LawFlash

Staying Within the Legal Lane: Providing Products and Services for COVID-19

July 06, 2020

Companies marketing products or services for coronavirus (COVID-19) should be aware of key areas of healthcare law and regulation, including Food and Drug Administration regulation, clinical laboratory testing oversight, product liability, and digital health/telehealth regulation.

As the COVID-19 pandemic persists, many companies have started to refocus their expertise and resources to support efforts to combat the disease and take advantage of new strategic opportunities. These activities include, for example, the development and supply of face masks and other personal protective equipment (PPE); SARS-CoV-2/COVID-19 testing devices and services; ventilator devices and components; and digital health technologies and services, including telehealth and remote patient monitoring.

Many companies working on these issues are not traditional healthcare or life sciences companies. Healthcare, however, is a highly regulated space, and regulators are continuing to issue new policies and regulations to address the critical need for goods and services to combat COVID-19, while also protecting the public health. As companies move forward on these important efforts, they should be aware of the relevant regulatory and legal requirements to avoid enforcement and liability risks.

This LawFlash provides an overview of key areas of law and regulation that impact companies marketing products or services to support COVID-19 efforts.

FDA Regulation

Most products intended for use in the diagnosis, screening, or treatment of COVID-19 patients or for use by healthcare professionals (e.g., to help protect against disease transmission) are subject to Food and Drug Administration (FDA) regulation. For example, FDA regulates the following product types as medical devices: PPE (including face masks, N95 respirators, face shields, gloves, and gowns), air purifiers intended for a medical purpose, diagnostic tests, sample collection devices, ventilators, thermometers and thermal cameras, and certain software apps. In addition, FDA regulates hand sanitizers and therapeutics as drugs.

Companies looking to shift resources to produce these much-needed medical products must be mindful of the FDA requirements applicable to the particular product type. FDA has been prolific in issuing guidance for medical products used to respond to the COVID-19 pandemic, having issued to date more than 50 guidance documents and FAQs, and dozens of Emergency Use Authorizations for COVID-19 devices and drugs. FDA’s policies and guidance, however, change frequently as the agency learns more about the disease and the data supporting the drugs/devices used in the pandemic. Thus, it is critical to keep track of such changes.

Product Liability and the PREP Act

Given the high-risk nature of COVID-19, companies should consider potential product liability risks if they choose to produce or market medical products in this space. There are, however, certain liability immunity protections under the federal Public Readiness and Emergency Preparedness (PREP) Act. Specifically, the PREP Act provides immunity from personal injury, business disruption, or property damage claims (except willful misconduct) to individuals or organizations involved in the manufacture, distribution, or dispensing of drugs, biologics, and devices intended for use for COVID-19, which are referred to as “covered countermeasures.”

To be covered by PREP Act immunity, the COVID-19-related activities and products must meet the criteria set forth in the US Department of Health and Human Services (HHS) declaration of immunity from liability, published March 17, 2020. This declaration describes several detailed criteria and limitations for liability immunity under the PREP Act for COVID-19 activities; thus, it is important to assess applicability on a case-by-case basis.

Clinical Testing Oversight

Many companies are evaluating options to provide testing services, given the increasing demand for COVID-19 testing capacity, particularly as employers seek to screen employees returning to work (refer to our prior LawFlash, Reopening the Workplace: A Preliminary Guide for US Employers). Companies considering providing COVID-19 testing services should be cognizant that the federal requirements under the Clinical Laboratory Improvement Amendments (CLIA) apply to COVID-19 testing, including molecular testing, serology (antibody) testing, and antigen testing.

Although there are a few tests that have been authorized by FDA for use at point of care, most tests must be performed in a CLIA-certified laboratory. Many states also impose licensure and other requirements for COVID-19 testing, including restrictions on who can order a COVID-19 test. Further, it is important for companies seeking to offer COVID-19 testing services to ensure the tests they intend to purchase/use have been properly authorized by FDA. For example, FDA has published on its website multiple lists of COVID-19 tests authorized pursuant to FDA’s Emergency Use Authorization process or via FDA guidance, and has also published a list of tests that should no longer be distributed for COVID-19.

Digital Health and Telehealth

The current pandemic has dramatically increased consumer demand, globally, for digital health solutions and telehealth services as patients and providers continue to social distance. We described the evolution of telehealth demand in a prior LawFlash, Telehealth Use Surges Around the World Amid COVID-19. Importantly, many traditional healthcare providers may have limited or no prior experience with telehealth. As the use of and billing for the telehealth modality involves additional complexities, it is critical that healthcare providers understand these issues to avoid noncompliance.

Digital health solutions targeted toward COVID-19, such as mobile apps or artificial intelligence platforms for patient screening, may be regulated by FDA. FDA generally regulates software and other digital health technologies intended for medical uses, subject to certain exceptions. Even prior to the COVID-19 pandemic, FDA had issued several guidance documents on statutory exemptions and enforcement discretion policies for digital health products.

Since the start of the pandemic, FDA has issued many new COVID-19-related guidance documents loosening certain requirements for digital health technologies, such as remote monitoring devices, digital pathology devices, and digital health devices for psychiatric disorders. Companies seeking to market COVID-19-related digital health solutions should therefore be mindful of FDA’s evolving policies on these issues.

Healthcare Regulation and Reimbursement

The healthcare industry has been uniquely affected by the COVID-19 pandemic. There has been a fundamental shift in the nature, intensity, and cost of medical services rendered over the last several months, as well as the lost revenues associated with the pandemic. Many healthcare stakeholders—including health systems and physicians, dentists, and other practitioners—have been restricted from furnishing elective procedures, and as a result, they have seen their bottom lines crumble.

Other healthcare providers continuing to render essential services have faced extreme challenges due to staff upheaval, PPE shortages and usage burdens, heightened safety considerations, and patient behavioral changes, as well as a rapidly evolving set of regulations and guidance at the federal and state levels, for both operations and reimbursement. Tracking and digesting the rapidly evolving COVID-19 landscape has required enormous management focus and attention. Even more so, the HHS Provider Relief Fund, while relieving some financial burdens for many healthcare stakeholders, has been joined with complex terms and conditions with ever-changing guidance that narrows the applicable uses of those grant funds and that will increase accounting costs dramatically.

We have stayed on top of these dynamically evolving issues through daily updates from the Centers for Medicare and Medicaid Services, HHS Office of the Inspector General, and US Department of Justice, as well as various state guidance documents. Although it can be challenging to understand this evolution as regulatory agencies race to deal with the emergency of the day, we can provide comprehensive and updated guidance to ensure healthcare and life sciences providers remain compliant.

How We Can Help

Morgan Lewis helps companies around the world and across industries assess the impact of the legal and regulatory issues described above. We provide legal and regulatory strategy and counsel on product submissions, product liability risks, and ongoing regulatory compliance.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. Find resources on how to cope with the post-pandemic reality on our NOW. NORMAL. NEXT. page and our COVID-19 page to help keep you on top of developments as they unfold. If you would like to receive a digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts, and download our COVID-19 Legal Issue Compendium.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Washington, DC
Michele Buenafe
Dennis Gucciardo
Kathleen Sanzo
Jacqueline Berman
Howard Young
Jacob Harper

Houston
Gregory Etzel
Susan Harris

Philadelphia
John Lavelle
Brian Schaffer

Pittsburgh
Wendy West Feinstein