HHS Orders FDA to Stand Down on LDTs

The Department of Health and Human Services issued an Aug. 19 rescission order to the FDA directing the agency to cease requiring any premarket reviews for lab-developed tests (LDTs), a change the administration said is consistent with two executive orders (EOs). The order mentions the COVID-19 pandemic, but seems intended to endure beyond the existing declaration of public health emergency.

The question of the FDA’s statutory authority to regulate LDTs has dated back at least as far as the early 1990s. In 2006, the Washington Legal Foundation (WLF) resurrected the question in a citizen’s petition that makes reference to a similar petition filed in 1992. According to the 2006 petition, the FDA waited six years to respond to the earlier petition, and WLF cited “an urgent need for FDA to comply with the Administrative Procedures Act (APA). The APA is also a timely theme, given the Department of Justice’s recent public pronouncement about whether the underlying statute is in need of a legislative update.

The HHS announcement states that the FDA is not authorized to require premarket review of any sort for LDTs absent the use of the rulemaking process. This would supplant the FDA’s use of guidances, immediately-in-effect policy declarations, and any other informal mechanisms. The notice advises, however, that LDTs practiced for testing for the COVID-19 pandemic will not enjoy immunity from product liability under the Public Readiness and Emergency Preparedness (PREP) Act without an emergency use authorization or submission of a regulatory filing under a conventional premarket review path.

At present, there are two competing legislative responses to the impasse making the rounds on Capitol Hill, such as H.R. 6102, the Verifying Leading-edge IVCT Development (VALID) Act of 2020, which has a companion bill in the Senate. While previous iterations of the VALID Act included language directed toward a pre-certification program that seemed to parallel the precert program for software as a medical device, this latest version describes a technology certification process that would ease the demands ordinarily imposed by FDA premarket review. Neither the House nor the Senate version has come up for a vote in committee, however.

Conversely, the Verified Innovation Testing in American Laboratories (VITAL) Act of 2020, sponsored by Sen. Rand Paul (R-Ky.), would place sole authority for LDT regulation under the Centers for Medicare & Medicaid Services. S. 3512 keys on laboratory staffing qualifications to ensure that tests are appropriately developed and conducted, but also has provisions related to the pandemic, such as a requirement that CMS update the related CLIA regulations to address future pandemics. This bill, too, has failed to gain enough traction to merit a vote in the committee of jurisdiction.

PTO Revisiting IPR Rules of Practice

The U.S. Patent and Trademark Office is considering an amendment to the rules of practice for several patent procedures as indicated by an entry at the electronic dashboard for the Office of Information and Regulatory Affairs at OMB. The entry is titled to reflect an examination of the rules of practice in trials before the Patent Trial and Appeal Board, the entity charged with handling inter partes reviews (IPRs). There is little additional information as to the nature of the proposed changes, however.

The IPR process has come under fairly constant fire in the years since passage of the America Invents Act, including in a 2017 article describing the process as “a patent killing field.” The authors of the article claimed that despite the numbers posted by the PTO, the IPR process proved substantially more hostile toward claims than litigation conducted in Article III courts.

The docket for this proposal lists four meetings, the first of which took place Aug. 4 with members of the Computer & Communications Industry Association. Included in the documents for that Aug. 4 meeting is a file by PTO suggesting that IPR institution rates have dropped from 87% in fiscal year 2013 to 56% to date in fiscal 2020. However, the sheer volume of petitions for IPRs rose from 220 in that first year to more than 1,500 three fiscal years later. The current total for FY 2020 is 854 petitions, 478 of which have been instituted.

DOJ Presses for Reforms of APA

The U.S. Administrative Procedure Act (APA) came into being in 1946, but by some accounts hasn’t been subjected to a serious overhaul in the intervening 74 years. However, the Department of Justice has made the argument that the time has come to revisit the language in the APA, and has bipartisan Senate legislation to back the argument.

The Aug. 11, 2020, DOJ statement includes a link to a report that summarizes the findings of a December 2019 summit on the measures that might bring the APA more into line with modern circumstances. The report, titled “Modernizing the Administrative Procedure Act,” is largely a transcription of the discussions at the summit, but the report also cites previous efforts to amend the APA due to concerns that the statute has not worn well with the passage of time.

Among these was a push for reform by the Second Hoover Commission in 1955, but another pressing consideration is the sheer cost of regulation. Deputy Attorney General Jeffrey Rosen estimated that the aggregate annual cost of federal regulation is as much as $2 trillion a year, a sum one speaker said would represent the ninth largest economy in the world if that figure represented a nation’s gross domestic product.

Multiple Legislative Proposals, No Votes

The APA has not gone untouched in the 74 years since its passage, but many of the changes, such as the 1967 Freedom of Information Act, have been additive in nature rather than attempts to substantially overhaul the APA. Several bipartisan bills have emerged in Congress recently to address the drift of the APA toward functional senescence, including the Regulatory Accountability Act of 2017 (S. 951). Among its other provisions, S. 951 would have required federal agencies to conduct public hearings preparatory to development of rules with an anticipated economic impact of $100 million or more.

Another feature of the bill is a requirement that federal agencies must disclose all data and other sources of information used in rulemaking per the Portland Cement doctrine. The administrative requirement of a cost benefit analysis for rules would also become part of the statute via S. 951. That bill never came up for a vote, however.

There is also some interest in the Independent Agency Regulatory Analysis Act (S. 869), which would subject independent federal agencies to the same requirements as other agencies. This includes the economic impact analysis requirement for rules that are estimated to impose an economic cost of $100 million, but this bill was never put to a vote in the Senate Homeland Security and Government Affairs Committee.

Despite the absence of legislation, the Trump administration has taken measures, including Executive Order 13,771, which is said to have led to a reduction in the volume of new federal rules from the average of 279 rules between 2000 and 2016 to 61 in 2017 and 2018. According to the related entry at the Office of Information and Regulatory Affairs, this executive order has eliminated more than $13 billion in costs across government in 2019 and an overall total of nearly $51 billion since 2017.

As might be expected, the Brand memo receives some attention in connection with administrative activities, given that it bans the use of federal agency guidance as an indicator of violations in civil and criminal matters pursued by the DOJ. Rosen said in his presentation that federal agencies are sometimes inclined to issue guidances in lieu of rulemaking in an attempt to avoid the relatively cumbersome rulemaking process, but as a result, private sector entities may find themselves unavoidably in conflict with one or more guidances that may be difficult to locate.

While the summit took place prior to the onset of the COVID-19 pandemic and thus might be counted as a casualty of the pandemic, DOJ’s revival of the question signals an interest in renewing the push for reform of the APA. The impending election suggests, however, that any related legislation will not emerge until December at the earliest, with calendar year 2021 perhaps a more likely target date.

FDA Releases Final Guidance for Multiple Function Devices

After a wait of two years, the FDA has concluded the draft guidance for multiple function devices with a final version that makes several substantive changes. Among these is that the list of participating centers now includes the Center for Drug Evaluation and Research (CDER), which was excluded from the draft.

One of the clear indications that the FDA took to heart some of the recommended changes is that the draft covered 18 pages while the final version spans 27 pages. The draft explicitly stated that the scope includes device constituents of combination products, a factor that prompted at least one trade group to recommend that the final version include CDER.

Conversely, the draft and final guidances both state that the FDA will offer no insight as to which functions do and do not meet the definition of a device. Both versions apply the same approach regarding the device types for which the agency currently exercises enforcement discretion regarding compliance activities.

One of the more substantial changes to the policy appears in Section V., specifically the paragraphs for separation of the device and non-device functions in design and implementation. The draft guidance makes several overarching recommendations without providing much in the way of detail. However, the final guidance offers much more insight into the agency’s thinking, such as the suggestion that documentation of a risk analysis of the impact of the non-device function may aid the agency’s understanding of the device function under review.

The final guidance briefly discusses design architecture in the context of maximizing functional separation and segregation as a means of managing risk, content that is not seen in the draft. Also missing from the draft is a recommendation that the sponsor take cybersecurity issues under consideration when considering functional separation.

One of the major changes seen in the final guidance is the addition of a flowchart depicting assessments of the impact of non-device functions on the device function under review. One element of the flowchart states that any beneficial effect the non-device function might have on device performance should be included in the premarket filing, assuming the sponsor intends to include such information in product labeling.

In the absence of a determination that there will be any impact, positive or negative, the device maker should document the rationale for such a determination per the company’s standard operating procedures.

FDA Posts New Template for COVID-19 Testing

The FDA’s Center for Devices and Radiological Health has pressed forward with more policy changes to deal with the COVID-19 pandemic in the final days of July 2020, including publication of a template for non-clinical diagnostic testing in the home and other settings. FDA commissioner Stephen Hahn praised the publication of the template as a game changer, although limited supplies might continue to crimp the volume of testing.

The FDA’s July 29 statement explains that the new template will assist test developers in drafting their emergency use authorization applications for tests that can be performed outside a clinical lab setting, such as the home, the workplace, and in educational settings. This test would be available without a prescription, and Hahn said the objective is to ensure there are tests available that would be no more complicated to use than a pregnancy test.

“These types of tests will be a game changer in our fight against COVID-19, and will be crucial as the nation looks toward reopening,” Hahn said.

The Advanced Medical Technology Association said in a July 28 statement that the daily volume of molecular diagnostic tests for COVID-19 reached one million for the week ending July 24. That number is based on a report from a registry operated by AdvaMed and several diagnostics companies, which also states that 80 million total molecular tests have been shipped in the U.S. as of July 18.

Despite the increase in molecular testing, a number of stakeholders are pressing Congress for dedicated funding and clear coverage guidelines for testing. The letter was signed by several each of medical societies, trade associations and non-profit patient organizations, but the House and Senate are at a standstill over their respective economic relief bills, which include the much-needed taxpayer funding for testing.

FDA to Resume Domestic Device Inspections

The FDA was forced to announce in March 2020 that it would suspend inspections of drug and medical device manufacturing sites because of the COVID-19 pandemic, but the agency has partially reversed that decision in a July 10 statement. FDA commissioner Stephen Hahn said the pause that had been applied to inspections did not prevent the agency from conducting mission-critical inspections, although routine surveillance inspections had been shuttered for four months.

The FDA has been tracking state and local conditions with the aid of a rating system designed to establish which locations are reasonably safe for a site inspection. This COVID-19 advisory rating system makes use of real-time data to provide a qualitative assessment of the number of cases in an area. These data are shared with the agency’s partners on the state level who handle some inspectional activities, presumably including inspections of mammography facilities.

The rating system is broken down into three levels of risk on a county-by-county basis, starting with the category of counties where inspections will only take place when those inspections are deemed mission-critical. The second tier of inspections takes into account whether the agency can send field investigators who have not identified themselves as vulnerable to poor outcomes for infection with the SARS-CoV-2 virus. The last tier is for counties that are open to a resumption of normal activities. The agency’s objective is to resume surveillance inspections the week of July 20, although the FDA said that conditions on the ground would continue to drive the level of inspectional activity.

FDA Posts Two Draft Updates

Regulatory science has not completely stagnated in the COVID-19 pandemic, a fact of life demonstrated by two draft guidances the FDA published for updates to existing guidances. One of these is a July 13 update for 510(k) submissions for devices that provide atherectomy for the peripheral vasculature, comments for which are due Sept. 11.

The scope of the draft is limited to intraluminal artery strippers that fall under the MCW product code, which includes four technologies, including rotational atherectomy devices. Sponsors can use ISO 10993 to test for biocompatibility, and ISO 14971 for risk evaluation and management. Devices that are packaged with a pre-installed internal battery will have to fulfill several performance testing recommendations, including shelf life, and the sponsor will have to determine the impact of sterilization on the battery when the battery will be left in the device during sterilization procedures.

The FDA states that it has no intention of imposing changes to the existing guidance that are not specified in this latest draft. Interestingly, the existing final guidance was issued in February 2020, less than two years after the previous draft had been published.

The second updates draft published in the month of July is the July 14 draft for clinical and non-clinical investigations into devices for treatment of benign prostatic hyperplasia (BPH), which will also limit updates to the existing to the contents of the draft. This draft will update the recommendations for devices that are covered by four product codes (KNS, PEW, PZP and NOY), and includes updates to recommended approaches to animal studies.

Among the draft recommendations is that animal studies should include both gross and histological examinations of the treated area by a pathologist who is blinded to the treatment. The draft states that animal studies of thermotherapy devices should include evaluations of how well the device limits the volume of affected tissue by checking parameters such as blood flow and tissue heterogeneity. There are also recommendations for animal studies of stents used for BPH.

Also included in the updates draft for BPH devices are recommendations for pilot and pivotal studies, including a recommendation that the sponsor make use of a randomized, controlled study design for the pivotal study. While the standard of care for the population under investigation might be the most appropriate control treatment, the FDA said the risk-benefit ratio of the investigational device should be comparable to that of the control treatment. The comment period for this draft closes Sept. 14.

FDA Sets 50% Efficacy Benchmark in Vaccine Guidance

The FDA has released a guidance for development of vaccines in response to the COVID-19 pandemic, which among other things suggests the agency will push harder to ensure that any such studies enroll pregnant women and minorities. The guidance also calls for an effectiveness rate of 50%, a benchmark which exceeds those of most recent influenza vaccines used in the U.S.

The June 30 FDA press release states that the agency may use the accelerated approval pathway for licensing a vaccine for the SARS-CoV-2 virus, but that any application would have to identify an immune response or other measure “that is reasonably likely to predict clinical benefit.” The agency left open the possibility that a vaccine could be distributed under the emergency use authorization program (EUA), but the guidance seems to suggest that the FDA is reluctant to grant an EUA authorization for the first vaccine specific to this virus.

The guidance states that issuance of an EUA prior to completion of a large randomized trial could inhibit demonstrations of effectiveness, and that such a study may be needed to clarify the effect of the vaccine on vaccine-associated enhanced respiratory disease. Conversely, the FDA said an EUA may be appropriate once the study has returned sufficient data to demonstrate safety and effectiveness, even if the manufacturer has not yet submitted all the data from that study.

Patients who are at higher than average risk of severe adverse events may be excluded from early-phase studies, but those patients may have to be included in late-phase studies. Trials of all stages will have to include pregnant women and women who are not actively avoiding pregnancy, along with several other sub-groups, including racial and ethnic minorities and elderly patients. Randomized, controlled trials will have to enroll evenly between placebo and the candidate vaccine, and the FDA said an approved vaccine can be used as a control for subsequent vaccine studies.

In the discussion of statistical considerations, the guidance calls for a 50% efficacy endpoint both at the completion of the study and at any interim analysis, a superior metric to 11 out of 15 of the vaccines listed at the CDC website. The most recent influenza vaccine to exceed that mark is the 2013-14 vaccine for the H1N1 virus, which provided an effectiveness rate of 52%.

The FDA said the terms of the guidance will continue to apply after the public health emergency has been withdrawn, and that any revisions will be made within 60 days of the termination of the emergency. The guidance makes some concessions on manufacturing considerations, including the use of a virtual site inspection, depending on that manufacturing site’s compliance history.

High-throughput Testing Emphasized

The FDA’s EUA program for testing and diagnostics is still a key component in the U.S. federal government’s efforts to rein in the COVID-19 pandemic, and the agency is now focused on bringing high-throughput testing into the picture. Timothy Stenzel, director of the FDA’s Office of In Vitro Diagnostics and Radiology said on a June 24 town hall that the FDA is also working on an EUA template for molecular testing for the pandemic, which would also help to enable the volume of testing needed to reopen the economy.

According to the FDA’s transcript of the town hall, the agency has received a number of questions about the distinction between testing for diagnosis, screening and surveillance. Stenzel asked that test developers comb through existing guidance and templates for answers to their questions prior to contacting the agency, and said the emphasis is on point-of-care and high-throughput testing systems. The agency’s review of such systems is contingent on receipt of an EUA filing that contains sufficient data for review, including separate reporting for the various antibody isotypes stimulated by the virus.

The FDA made good on Stenzel’s promise, adding two templates for molecular testing at the template webpage. The July 2 update provides one template each for commercial manufacturers and labs, and there are provisions in the documents for asymptomatic testing for screening purposes and for testing of specimen pools.

The PREP Act and the Revocation of an Emergency Use Authorization

In recent weeks, the FDA has revoked Emergency Use Authorizations (EUAs) for several products meant to combat COVID-19.  These include the June 15, 2020 revocation [fda.gov] of the oral formulations of chloroquine phosphate and hydroxychloroquine sulfate and the June 16, 2020 revocation [fda.gov] of the Chembio Diagnostic Systems Inc.’s DPP COVID-19 IgM/IgG System.

The fact that FDA is revoking its authorization for drugs and medical devices may have implications for the immunity granted under the Public Readiness and Emergency Preparedness Act (“PREP Act”) (42 U.S.C. § 247d-6d and 6e) for products that have had their authorizations revoked.  This blog explores this issue.

Background on PREP Act and the EUA Statute.

Some background on both the PREP Act and EUA statute is important in order to understand the issue.  The PREP Act provides nearly blanket immunity under certain circumstances for manufacturers, distributors, and administrators of certain drugs, medical devices, and biologics meant to counteract an epidemic or pandemic.  This immunity is provided not only to approved drugs and cleared medical devices, but also investigational drugs and medical devices, as well as drugs and medical devices that have been authorized by the FDA under its EUA authority.

So, what is the FDA’s EUA authority and how does it work?  In short, if the Secretary of Health and Human Services declares a public health emergency, the FDA can authorize the use of a non-approved/non-cleared product, or authorize an off-label use of an otherwise approved/cleared product, for the limited purpose of combatting the public health emergency.  21 U.S.C. § 360bbb-3.  Once authorized for emergency use, the products can be sold and used under the conditions of the EUA authorization until one of three events occur: either (i) the product becomes approved or cleared via a traditional pathway, (ii) the public health emergency ends, or (iii) the FDA revokes its emergency use authorization.  Id.  The FDA can revoke an authorization if there is no longer a need for the product, the evidence supporting the authorization is no longer met, or other circumstances make revocation appropriate to protect public health and safety.  Id. at (g)(2).  Even if the health emergency ends or the FDA revokes its authorization, continued use of the product with respect to a specific patient can continue if found necessary by the patient’s attending physician.  Id. at (f)(2).

The EUA statute partially addresses the issue of a manufacturers’ obligations if the product is revoked or the public health emergency ends.  If the public health emergency ends, the EUA statute provides that the “Secretary shall consult with the manufacturer of such product with respect to the appropriate disposition of the product.”  Id. at (b)(2)(B).  The statute does not address this issue if the FDA revokes its authorization, though the FDA’s interpretation of the statute is that it will similarly consult with the manufacturer if it revokes the authorization on the appropriate disposition of the product.  Emergency Use Authorization of Medical Products and Related Authorities, Food Drug Cosm. L. Rep. 300052.

FDA’s COVID-19 Response.

With this background on the statutes out of the way, let’s turn to the FDA’s response to COVID-19 under these statutes.  On February 4, 2020, Secretary Azar declared a public health emergency for COVID-19, which enabled the FDA to begin issuing EUAs for products intended to combat COVID-19.  85 FR 7316.  Since the beginning of the COVID-19 pandemic, the FDA has authorized [fda.gov] over 150 products under its EUA authority.  These products fall into six categories: (i) In Vitro Diagnostic Products, (ii) High Complexity Molecular-Based Laboratory Developed Tests, (iii) SARS-CoV-2 Antibody Tests, (iv) Personal Protective Equipment and Related Devices, (v) Ventilators and Other Medical Devices, and (vi) Drug Products.

These 150+ products, as such, fall within the definition of a “covered countermeasure” under the PREP Act, and thus largely fall within the protections of the PREP Act.  42 U.S.C. § 247d-6d; see also 85 FR 15198.  However, the question arises whether the products for which EUA authority was revoked enjoy the same immunity as non-revoked EUA products under the PREP Act.

What Happens Under the PREP Act if the FDA Revokes its EUA Authorization?

Neither the PREP Act itself nor the EUA statute directly address the issue of what happens under the PREP Act if the FDA revokes its EUA authorization.  However, buried deep in the PREP Act are two references to EUA revocation.  These references strongly suggest that EUA revocation does not, in and of itself, remove PREP Act immunity.

The references to EUA revocation in the PREP Act appear in the section that addresses the willful misconduct exception to immunity.  As background, the PREP Act contains an immunity exception that provides that there is no immunity when a manufacturer or distributor engaged in “willful misconduct” with respect to the covered product.  In turn, the statute provides a lengthy definition of what constitutes willful misconduct.  42 U.S.C. § 247d-6d(c-d).  Among the circumstances described, is the initiation of an “enforcement action” by the federal government that resulted in a “covered remedy.”  Id. at (c)(5).  An “enforcement action” is defined as a laundry list of items, such as an injunction or mandatory recall of a product.  Among the listed items that constitute an enforcement action is “a revocation, based on willful misconduct, of an authorization under section 564 of such Act [21 USCS § 360bbb-3].”  Id. at (c)(5)(B)(i) (block parentheticals in original).  In other words, only a revocation of an EUA that was “based on willful misconduct” can constitute an “enforcement action.”  Id.  Conversely, in the laundry list of items included in the definition of “covered remedy,” the following appears, among others: “a revocation of an authorization under section 564 of such Act [21 USCS § 360bbb-3].”  Id. at (c)(5)(B)(i)(I) (block parentheticals in original).

As such, the PREP Act contemplates that a product whose authorization has been revoked for a reason other than willful misconduct – perhaps because FDA finds that there are significant clinical performance problems with it – is still entitled to immunity.  Otherwise, there would be no reason to define the method by which the authorization must be revoked in order to lose immunity.  A plaintiff attempting to demonstrate that PREP Act immunity does not apply needs to show more than just the EUA revocation in order to prove willful misconduct.  Rather, the plaintiff must show that the revocation was “based on willful misconduct” as defined in the Act.  Id. at (c)(5)(B)(i).  The recent revocation letters from the FDA contain no such language.

This conclusion that immunity remains following the revocation of an EUA is bolstered by the purpose of the PREP Act.  The policy behind the PREP Act is to provide immunity so as to encourage companies to make products that help reduce the severity of pandemics.  And, if all that must occur for a product to no longer receive the PREP Act protection is that it loses its EUA authorization status, that would run contrary to the purpose of encouraging companies to make products and seek EUA authorization.  Similarly, a product can lose its authorization once the pandemic is over in the same manner as if it was revoked during the pandemic.  And certainly, products that are no longer needed after the declared public health emergency has ended continue to have protection under the PREP Act for their use during the pandemic.  Otherwise, the PREP Act would provide no protection at all.

This conclusion is further bolstered by the fact that the PREP Act states that its “sole exception to the immunity from suit” is for “willful misconduct,” Id. at (d), which is a much higher standard than the standard for revoking an EUA.  Compare 42 U.S.C. § 247d-6d(c) (setting forth the willful misconduct standard) with 21 USCS § 360bbb-3(g)(2) (setting forth the revocation standard). While the “sole exception” language should not lull manufacturers into believing the PREP Act always provides protections, this “sole exception” language does show that willful conduct is far more serious than a simple revocation of an EUA.

In spite of the foregoing, none of the above points are a guarantee that a court may not reach a contrary result.  After all, the PREP Act does not specifically say that it extends to products whose EUAs have been revoked.  Rather, this is only a result by necessary implication from the definition of willful misconduct, as well as the policy behind the PREP Act and the EUA statute.

Next Steps After Revocation.

If an EUA is revoked, the manufacturer should work with FDA on the appropriate disposition of the product.  See 21 U.S.C. § 360bbb-3(b)(2)(B); Emergency Use Authorization of Medical Products and Related Authorities, Food Drug Cosm. L. Rep.  300052.  While the product can continue to be used for a specific patient if found necessary by the patient’s attending physician, what must be done with the product that remains in the marketplace after the EUA has been revoked needs to be addressed with FDA.

It is important for the manufacturer to be aware that in the laundry list of actions that constitutes “an enforcement action” under the PREP Act’s willful exception is “a mandatory recall of a product because [a] voluntary recall was refused.”  Put another way, if forced to do a mandatory recall as opposed to a voluntary recall, a manufacturer increases the likelihood that it will not enjoy the full protections of the PREP Act.

Written by Jordan Lipp, Partner at Childs McCune

Churn at Justice as Drug Pricing Rule Falters Again

Bipartisan supporters of drug pricing transparency in the U.S. absorbed another blow when an appeals court rejected the Trump administration’s drug price transparency rule as lacking statutory support. This was not the only source of churn on the legal front as three top-level officers at the U.S. Department of Justice announced their resignations, putting the White House in a position of naming replacements in a process that may prove contentious in an already-contentious election year.

D.C. Circuit Court Backs District Court

In a June 16 decision, the U.S. Court of Appeals for the District of Columbia Circuit affirmed a lower court’s rejection of the Trump administration’s May 2019 final rule for disclosure of wholesale acquisition costs (WACs) for some pharmaceuticals and biologics. The rule did not apply to items that cost less than $35 per month, but otherwise covered products available via the Medicare or Medicaid programs. Some stakeholders had argued that disclosure of those WACs would be meaningless for most consumers, given that their health or prescription drug plans act as fiscal intermediaries.

The U.S. District Court for the District of Columbia imposed a stay on the rule a day before the rule was set to go into force in July 2019, and determined that makers of drugs and biotech therapies are not direct actors in the Medicare and Medicaid programs, thus nullifying the rule. The perceived absence of direct congressional intent regarding price disclosures was also noted in the district court ruling.

Attorneys for the Department of Health and Human Services had argued that the rule was a permissible regulatory mandate on the assumption that it led to more efficient administration of federal government programs. The D.C. Circuit Court declared that HHS had acted unreasonably in concluding that its authority allowed it to impose a “sweeping disclosure requirement that is largely untethered to the actual administration of the Medicare or Medicaid programs.” The district court demonstrated little interest in the government’s argument for deference per Chevron, although the circuit court conceded that federal government agencies enjoy at some deference from jurists. Still the court said the disclosure rule’s “blunderbuss operation falls beyond any reasonable exercise” of HHS’s statutory power.

The circuit court said also that the anticipated trickle-down effect of WAC price disclosures was insufficient to carry the government’s argument. The fact that the rule applied to all direct-to-consumer ads, not just those that directly address Medicare and/or Medicaid beneficiaries, also served to weaken the government’s case.

Francisco, Benczkowski and Hunt Resign

Solicitor General Noel Francisco has announced his resignation in a June 17 letter to President Trump, but Francisco’s news was virtually simultaneous with the news that Assistant Attorney General Jody Hunt would leave the department’s civil division. However, these were both preceded by roughly a week by the news that the department’s head of the criminal division, Brian Benczkowski, would also leave his post.

All three positions are critical for regulated industries as the SG enunciates the administration’s position on matters that appear before the Supreme Court, while the other two are responsible for federal enforcement prosecuted under the False Claims Act. Francisco’s letter said the resignation is effective July 3, bringing to an end a tenure that commenced in January 2017, when he was named the acting SG.

Francisco backed the failed effort to prod the U.S. Supreme Court to revisit the patent subject matter eligibility problem, while Hunt and Benczkowski were in their respective offices as the Brand and Granston memos made themselves felt in federal prosecutions of corporate entities. They were also charged with administering changes to the Justice Manual, which was substantially revised in December 2018. Benczkowski and Hunt, like Francisco, will leave their jobs July 3.

FDA Moves on Home Sample Collection for COVID-19

The FDA has broken new ground on numerous occasions as a result of the COVID-19 pandemic, including with the release of a voluntary template for at-home sample collection kits under the emergency use authorization program. There are limitations to the use of home sample collection kits for the pandemic, however.

The agency’s May 29 press release indicated that test developers can provide a test for samples obtained by the user in their domicile only if that test is authorized under the EAU program, or when used in connection with a study overseen by an IRB. Jeff Shuren, director of the Center for Devices and Radiological Health, said home collection samples are the subject of several concerns, including whether the sample can be shipped without degradation.

The FDA template states that the sample can be drawn from the anterior nares or saliva, and that a developer that wants to manufacture a sample collection kit for other types of respiratory specimens (or non-respiratory sources) should contact the agency regarding a validation a strategy. The developer of that home collection kit should also contact the Pipeline and Hazardous Materials Safety Administration regarding compliance with regulations pertaining to hazardous materials shipping, the FDA said.

CDC Advises Caution on Serological Test Interpretation

U.S. federal government activity has been more or less constant even after omitting the FDA’s updates, such as the routinely updated antibody test guidelines posted by the Centers for Disease Control and Prevention. CDC pointed out recently that interpretation of a serological test can be hazardous if local seroprevalence is in the mid-single digits. In addition to advising that there is no clear answer as to which antibody isotype is most advantageous for COVID-19 surveillance, the update page also states that when prevalence is at 5%, a serological test with 90% sensitivity and 95% specificity might offer a positive predictive value of only 49%.

This can be improved upon by the use of a test with a specificity of 99.5% or greater, or by pre-test screening to eliminate those at a low probability of infection, while another option is to run a second test on any individuals who test positive. A repeat testing strategy based on an orthogonal algorithm would require that the second test be a different test than the first, but CDC also advised that tests for immunoglobulin A (IgA) are not seen as particularly reliable, at least until more information emerges about the dynamics of IgA in the context of the SARS-CoV-2 virus.

The Federal Communications Commission announced May 28 that it had approved another 53 funding applications for telehealth programs specifically set aside for the COVID-19 pandemic. The funding for these programs was provided by the Coronavirus Aid, Relief and Economic Security (CARES) Act, and this latest round of telehealth program awards will account for $18.22 million out of the total of more than $68 million granted to date under this program.

The FCC’s COVID-19 telehealth program has $200 million to work with under the terms of the CARES Act, although the entirety of that funding source need not be expended. This was the eight set of telehealth programs announced by the FCC, the first of which was announced April 16.

Precisely how long these telemedicine programs will be needed in such numbers is difficult to pin down, but the Advanced Medical Technology Association recently highlighted a survey suggesting that three in four Americans would not hesitate to undertake a face-to-face visit with their physician. Patients have been skipping cardiology care sessions, cancer screenings, and other essential care visits as a consequence of the pandemic, but the vast majority of the 593 respondents believe the time has come to go see the doctor. Roughly half of those surveyed in a separate poll said they or someone in their household has postponed or skipped entirely a medical visit in recent months.

FDA Issues Pandemic Policy for Supplements

The FDA’s device center has put forth a number of policy documents to handle the effects of the COVID-19 pandemic, and one of the latest takes up the filing of supplements for PMA and humanitarian device exemption devices. As is the case with a number of other guidances for the pandemic, this guidance spells out the conditions under which sponsors need not file for changes to devices in some instances, but device makers must document all those changes nonetheless.

The policy for PMA and HDE devices allows the manufacturer to make changes to the device without a 30-day notice or a supplement if a design change was motivated by a need to address a lack of components caused by supply chain disruptions. Manufacturing site changes can be undertaken without a supplementary filing if that site change was necessary to provide employees with sufficient room to practice social distancing.

Manufacturers can make changes to the materials used in the device that are necessitated by changes in manufacturing, assuming that manufacturing change was brought on by the conditions imposed by the pandemic. This holds only if the change in material does not suggest an impact on device safety or performance, however.

Conversely, the manufacturer cannot make a change to a device’s intended use under this policy, and even the changes that qualify under this pandemic policy must be documented per routine record-keeping activities, such as device history records. The sponsor must also report all changes, exempt or not from supplementary flings, in the annual report due for that device. Interestingly, the FDA had just completed its revised guidance for PMA annual reports in December 2019.

PTO Says No to AI as Inventor

The U.S. Patent and Trademark Office announced last year that it was seeking feedback on whether artificial intelligence could be an inventor, but the agency ultimately declined to go along with the concept. Underlying the decision was the fact that the statute makes specific reference to entities that would qualify as a natural person or persons, but PTO was not the only patent office to pass on the proposal.

The PTO opened the proposal for public comment in August 2019 at the behest of the inventors of the DABUS algorithm, Stephen Thaler of Imagitron LLC. The algorithm, which Thaler described as a creativity machine, is a general-purpose algorithm that Thaler claimed was not trained for any specific invention or field of endeavor. When Thaler first filed for a patent in 2019, the examiner returned the application for failure to identify the inventor by a legal name.

The problem for Thaler, according to the PTO, is that Title 35 of the U.S. Code defines an inventor or inventors as “the individual or … individuals who invented or discovered the subject matter of the invention.” The agency said Section 101 of Title 35 states that “whoever invents or discovers” a useful article may obtain a patent, and that other portions of Title 35 make reference to pronouns such as “himself” and “herself.”

The PTO pointed to case law in support of its position as well, including a 2013 decision by the Court of Appeals for the Federal Circuit. The PTO observed that Thaler had himself acknowledged that an AI system enjoys no property rights under current law, which the agency said “further calls into question whether the submitted assignment document satisfies the requirements” spelled out in several portions of the Code of Federal Regulations.

Thaler had no better luck in other patent offices, including the U.K. Intellectual Property Office, which came to a similar conclusion in December 2019. The U.K. IPO’s handling of the matter largely mirrored that of the PTO’s approach, initially rejecting the application because “a person must be identified” on an application. The agency’s deputy director, Huw Jones, acknowledged that there is a legitimate question as to how such issues ought to be handled, but recommended that the debate be handled legislatively and “not shoehorned arbitrarily into existing legislation.”

PTO Eyes Prioritized Patents to Combat Covid-19

The FDA and other agencies at the U.S. Dept. of Health and Human Services have taken a number of measures to push back against the COVID-19 pandemic, but an agency at the Dept. of Commerce is also getting into the fight. The Patent and Trademark Office recently unveiled a prioritized patent examination pilot that will put COVID-fighting applications to the front of the queue, with a special emphasis on small and micro entities.

The May 8 PTO statement indicates that the agency will waive the fees ordinarily associated with priority patent applications, but also that these applications will be processed within six months, assuming the applicant responds to PTO queries promptly. PTO director Andrei Iancu said small businesses and independent inventors “are often the difference makers when it comes to cutting-edge technology,” but “are also in most need of assistance” as the pandemic wears on.

In the accompanying Federal Register notice, PTO said the scope of the program is limited to products that are subject to an FDA premarket review process, such as emergency use authorizations, premarket approvals and new drug applications. Biologics license applications are also within the scope of the program, but continuing original patent applications are apparently excluded. Filings must include no more than four independent claims and no more than 30 total claims. Multiple dependent claims are also out of consideration, and applicants that file for an extension for time to file a reply will lose their place in this expedited program.

FDA Resets Serology Test Policy for Pandemic

The FDA has maintained a steady pace of policy changes in connection with the COVID-19 pandemic, including a May 4 policy that calls on makers of some serological tests to file for an EUA for their tests. The change followed congressional criticism that many of these tests did not work as advertised, but also followed an extended period during which a large number of tests came to market and thus there was a less pressing need for a relaxed policy.

In an accompanying statement, the FDA said the original testing policy under the emergency use authorization program was borne of a need to provide sufficient regulatory flexibility to bring surveillance testing to the medical front lines. A number of serology tests have arrived with claims of FDA approval or authorization despite lacking such a regulatory acknowledgment, but other tests were shown to perform poorly despite otherwise avoiding the agency’s ire.

Consequently, commercial test developers have 10 days to file for authorization under the EUA program after notifying the agency of the results of test validation, or 10 days after the date of publication of the May 4 policy. High-complexity labs that develop their own tests must still forward validation data to the agency, although they are not required to seek authorization via the EUA program. The FDA recommends they do seek inclusion in the EUA listing, however.

The testing policy was updated again May 9 with the news that the first antigen test for the SARS-CoV-2 virus had gained a place in the EUA policy, and the FDA said more such tests will soon be thus authorized. The anticipation regarding antigen testing is that it will rapidly increase the total volume of tests made to the American public, a critical piece in the effort to bring the pandemic under control. However, the agency advised that antigen testing is even more prone to false negatives than molecular testing for viral RNA, and a negative result for an antigen test may have to be checked by a molecular test – usually a polymerase chain reaction (PCR) test – prior to any clinical decision-making.

Still, the FDA noted that antigen tests are less expensive to deploy than PCR tests and usually provide more rapid turn-around. Antigen tests may boost overall testing capacity by millions per day, but the FDA noted that these are intended as diagnostic tests even as the agency noted that they may also aid in the effort to “identify infection rates closer to real time.”