter, the recipient must submit a written response with the basis for noncompliance and provide the information that was initially required to be reported. In addition, within 45 calendar days after issuance of the letter, HHS must make the letter and any response available to the public on FDA’s website (the letter will not be posted if HHS determines it was issued in error or there was a reasonable basis for not providing the required notification).

If HHS concludes that there is, or is likely to be, a shortage of a device, the agency must, as appropriate, prioritize and expedite the review of certain medical device submissions (e.g., a 510(k)) that could help mitigate or prevent the shortage, or prioritize and expedite an inspection or re-inspection of an establishment that could help mitigate or prevent a shortage.  HHS will establish and maintain a publicly available, up-to-date list of devices in shortage in the U.S., including information about the device and the shortage. The list will exclude certain information, such as trade secrets and confidential information, or if the disclosure would adversely affect the public health.

National Academies Report on America’s Medical Product Supply Chain Security (Section 3101)

The CARES Act requires the HHS Secretary to enter into an agreement with the National Academies of Sciences, Engineering, and Medicare (the “National Academies”) to “examine and, in a manner that does not compromise the national security, report on the security of the U.S. medical product supply chain.” The report is meant to serve as a tool to:

• Assess and evaluate U.S. dependence on critical drugs and medical devices that are sourced or manufactured outside of the U.S., which may include an analysis of the following:
  • the supply chain of critical drugs and devices of greatest priority to providing health care;
  • any potential public health security or national security risks associated with reliance on critical drugs and devices sourced or manufactured outside the U.S.;
  • any existing supply chain information gaps, as applicable; and
  • potential economic impact of increased domestic manufacturing.

The report will also provide recommendations, which may include a plan to improve the resiliency of the supply chain for those products determined to be critical drugs and devices and address supply vulnerabilities or potential disruptions of such products that “would significantly affect or pose a threat to” the security of the public health or national security. In addition, the CARES Act includes some specific requirements for the National Academies to follow when developing the report (e.g., consider specific inputs from HHS, the Department of Homeland Security, the Department of Defense, the Department of Commerce, the Department of State, the Department of Veterans Affairs, the Department of Justice, and any other federal agencies as appropriate).

Requiring the Strategic National Stockpile to Include Certain Types of Medical Supplies (Section 3102)

The CARES Act also amended section 319F-2(a)(1) of the Public Health Service Act (42 U.S.C. § 247d-6b(a)(1)) by adding additional supplies to the Strategic National Stockpile.  More specifically, the Act amends the Public Health Services Act by inserting “(including personal protective equipment, ancillary medical supplies, and other applicable supplies required for the administration of drugs, vaccines and other biological products, medical devices, and diagnostic tests in the stockpile)” after “other supplies.”

Treatment of Respiratory Protective Devices as Covered Countermeasures (Section 3103)

The CARES Act provides additional liability protection for certain device manufacturers. The Public Readiness and Emergency Preparedness Act (PREP Act) provides that “a covered person shall be immune from suit and liability under Federal and State law with respect to all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure if a declaration under subsection (b) has been issued with respect to such countermeasure.”² On March 10, 2020, the HHS Secretary issued a PREP Act declaration to immunize certain individuals and entities from liabilities associated with the manufacturing, testing, distribution, administration and use of “covered countermeasures” used to combat the COVID-19 public health emergency. The CARES Act provides immunity for manufacturers of certain respiratory protective devices by amending the definition of “covered countermeasure” under the PREP Act to include “respiratory protective device[s] that [are] approved by the National Institute for Occupational Safety and Health under part 84 of title 42, Code of Federal Regulations (or any successor regulations), and that the Secretary determines to be a priority for use during a public health emergency declared under section 319” to the definition of a “covered countermeasure.”³ 

Title III to Division B of the CARES Act also provides emergency funding to government agencies to support certain endeavors related to the medical device industry (e.g., purchase of medical supplies by the federal government or the development of medical supplies).⁴ 

AGG Observations

• The COVID-19 pandemic sheds light on the nation’s vulnerability to a shortage of necessary medical supplies during a national pandemic. The changes implemented by the CARES Act showcase an attempt to implement proactive measures to counteract this vulnerability and incentivize medical device companies to innovate and manufacture needed medical supplies.
• Applicable medical device manufacturers should be aware of medical device shortage reporting requirements and take steps to ensure compliance.
• There will be increased scrutiny and oversight of S. dependence on critical drugs and devices that are sourced or manufactured outside of the U.S.

[1] The full text of the CARES Act is available at https://www.govinfo.gov/content/pkg/BILLS-116hr748enr/pdf/BILLS-116hr748enr.pdf

[2] 42 U.S.C.A. § 247d-6d.

[3] 42 U.S.C. § 247d–6d(i)(1)(D). For additional information regarding liability protections under the PREP Act, please see HHS Issues New Guidance on PREP Act Immunity When Prescribing, Administering, or Dispensing Drugs and Devices for COVID-19, available at https://www.agg.com/news-insights/publications/hhs-issues-new-guidance-on-prep-act-immunity-when-prescribing-administering-or-dispensing-drugs-and-devices-for-covid-19/.

[4] The PREP Act also included emergency assistance for the manufacture and purchase of necessary medical supplies.