A Look Ahead in Life Sciences: What We Are Tracking in Q2 2023 and Beyond

How FDA and industry are responding to COVID-19.

• We will be watching how the US Food and Drug Administration (FDA or the Agency) intends to unwind a large swath of COVID-19-related guidance documents and how long and in what form these guidances will continue to be in effect after the expiration of the COVID-19 PHE declaration, which is expected on May 11, 2023.
• FDA identified its June 2020 guidance (which announced its temporary policy on distribution of drug samples during the COVID-19 PHE) as one of many guidances set for expiration on May 11, 2023, despite statements in the guidance that FDA’s interpretations are “not anticipated to change following termination of the COVID-19 PHE.” Specifically, regarding delivery of samples to a licensed practitioner’s home, the June 2020 guidance notes the following as one such interpretation not likely to change following PHE termination: “neither [the Prescription Drug Marketing Act of 1987] nor [21 CFR part 203] prohibits the delivery of drug samples to the licensed practitioner’s home, provided that the licensed practitioner executes and submits a written request to the manufacturer or authorized distributor of record for the delivery of the drug samples to their home being used as an office, and all other applicable provisions in part 203 are met.” On expiration of this June 2020 guidance on May 11, 2023, manufacturers and marketers will have to review whether to allow continued shipments to practitioners’ homes.
• FDA issued two final guidances in March 2023 describing its transition plan for medical devices that fall within certain enforcement policies and emergency use authorizations (EUAs) issued during the COVID-19 PHE.
• In January 2023, FDA updated its COVID-19 test policy and its policy for evaluating the impact of viral mutations on COVID-19 tests. In the updated test policy, FDA explained that it intends to consider the performance of a test across all known variants and will evaluate the test developer’s plans for post-authorization monitoring. The Agency also recommends that test developers address in their EUA request or marketing submissions whether labeling should include statements or limitations related to the time period during which and geographic location in which clinical specimens used in the test’s evaluation were collected, noting that the clinical performance has not been established in all circulating variants, and that performance may vary depending on the variants circulating at the time of patient testing, and their prevalence. On March 22, 2023, FDA also hosted its last regularly scheduled virtual town hall on test development and validation for monkeypox and COVID-19 emergency use tests.

How companies develop their products.

• We are following growing sentiment from clinical research organizations and industry that FDA quell concerns regarding non-human primate (NHP) sourcing for past and planned NHP studies.
• FDA recently issued a draft guidance addressing Clinical Trial Considerations To Support Accelerated Approval of Oncology Therapeutics with its recommendations for designing randomized controlled trials, disfavoring single-arm trials.
• FDA recently issued a draft guidance addressing considerations for the design and analysis of externally controlled trials that use patient-level data from other clinical trials or from real-world data sources to study the safety and effectiveness of drugs and biologics.
• FDA recently issued a revised draft Q&A guidance on the use of electronic systems, electronic records, and electronic signatures in clinical investigations of FDA-regulated products, including under 21 CFR Part 11. This revised guidance expands upon FDA’s initial 2017 draft guidance with respect to many key topics, including audit trails and the use of digital health technologies (DHTs) or digital tools to support remote data capture.
• We continue to monitor a new bill (H.R. 1117) introduced in February in Congress, with a growing list of cosponsors added in March, that would address inclusion of pregnant and lactating women in clinical research.
• We expect FDA to implement its new clinical trial Diversity Action Plan authority for Phase 3 or pivotal study drug and biologic developers and device developers conducting clinical trials (whether under investigational device exemptions or not), pursuant to section 3601 of the Food and Drug Omnibus Reform Act (FDORA).
• FDA recently published its framework for the use of DHTs in drug and biological product development. The framework outlines how FDA will implement a multifaceted DHT program for drugs and biologics, including hosting workshops and demonstration projects; engaging with stakeholders; establishing internal processes to support the evaluation of DHTs for use in drug development; promoting shared learning and consistency regarding DHT-based policy, procedure, and analytic tool development; and publishing guidance documents.
• We continue to watch for FDA’s implementation of a new provision of the FDCA that allows FDA to designate a “platform technology” that has the potential to be incorporated in or utilized by more than one drug. Under section 2503 of FDORA, FDA may expedite the development and review of a subsequent application for a drug that incorporates or utilizes a designated platform technology and must issue draft guidance on the new designation program within one year of enactment of FDORA.
• We continue to watch for final FDA regulations that would harmonize clinical research regulations with the US Department of Health and Human Services (HHS) Common Rule.

Deciding whether a company can market or sell a specific product.

Pharmaceuticals/Biologics

• We are following substitute language reported in the Committee on the Judiciary to the Preserve Access to Affordable Generics and Biosimilars Act (S. 142), introduced in January 2023 with 10 bipartisan cosponsors, to “prohibit brand name drug companies from compensating generic drug companies to delay the entry of a generic drug into the market, and to prohibit biological product manufacturers from compensating biosimilar and interchangeable companies to delay the entry of biosimilar biological products and interchangeable biological products.”
• We will continue to see the use of real-world evidence in submissions and likely continued guidance from FDA. Section 3629 of FDORA requires FDA to issue and/or update its guidance within one year.

Medical Device/Medtech

• We continue to monitor how FDA’s September 2022 final guidance on Clinical Decision Support Software is being applied by the Agency. 
• We are monitoring FDA’s Total Product Life Cycle Pilot, designed to help reduce time from concept to commercialization for medical devices going through the FDA approval and clearance processes.
• We are monitoring the implementation of new cybersecurity authorities for software-containing or internet-connected devices, enabling FDA to require sponsors to develop cybersecurity plans for postmarket implementation, as mandated in section 3305 of FDORA. FDA recently issued its guidance on its refuse to accept policy for cyber devices and related systems.
• We are analyzing FDA’s recently issued draft guidance on predetermined change control plans (PCCPs) for artificial intelligence/machine learning-enabled devices.
• We also anticipate final FDA guidance on the content of premarket submissions for device software functions.

In Vitro Diagnostic/Laboratory Testing

• Note: The Omnibus Spending Law did not include the VALID Act, covering FDA regulation of laboratory-developed tests (LDTs). In March 2023, the VALID Act of 2023 was introduced in the U.S. House of Representatives by Reps. Larry Bucshon (R-Ind.) and Diana DeGette (D-Colo.

How companies manufacture, promote, and monitor their approved products.

• We are analyzing FDA’s recent discussion paper on artificial intelligence (AI) in drug manufacturing, which identifies five areas of consideration and potential policy development. FDA has requested public feedback on these areas. Comments on the discussion paper are due to the docket by May 1, 2023.
• FDA recently issued final guidance to interpret the terms used in the definition of suspect product and illegitimate product for verification obligations under the Drug Supply Chain and Security Act (DSCSA). The requirements of the DSCSA have been phased in since November 2014, but full interoperable electronic track and trace systems must be in place for certain manufacturers, repackagers, wholesale distributors, dispensers, and third-party logistics providers of prescription drugs by November 27, 2023.
• We are awaiting a final rule by which FDA will align its quality system regulation with ISO 13485. Section 3611 of FDORA codifies FDA’s authority over medical device inspections to allow the Agency to collect “records or other information” from facilities “in advance of, or in lieu of” inspections of manufacturing establishments. We will be monitoring for FDA’s guidance on this topic.
• We are awaiting the publication of a final or a revised draft guidance on Presenting Quantitative Efficacy and Risk Information in Direct-to-Consumer Promotional Labeling and Advertisements, updating FDA’s 2018 draft guidance on this topic. The new release will update industry and FDA’s Office of Prescription Drug Promotion on how to interpret and apply FDA’s authority over DTC efficacy and risk presentations.

Whether Medicare/Medicaid or commercial payors are willing to pay for a product, how much, and under what circumstances.

Pharmaceuticals/Biologics

• We continue to follow how the Inflation Reduction Act of 2022 will affect reimbursement for pharmaceutical and biologic products (price caps, required discount program for all drugs, mandatory rebates if a drug’s price increases at a rate that outpaces inflation, a redesign of the Medicare Part D benefit, and an increase in biosimilar pricing). In February 2023, CMS released proposed guidance for the calculation of inflation rebates under Medicare Part B and Medicare Part D, and in March 2023, CMS released proposed guidance for the drug price negotiation program. We anticipate that CMS will continue to release proposed and final guidance over the coming months; including (a) requiring applications for the small biotech exception to be required in Q2 or Q3, and the initial delay request for biosimilar manufacturers; (b) an information collection request on the negotiation process; and (c) the selection of the first 10 drugs subject to the negotiation program on September 1, 2023. Notably, in February 2023, the HHS Office of Inspector General (OIG) released a Technical Assistance Brief that provides CMS with details about some of the areas of the Part B inflation rebates that OIG views as administratively challenging. Also in March 2023, CMS released the list of the first set of drugs under Medicare Part B that are subject to the inflation rebate payment requirement.
• HHS also released a report in February 2023 that poses three new pharmaceutical payment demonstration models, including a new model under which Part D plans would be encouraged to offer a low, fixed copayment across all cost-sharing phases of Part D for a standardized list of high-value generic medications; a new model that would establish a partnership among state Medicaid agencies and CMS to negotiate multistate outcomes-based pricing for cell and gene therapy; and a new model that would examine price adjustments for drugs approved under FDA’s accelerated approval pathway based on whether confirmatory clinical trials have been conducted.
• We are monitoring HHS’s proposed rule that would modify the current alternative dispute resolution process under the 340B drug discount program, which has been the subject of much scrutiny and disagreement among pharmaceutical manufacturers (who are obligated to cap prices significantly for patients of qualified covered 340B public health entities) and the public health entities whose patients benefit from reduced 340B pricing. The proposed rule was open for comments until January 30, 2023, and would simplify and expedite the process by which covered entities and drug manufacturers resolve disputes about overcharging, duplicate discounts, or drug diversion.
• In its first two advisory opinions of 2023, the OIG approved (1) a pharmaceutical manufacturer’s proposal to offer financial assistance for transportation, lodging, and meals provided to financially needy pediatric patients and caregivers in connection with the manufacturer’s drug treatment (AO 23-01), and (2) a pharmaceutical manufacturer’s program to offer free product for a limited period of time to certain rare disease patients who experience a delay in their insurance approval (AO 23-02).

Medical Device/Medtech

• FDA’s Center for Devices and Radiological Health launched its Payor Communication Task Force to facilitate medical device manufacturer discussions with payors and to potentially shorten the time between FDA approval or clearance and coverage decisions.
• On the horizon (anticipated April 2023): CMS is expected to release new Medicare regulations that would permit earlier coverage of medical technology that has received FDA breakthrough designation. The new program, expected to be called "Transitional Coverage of Emerging Technology,” will address coverage requirements for breakthrough technology and is intended to address the so-called medtech “valley of death.”
• Following: Similarly, a bipartisan bill (H.R. 1691) has been introduced in the US House that would provide for prompt coverage by CMS of devices that receive breakthrough designation.
• Following: A bipartisan bill (S. 723/H.R. 1458) reintroduced the Access to Prescription Digital Therapeutics Act, which would authorize coverage of prescription digital therapeutics by Medicare and Medicaid. This 2023 bill is identical to the language from the bill introduced during the 117th Congress apart from new dates for implementation.

Companies’ interactions with their customers and other stakeholders.

• In March 2023, the DOJ released an updated version of its guidance for evaluation of corporate compliance programs. The updated guidance includes new information for how the DOJ expects companies to compensate executives and employees (namely, using compensation as an incentive for good behavior and as an incentive to prevent inappropriate behavior) as well as guidance on monitoring and compliance expectations about employee use of mobile devices.
• We continue to see an increase in DOJ enforcement of the False Claims Act and Anti-Kickback Statute in laboratory, diagnostic testing, and telehealth spaces.

Companies’ interactions with sensitive patient data.

• We continue to see increasing touchpoints for companies accessing sensitive patient information through integrated data platforms that could more significantly implicate HIPAA, GDPR, and US state privacy and data security laws like the CCPA.