President Donald Trump has issued an executive order enabling the Defense Production Act, which gives the U.S. Department of Health and Human Services broader leeway to conscript industrial production to deal with the COVID-19 outbreak. While the order requires device and equipment makers to allocate production per the federal government’s directives, Vice President Mike Pence said in a March 19 press briefing that a new source of ventilators has been identified that may help meet the burgeoning demand.
The March 18 executive order cites the needs for ventilators and personal protective equipment, presumably including N95 respirator masks, although the order indicates that the list of potential requisitions is not thus limited. The action was taken several days after Sen. Ed Markey (D-Mass.) posted a letter to the administration urging the White House invoke the statute.
The vice president said during the briefing that diagnostic testing “is available in all 50 states and becoming increasingly available literally every hour of the day.” He added that the White House has received a report that tens of thousands of tests are being performed every day, noting that state labs are now all required to report results to the CDC. Pence also sought to suppress panic testing. “If you don’t have symptoms, you don’t need to have a test,” he said, citing the need to reserve testing capacity for those who are likely to have the disease.
Many of the related supplies are available in the private sector, and Pence said Honeywell International Inc., of Charlotte, N.C., is one company that has provided industrial masks to hospitals. “All of those masks have liability protection,” Pence said, adding that construction companies are checking supplies of industrial-use masks and donating them to local hospitals. He said the federal government has identified tens of thousands of ventilators that can be converted to treat patients, adding that the administration is “increasingly confident” that the supply will meet the demand.
Trump vows to ‘slash red tape’
Trump said during the briefing that the U.S. FDA would “slash red tape like we’ve never done before” in response to the COVID-19 outbreak, vowing that the agency will move vaccines and therapies into trial as quickly as possible. The deregulatory emphasis is in keeping with executive order 13771 from January 2017 in which the White House required federal agencies to withdraw two regulations for each new one.
While details were not immediately available, Trump said, “what we’re talking about today is beyond right-to-try,” the measure from 2018 that gives terminally ill patients access to therapies that have cleared phase I studies. The president also highlighted the antimalarial drugs chloroquine and hydroxychloroquine as therapies that potentially could hold promise for COVID-19 patients, stating that there are “very encouraging early results.” He also referred to remdesivir, the therapy under development by Gilead Sciences Inc., of Foster City, Calif., which the president said, “seems to have very good results.”
For his part, FDA Commissioner Stephen Hahn said that his mission in the COVID-19 crisis is “not to provide false hope, but to provide hope.” Hahn noted that his agency is receiving a number of submissions and communications from manufacturers regarding experimental therapies and potential reuses of existing drug and biotech approvals. Still, Hahn said, the FDA has the responsibility to ensure safety and efficacy, adding “we are working day and night to do this.”
Hahn emphasized the right treatment at the right dosage for the right patient at the right time, stating that dosing is nearly as critical a piece of the therapeutic puzzle as any other. “We will collect the data and make the absolutely right decision,” Hahn said, adding that the agency would like to test chloroquine in a trial.
There is now a cross-agency effort at the Department of Health and Human Services (HHS) directed toward the use of convalescent plasma, which was discussed in recent articles in The Lancet and in the Journal of Clinical Investigation, Hahn said. The underlying concept is to introduce immunoglobulins from recovered coronavirus patients to boost the immune system of those who still are recovering. He indicated that such an approach could take as little as three to six months to develop, adding that this and other efforts at the FDA are part of a continuous process to thwart the SARS-CoV-2 virus.
Hahn said the development and review of a vaccine approval is still about 12 months off, while Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases, has cited a timeline of 12 to 18 months.
Allocation authority a vital cog
The Defense Production Act of 1950 carries with it two authorities, both of which are vital in a national emergency. Angela Styles, who is with the Washington office of Akin Gump Strauss Hauer & Feld LLP, told BioWorld that the act's allocation authority may be more controversial compared with the law’s prioritization authority.
Prioritization authority allows federal agencies to issue rated orders, which permits the government to claim any share or the entirety of a contractor’s production of a given product. This has been invoked on several occasions by the Department of Defense (DoD), but usually entails very detailed negotiations between the manufacturer and the federal government.
Styles said the allocation authority “is extraordinarily broad,” and allows the federal government to take control of resources and facilities and use them for whatever is needed to address the situation at hand. The three entities most likely to require production of N95 masks are HHS, DoD and the Veteran’s Health Administration. The government could have used rated order issuances to bolster production of N95 masks, Styles said, but this is rarely, if ever, invoked for these items.
HHS could to some extent mandate production of items like the N95 masks without invoking allocation authority, but Styles said the executive order allows that department to require production of these items, all of which could be claimed by the federal government. “They could even take over the facility” entirely, she said, adding “it is like a World War II authority.” This seems a less than likely outcome at present, given that the White House has not yet issued any specific orders under the act.
Manufacturers may want to anticipate what they would have to do comply with an order for production capacity, Styles said, but she noted that the authority also could affect a manufacturer’s handling of idle production capacity. Assuming the government mandates production of a site, any needed changes would be paid for by the federal government, “so there are some opportunities as well,” she said.
There is a provision in the regulation that is explicit about some aspects of liability, Styles said, so a manufacturer’s customers would not be able to sue for breach of contract for these supplies. Whether this indemnification applies to shareholder lawsuits in the event of damage to a company’s financial fortunes is unclear, however, although the terms “damages” and “penalties” are cited as being insulated from legal reprisals. Styles said there is little in the way of case law that would be suggestive on this point.