The CARES Act: Provisions for Healthcare and Life Sciences

On March 27, 2020 the President signed the CARES Act package which not only included economic relief but includes a range of other healthcare provisions, funding and regulatory relief for hospitals and other providers and key provisions.

Hospitals/Healthcare

• Hospital and Healthcare Provider Emergency Fund – $100 billion fund for hospitals and healthcare providers for COVID-19 related expenses and lost revenue.
• Medicare Add-On Payment for Hospital Inpatient Payments – Provides for a 20% Diagnosis Related Group (DRG) add-on payment for Medicare inpatient hospital payments for COVID-19 patients.
• Medicare Sequestration Cuts Suspended – Suspends 2% Medicare sequestration cuts beginning May 1, 2020 through December 31, 2020.
• Expand Eligibility for Medicare Advance Payments – Expands program for hospitals(during the emergency period) to access an existing Medicare accelerated payments.
• Delay in Medicaid Disproportionate Share Hospital (DSH) Payment Cuts – Delays pending Medicaid DSH payment reductions until December 1, 2020.

Pharma/Therapeutics/Diagnostics/Medical Supplies

• Vaccine, Therapeutics, Diagnostics, and other Preparedness Needs – $11 billion. Including at least $3.5 billion for manufacturing, and purchase of vaccines and therapeutic.
• Strategic National Stockpile – $16 billion in funding to procure personal protective equipment, ventilators, and other medical supplies for federal and state response efforts. It also clarifies that the Strategic National Stockpile can stockpile medical supplies, such as the swabs necessary for diagnostic testing for COVID-19.
• NIH Funding – Additional $945 million in funding for vaccine, therapeutic, and diagnostic research – this is in addition to earlier funding increases included in previous coronavirus emergency legislation.
• Respiratory devices designated as covered countermeasures – Provides permanent liability protection for manufacturers of personal respiratory protective equipment, such as masks and respirators, in the event of a public health emergency, to incentivize production and distribution.
• Prioritize reviews of drug applications and incentives – Requires FDA to prioritize and expedite the review of drug applications and inspections to prevent or mitigate a drug shortage.
• Additional Reporting Requirements for Drug and Device Manufacturers – Requires drug and device manufacturers to submit information when there is an interruption in supply.
• Establishes a new OTC FDA user fee Program – Allows FDA to hire additional staff members to ensure there is adequate agency oversight to approve changes to OTC drugs.
• OTC Drug Regulations of nonprescription drugs marketed with an approved drug application – Reforms the regulatory process for over-the-counter (OTC) drug monographs by allowing the Food and Drug Administration (FDA) to approve changes OTC drugs administratively, rather than going through a full notice and comment rulemaking. Currently, FDA can approve all other drugs without going through a full notice and comment rulemaking, and this legislation makes sure OTC medicines receive the same treatment as other drugs. Incentivizes companies to create more innovative products by providing an 18-month market-exclusivity component that rewards a return on investment for new OTC drugs. Also, the legislation clarifies that nothing in the bill will apply to drugs previously excluded by the FDA from the Over-the-Counter Drug Review.