News
November 2, 2020

FDA Issues List of Essential Medicines, Medical Countermeasures, and Critical Inputs Under President Trump's "Buy American" Executive Order

Advisory

On October 30, 2020, the Food and Drug Administration (FDA) issued the List of Essential Medicines, Medical Countermeasures, and Critical Inputs Required by Executive Order (List). The publication of the List is an important step in the implementation of President Trump's August 6, 2020 Executive Order on Ensuring Essential Medicines, Medical Countermeasures, and Critical Inputs Are Made in the United States (Executive Order), which directed agencies to take steps to increase domestic manufacturing and reduce dependence on foreign supplies of some important medical products and their components. The Executive Order and the List could have a significant effect on government purchases of medical products and on FDA oversight over these products. FDA has solicited input, and we anticipate that a future Federal Register notice will provide a deadline for comments.

Background

The Executive Order directed that by November 4, 2020, FDA issue a list of essential medicines (defined as "medically necessary to have available at all times in an amount adequate to serve patient needs and in the appropriate dosage forms"), medical countermeasures (defined as qualified countermeasures, qualified pandemic or epidemic products, or security countermeasures), and critical inputs (defined to include active pharmaceutical ingredients (APIs), API components, and certain other drug and medical device ingredients or components that are critical to the safety and effectiveness of essential medicines and medical countermeasures. The Executive Order left FDA with broad discretion as to which medicines and inputs to include on this list.

Inclusion on the List triggers several "Buy American" provisions. With some important exceptions, the Executive Order requires agencies to procure products on the List by using procedures to limit competition to products made in the US and dividing procurement requirements among two or more manufacturers located in the US These mandates do not apply when procurements would be inconsistent with the public interest, would result in a 25% increase to the cost of procurement, are necessary for a public health emergency, or would not be available in sufficient quantity and quality. The Order also directs the Defense Department to restrict procurement of List products to domestic sources and to reject otherwise acceptable offers from foreign sources where considered necessary for national defense reasons. The cost, shortage, and public health emergency exceptions, but not the public interest exception, apply to the Defense Department provision . . . .The Executive Order also directs agencies to develop and implement procurement strategies to strengthen and mobilize domestic research and development and manufacturing capabilities to increase the domestic manufacture of product on the List. For products to be considered domestic under the Executive Order, both their critical inputs and finished forms must be made in the US. The Order also directs FDA to accelerate approval for domestic List products, increase foreign inspections of List products, and refuse admission of imported List products if there was a refusal to permit or an unreasonable delay in a foreign inspection. The Executive Order also directs HHS to identify vulnerabilities to the supply chain and to propose regulations and guidances to address these issues.

Inclusion of a product on the List, thus, has several consequences. Domestic manufacturers will have a significant advantage in government procurement and will have an accelerated approval process for new products. Foreign manufacturers will not only face a disadvantage in procurement, but will also face increased FDA inspections and scrutiny. Because of the possibility of shortages and increased costs, however, the Executive Order's exceptions could have a substantial effect on how the order is implemented. In addition, the implementation of the Executive Order could clash with existing US trade agreements, which will likely trigger protracted negotiations.

FDA's List

FDA's list contains 223 drug and biological products, essential medicines and medical countermeasures, and 96 device medical countermeasures. For essential medicines, FDA included products that are "most needed for patients in US acute care medical facilities, which specialize in short-term treatment for severe injuries or illnesses, and urgent medical conditions." However, FDA did not include medicines for longer-term chronic management including those needed to cure a condition through weeks or months of treatment. The agency focused on the most commonly needed dosage forms and presentations but also included products needed by specific populations, such as children or pregnant women. The vast majority of products are approved brands or generics, but FDA included some unapproved products, as well. In addition to API and some API components, the "critical inputs" for essential medicines include "ingredients or constituent parts that possess unique attributes essential to the approved uses of the product on the List."

             FDA summarized its criteria for medical countermeasure medicines on the List:

In general, a medicine that meets one of the three statutory definitions described above is included on the list and be determined to be "medically necessary. . ." as set forth in the EO. However, medicines that meet the definition of "qualified pandemic or epidemic product" but are only available pursuant to an IND or EUA will generally not be deemed to be "medically necessary. . ." and have been excluded from the list. We will add such medicines to the list once they are approved. Further, for approved medicines for which the MCM use is not included in the product's labeling, the product will not be considered "medically necessary. . ." and will not be included on the list if FDA has information to suggest they are unsafe or ineffective for use as an MCM (e.g., those for which we've determined an EUA is not appropriate).

The agency also stated that medical countermeasure medicines on the List align with medical countermeasure stockpile planning.

The devices on the medical countermeasure portion of the List are heavily focused on equipment used in the current or future pandemics, such as rapid tests, diagnostic testing kits, personal protective equipment, ventilators, vital sign monitoring devices, and vaccine delivery devices. The listed "critical inputs" include "active pharmaceutical ingredients of essential medicines and medical countermeasures, as well as ingredients or components that possess unique attributes essential in assessing the safety and effectiveness of such products."

Next Steps

The inclusion of a product or input on the List could have a significant effect on procurement (and thus the overall market and price for the product) and on FDA oversight and regulation. Finished product manufacturers, component manufacturers, purchases and other stakeholders should examine the list carefully. FDA has opened a docket to provide comments on the list, and we expect that many parties will submit comments.

The future implementation of the Executive Order will obviously depend heavily on the presidential election. A new Administration could repeal the Executive Order. However, Vice President Biden has identified the rebuilding of domestic medical product manufacturing capacity as an important objective. The Vice President has not produced a list of essential medicines, but has proposed using tools such as domestic manufacturing requirements for federal procurement contracts, tax code revisions, federal funding of domestic drug production, and use the Defense Production Act to require drug companies to make some drugs domestically.

More generally, the Executive Order's Buy American focus is one part of a broader, bipartisan concern with oversight over the medical product global supply chain. The March 2020 CARES Act included several provisions regarding the supply chain, including additional drug shortage and drug sales volume reporting requirements, a requirement to develop redundancy risk management plans, and a study by the National Academies of Sciences, Engineering, and Medicine on the national security and public health threats related to the US global pharmaceutical supply chain. Regardless of the outcome of the election, we expect that FDA will increase its oversight over the supply chain through increased inspection frequency and enforcement.

We advise interested clients to assess their supply chain risks from regulatory, procurement, and transactional perspectives and to keep informed of developments in this evolving area.

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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