Category Archives: Health Law

Distribution of Drug Samples During COVID-19: FDA Issues Temporary Policy

In response to the ongoing COVID-19 public health emergency, the United States Food and Drug Administration (FDA) issued a temporary policy related to the distribution of drug samples. Recognizing the unique challenges currently facing manufacturers that distribute drug samples as part of marketing efforts and the healthcare providers requesting those samples for patients, the FDA is temporarily easing certain requirements of the Prescription Drug Marketing Act.

To read the full text of this Duane Morris Alert, please visit the firm website.

Healthcare M&A Corner – COVID-19 and M&A Transactions: Key Considerations and a Beacon of Light

Normally, my posts describe and analyze specific niche aspects of an M&A deal in order to provide what I hope readers deem as helpful advice.  While the material below initially follows the same roadmap, I also wanted to take this unique opportunity during the COVID-19 pandemic to raise a glass to all of the frontline healthcare, grocery, transit, and other workers risking their lives on a daily basis to save ours, as well as those working in the M&A sphere, including my colleagues and clients, and their advisors and representatives (and dare I say even opposing parties and their teams) who have stepped up their game with respect to collegiality.

As mentioned above, the COVID-19 pandemic has upended the world in countless ways, with healthcare M&A transactions of course having not been spared.  Many promising deals have been placed on hold and the ones powering through will now encounter new hurdles to clear before closing.  Here are some quick issues that M&A parties should consider with the current state in mind.

The Deal Itself

  • Should the parties delay or push forward?
    • If delayed, focus on potential extension of various previously set deadlines:
      • Confidentiality
      • Letter of Intent (binding provisions)
      • Due Diligence Periods, Scope, and Access (also applicable below)
    • If moving forward, consider necessary or resultant changes to (either pre-signing or through a post-signing amendment):
      • Financials
        • Company Results; Valuation
        • Purchase Price
        • Working Capital Adjustments
        • Earn-outs
      • Disclosure Schedules
      • Closing Conditions
        • Third-Party Availability re
          • Regulatory Approvals/Permits
          • Consents to Assignment/Change of Control
        • Material Adverse Effect (Change) Definition
        • Representations and Warranties
        • Indemnification Provisions
        • Force Majeure
        • Operations Between Signing and Closing; Ordinary Course of Business Definition
          • Buyer Consents
          • Seller Carve-Outs for Contingency Measures
        • Termination Provisions

Again, I am happy to report that in my experience, the players behind the deal have largely exhibited a much more cordial and empathetic tone during the COVID-19 pandemic, and I have noticed some very encouraging signs recently.  In addition to a generally softer and more understanding or forgiving tenor, the typical greeting or sign off has resembled some variation of the following: “I hope all is well on your end, and you and your family are staying safe and healthy during these challenging times.”  While it is true that this clause is often stated in response to something similar initiated on my end, I have also observed several opening iterations from all of the M&A players.

It is easy to brush these interactions off, but providing professional services and doing business in a high stakes and fast paced industry is stressful enough (especially at this point in time) so when your “adversaries” become a little less so it makes life that much easier; not to mention treating people with respect is the right thing to do, of course.  My hope is that this type of behavior will last beyond the current state of affairs, but only time will tell.  Have you noticed similar changes in the world of M&A?  If so, do you think such conduct will survive beyond the COVID-19 pandemic?

David Kahn practices in the area of healthcare law, concentrating on Mergers and Acquisitions.

Don’t Leave CARES Act Dollars on the Table (or in the Wrong Pocket)

As part of a suite of COVID-19 relief programs, the CARES Act appropriated $100 billion into a Provider Relief Fund meant for “hospitals and other healthcare providers on the front lines of the coronavirus response.” Medicare providers and facilities should have seen funds appear in their accounts between April 10 and April 17 when the first $30 billion of the $50 billion general allocation was distributed. Further, eligible recipients should begin to see funds from the remaining $20 billion of the general allocation as well as additional targeted allocations for hospitals in hot zones or rural areas.

The initial distribution was based on providers’ proportional share of Medicare Fee-For-Service reimbursements in 2019. For the sake of efficiency, these distributions were made based on the Tax Identification Numbers used when submitting bills. This approach, while expeditious, has also resulted in several potentially undesirable consequences. For example, practices or facilities that experienced a change of ownership during 2019 may notice that their distribution excluded the proportional share of reimbursement for the period prior to the change of ownership when the prior owner’s TIN was still in place. In fact, the prior owner may have received those funds attributable to that time period. Additionally, the interests of facilities and group practices may not align with the providers for whom they bill as they face the dilemma of how to appropriately allocate relief funds and whether credit should be given for compensation based on collections. The resolution of these issues will likely hinge on the terms of the contracts that govern these employment relationships.

Hospitals, facilities, providers, and all other affected parties are advised to consult with legal counsel when faced with the nuances of CARES Act funding. Further, as Congress debates additional funding packages, stakeholders should have a plan in place that suits their particular and unique needs. The Health Law Practice Group at Duane Morris is prepared to guide clients through the intricacies of these programs and advise on the most advantageous approach for future relief fund packages. Facilities and providers should contact Neville Bilimoria, Erin Duffy, Kirk Domescik, Ryan Wesley Brown, or your usual contact within the Health Law Practice Group with any questions regarding CARES Act funding.

FDA Takes Steps to Enhance Availability of Safe and Effective Face Masks

Over the past week, the U.S. Food & Drug Administration (FDA) has taken a number of steps to enable manufacturers and distributors of face masks to more efficiently make their products available to the marketplace. FDA has accomplished this by establishing criteria that would allow manufacturers to bypass normally required (and often time-consuming) regulatory review.

To read the full text of this Duane Morris Alert, please visit the firm website.

CARES Act Provider Relief Fund $30 Billion Distribution Announced by HHS

Immediate funds are now available for providers to receive a cash influx at a critical time. The challenge will not be receiving the funds, but rather keeping the funds after a future audit of compliance with the terms and conditions.

On April 10, 2020, the United States Department of Health and Human Services (HHS) announced the immediate distribution of an initial $30 billion in relief funding to providers in support of the nationwide COVID-19 response. The distribution is part of the $100 billion provider relief fund included in the Coronavirus Aid, Relief and Economic Security (CARES) Act recently passed by Congress. Importantly, HHS has noted that these are payments, not loans, to healthcare providers, and will not need to be repaid unless the provider does not comply with the terms and conditions.

To read the full text of this Duane Morris Alert, please visit the firm website.

Expansion of Immunity Protections for Covered Countermeasures and Healthcare Volunteers Under CARES Act

As discussed in our March 18 Alert, the Secretary of Health and Human Services has issued a declaration authorizing drugs, devices and biologics used to treat or mitigate COVID-19 as covered countermeasures under the Public Readiness and Emergency Preparedness (PREP) Act. Following Secretary Azar’s declaration of a public health emergency, covered persons may obtain immunity under federal law for all claims arising from manufacturing, distributing or administering covered countermeasures, subject to the conditions laid out at 42 U.S.C. § 247d-6d, the declaration and other applicable regulations.

Subsequent to our previous Alert, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which expanded the covered countermeasure protections offered by the PREP Act.

To read the full text of this Duane Morris Alert, please visit the firm website.

American Thoracic Society Releases Interim Guidance on Treatment of COVID-19, Including Discussion of Controversial Hydroxychloroquine Therapy

The American Thoracic Society (ATS) on April 3, 2020 published a guidance document providing several suggestions for treatment of COVID-19.  The document, entitled “COVID‐19: Interim Guidance on Management Pending Empirical Evidence,” was developed by an ATS-led international task force and addresses several recently publicized potential treatment regimens.  While the document explicitly does not constitute ATS’s official position on treatment of COVID-19 infections, the authors explain that it is intended to provide “interim guidance for therapeutic interventions to frontline clinicians, based upon scarce direct evidence, indirect evidence, and clinical observations and experiences of clinicians around the world who have battled COVID-19.”  The document’s “suggestions” were developed based on the survey responses of 80 clinicians who have been involved in treatment of COVID-19 around the world.

The guidance document addresses a number of potential therapeutic interventions as well as the circumstances and parameters under which those interventions may or may not be recommended for use.  The authors point toward the need to gather significantly more data on the proposed treatments, but acknowledge that, given the urgent need to find effective treatments for severe COVID-19 infections, providers will likely need to administer unproven treatments before results from clinical trials are available.  To further assist with assessing the efficacy and safety of various treatments, the authors call for the collection of data from patients who receive these interventions outside the context of clinical trials.  Ideally, such data would include detailed information about patient characteristics; the interventions administered; and the outcomes of the attempted treatments, including mortality, ICU length of stay, hospital length of stay, intubation rate, length of mechanical ventilation, need for long‐term oxygen therapy, and adverse events.
Continue reading American Thoracic Society Releases Interim Guidance on Treatment of COVID-19, Including Discussion of Controversial Hydroxychloroquine Therapy

Illinois Executive Order Limits Tort Liability for Health Care Facilities, Providers, and Volunteers

Several states have taken measures to provide immunity from tort liability to health care providers and facilities aiding in the COVID-19 pandemic outbreak. On April 1, 2020, Illinois Governor J.B Pritzker issued an Executive Order in Response to COVID-19 (Executive Order 2020-19). This Order grants certain health care facilities, professionals, and volunteers immunity from civil liability when rendering assistance during the COVID-19 outbreak. As described below, the standards vary depending on whether the action was taken by a state facility or employee versus a private facility or employee or whether acting as a volunteer. Continue reading Illinois Executive Order Limits Tort Liability for Health Care Facilities, Providers, and Volunteers

The CARES Act Amends Federal Law Governing the Confidentiality of Substance Use Disorder Patient Records

The CARES Act (the “Act”), enacted on March 27, 2020, makes notable changes to federal law governing the disclosure of substance use disorder (“SUD”) records.  The Act amends 42 U.S.C. 290dd-2, the governing statute of the regulations at 42 C.F.R. Part 2 (“Part 2”) to better align certain of its confidentiality requirements with HIPAA. The amendments do not change the basic premise that prior written consent of the patient is required for disclosure of SUD treatment records. However, once prior written consent of the patient is obtained, the amendments allow a covered entity, business associate, or Part 2 program to use or disclose SUD records for purposes of treatment, payment, and health care operations as permitted by HIPAA. Any information so disclosed may then be redisclosed in accordance with the HIPAA regulations. The amendments also allow a patient’s prior written consent to be given once for all such future uses or disclosures for purposes of treatment, payment, and health care operations, until the patient revokes his or her consent in writing. Continue reading The CARES Act Amends Federal Law Governing the Confidentiality of Substance Use Disorder Patient Records

HHS Activates DEA Exemption to Allow Remote Prescribing of Controlled Substances

In order to facilitate social distancing measures during the COVID-19 pandemic, state and federal regulatory agencies are moving quickly to permit providers to continue to provide medical care through telemedicine. On March 16, 2020, Alex Azar, the Secretary of Health and Human Services, has declared a public health emergency and, therefore, activated the telemedicine allowance under 21 U.S.C. § 802(54)(D). Per the Secretary, this applies to all schedule II-V controlled substances in all areas of the United States for as long as the public health emergency declaration is in place so long as the following conditions are met: (1) the prescription must be issued for a legitimate medical purpose by a practitioner acting within his or her usual course of professional practice; (2) the telemedicine communication must be carried out using an audio-visual, real-time, two-way interactive communication system, and (3) the practitioner must act in accordance with all applicable state and federal laws.

In Pennsylvania, Act 96 of 2018 provides exceptions to electronic prescription requirements “in an emergency situation pursuant to Federal or State law and regulations of the department.” Each state regulates the prescription of controlled substances differently and will respond to this ongoing emergency in a different way. Although many restrictions have been eased, providers are urged to ensure that they comply with all applicable laws and regulations when prescribing controlled substances.