Keeping pace with the ever-changing life sciences industry, Morrison Foerster stays on top of the trends and political, legal, and economic drivers to support striking the balance between innovative discovery and purposeful business planning to assure our clients continued success. MoFo Life Sciences shares timely legal and business insights and in-depth analyses on trends and the complex technologies at the heart of the global pharmaceutical, biotechnology, diagnostics, medical devices, digital health, and AgTech fields.Learn more about our <a href="https://www.mofo.com/capabilities/life-sciences-healthcare" target="_self">Life Sciences practice</a>.<h2 dir="ltr">ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants. She represents clients ranging from large international pharmaceutical companies to midsized companies, startups, and universities.Meghan has filed numerous Patent Term Extension applications to secure additional term for her clients’ patents, which cover FDA-approved products. In addition, Meghan has extensive experience addressing complex obviousness-double patenting and subject matter eligibility issues impacting her clients’ patent portfolios. Meghan also represents clients in both investor-side and target-side due diligence, in deals from seed funding to initial public offerings.Prior to law school, Meghan attended graduate school at the University of California, Los Angeles, where she received a Ph.D. in biological chemistry based on her work on protein-protein and protein-DNA interactions at a molecular level. Meghan is the author of several scientific publications and has presented her research at international conferences.Meghan received her J.D. from the University of Southern California Law School and spent a year as a visiting student at Santa Clara University, where she focused on intellectual property.

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Morrison Foerster's patent prosecution and patent strategy team is highly qualified with more than 100 advanced degrees and multilingual capabilities.

With 80+ Ph.D.s, more than 100 advanced degrees, and multi-lingual capabilities, including Chinese and German, we offer clients around the world a patent prosecution and counseling practice that is unrivaled in its depth of industry and technical experience.

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Dr. Meghan Poon counsels clients on patent preparation and prosecution, portfolio strategy, and IP due diligence in the areas of biotechnology and biologics. She has significant experience in diverse technologies including antibodies, cell therapies, gene therapies, diagnostics, and gene-edited plants.

Meghan Poon

Wolfgang advises clients on contentious and non-contentious matters involving their most valuable intellectual property assets in life sciences, digital, and high-tech industries.His subjects of focus include research and development collaborations, complex licensing agreements, and other technology transactions, as well as know-how protection strategies, and employee invention law. He also has substantial experience in litigating patents, trademarks, and other intellectual property assets, often in a multijurisdictional context. In addition, Wolfgang and his team frequently clear trademarks and ad campaigns and prosecute trademark applications.Wolfgang is co-editor of our <a href="https://lifesciences.mofo.com/" dir="ltr" target="_blank">MoFo Life Sciences Blog</a>.Wolfgang is a partner of Morrison Foerster based in our German office in Berlin.<h4 dir="ltr">Representative Transactional Matters</h4><ul dir="ltr"><li>U.S.-based BioTech fund on various research collaborations and other transactions with German start-ups or research institutions.</li><li>Negotiate multimillion-euro strategic partnership between two AgTech leaders concerning the development and commercialization of pest-resistant transgenic traits.</li><li>Craft global multi-million collaboration regarding AI-powered robotic MaaS.</li><li>UK-based digital health company on product roll-out of RPM applications in Germany; coordinate international expansion.</li><li>Advise numerous German start-ups on their U.S. expansion.</li><li>Draft diverse global patent and know-how license agreements in the areas of AgTech and life sciences—including gene licensing and licensing of genome editing technologies (e.g., CRISPR)—and medical devices; draft correlating supply and distribution agreements.</li><li>Structure IP rights in connection with joint ventures and other M&A transactions, including the carve-out of a patent-heavy semiconductor business comprising nine jurisdictions into a German–U.S. joint venture.</li><li dir="ltr">Advise on government-funded, multi-partner R&D projects and/or R&D projects with academic institutions, as well as on employee invention law.</li></ul><h4 dir="ltr">Representative Contentious IP Matters</h4><ul dir="ltr"><li>Lead counsel in an international dispute between software companies on rights and obligations following termination of a multi-million licensing and distribution arrangement; coordinate local counsel.</li><li>Defend Japanese chip manufacturer in high-profile SEP-litigation; advise on global settlement arrangement.</li><li>Represent leading internet retailer in patent infringement and concurrent invalidity proceedings in the context of a multijurisdictional dispute concerning touch-screen technology.</li><li>Represent diverse pharmaceutical and life sciences companies in national and cross-border patent infringement proceedings and other technology-related disputes, including preliminary injunctions as well as pre‑trial discovery and inspection proceedings, concerning, inter alia, drug-coating technologies, toner cartridges, medicinal gases, transgenic plants, and vaccines.</li><li dir="ltr">Conduct trademark, copyright, and false advertising litigation, including, most notably, a high-profile trademark litigation for a German bank, and a nine-country cross-border trademark litigation involving a famous pharmaceutical brand.</li></ul>

Dr. Wolfgang Schönig berät Mandanten zum Schutz des geistigen Eigentums sowohl in streitigen als auch nichtstreitigen Angelegenheiten, mit einem besonderen Fokus auf die IP-rechtliche Beratung von Unternehmen aus den Bereichen Life Sciences, Digitalwirtschaft und High-Tech.Zu seinen Beratungsschwerpunkten gehören Forschungs- und Entwicklungskooperationen, komplexe Lizenzvertragsgestaltungen und andereTechnologie-Transaktionen, sowie Know-how-Schutz-Strategien und das Arbeitnehmererfinderrecht. Er verfügt zudem über umfangreiche Prozesserfahrung zur Durchsetzung von Patenten, Marken- und anderen IP-Rechten, häufig auch in einem grenzüberschreitenden Kontext. Darüber hinaus bewertet Dr. Wolfgang Schönig zusammen mit seinem Team regelmäßig die Rechtskonformität von Werbekampagnen, prüft die Verfügbarkeit von Marken und entwickelt entsprechende Anmeldestrategien.Dr. Wolfgang Schönig ist Co-Editor des Life Sciences Blogs von Morrison Foerster.Er hat seinen Doktortitel an der Heinrich-Heine-Universität Düsseldorf und seinen LL.M. an der Fordham School of Law in New York erworben, jeweils mit Schwerpunkt im gewerblichen Rechtsschutz. Seinen MBA-Abschluss erhielt er von der European University in Barcelona.Dr. Wolfgang Schönig ist Partner des deutschen Büros von Morrison Foerster in Berlin.<h4 dir="ltr">Repräsentative Transaktionen</h4><ul><li dir="ltr">BioTech-Fonds mit Sitz in den USA bei verschiedenen Forschungskooperationen und anderen Transaktionen mit deutschen Start-ups oder Forschungseinrichtungen</li><li dir="ltr">Verhandlung einer hochvolumigen strategischen Partnerschaft zwischen zwei Technologieführern im Bereich Crop Science betreffend der Entwicklung und Kommerzialisierung von bestimmten Resistenzen</li><li dir="ltr">Gestaltung einer globalen Multi-Millionen-Zusammenarbeit für KI-gestützte Roboter</li><li dir="ltr">Ein in Großbritannien ansässiges Unternehmen für digitale Gesundheit bei der Markteinführung von RPM-Anwendungen in Deutschland; Koordination der internationalen Expansion</li><li dir="ltr">Beratung zahlreicher deutscher Start-ups bei deren US-Expansion</li><li dir="ltr">Strukturierung und Verhandlung diverser Patent- und Know-How-Lizenzen in den Bereichen Ag Tech und Life Sciences – einschließlich Fragen zu genome editing wie CRISPR-Medizingeräte, sowie Gestaltung von Softwarelizenzverträgen und Erstellung korrespondierender Liefer- und Vertriebsvereinbarungen</li><li dir="ltr">Strukturierung von IP-Rechten im Zusammenhang mit Joint Ventures und anderen M&A-Transaktionen, darunter die Koordination eines neun Länder umfassenden IP Carve-Outs im Rahmen eines Halbleiter-JVs</li><li dir="ltr">Beratung zu staatlich geförderten Multi-Partner F&E-Projekten und/oder F&E-Projekten mit akademischen Einrichtungen sowie zum Arbeitnehmererfindungsrecht</li></ul><h4 dir="ltr">Repräsentative IP-Streitigkeiten</h4><ul><li dir="ltr">Lead Counsel in einem internationalen Rechtsstreit zwischen Softwareunternehmen über Rechte und Pflichten nach Beendigung einer millionenschweren Lizenz- und Vertriebsvereinbarung; Koordinierung der lokalen Anwälte</li><li dir="ltr">Verteidigung eines japanischen Chipherstellers in einem prominenten Streitfall bezüglich Standardessentieller Patente (SEP); Beratung zu einer globalen Vergleichsregelung</li><li dir="ltr">Verteidigung einer führenden Internetplattform gegen Ansprüche eines Patenttrolls wegen vermeintlicher Verletzung von Patent bezüglich Touchscreen-Technologie sowie korrespondierende US-Streitigkeiten</li><li dir="ltr">Vertretung von Pharma- und Life Science-Unternehmen in nationalen und grenzüberschreitenden Patentverletzungsverfahren und anderen technologiebezogenen Streitigkeiten, einschließlich einstweiliger Verfügungsverfahren und vorprozessualer Beweissicherungs- und Besichtigungsverfahren, unter anderem in Bezug auf Arzneimittelbeschichtungstechnologien, Tonerkartuschen, medizinische Gase, transgene Pflanzen und Impfstoffe</li></ul>

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Wolfgang Schönig is a partner of Morrison Foerster (International) LLP based in our German office in Berlin. His practice specialty is advising on IP aspects relative to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. Wolfgang is specialized in research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

Wolfgang Schönig focuses his practice on IP aspects relative to transactions in the digital, telecoms, high tech, life sciences, and pharmaceuticals industry, as well as legal representation in IP disputes.

Wolfgang Schönig advises clients on IP aspects relating to transactions in, among others, the life sciences, AgTech and pharmaceuticals industry, as well as legal representation in IP disputes. His additional focus areas include research and development collaborations, complex licensing agreements, technology acquisitions, know-how protection strategies, and employee invention law.

Wolfgang Schönig

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Data Privacy at the Crossroads of AI and Life Sciences: U.S. and EU Perspectives

Federal Circuit Vacates and Remands in Long-Pending Dispute over CRISPR IP

The Future of Food: Exploring the World of Cell-Cultivated Cuisine (Blog Post)

Patent-Eligibility Considerations & Prosecution Strategies for AI-Based Life Sciences Patent Applications

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ASTM International recently approved a new performance standard that will tell consumers just how much protection their cloth face masks offer. Some face coverings like N-95 respirators and surgical masks must meet certain filtration requirements enforced by government agencies like the U.S. Occupational Safety and Health Administration (OSHA) and the U.S. Food and Drug Administration (FDA). But, until recently, other masks like reusable gaiters and cloth face coverings had no performance standards whatsoever, making it impossible for consumers to judge how protective their masks were or to compare one mask to another.Last month, ASTM International approved the new voluntary standard <a href="https://www.astm.org/Standards/F3502.htm" target="_blank">ASTM F3502-21</a> (F3502) for Barrier Face Coverings. It applies to cloth face masks and gaiters intended for everyday use, not to masks used in a medical setting or for worker protection, which are already regulated. The goal is to provide a baseline performance standard, but masks that do not make the cut can still be sold.Like most product performance standards, F3502 contains design, construction, and labeling requirements. It offers two classification levels based on the mask’s filtration efficiency and breathability. For particulate filtration efficiency, masks can meet the minimum requirements by filtering 20% or more of particles during testing, or the higher level 2 requirements by filtering 50% or more. Two levels are also available based on the masks’ airflow resistance, with a more breathable mask achieving a higher result. Manufacturers must verify their results at a certified test laboratory, and can then claim that their mask “Meets ASTM F3502” requirements and describe the mask’s performance levels.F3502 presents an interesting opportunity for mask manufacturers, which can now sell a high-quality face covering without necessarily meeting the high standards for medical-grade or N-95 masks. Because this is not a federal standard, the masks are not subject to federal agency approval such as FDA’s Emergency Use Authorization process for various medical face masks. Likewise, barrier face coverings do not qualify as medical countermeasures, so manufacturers are not eligible for the Public Readiness and Emergency Preparedness Act’s liability protections.Some masks have already met the F3502 standard and are available for purchase. It remains to be seen how heavily consumers will support the new standard by purchasing certified masks. In a market with no easy way for buyers to know how much protection their masks offer, this new standard may help consumers make more informed choices and encourage manufacturers to make better masks.

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New Face Mask Performance Standard Has Consumers Covered

Virginia Becomes the First State to Adopt COVID-19 Workplace Safety Mandates

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ASTM International recently approved a new performance standard that will tell consumers just how much protection their cloth face masks offer. Some face coveri

New Face Mask Performance Standard Has Consumers Covered

On December 11, 2020, a SARS-CoV-2 (COVID-19) vaccine developed by Pfizer and BioNTech became the first to receive Emergency Use Authorization (EUA) from the U.S. Food and Drug Administration (FDA). Since then, two others (produced by Moderna and Johnson & Johnson) have also been granted EUA.<a target="_blank" href="https://www.fda.gov/media/144412/download">Pfizer</a>’s and <a target="_blank" href="https://www.fda.gov/media/144636/download#:~:text=On%20December%2018%2C%202020%2C%20FDA,Section%20564%20of%20the%20Act.">Moderna</a>’s vaccines have many features in common: both utilize relatively new mRNA technology in a two-dose administration and both claim around 95% efficacy. In contrast, <a target="_blank" href="https://www.fda.gov/media/146303/download">Johnson & Johnson</a> has developed an adenovirus-based vaccine, provided in a single shot, that offers around 66% efficacy. In total, some <a target="_blank" href="https://covid.cdc.gov/covid-data-tracker/#vaccinations">260 million doses</a> of these three vaccines have been administered in the United States since December 2020, and just over one third of the population has been fully vaccinated. Though there is still a long way to go before the United States reaches herd immunity (<a target="_blank" href="https://www.nytimes.com/2021/05/03/health/covid-herd-immunity-vaccine.html">if it ever does</a>), promising <a target="_blank" href="https://www.cdc.gov/coronavirus/2019-ncov/science/science-briefs/fully-vaccinated-people.html">data</a> indicate that fully vaccinated people gain protection against different variants of COVID-19, are more resistant to developing asymptomatic infections, and may be less likely to spread COVID-19 to other people.All U.S. residents over 16 have been eligible to be vaccinated since mid-April 2021, and the Johnson & Johnson shot will likely play a key role in the nationwide rollout: as a highly effective, single-dose vaccine, it is seen as a particularly attractive “one-and-done” candidate for accessing hard-to-reach communities (for example, isolated rural areas and poorer neighborhoods in major cities). However, since the Johnson & Johnson vaccine received authorization in late February 2021, its distribution in the United States has been met with a number of setbacks that have hampered its ability to help accelerate the national immunization effort.In March 2021, up to <a target="_blank" href="https://www.nytimes.com/2021/03/31/us/politics/johnson-johnson-coronavirus-vaccine.html">15 million doses</a> of the Johnson & Johnson vaccine were contaminated by manufacturing mishaps at the Emergent Biosolutions plant in Baltimore, Maryland. Emergent, a multinational biopharmaceutical company, had partnered up with both Johnson & Johnson and AstraZeneca (whose vaccine is not yet authorized in the United States) to manufacture COVID-19 vaccines. It was discovered that workers at the plant had mixed up the two vaccines’ ingredients, meaning millions of doses of the Johnson & Johnson vaccine had to be discarded. According to an FDA <a target="_blank" href="https://www.fda.gov/news-events/press-announcements/fda-continues-important-steps-ensure-quality-safety-and-effectiveness-authorized-covid-19-vaccines">report</a> released on April 21, 2021, Emergent agreed to “pause new production while it works with the FDA to resolve potential quality issues,” meaning there could be significant delays in future shipments of the Johnson & Johnson vaccine from the Maryland production site.By mid-April 2021, more than 6.8 million doses of the Johnson & Johnson vaccine had been administered to the American public. However, following reports of six different cases of a “rare and severe type of blood clot” in recipients of the vaccine, including one fatality, the FDA and the Centers for Disease Control and Prevention (CDC) jointly <a target="_blank" href="https://www.fda.gov/news-events/press-announcements/joint-cdc-and-fda-statement-johnson-johnson-covid-19-vaccine">recommended</a> a pause in the use of the vaccine while they took time to review the available data.It is important to bear in mind that the Johnson & Johnson vaccine (like its Pfizer and Moderna counterparts) has not been approved by the FDA; rather, it has been granted <a target="_blank" href="https://www.fda.gov/vaccines-blood-biologics/vaccines/emergency-use-authorization-vaccines-explained">Emergency Use Authorization</a>. An EUA is “a mechanism to facilitate the availability and use of medical countermeasures, including vaccines, during public health emergencies” when “there are no adequate, approved, and available alternatives.” An EUA can be revoked or terminated at any time if the FDA determines that the need for emergency authorization is no longer met. Following the successful rollout of its vaccine under EUA, Pfizer-BioNTech submitted a <a target="_blank" href="https://www.fda.gov/vaccines-blood-biologics/development-approval-process-cber/biologics-license-applications-bla-process-cber">Biologics License Application</a> (BLA) for full FDA approval of their two-shot regimen on May 7, 2021, which, if granted, could have important implications for vaccine mandates and marketing strategies. Moderna and Johnson & Johnson have not yet initiated BLAs (which require six months of post-immunization safety and efficacy data) for their vaccines.Notably, even in light of the reports of blood clots in a small number of individuals, the FDA did not decide to revoke the Johnson & Johnson vaccine’s EUA—instead, it recommended that states temporarily halt the use of the vaccine while the CDC’s Advisory Committee on Immunization Practices (ACIP) convened to study the reported blood-clot cases. Following a 10-day pause, the ACIP (which is made up of medical and public health experts from across the country) and FDA released a joint <a target="_blank" href="https://www.fda.gov/news-events/press-announcements/fda-and-cdc-lift-recommended-pause-johnson-johnson-janssen-covid-19-vaccine-use-following-thorough">statement</a> on April 23, 2021 recommending that the use of the Johnson & Johnson vaccine be resumed, asserting that the vaccine’s “known and potential benefits outweigh its known and potential risks.” The FDA and ACIP further noted that the Johnson & Johnson <a target="_blank" href="https://www.fda.gov/media/146305/download">Fact Sheet</a> had been updated to explain that there is a very low risk of developing blood clots after receiving the shot, particularly in women under 50.Now that the Johnson & Johnson vaccine is back in play, many hope that it will help meet the Biden administration’s new <a target="_blank" href="https://www.nytimes.com/2021/05/04/us/biden-covid-vaccine-strategy.html">goal</a> of having 70% of American adults receive at least one shot by July 4, 2021. A further boost to the national vaccination effort came on May 10, 2021, when the FDA announced that the Pfizer vaccine EUA had been amended to permit administration to 12- to 15-year-olds.

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Dr. Garreth McCrudden is a member of the Intellectual Property Group and focuses his work on patent prosecution and portfolio management for clients in the chemical and pharmaceutical fields.
Prior to

Garreth W. McCrudden, D.Phil.

Garreth McCrudden

COVID-19 Vaccines: And Then There Were Three (Again)

On December 11, 2020, a SARS-CoV-2 (COVID-19) vaccine developed by Pfizer and BioNTech became the first to receive Emergency Use Authorization (EUA) from the U.

COVID-19 Vaccines: And Then There Were Three (Again)

In February, the Consumer Technology Association (CTA) announced a voluntary standard for healthcare products that use Artificial Intelligence (AI). This standard follows the Food and Drug Administration’s (FDA) recently <a target="_blank" href="https://lifesciences.mofo.com/topics/Progress-and-Concerns-of-FDAs-Plan-for-Regulatory-Oversight-of-Artificial-IntelligenceMachine-Learning-AIML-Based-Software-as-Medical-Devices-SaMDs.html">published action plan</a> for regulatory oversight of AI and machine learning-based medical software. FDA ultimately determines the regulatory process and requirements to legally market AI healthcare products, generally reviewing products to make sure they are safe and effective for the consumer market. FDA has worked to adopt a new regulatory framework for AI/ML software medical devices for years now. But as ANSI/CTA‑2090 suggests, regulatory approval is just one consideration for this novel product category.CTA’s standard focuses on the trustworthiness of healthcare AI products. While this factor is not typically a regulatory requirement, CTA claims that trust is critical to the acceptance and successful implementation of novel AI technologies, especially those in the healthcare setting. The publication represents consumer and manufacturer perspectives on the key features that AI‑based medical software should offer to build trust. The standard focuses on three main trustworthiness areas—Human, Technical, and Regulatory Trust—and outlines baseline features and requirements in each category for products to incorporate.<div class="embedded-entry redactor-component block-entry" type="entry" data-sys-entry-uid="blt7a1791e6beb824d1" data-sys-entry-locale="en-us" data-sys-content-type-uid="image_content" sys-style-type="block"><div data-reactroot=""><img src="https://media2.mofo.com/v3/images/blt5775cc69c999c255/bltf994dfb429a553a5/627317880d4d8e1d7f10f2f6/pic.jpg?format=auto&amp;quality=60" alt="3 Trustworthiness Areas of Healthcare AI Products"></div></div><h4>Human Trust</h4>The Human Trust factors focus on facilitating transparent and smooth human interaction with the product. The standard encourages developers to provide users with clear descriptions of what the AI predicts, its clinical parameters, limitations, and performance parameters. Users should be able to understand what the system is capable of and how it may make mistakes. The product should present information that is contextually relevant and consistent with social norms. Programs should incorporate a fault-tolerant user interface appropriate for the target audience. The standard notes that the degree of human trust required increases as the level of AI autonomy increases, so clear explanations of the AI’s autonomy and human input are required.<h4>Technical Trust</h4>To build trust in the product’s ability to perform as technically expected, developers should understand potential bias in the program’s data set and mitigate it to promote system fairness. Applicable data privacy and security requirements should be followed, in addition to being transparent about what information is collected and why. Data sources and any merging or processing of the data used to train the program should also be disclosed to build trust.<h4>Regulatory Trust</h4>The final component addresses how the product is accepted within the highly regulated health care industry. Various federal and state agencies have oversight of different parts, from medical devices to provider licensure and care standards.Follow our <a target="_blank" href="https://lifesciences.mofo.com/">MoFo Life Sciences blog</a> to stay up to date with the latest developments in healthcare AI/ML policy.

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CTA Publishes New Standard for Healthcare AI

Patenting Artificial Intelligence in the U.S. – Considerations for AI Companies

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In February, the Consumer Technology Association (CTA) announced a voluntary standard for healthcare products that use Artificial Intelligence (AI). This standa

CTA Publishes New Standard for Healthcare AI

The Ninth Circuit recently weighed in on the appeal of a False Claims Act lawsuit from a relator against Medtronic. In this case, the relator alleges that Medtronic, Inc.:(1)  Engaged in “fraud-on-the-FDA” when obtaining clearance for several devices used in spinal fusion surgeries; (2)  Engaged in unlawful marketing of the devices for off-label and contraindicated use; and (3)  Paid illegal kickbacks to physicians to induce physicians to order such devices in violation of the federal Anti-Kickback Statute.The Ninth Circuit reversed the district court, in part, for the fraud-on-the-FDA allegation, and affirmed the district court’s dismissal of the unlawful marketing and kickback allegations. We discuss each of these allegations in turn.With regard to the fraud-on-the-FDA allegation, the relator alleges that Medtronic defrauded the FDA into granting it Class II clearance for the devices. The Ninth Circuit accepted the relator’s grouping of the devices into two categories: (1) “Contraindicated-only Devices,” devices that cannot be used for their intended use in the thoracolumbar spine in their clearance application, but rather can only be used in the cervical area of the spine; and (2) “Extra-use Devices,” devices that could be used for their stated intended use in the thoracolumbar spine, but are used for a contraindicated use in the cervical spine.In its decision, the Ninth Circuit dismissed the relator’s fraud-on-the-FDA allegation with regard to the Extra-use Devices; however, for the Contraindicated-only Devices, the Ninth Circuit reversed the district court, giving credence to the relator’s theory that such devices were not properly cleared by FDA for any use, and that if Medtronic properly disclosed that the devices’ intended use was in the cervical spine, then FDA would have required Class III approval, rather than Class II clearance based on a predicate device. The relator advanced this argument in an attempt to show that the fundamental requirement for Medicare or Medicaid reimbursement of a device—that there be an appropriate FDA clearance or approval in place—had not occurred in this case. We note that Medtronic countered this relator’s allegation by stating that a False Claims Act action is an improper vehicle to bring a fraud-on-the-FDA claim and plans to continue to defend itself against this remaining claim that was not dismissed by the Ninth Circuit.With regard to unlawful marketing claim for contraindicated use, the relator alleges that Medtronic marketed the devices without FDA approval or clearance for use in the cervical spine, which would be an off-label and contraindicated use, and thus a misbranding and adulteration violation of the FDCA. The Ninth Circuit affirmed the district court in dismissing the relator’s claims, more firmly establishing the standard that off-label promotion is not an inherent False Claims Act violation, particularly if the device has appropriate FDA clearance or approval and is “reasonable and necessary” under the CMS rules.In the decision, the Ninth Circuit specifically noted the well-rooted idea that a physician may use a device for an off-label purpose so long as such use is medically necessary and reasonable. The court went on to state: “As long as a doctor finds an off-label use to be medically reasonable and necessary, then the off-label use is permitted, even if the particular use is contraindicated on the label.” The court’s reasoning is in line with the concept that FDA does not regulate or interfere with the practice of medicine. Accordingly, whether a device is used off-label has no bearing on whether a federal healthcare program reimburses for such device; rather, the device must have FDA approval/clearance and be “reasonable and necessary” to be eligible for Medicare coverage, as well as meet any other pertinent regulations.Lastly, with regard to the relator’s allegations of Anti-Kickback violations, the Ninth Circuit dismissed the relator’s claims. The relator alleged that Medtronic paid illegal kickbacks to healthcare providers through the use of improper rebate agreements with hospitals and through paying physicians for food, travel, and promotional costs related to business development events.  The Ninth Circuit affirmed the district court in dismissing these two anti-kickback allegations. First, the Ninth Circuit found that the relator did not identify how the rebate agreement violated the Anti-Kickback statute, particularly in light of the fact that medical device companies may provide rebates if such rebates are properly disclosed and reflected in charges to federal healthcare programs, in accordance with existing safe harbor provisions. Second, the Ninth Circuit found that the relator identified only general allegations related to improper physician remuneration; the relator did not identify any physicians or categories of physicians who received payment in connection with these types of events or connect such physicians or groups of physicians to the purchase or use of the subject devices.This decision, therefore, only leaves open one important claim, the “fraud-on-the-FDA” claim. Our team will be monitoring this issue going forward to better understand how the courts are interpreting this important claim, where private litigants seek to enforce or prosecute issues under the FDCA.

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Ninth Circuit Weighs in on Fraud-on-the-FDA Theory, Marketing Devices for Off-Label Use, and Kickbacks

FDA Clinical Decision Support Software vs. EU’s Medical Device Regulation

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The Ninth Circuit recently weighed in on the appeal of a False Claims Act lawsuit from a relator against Medtronic. In this case, the relator alleges that Medtr

Ninth Circuit Weighs in on Fraud-on-the-FDA Theory, Marketing Devices for Off-Label Use, and Kickbacks

On Friday, March 26, 2021, over 180 attendees worldwide attended McKinsey & Company’s first Global HealthTech CEO Connect of 2021. The discussion focused on regulatory and legal considerations for software as a medical device (SaMD) in both the United States and Europe and specific use cases for digital therapeutics and other digital health products. Speakers included Morrison & Foerster partners Bethany Hills and Wolfgang Schönig as well as special guest Corey McCann, president and CEO of Pear Therapeutics, in a fireside chat at the end of the program. Globally, the convergence of software technology and life sciences creates a massive opportunity for growth, and the market for these products is growing exponentially. Both the U.S. Food and Drug Administration (FDA) and European regulators have focused on establishing a regulatory framework for oversight of SaMD.After key definitions and concept overviews by the McKinsey team, Bethany Hills set the foundation of the FDA’s evolution in regard to SaMD in the United States and provided insights into the specific pathways impacting digital therapeutics. The FDA has not specifically defined SaMD, instead relying in the guidance documents on the definition provided by the International Medical Device Regulators Forum (IMDRF), which define the term as software intended to be used for one or more medical purposes that perform these purposes without being part of a hardware medical device. In essence, the software must act on its own, and have indications or be intended for the diagnosis, treatment, prevention, or monitoring of a condition. Medical devices in the United States are assigned one of three regulatory classes based on the risk and safety and effectiveness of the device. Most SaMD would fall under Class I or II, which then determines the type of submission required for authorization to market, including the 510(k) and De Novo pathways. Most devices are cleared under the 510(k) pathway; however, that trend is changing more recently, with many de novo submissions and authorizations involving SaMD. Areas to keep a close eye on include FDA’s finalization of its Clinical Decision Support Software Guidance, currently in draft form, and the Pre-Certification Pilot Program that could significantly impact SaMD if implemented outside the pilot program, by providing a faster, more efficient pathway to FDA authorization. The FDA does not make reimbursement-related decisions, however, a recent <a target="_blank" href="https://www.federalregister.gov/documents/2021/01/14/2021-00707/medicare-program-medicare-coverage-of-innovative-technology-mcit-and-definition-of-reasonable-and">CMS Final Rule</a> creates the Medicare Coverage of Innovative Technology (MCIT) pathway that will result in four years of national Medicare coverage starting on the date of the FDA’s market authorization of a device holding a Breakthrough Device Designation.  Providing the European perspective, Wolfgang took the stage to discuss the EU’s current regulatory landscape, and reimbursement for Digital Health Apps in Germany. The EU Medical Device Directive (MDD) will soon be replaced, effective May 26, 2021, by the EU Medical Device Regulation (MDR), directly applicable across the EU and significantly stricter for medical device software (MDSW) in three areas: prediction and prognosis applications, impact on the Class I categorization, and enhanced quality and safety requirements. After a review of the MDSW classifications and key changes to the Quality Management Systems, including more stringent requirements for Post-Market Surveillance activities, additional responsibilities along the supply chain, and stricter timeframes for document retention and incident reporting, the discussion turned to Unique Device Identification, which aims to enhance the effectiveness of post-market safety-related activities and traceability. Finally, the discussion focused on the application requirements for low risk apps (Class I or IIa) to receive reimbursement in Germany per the regulation on the Eligibility of Digital Health Applications for Reimbursement by the State Health Schemes (DiGAV), including certain interoperability requirements with the Electronic Patient File system, data protection requirements, and positive healthcare effects to be shown.Below are some highlights from the Q&A:1. Are there exceptions for software developed in a research setting/environment?a. In the United States, a software product can be used in a research and development setting without requiring the FDA’s authorization. However, there are nuances if the research setting involves human subjects.b. In the EU, the MDR generally applies to SaMD that is made available to others, including in a research setting. Yet, one important exception allows for the in-house development and use of SaMD in health institutions with only limited regulation (Article 5(5) MDR). The requirements to fulfill in order to benefit from this exception are rather strict. Most notably, they include that the specific needs for the targeted treatment cannot be met by any equivalent device on the market and that the SaMD is not transferred to another legal entity.2. Is there different regulatory treatment if the use of the medical device is for healthcare providers only vs. patients?a. In the United States, the answer depends on the category of the SaMD. For example,<a href="https://www.fda.gov/media/109618/download" target="_blank"> Clinical Decision Support</a> software has different standards applied for provider users v. patient users.b. The MDR in the EU does not expressly distinguish between groups of end-users; however, some regulatory requirements can make differentiated measures necessary. For example, instructions for use under certain circumstances may be delivered to professionals in electronic form while non-professional users can demand a printed version. Additionally, member states of the EU can decide that the instructions must be delivered in a certain language. In this regard, Germany requires documents to be in German for non-professional users but deems English instructions sufficient for professional users.3. What are some of the reimbursement options for SaMD companies?a. Reimbursement options and pathways seem elusive for SaMD companies, although there does seem to be an evolving path for the category of digital therapeutics.b. In the EU, reimbursement options for SaMD are not harmonized, i.e., each member state has established its own rules on the matter. This means, that the requirements to qualify for reimbursement differ significantly from country to country. Since the COVID-19 pandemic has seriously boosted the acceptance and demand for digital health products, some member states are currently revisiting their frameworks for reimbursement for SaMD. Germany, for instance, has enacted the DiGAV under which certain low risk apps (Class I or IIa) can receive reimbursement (see above and <a href="https://www.bfarm.de/SharedDocs/Downloads/EN/MedicalDevices/DiGA_Guide.pdf;jsessionid=04D2120BC0B889420CDDF02A652FA0D2.2_cid354?__blob=publicationFile&v=2" target="_blank">here</a>).4. What are the implications of GDPR on SaMD regulation in Europe? Among other issues to consider, the GDPR sets up restrictions for transfers of personal data from within the European Union to a country outside the EU. Please note that the meaning of “transfer” is understood quite broadly, and includes situations in which personal data becomes accessible to a third party, even if such third party does not actually access the data. Cross-border data transfers require a so-called transfer mechanism, which can usually be an adequacy decision by the European Commission for a particular country, EU model clauses, or binding corporate rules. Following the judgment of the European Court of Justice in the case “Schrems II,” in which the Court invalidated the EU-U.S. Privacy Shield, transfers to the United States have become particularly onerous to facilitate. Furthermore, EU member states may have introduced additional restrictions for transfers in the context of SaMD. For example, in Germany under the DiGAV, data transfers to the United States or any other non-EU country without an adequacy decision by the EU Commission is generally impossible. However, the German Federal Institute for Drugs and Medical Devices has issued guidance explaining under which circumstances it may be possible to use EU subsidiaries with parent companies in non-EU countries. More information is available <a href="https://www.bfarm.de/SharedDocs/Downloads/EN/MedicalDevices/Data_Processing_outside_of_Germany_FAQ.pdf?__blob=publicationFile&v=3" target="_blank">here</a>. Please note, however, that this topic is hotly debated and far from settled.5. How critical is HIPAA for companies in the U.S. market? HIPAA is a critical set of federal standards for privacy and security of protected health information. However, HIPAA is only one piece of the patchwork of privacy and security laws in the United States spanning federal and state requirements that could be applicable to SaMD.Related posts <a target="_blank" href="https://lifesciences.mofo.com/topics/Progress-and-Concerns-of-FDAs-Plan-for-Regulatory-Oversight-of-Artificial-IntelligenceMachine-Learning-AIML-Based-Software-as-Medical-Devices-SaMDs.html">FDA’s Plan for AI/ML-Based Software as Medical Devices: Progress and Concerns</a><a target="_blank" href="https://lifesciences.mofo.com/topics/FDA-Clinical-Decision-Support-Software-vs-EUs-Medical-Device-Regulation.html">FDA Clinical Decision Support Software Vs. EU’s Medical Device Regulation</a>  MoFo Life Sciences also features a six-part blog series discussing software as a medical device in Europe and the current regulatory landscape in more detail. Catch-up on parts 1-5 below and subscribe to our blog to receive the latest updates. <ul><li><a target="_blank" href="https://lifesciences.mofo.com/topics/Software-as-a-Medical-Device-in-Europe--New-Regulatory-Regime-About-to-Enter-into-Force--Part-1-of-6.html">New regulatory regime about to enter into force</a></li><li><a href="https://lifesciences.mofo.com/topics/Software-as-Medical-Device-in-Eu--New-Reg-Enter-into-Force--Part-2-of-6.html" target="_blank">A more detailed approach to the “intended purpose” </a> </li><li><a href="https://lifesciences.mofo.com/topics/Software-as-Medical-Device-in-Europe-New-Reg-Regime-to-Enter-into-Force-Part-3.html" target="_blank">Risk class re-categorization</a></li><li><a href="https://lifesciences.mofo.com/topics/Software-as-a-Medical-Device-in-Europe--New-Regulatory-Regime-About-to-Enter-into-Force-Part-4-of-6.html" target="_blank">Additional quality assurance and documentation requirements for MDSW</a></li><li><a href="https://lifesciences.mofo.com/topics/Software-as-medical-device-in-Europe--New-Regulatory-Regime-About-To-Enter-Into-Force--Part-5-of-6.html" target="_blank">Introduction of a Unique Device Identification requirement for MDSW</a></li></ul>

Wolfgang advises clients on contentious and non-contentious matters involving their most valuable intellectual property assets in the digital, high-tech, life sciences, and pharmaceutical industries.

Global HealthTech CEO Connect: Software as a Medical Device in the U.S. and EU Recap

On Friday, March 26, 2021, over 180 attendees worldwide attended McKinsey & Company’s first Global HealthTech CEO Connect of 2021. The discussion focused on reg

Global HealthTech CEO Connect: Software as a Medical Device in the U.S. and EU Recap

In follow-up to our colleagues recent <a target="_blank" href="https://lifesciences.mofo.com/topics/Software-as-Medical-Device-in-Europe-New-Reg-Regime-to-Enter-into-Force-Part-3.html">post</a> about the newly implemented Medical Device Regulation (“MDR”) in the European Union, this post will discuss some of the similarities between FDA’s Clinical Decision Support (“CDS”) Software Draft <a target="_blank" href="https://www.fda.gov/media/109618/download">Guidance</a> (together the “CDS Draft Guidance”) and the MDR. While still in draft form, we note that FDA has signaled its intent to finalize the CDS Draft Guidance in 2021.<h4>Statutory Framework</h4>Under the current CDS Draft Guidance, FDA first bases its approach to CDS on criteria set forth in the 21st Century Cures Act (the “Cures Act”). Excluded from the definition of a “device” under the Cures Act are software functions that met all four of the following criteria:(1) not intended to acquire, process, or analyze a medical image or a signal from an in vitro diagnostic device or a pattern signal from a signal acquisition system;(2) intended for the purpose of displaying, analyzing, or printing medical information about a patient or other medical information (such as peer-reviewed clinical studies and clinical practice guidelines);(3) not intended for the purpose of supporting or providing recommendations to a health care professional about prevention, diagnosis, or treatment of a disease or condition; and(4) intended for the purpose of enabling such health care professional to independently review the basis for such recommendations that such software presents so that it is not the intent that such health care professional rely primarily on any of such recommendations to make a clinical diagnosis or treatment decision regarding an individual patient.Notably, these criteria do not include software functions intended for a patient or caregiver; rather, these criteria apply only to those software functions for “health care professionals.” Accordingly, software device manufacturers must analyze all software functions utilized by patients and caregivers carefully using the CDS Draft Guidance to determine whether FDA will either exercise its oversight focus, requiring the software to receive FDA approval as a device, or its enforcement discretion.  <h4>IMDRF Framework</h4>FDA’s CDS Draft Guidance also relies on the International Medical Device Regulators Forum (“IMDRF”) Framework for Software as a Medical Device (“SaMD”) in approaching its interpretation of the criteria from the statue that would exclude a software from the definition of a medical device. The MDR also utilized this IMDRF framework for SaMD. IMDRF focuses on two factors, which are critical to the analysis of SaMD: (1) whether the user uses the information provided by a SaMD to treat or diagnose, to drive clinical management, or to inform clinical management; and (2) whether the patient’s healthcare situation or condition is critical, serious, or non-serious.The CDS Draft Guidance utilizes the IMDRF framework, and includes a variation of the classification used under Rule 11 by the European Commission’s <a href="https://ec.europa.eu/docsroom/documents/37581" target="_blank">Guidance on Qualification and Classification of Software in Regulation (EU) 2017/745-MDR and Regulation (EU) 2017/746-IVDR</a>, to similarly categorize different types of SaMD.<table border="1" cellspacing="0" cellpadding="0"><tbody><tr><td width="156" rowspan="2" style="width: undefined%; height: auto;">State of healthcare situation or condition</td><td width="468" colspan="3" style="width: undefined%; height: auto;">Significance of information provided by SaMD tohealthcare decision</td></tr><tr><td width="156" style="width: undefined%; height: auto;">Treat ordiagnose</td><td width="156" style="width: undefined%; height: auto;">Drive clinical management</td><td width="156" style="width: undefined%; height: auto;">Inform clinicalmanagement</td></tr><tr><td width="156" valign="top" style="width: undefined%; height: auto;">Critical</td><td width="156" valign="top" style="width: undefined%; height: auto;">IV</td><td width="156" valign="top" style="width: undefined%; height: auto;">III</td><td width="156" valign="top" style="width: undefined%; height: auto;">II</td></tr><tr><td width="156" valign="top" style="width: undefined%; height: auto;">Serious</td><td width="156" valign="top" style="width: undefined%; height: auto;">III</td><td width="156" valign="top" style="width: undefined%; height: auto;">II</td><td width="156" valign="top" style="width: undefined%; height: auto;">I</td></tr><tr><td width="156" valign="top" style="width: undefined%; height: auto;">Non-serious</td><td width="156" valign="top" style="width: undefined%; height: auto;">II</td><td width="156" valign="top" style="width: undefined%; height: auto;">I</td><td width="156" valign="top" style="width: undefined%; height: auto;">I</td></tr></tbody></table> FDA uses the risk-categorizations described above to apply a risk-based policy to its regulation of Device CDS functions.<h4>Other Components of the CDS Draft Guidance</h4>In addition to the above framework from IMDRF, the CDS Draft Guidance also focuses on whether the intended user is a healthcare provider or a patient or caregiver and whether the user can independently review the basis for the recommendation from the software.  This focus on user-type and independent review, rooted in the Cures Act language, is a departure from the IMDRF (and the MDR’s) framework, which focuses more upon the intended use of the software and the medical conditions the software covers. As you can see in the table below, FDA has a demonstrated interest in those software functions where the intended user is a patient or caregiver, particularly when the device is informing clinical management for serious or critical healthcare situations or conditions. Similarly, when the intended user is a healthcare provider, FDA does not consider the software to be a device so long as the healthcare provider can independently review the basis for the recommendation.Combining the IMDRF Framework with FDA’s focus on the user-type and whether the user can independently review the basis for the recommendation, results in the following table:<table border="1" cellspacing="0" cellpadding="0"><tbody><tr><td width="249" colspan="2" valign="top" style="width: undefined%; height: auto;"> </td><td width="125" valign="top" style="width: undefined%; height: auto;">Intended User is HCP</td><td width="234" valign="top" style="width: undefined%; height: auto;">Intended User is Patient or Caregiver</td></tr><tr><td width="125" valign="top" style="width: undefined%; height: auto;">IMDRF Risk Categorization</td><td width="125" valign="top" style="width: undefined%; height: auto;">Can the User Independently Review the Basis?</td><td width="125" valign="top" style="width: undefined%; height: auto;">FDA Regulation</td><td width="234" valign="top" style="width: undefined%; height: auto;">FDA Regulation</td></tr><tr><td width="125" rowspan="2" valign="top" style="width: undefined%; height: auto;">InformxCritical</td><td width="125" style="width: undefined%; height: auto;">Yes</td><td width="125" style="width: undefined%; height: auto;">Not a Device</td><td width="234" style="width: undefined%; height: auto;">Oversight Focus</td></tr><tr><td width="125" style="width: undefined%; height: auto;">No</td><td width="125" style="width: undefined%; height: auto;">Oversight Focus</td><td width="234" style="width: undefined%; height: auto;">Oversight Focus</td></tr><tr><td width="125" rowspan="2" valign="top" style="width: undefined%; height: auto;">InformxSerious</td><td width="125" style="width: undefined%; height: auto;">Yes</td><td width="125" style="width: undefined%; height: auto;">Not a Device</td><td width="234" style="width: undefined%; height: auto;">Oversight Focus</td></tr><tr><td width="125" style="width: undefined%; height: auto;">No</td><td width="125" style="width: undefined%; height: auto;">Oversight Focus</td><td width="234" style="width: undefined%; height: auto;">Oversight Focus</td></tr><tr><td width="125" rowspan="2" valign="top" style="width: undefined%; height: auto;">InformxNon-Serious</td><td width="125" style="width: undefined%; height: auto;">Yes</td><td width="125" style="width: undefined%; height: auto;">Not a Device</td><td width="234" style="width: undefined%; height: auto;">Enforcement Discretion</td></tr><tr><td width="125" style="width: undefined%; height: auto;">No</td><td width="125" style="width: undefined%; height: auto;">Enforcement Discretion</td><td width="234" style="width: undefined%; height: auto;">Oversight Focus</td></tr></tbody></table> <h4>Examples</h4>The CDS Draft Guidance provides a number of examples where FDA works through its framework. These examples walk through the IMDRF framework while considering the intended user and whether the user can independently review the recommendation from the SaMD.Non-Device CDSFDA considers the following software to not be a device: software that compares patient signs, symptoms, or results with available practice guidelines (institutions-based or academic/clinical society-based) to recommend condition-specific diagnostic tests, investigations, or therapy to healthcare providers. In this example, the software uses practice guidelines as the basis for the recommendation and provides such guidelines to the healthcare provider to review, such that the health care provider does not rely primarily on the software’s recommendation.Enforcement DiscretionFDA plans to utilize its enforcement discretion on software that assist a patient in identifying an over-the-counter cold or allergy medication to consider purchasing based on symptoms. In this example, the software would include appropriate warnings about products with overlapping ingredients. This software is device CDS because it is intended for a patient; however, FDA does not intend to enforce compliance because the software is intended to provide options to patients for the treatment of a non-serious situation or condition and because the patient can independently review the basis for the software’s recommendations.Oversight FocusFDA plans to focus its regulatory oversight on device CDS functions intended for patients, where the software is informing clinical management of serious or critical conditions. For example, FDA intends to regulate the following as device CDS: a software function that recommends when the parent or caregiver of pediatric patients with cystic fibrosis should take a child to the emergency room by aggregating information based on patient-specific symptoms and care guidelines. This software is device CDS because a caregiver uses the software and the software informs clinical management for a critical situation or condition, particularly because of the fragility of the target population.   <h4>Conclusion</h4>Recognizing that companies with global offerings face a complexity of issues, companies should seek to leverage similarities amongst the regulatory classification of SaMD and CDS. However, companies should simultaneously be acutely attuned to the critical differences in how those frameworks are applied by the applicable regulatory bodies. There is a need for attention to these issues, particularly with the upcoming finalization of the CDS guidance in FY2021 by FDA and the MDR coming into effect on May 26, 2021.

FDA Clinical Decision Support Software vs. EU’s Medical Device Regulation

In follow-up to our colleagues recent post about the newly implemented Medical Device Regulation (“MDR”) in the European Union, this post will discuss some of t

During the COVID-19 pandemic, governments across the globe have become increasingly involved in the private sector.[1] State-owned enterprises have long been common in Asia, but the pandemic has increased their prominence in Europe. In Italy and Norway, for instance, governments are taking equity stakes in the airline industry to help distressed companies. Now, with vaccine manufacturing ramping up, it makes sense that governments would intervene in the life sciences and pharmaceutical sectors as well. In our article published earlier this month on, we analyzed the <a target="_blank" href="https://lifesciences.mofo.com/topics/COVID-19-State-Intervention-in-Times-of-Vaccine-Shortages.html">legal framework for state intervention in vaccine production in Germany</a>. Since then, the German government has <a target="_blank" href="https://www.reuters.com/article/health-coronavirus-vaccine-supply-insigh/as-vaccine-nationalism-deepens-governments-pay-to-bring-production-home-idUSKBN2B40IX">increased its support </a>for local vaccine production. But what is happening across the pond in the United States?Here, too, the federal government has intervened to ramp up the vaccine supply. On March 2, 2021, President Biden announced an historic partnership between Johnson & Johnson (J&J) and Merck to increase production of J&J’s COVID-19 vaccine. While this partnership between two pharmaceutical behemoths is significant in its own right, it also made headlines for the role government played in brokering the deal. The Biden administration agreed to pay $268.8 million to upgrade two Merck production facilities and is helping Merck procure necessary equipment. Of course, this was not the first time during the Coronavirus crisis that the federal government has intervened to shape the private sector’s pandemic response.[2] Nevertheless, it is notable that President Biden is engaging the private sector at this scale and so soon into his presidency. The Biden administration’s early approach to state intervention during the COVID-19 pandemic may portend even greater involvement down the road, which would present both opportunities and risks for life sciences companies doing business in the U.S.<h4>The Statutory Framework</h4>Over 90 percent of constitutions in the world contain emergency clauses, but not the U.S. Constitution.[3] Instead, the federal government’s authority to intervene in a pandemic comes from a patchwork of statutes and regulations. At the center of this constellation is the Defense Production Act, 50 U.S.C. § 501 et seq. (DPA). The origins of the DPA trace back to the War Powers Act of 1941 and 1942, passed during WW2 to give President Roosevelt more control over the wartime economy. Congress enacted the DPA in 1950 during the Korean War and has re-authorized it ever since then—most recently in the John S. McCain National Defense Authorization Act of 2019. In short, the modern DPA authorizes the executive branch to mobilize private actors and allocate resources during moments of national crisis. The president can compel companies to prioritize orders from the government, allocate materials/resources, offer loans or loan guarantees, make purchase commitments, and authorize companies to work together. Historically, the federal government has used the DPA to procure defense contracts and respond to natural disasters. For more information about the DPA, see MoFo’s articles providing a <a target="_blank" href="https://govcon.mofo.com/coronavirus/a-summary-of-the-defense-production-act/">summary of the Defense Production Act</a> and <a target="_blank" href="https://govcon.mofo.com/coronavirus/the-defense-production-act-a-little-known-statute-that-may-soon-be-running-your-company/">three key takeaways about the DPA</a>. In addition to the DPA, the executive branch derives authority to respond to public health emergencies from several other sources. First, the National Emergencies Act, 50 U.S.C. § 1601 et seq., allows the president to declare national emergencies, which essentially unlock statutory powers that the executive branch cannot otherwise access. President Trump declared the COVID-19 pandemic a national emergency on March 13, 2020. Second, the Stafford Act, 42 U.S.C. § 5521 et seq., organizes federal emergency assistance with respect to state and local governments. Third, the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013, 42 U.S.C. ch. 6A § 201 et seq., allows the Food & Drug Administration (FDA) to prepare and stockpile medical countermeasures (drugs, vaccines, and devices), and streamlines the FDA’s emergency responsiveness. Fourth and most recently, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) gives the FDA a greater role in drug/vaccine supply chains. This is not an exhaustive list of emergency legislation. But when it comes to intervening in private contracting to boost vaccine production, the DPA is the most significant legislation.<h4>The Biden Administration’s Response to COVID-19</h4>On his very first day in office, President Biden passed Executive Order 13987. E.O. 13987 established the position of Coordinator of the COVID-19 Response (currently Jeffrey Zients) and organized that office in the White House. Among other responsibilities, President Biden charged the COVID-19 Response Coordinator with coordinating the government’s efforts to produce and distribute personal protective equipment, vaccines, and tests, “including through the use of the Defense Production Act[.]”[4] President Trump depended somewhat on the DPA for his early COVID-19 response, but critics, including then-candidate Biden, argued that he did not fully take advantage of the <a target="_blank" href="https://www.nytimes.com/2020/09/22/health/Covid-Trump-Defense-Production-Act.html">Act to manage the medical equipment supply chain</a>. Thus, President Biden’s early focus on the DPA signaled a shift from the prior administration.The next day, on January 21, 2021, President Biden signed Executive Order 14001, ordering the secretary of state, secretary of defense, secretary of health and human services, secretary of homeland security, and the heads of relevant agencies to review the inventory of critical pandemic response supplies and fill any shortfalls. In particular, section 2 of the E.O. directs executive officers to “take appropriate action using all available legal authorities, including the Defense Production Act, to fill those shortfalls as soon as practicable by acquiring additional stockpiles, improving distribution systems, building market capacity, or expanding the industrial base.”[5] Section 3 lays out steps to address the pricing of pandemic supplies. Section 4 seeks to develop “a strategy to design, build, and sustain a long-term capability in the United States to manufacture supplies for future pandemics and biological threats.” Section 5 provides that the federal government will communicate with Tribal governments to ensure access to the Strategic National Stockpile.The Biden administration <a target="_blank" href="https://www.politico.com/news/2021/02/05/biden-defense-production-act-coronavirus-466130">announced its first significant anti-COVID-19 measures</a> on February 5, 2021. Specifically, it announced plans to sign DPA contracts with six diagnostic companies to make at-home and point-of-care testing more widely available. It also announced that it would use the DPA to give Pfizer priority access to certain materials that are essential in vaccine manufacturing. At that time, the FDA had only approved the Pfizer and Moderna vaccines, while the J&J single-shot vaccine was still under review. The White House expected J&J to get FDA approval, but <a target="_blank" href="https://www.politico.com/news/2021/02/05/biden-defense-production-act-coronavirus-466130">under-produce in terms of quantity</a>. Of course, the Biden administration later addressed that shortfall when it facilitated the J&J-Merck partnership.<h4>Opportunities for Collaboration Among Private Actors</h4>Given President Biden’s early reliance on the DPA within the first 60 days of his presidency, it is likely that the federal government will continue to intervene in private contracting. This is exciting for life sciences companies because government purchase orders and loan guarantees can provide businesses with reliable revenue streams. Moreover, the DPA may create unique opportunities for businesses to collaborate that might not otherwise be possible. Most notably, Section 708 of the DPA provides for voluntary agreements among private parties to meet national defense requirements or needs. Section 708(j) creates a limited defense to antitrust enforcement if anticompetitive behavior was done “in the course of developing a voluntary agreement initiated by the President or a plan of action adopted under any such agreement [or] to carry out a voluntary agreement initiated by the President and approved in accordance with this section[.]” In other words, collaboration between competitors, such as J&J and Merck, does not risk antitrust enforcement when it has the president’s seal of approval. And while subsection (j) requires the president to initiate voluntary agreements, there is little antitrust risk if entities pitch these agreements to the White House. Thus, the DPA may create new opportunities for businesses during COVID-19.Yet would-be collaborators should still be wary of antitrust risks. In April 2020, MoFo antitrust lawyers published an <a target="_blank" href="https://www.corporatecomplianceinsights.com/collaboration-pricing-covid-19/">article highlighting several antitrust risks</a> specific to the COVID-19 pandemic. They warned that the Department of Justice and Federal Trade Commission will still go after anticompetitive behavior, especially behavior that seeks to take advantage of the ongoing pandemic such as price gouging, price fixing, and stockpiling/hoarding resources. The article also highlighted possible consumer protection issues related to COVID-19. For instance, consumer protection laws in many states also proscribe price gouging. And although the DPA provides a <a target="_blank" href="https://fas.org/sgp/crs/natsec/LSB10534.pdf">limited defense with respect to antitrust enforcement</a>, it is not clear that subsection (j) applies to consumer protection laws as well. Ultimately, businesses hoping to collaborate with pandemic responsiveness/vaccine production should be cautious and seek counsel.<h4>The Outlook for Late 2021 and Beyond</h4>President Biden’s intervention to ramp up vaccine production has been an unqualified success. Entering office, his goal was to provide 100 million vaccinations within his first 100 days. After reaching that target on day 59, President Biden announced a bold, new goal: 200 million vaccinations within the first 100 days. Given that there are 260 million adults living in the U.S., that is good news; experts predict that approximately <a target="_blank" href="https://www.nytimes.com/live/2021/03/25/world/covid-vaccine-coronavirus-cases">80 percent of the population, or 208 million, must be vaccinated to achieve herd immunity</a>. Altogether, the Biden administration hopes to make vaccines available to <a target="_blank" href="https://www.nytimes.com/2021/03/02/us/politics/merck-johnson-johnson-vaccine.html">every adult in the United States by May 1</a>.Yet that will not mark the end of vaccine production in the United States. First, as new variants of the coronavirus emerge over the summer, vaccinated individuals may require <a target="_blank" href="https://www.npr.org/sections/health-shots/2021/02/25/971345409/covid-19-vaccine-makers-booster-shots-aim-at-a-moving-target-coronavirus-variant.">booster shots</a> to keep up their immunity. Fortunately, Pfizer and Moderna have already started preparing to bring variant-specific third doses to clinical trial. Second, the FDA is likely to approve COVID-19 vaccines for children at some point in the future. To date, the FDA has only approved vaccines for adults. Just last week, however, Pfizer announced a <a target="_blank" href="https://www.cnbc.com/2021/03/25/covid-vaccine-pfizer-begins-trial-on-infants-and-young-kids.html">clinical trial for its COVID-19 vaccine involving healthy 6-month-old to 11-year-old children</a>. With over 70 million children living in the U.S., it is likely that demand for the COVID-19 vaccines will remain high through the end of 2021. Third, the U.S. will remain involved in vaccine production even after reaching domestic herd immunity. Soon after entering office, President Biden entered <a target="_blank" href="https://www.bbc.com/news/world-55795297">Covax</a>, a partnership with the World Health Organization to deliver COVID-19 vaccines to the developing world. Low- to middle-income countries lag behind wealthy nations in terms of vaccine procurement, and current models estimate that there will not be enough vaccines for the global population until 2023–24.What exactly does all of this mean for life sciences companies doing business in the United States? It means that, although there appears to be a light at the end of the COVID-19 tunnel, the pandemic will continue to unfold both domestically and abroad well into the future. Correspondingly, private-public partnerships and state interventions into vaccine production should persist into the future as well. Businesses that are currently fighting COVID-19 should brace themselves to continue long-term. And businesses that have not been involved with the pandemic response thus far may yet find opportunities to contribute going forward.<h4>Short-Term Authority and Long-Term Preparedness</h4>Looking beyond COVID-19 vaccine production and rollout, the DPA will also play a prominent role in general pandemic preparedness going forward. Again, E.O. 14001 sought to increase vaccine production capacity for future pandemics. On the surface, it may seem odd that the president could wield emergency powers to achieve long-term objectives. Yet the DPA actually contemplates such prophylactic measures; in fact, preparedness is one of the primary objectives of the policy.[6] Of course, life sciences companies may not be able to produce vaccines in anticipation the next deadly virus outbreak, but they can begin to replenish the national stockpile of personal protective equipment and medical devices, such as ventilators. Already, President Biden has used <a target="_blank" href="https://www.wsj.com/articles/biden-to-address-chip-shortages-supply-chain-problems-with-executive-action-11614160803">executive authority to bolster supply chains</a> for critical pharmaceutical materials. Look out for similar measures in the future.Over one year into COVID-19, even with vaccines rolling out across the country, there is still a long way to go in responding to this pandemic and preparing for the next one. And while the Biden administration is still in its infancy, it is already clear that the White House will take a hands-on approach in public health and emergency preparedness—before, during, and after crises. Healthcare and life sciences companies should prepare for—and look forward to—that new reality.[1] OECD Policy Responses to Coronavirus (COVID-19)The COVID-19 crisis and state ownership in the economy: Issues and policy considerations. The Wall Street Journal: <a target="_blank" href="https://www.wsj.com/articles/western-economies-embrace-state-intervention-emulating-asia-11604574001">Western Economies Embrace State Intervention, Emulating Asia</a>.[2] <a target="_blank" href="https://www.lawfareblog.com/understanding-trumps-invocation-defense-production-act-meat">Understanding Trump’s Invocation of the Defense Production Act for Meat</a>.[3] Harvard Law Review: States of Emergencies Part I. Oxford Academic: <a target="_blank" href="https://academic.oup.com/icon/article/16/1/101/4995561?login=true">The architecture of emergency constitutions</a>.[4] Federal Register: <a target="_blank" href="https://www.federalregister.gov/documents/2021/01/25/2021-01759/organizing-and-mobilizing-the-united-states-government-to-provide-a-unified-and-effective-response">Organizing and Mobilizing the United States Government To Provide a Unified and Effective Response To Combat COVID-19 and To Provide United States Leadership on Global Health and Security</a>.[5] Federal Register: <a target="_blank" href="https://www.federalregister.gov/documents/2021/01/26/2021-01865/a-sustainable-public-health-supply-chain">A Sustainable Public Health Supply Chain</a>.[6] The Stafford Act defines “emergency preparedness” to include “[m]easures to be undertaken in preparation for anticipated hazards[.]” 42 U.S.C. § 5195a(3)(A).

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Brigid is a food, drug, and medical device lawyer who counsels life sciences companies on a wide range of U.S. Food & Drug Administration pre- and post-market regulatory issues.

Brigid DeCoursey Bondoc

Brigid is a food, drug, and medical device lawyer who counsels life sciences companies on a wide range of U.S. Food & Drug Administration pre- and post-market regulatory issues.

Brigid Bondoc

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Vaccine Production and State Intervention in the U.S.

Using Waivers to Curb COVID-19 Legal Exposure

During the COVID-19 pandemic, governments across the globe have become increasingly involved in the private sector.[1] State-owned enterprises have long been co

Vaccine Production and State Intervention in the U.S.

U.S. Food and Drug Administration (FDA) has acknowledged the prevalence of Artificial Intelligence/Machine Learning (AI/ML)-Based Software as Medical Devices (SaMDs) and has been taking steps towards advancing its regulatory oversight. The FDA recently published an AI/ML SaMD action plan, developed in direct response to stakeholder feedback. It is now one month later, and the FDA has yet to implement any steps outlined in its action plan, all the while approving more and more AI products. This post discusses the progress the FDA has made thus far for regulating AI/ML-based SaMDs and the concerns that remain.<h4>FDA’s Progress for Regulatory Oversight</h4>Artificial intelligence is growing rapidly in the field of healthcare. The <a target="_blank" href="https://www.fda.gov/medical-devices/software-medical-device-samd/artificial-intelligence-and-machine-learning-software-medical-device">FDA has acknowledged</a> its importance and the impact it has on health care, but has not been able to keep up with manufacturers. In April 2019, the FDA published “<a target="_blank" href="https://www.fda.gov/files/medical%20devices/published/US-FDA-Artificial-Intelligence-and-Machine-Learning-Discussion-Paper.pdf">Proposed Regulatory Framework for Modifications to Artificial Intelligence/Machine Learning (AI/ML)-Based Software as a Medical Device (SaMD) – Discussion Paper and Request for Feedback</a>,” describing for the first time, clearly, the FDA’s potential approach to premarket review of AI/ML SaMDs. The potential approach involved a “Predetermined Change Control Plan” for premarket submissions including “SaMD Pre‑Specifications” (SPS) and an “Algorithm Change Protocol” (ACP) to account for the iterative nature of AI/ML-based SaMDs.In February 2020, the FDA announced a marketing authorization via the De Novo pathway for the <a target="_blank" href="https://www.fda.gov/news-events/press-announcements/fda-authorizes-marketing-first-cardiac-ultrasound-software-uses-artificial-intelligence-guide-user">first cardiac ultrasonic software that uses AI to guide users</a>. The manufacturer used a Predetermined Change Control Plan in its application to obtain authorization.In the same month, the FDA held a public workshop on the “Evolving Role of Artificial Intelligence in Radiological Imaging.” The FDA and the public stakeholders discussed best practices for validation of AI‑automated radiological imaging software and image acquisition devices.In September 2020, FDA launched the <a target="_blank" href="https://www.fda.gov/news-events/press-announcements/fda-launches-digital-health-center-excellence">Digital Health Center of Excellence</a> within the Center for Devices and Radiological Health. According to the FDA, the focus of the Digital Health Center of Excellence is “helping both internal and external stakeholders achieve their goals of getting high quality digital health technologies to patients by providing technological advice, coordinating and supporting work being done across the FDA, advancing best practices, and reimaging digital health device oversight.”In January 2021, the FDA published “<a target="_blank" href="https://www.fda.gov/news-events/press-announcements/fda-releases-artificial-intelligencemachine-learning-action-plan">Artificial Intelligence/Machine Learning (AI/ML)‑Based Software as a Medical Device (SaMD) Action Plan</a>,” outlining the FDA’s plans for progressing its regulatory oversight. The Action Plan identified five areas for the FDA focus: <ol><li>Tailored regulatory framework for AI/ML-based SaMDs; </li><li>Good machine learning practices (GMLPs); </li><li>Patient-centered approach incorporating transparency to users; </li><li>Regulatory science methods related to algorithm bias and robustness; and </li><li>Real-world performance (RWP).  </li></ol>The FDA stated that it will update its regulatory framework and publish a draft guidance in 2021, actively engage in efforts to harmonize GMLPs, hold public workshops on device labeling for transparency to users, develop methodology for evaluating and improving machine learning algorithms (including identifying and eliminating bias), and develop a framework for gathering and validating RWP. Although the AI/ML Action Plan is recent, the FDA has not yet taken any steps to implement any of these focus areas for policy development or clarification.<h4>The FDA’s Approval of AI/ML-Based SaMDs</h4>Since 2012, the FDA has approved over 160 medical AI/ML-based SaMDs, the majority being in 2019 and 2020. Some <a target="_blank" href="https://www.statnews.com/2021/02/03/fda-artificial-intelligence-clearance-products/">reports</a> have found, upon investigation, that the requirements the FDA has imposed on device submission have been inconsistent. For example, some submission sponsors disclosed the amount of patient data used to validate the performance of their devices while others did not. And, according to one investigative <a target="_blank" href="https://www.statnews.com/2021/02/03/fda-clearances-artificial-intelligence-data/">report</a>, when disclosed, the amount of data varied widely from 100 patients on one end of the spectrum to 15,000 patients on the other end. Only a handful of manufacturers reported racial makeup of the study populations and a few provided gender breakdown. This creates uncertainty as to how effective the AI/ML-based SaMDs will perform with respect to algorithmic bias. Additionally, the FDA has not made training and testing data for these approved AI/ML-based SaMDs publicly available, potentially creating a lack of trust in these technologies or, at the very least, making it difficult for purchasers of the SaMDs to make informed decisions based on similar evidence criteria. However, perhaps most importantly, the FDA has yet to figure out how to handle real-world leaning and adaptation within the regulatory framework. Although the FDA clearly aims for increased regulation and monitoring of AI/ML-based SaMDs, it has not provided a specific plan for any of the five focus areas identified in its AI/ML Action Plan. The FDA may need to act much quicker in developing consistent standards as the number of AI/ML-based SaMDs submissions to the FDA continue to increase (from two products in 2012 to 70 products in 2019). The FDA should address stakeholder concerns of data and approval process inconsistencies, lack of well-established standards, transparency, labeling challenges, trustworthiness, algorithmic biases, and RWP. ConclusionThe FDA is slowly taking steps towards its commitment to develop a regulatory framework for AI/ML-based SaMDs. For now, the FDA has not yet provided any consistent standards. Without such widely-applicable guidance, manufacturers should expect a longer application timeline and extensive discussions with the FDA—in effect creating a customized plan for data and evidence generation for each and every AI/ML SaMD. It is unpredictable at this stage what the FDA will require and ask for in these negotiations, although to some extent prior submissions and authorizations serve as a baseline for consideration. As artificial intelligence and machine learning technologies are increasing in availability and applicability, organizations and device sponsors will continue to build their own databases and define their own standards, which the FDA may be strategically waiting for.