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Issue Brief: CARES Act Provisions on Shortages and Readiness

Issue Brief

March 30, 2020


On March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security Act” (CARES Act) was passed. This is the third piece of legislation to address the COVID-19 crisis, with provisions largely centered on shoring up the economy and providing additional support for medical response, including coverage of COVID-19 testing and treatment and additional money for hospitals, health centers, and other providers. Several of ASHP’s key drug shortage recommendations were included in the legislation. Additionally, CARES introduces enhancements to the Strategic National Stockpile (SNS).

Drug Shortages Provisions

CARES includes provisions that specifically address drug shortages by providing FDA with new authorities. Specifically, CARES enacts the following requirements, all of which were drawn in part from ASHP’s drug shortage legislative priorities:

  • Priority Reviews for Shortage Drugs: FDA will now prioritize reviewing applications for generic drugs in shortage, including expediting inspections and reviews for abbreviated new drug applications and supplements. FDA must also submit a yearly report to Congress that includes market-based recommendations for legislative language or regulatory action that encourages:
    • Manufacturing of drugs in shortage;
    • Domestic manufacturing of finished dosage forms; and
    • Domestic manufacturing of active pharmaceutical ingredients (APIs).
  • Mandatory Manufacturer Reporting: Manufacturers now have enhanced mandatory reporting requirements for drug shortages. FDA will receive far more manufacturer details around each shortage, including full disclosure of the precipitating events, likely extent and duration, and expected impact of each shortages.
    • Manufacturers must now report interruptions or disruptions of a drug’s active pharmaceutical ingredient (API) to FDA.
    • Manufacturers must also report whether any associated medical device used to administer the drug is a reason or risk factor for shortage.
  • Manufacturer Risk and Redundancy Plans: Manufacturers must develop risk management and redundancy plans for their supply chains, including undertaking a risk assessment to identify factors that could impact production of finished products or APIs.

CARES also includes an $80 million supplemental appropriation to FDA to support, among other things, advanced manufacturing capacity for medical products, including drugs. ASHP is pleased to see the inclusion of this funding, as it aligns with ASHP’s call to improve and implement advanced manufacturing technology as a means to prevent drug shortages.

New Device Shortage Reporting Requirements

CARES introduces new transparency around shortages of certain medical devices, including mandatory reporting requirements and the creation of a device shortages list. Under the new law, manufacturers who produce a life-supporting, life-sustaining, emergency medical device critical to public health before or during a public health emergency must now report any meaningful supply disruption or discontinuance to the Health & Human Services Secretary. These manufacturer reports will also be made public to interested parties, including providers, to extent possible without disclosing any proprietary information or trade secrets.

Strategic National Stockpile Changes

The Strategic National Stockpile (SNS) houses U.S. emergency supplies. While SNS has always stored medications, CARES requires that SNS include “personal protective equipment, ancillary medical supplies, and other applicable supplies required for the administration of drugs, vaccines, and other biological products, medical devices, and diagnostic tests.” The more prescriptive SNS requirements are designed to prevent a repeat of the challenges to finding PPE and testing supplies that have hampered the COVID-19 response.

Practical Implications and Questions

CARES significantly improves transparency around drug and device shortages, but additional action will be necessary to reach ASHP’s longstanding goal of ending drug shortages. ASHP plans to work with FDA to ensure that the new provisions are implemented in the manner most conducive to the long-term protection of our medical product supply chain. ASHP will regularly update members on agency actions and developments related to all elements of COVID-19 response, including drug shortages.