The CARES Act Expands Rules on Drug and Device Shortage Reporting in Response to COVID-19

The CARES Act (the “Act”) was signed into law on Friday, March 27, 2020. The Act amends Section 506C and Chapter V of the Federal Food, Drug and Cosmetic Act (the “FD&C Act”) to address drug and device shortages creating a number of new obligations for manufacturers. The Act creates new rules for how biopharmaceutical and device manufacturers will have to manage and report on anticipated supply-chain disruptions for what the Secretary of the Department of Health and Human Services (the “Secretary”) has deemed to be life-saving and critical drugs and devices during a declared public health emergency.

Drugs 

The Act expands those provisions of Section 506C of the FD&C Act that address discontinuance or interruption in the production of life-saving drugs and the registration of producers of drugs.  Under Section 506C, drug manufacturers are required to notify the Secretary of the discontinuance or interruption in the production of a life-saving drug (i.e., a drug that is life-supporting, life-sustaining, or intended to prevent or treat a debilitating disease or condition that is not a radio pharmaceutical drug product). The Act also expands the categories of drugs that require notification of a discontinuance or interruption to include drugs that are critical to the public health during a public health emergency declared by the Secretary.

In addition, the Act requires notification of a permanent discontinuance or interruption in the manufacture of the active pharmaceutical ingredient (“API”) of a drug that is likely to lead to a meaningful disruption in the supply of the drug. See Title III, Part I, Subpart B, Sec. 3112. Further, notifications of discontinuation or interruption will need to include (1) whether the API is the reason or a risk factor; (2) the source of the API and any known alternative sources; (3) whether any associated device used for preparation or administration included in the drug is a reason or a risk factor; and (4) the expected duration of the interruption. Id. 

The Act also requires manufacturers of life-saving drugs, API, and associated devices used for preparation or administration included in the drug to develop, maintain, and implement a redundancy risk management plan. Id. The risk management plan must identify and evaluate risks to the supply of the drug for each establishment in which the drug or API is manufactured. Risk management plans will be subjected to inspection and copying by the Secretary.

Section 510(j) of the FD&C Act requires drug and device manufacturers to register with the Secretary and to file a list of all drugs and devices that are being produced for commercial distribution. The Act expands the filing requirement by requiring each drug registrant under the FD&C Act to submit annual reports to the Secretary on the amount of each drug produced for commercial distribution. The Secretary is also granted the authority to require such reports if there is a public health emergency.  

Devices

The Act amends Chapter V of the FD&C Act by adding a requirement that manufacturers of devices critical during a public health emergency notify the Secretary of a discontinuance or meaningful supply disruption. The Act defines “critical” devices as those that are “life-supporting, life-sustaining, or intended for use in emergency medical care or during surgery; or for which the Secretary determines that information on potential meaningful supply disruptions of such device is needed during, or in advance of, a public health emergency.” See Title III, Part I, Subpart C, Sec. 3121. This requirement is similar to the notification requirements for manufacturers of life-saving drugs. Notice is required to be made at least six months prior to the discontinuance or interruption in production of the product, or if that is not possible, as soon as practicable. As in situations involving disruption in production of life-saving drugs, the Secretary has the authority to prioritize and expedite review, and will also establish a device shortage list. 

Timing and Takeaways

These amendments to the FD&C Act will take effect 180 days after the enactment of the Act. However, given the sophistication and complexity of most biopharmaceutical and device manufacturers’ supply chains, manufacturers would be wise to allocate resources to closely monitor the specific supply chains for the products that will fall within the life-saving, life-supporting, and critical categories covered under these amendments. While the FDA is likely to provide additional guidance regarding the Agency’s compliance expectations for industry, affected life sciences organizations would be well served to collaborate with their manufacturing and distribution partners to conduct end-to-end assessments for drugs and devices that may meet the definitional criteria created under the Act. We note that government orders on both the state and federal level are changing every day, and the information contained in this Memorandum is accurate only as of the date set forth above.

For further information or questions on the new requirements for drug and device shortage reporting, please contact T. Reed Stephens or your Winston relationship attorney.

View all of our COVID-19 perspectives here. Contact a member of our COVID-19 Legal Task Force here.