Seven Regulatory Problems Laid Bare by the Coronavirus

Few things expose regulatory fault lines quite like an international medical emergency. For the Food and Drug Administration, the novel coronavirus (SARS-CoV-2) outbreak has exposed several longstanding regulatory issues that could have the potential to substantially impact how the US is able to effectively respond to not only this outbreak, but future emerging threats.

By Alec Gaffney ( and Laura Diangelo (


These issues, highlighted during the current crisis, will become more and more relevant as the US seeks to respond to any new or emerging threats in coming years. While the FDA has proposed fixes for some of the deficiencies, Congressional action may be needed.

Issue #1

How do you regulate a diagnostic?

“If you wish bake an apple pie from scratch”, quipped astronomer Carl Sagan, “first you must invent the universe.”

But if you wish to control a pandemic, first you must accurately diagnose the patient.

As the US confronts a growing outbreak of SARS-CoV-2, public health officials are scrambling to make available diagnostic products capable of identifying which patients are (and which aren’t) infected and at risk of infecting others.

While two diagnostic products have been authorized for use to date—one from the CDC and another from the New York State Department of Health—other public health laboratories have urged the FDA to allow them to create and validate their own diagnostics to identify the virus.

Traditionally, there are two types of diagnostic products: Those developed for use by a patient or provider at the site of care, and those developed by a laboratory for use within that same laboratory using samples sent in by a patient or provider. Those in the first category are referred to as in vitro diagnostics (IVDs), which have traditionally been regulated as medical devices by the FDA. The second category are referred to as Laboratory Developed Tests (LDTs), which have traditionally been regulated as the practice of medicine by the Centers for Medicare and Medicaid Services (CMS).

While the FDA has long maintained that LDTs are medical devices, and therefore subject to its regulatory oversight, it has typically exercised its discretion when enforcing its regulations—as long as the LDTs follows CMS’s regulations under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

For regulators, the concern is that if diagnostics aren’t properly validated or qualified, they could be inaccurate and lead to inappropriate or unnecessary care and follow-up. In the context of a diagnostic, an inaccurate device could mean either a false negative (diagnosis of someone with the disease as not having it) or a false positive (diagnosis of someone without the disease as having it).

However, emerging concerns about the CDC’s diagnostic product’s ability to identify the novel coronavirus have led to a shift in policy. On February 29, the FDA unveiled a new policy to allow CLIA-certified laboratories to develop their own diagnostic products and submit them to the agency. The hope, the FDA said, was to dramatically increase the availability of products with which to test for the presence of COVID-19.

“Rapid detection of COVID-19 cases in the U.S. requires wide availability of diagnostic testing to control the emergence of a rapidly spreading, severe illness,” the FDA said in a statement.

The new guidance document, effective immediately, allows certain laboratories to immediately use their own diagnostics as long as the test is validated and the FDA is notified within 15 days. That notification should take place using an Emergency Use Authorization, the FDA said.


In the meantime, the confusion over the FDA’s overall diagnostics policy has resulted in general confusion regarding which regulatory authority is in charge—FDA or CMS—and which regulator even has the legal authority with which to review products.

As legislators prepare to unveil major new legislation in early March that seeks to unify the regulatory approach to IVDs and LDTs, expect to see significant attention on whether a unified approach would have helped or hindered development of accurate tests to better detect SARS-CoV-2.

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Issue #2

How do you incentivize the development of medical countermeasures?

Developing medical countermeasures—drugs and biologics used to mitigate or prevent the effects of a dangerous pathogen or other emergency—is profoundly difficult, even beyond the standard difficulties of drug development.

There are two key challenges in particular worth noting.

The first is the challenge of testing products. In many cases, a viral outbreak may end before a therapeutic under development is ready for testing. In such cases, the company could have difficulties identifying patients infected by the virus in which to test a vaccine or therapeutic. As it would be unethical to infect a patient with that virus just to test an investigational products’ efficacy, companies would then need to rely on a rarely used FDA regulatory pathway called the Animal Rule.

Under the Animal Rule, the safety of a product would be tested in healthy humans, while the efficacy of the product would be tested in animals infected with the target virus. This model has been used to develop several medical countermeasures, including those for anthrax and smallpox.

But even if a product is successfully developed, the sponsor of that drug faces a second key challenge: Was all that effort worth the financial cost? Outbreaks can both emerge and end quickly, so companies pouring hundreds of millions of dollars into developing a new vaccine or therapeutic product may ultimately find that there is no patient population in active need of their product once it receives FDA approval. With no available market, companies would therefore be unable to recoup their investment.

To make up for this uncertain market and encourage companies to rapidly invest in development of vaccines and therapeutics, the FDA has regulatory programs it uses to reward companies that obtain approval for medical countermeasures. These programs reward developers of medical countermeasures with Priority Review Vouchers, which are essentially coupons that are redeemable by a drug company for faster review of a different drug product. Vouchers can either be used by the company that receives them to accelerate the review of a product by 4 months, or they can be sold. Vouchers sold in the last few years have typically commanded a sale price of $100 million or more.

There’s just one problem: Neither of the FDA’s priority review voucher programs apply to SARS-CoV-2, the virus that causes COVID.

The FDA told AgencyIQ that it does not believe that the novel coronavirus qualifies for either of its two existing voucher programs, and that the virus will need to be added either by Congress or the agency. The FDA also said it’s not sure it has the authority to add coronavirus to the list, which could put pressure on Congress to take action.

Coronavirus is not among the diseases explicitly eligible to receive a Tropical Disease Priority Review Voucher or a Material Threat Medical Countermeasure Priority Review Voucher. While the FDA can add certain diseases to its list of those eligible to receive a Tropical Disease Voucher, FDA spokesperson Megan McSeveney told AgencyIQ that it may be unable to do so in this case since the disease does not disproportionately affect poor and marginalized populations, and there is likely to be a significant market in developed nations.

While HHS’s Assistant Secretary for Emergency Preparedness and Response (ASPR) could include Coronavirus on its list of “high-priority threats,” it has not yet done so.

The absence of voucher incentives for an emerging threat is not a new issue. Congress had to add both Ebola and Zika to the list of eligible diseases via legislation in 2014 and 2016, respectively. As pharmaceutical and biotechnology companies now look to develop new products (or re-purpose existing drugs), a voucher could help to sustain long-term investment. Based on existing research, it remains unlikely any treatment for coronavirus will be developed for several years.

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Issue #3

How can the FDA respond to medical product shortages?

The FDA has legal authority to manage shortages of many medical products, including drugs and biologics. This requires manufacturers to notify the agency of anything that may lead to a disruption in supply of a drug as early as possible, allowing the FDA to develop mitigation strategies to protect patient access.

However, the agency does not have corresponding authority for medical devices—despite multiple efforts to secure that authority from Congress.

In its fiscal year (FY) 2020 budget request to Congress, the agency submitted a proposal to “ensure FDA has timely and accurate information about likely or confirmed national shortages of essential devices to enable FDA to take steps to promote the continued availability of devices of public health importance.”

“Specifically, FDA is seeking authority to: require firms to notify FDA of an anticipated significant interruption in the supply of an essential device; require all manufacturers of devices determined to be essential to periodically provide FDA with information about the manufacturing capacity of the essential device(s) they manufacture; and authorize the temporary importation of devices whose risks presented when patients and healthcare providers lack access to critically important medical devices outweigh compliance with U.S. regulatory standards.”

While the FDA doesn’t have the power to compel medical device manufacturers to share information about shortages, the agency does keep in close contact with industry to identify and address potential shortages. The FDA collects information from approximately 260 manufacturers of “essential” medical devices on a quarterly, voluntary basis through its “Emergency Shortages Data Collection System.”

The FDA requires that device facilities register with the agency and list the products they make under the terms of a 2012 regulation. Applicable facilities include those operated by contract manufacturers and sterilizers.

This lack of authority has been an issue for regulators and Congress since at least 2001, when the FDA’s Center for Devices and Radiological Health (CDRH) said it was developing “operational plans and interventions that would enable CDRH to anticipate and respond to medical device shortages that might arise in the context of federally declared disasters/emergencies or regulatory actions.”

“In particular, CDRH identified the need to acquire and maintain detailed data on domestic inventory, manufacturing capabilities, distribution plans, and raw material constraints for medical devices that would be in high demand and/or would be vulnerable to shortages in specific disaster/emergency situations or following specific regulatory actions. Such data could support prospective risk assessment, help inform risk mitigation strategies, support real-time decision making by the Department of Health and Human Services during actual emergencies or emergency preparedness exercises, and mitigate or prevent harm to the public health.”

For the time being, the FDA lacks the authority to require companies to communicate about potential shortages. It also has little insight into the raw material suppliers that companies are using in their manufacturing. The manufacturers overseen by the FDA may not have plans in place to deal with absenteeism or other supply chain disruptions caused by a pandemic. Further, the agency’s inspection staff may not be able to gain access to certain Chinese facilities for months.

Even if a medical product is found to be in shortage, there is often little that the FDA can do. Alerting the public to a critical shortage can sometimes result in an exacerbation of the shortage as facilities (or market opportunists) seek to buy up as much of the remaining product as possible to prepare for a prolonged shortage. Still, the knowledge can help the FDA to identify alternative products and manufacturing sites.

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Issue #4

How can regulators share “commercially confidential” information?

Last week, the FDA announced that at least one drug product was experiencing a shortage as the result of the COVID-19 coronavirus outbreak.

“A manufacturer has alerted us to a shortage of a human drug that was recently added to the drug shortages list. The manufacturer just notified us that this shortage is related to a site affected by coronavirus. The shortage is due to an issue with manufacturing of an active pharmaceutical ingredient used in the drug. It is important to note that there are other alternatives that can be used by patients. We are working with the manufacturer as well as other manufacturers to mitigate the shortage. We will do everything possible to mitigate the shortage.”

But missing from that announcement were some key details, including the drug’s name, manufacturer, and location of its manufacturing site(s).

That information was withheld, the FDA said, because it was commercially confidential information. According to an FDA spokesperson, who spoke to the trade publication Regulatory Focus:

“While manufacturers are legally required to report drug supply disruptions to FDA, they are not required to provide the detailed information on their supply chain that we have needed to monitor the drug supply since the onset of the outbreak. … We need the cooperation of the drug companies in order to obtain accurate information as we proactively take steps to mitigate drug shortages, and companies will be less willing to provide this voluntary information if they cannot trust FDA not to disclose commercial confidential information such as drug names, company names or exact location of facilities.”

Under 21 CFR 20.61, “Trade secrets and commercial or financial information which is privileged or confidential” include “valuable data or information […] regards as privileged and not disclosed to any member of the public by the person to whom it belongs.”

Traditionally, the FDA has held that information includes the name of a drug manufactured at a specific facility. For example, FDA Warning Letters do not contain the name of a specific product made at a facility, even if that product is made under extremely deficient conditions.

That practice can severely limit public understanding of which drugs are at risk in a public health emergency. For example, while FDA records include the names and locations of all company facilities, there is no information available about which drugs they produce or in what quantities.

While the protection of that information can better allow the FDA to protect against panic-purchasing of pharmaceuticals (which could cause, rather than prevent a drug shortage), it also leaves patients and health systems unable to effectively plan for potential future shortages.

Issue #5

How can the FDA inspect what it can’t see?

Inspections are a crucial part of the FDA’s regulatory oversight role. Once a medical product is approved on the basis of safety and efficacy, the FDA must then ensure that it is being made to appropriate quality standards, known as the FDA’s Current Good Manufacturing Practices (CGMPs, for drugs) or Quality System Regulation (QSR, for devices).

But there is a significant downside to inspections during a pandemic: They rely on people. 

And at present, people—including the FDA’s inspectors—are not able to enter certain countries. “[W]e are not able to conduct inspections in China right now,” the FDA confirmed in a statement in late February.

“The FDA is not currently conducting inspections in China in response to the U.S. Department of State’s Travel Advisory to not travel to China due to the novel coronavirus outbreak. We will continue to closely monitor the situation in China so that, when the travel advisory is changed, we will be prepared to resume routine inspections as soon as feasible.”

The FDA ordinarily conducts about 500 inspections per year in China, including medical product and food facilities.

In light of the current difficulties in travelling to China, the regulator said it was instead relying on other tools, including import screening, examinations, sampling, import alerts, mutual recognition agreements with other regulators, and knowledge of a firm’s previous compliance history. The FDA expressed confidence that it could “rely on these other tools to give us comprehensive oversight of FDA-regulated products entering this country.”

However, the FDA has previously proposed explicit action that would have allowed it to keep better track of companies even without needing to physically enter the facilities.

In July 2015, the FDA issued a draft guidance document that would have required that companies submit “quality metrics” to the FDA on an ongoing basis, which would have allowed it to better measure pharmaceutical quality at those facilities. In response to significant (and negative) industry feedback, the FDA revised the guidance and proposed the creation of a voluntary pilot program to collect a “limited set of quality metrics” and other analytical data.

But since that approach is voluntary and still being tested, the FDA is not able to rely upon it in the current coronavirus outbreak.

Another model might be one based on telemedicine: Tele-inspections, in which a surrogate inspector (or robot) could enter a facility to conduct a basic assessment. While that model would require significant on-the-ground support, it could hypothetically identify significant deficiencies. However, it’s not clear that the FDA could compel companies to accept a video-based inspection process when they have historically had unclear authority to use basic photography.

Issue #6

What happens to the FDA or companies if its staff are affected by an emergency?

What happens if an outbreak of SARS-CoV-2 affects the FDA’s headquarters in Silver Spring, MD?

The agency is already concerned about the potential. On the FDA’s homepage is an advisory notice:

“In light of the public health emergency declared for the Novel Coronavirus, visitors to FDA campuses and buildings may be asked questions related to recent international travel.”

For the life sciences industry, an unhealthy FDA could be a significant concern for their ability to get new products to market. FDA review timelines for product approvals depend on the ability of a large number of review staff to be available.

For example, the approval of Balversa (erdafitinib) involved 44 individuals on the FDA review team. While some review work can be done remotely, a loss of efficiency could have ramifications for the timely review for a range of products, including new drugs, generics and other medical products that are currently under review or expected to be submitted shortly. It could also have an affect on the review of ongoing regulatory matters, such as the receipt and review of information related to adverse events.

As of October 2019, the FDA employed 17,600 full time equivalents, of which about 60% are considered by the FDA to be essential. However, unlike a government shutdown, it seems likely that the outbreak of a virus could cause significantly more staff to be kept home out of an abundance of caution.

Life sciences companies, too, could see their operations affected by a wider spread of coronavirus if there is a shortage of workers to actually work in manufacturing facilities. 

This is a longstanding concern for the FDA. In March 2011, the agency published a draft guidance document for producers of “medically necessary” drug products clarifying how manufacturers can plan for the effects of high absenteeism during a crisis event, such as a pandemic:

“For example, in an influenza pandemic, widespread human outbreaks of illness would be expected in the United States and around the world, resulting in widespread high absenteeism that could hinder normal production activities and cause shortages in the supply of drug products, packaging materials, and drug components. It is therefore vital for industry to prepare before an emergency situation occurs and to develop plans to ensure continuity of operations during emergencies (including, for example, an influenza pandemic, natural disaster, or personnel issue) that would prevent a significant portion of the work force from reporting. It is especially important for manufacturers of finished drug products to be aware of their suppliers’ and contractors’ responses to personnel shortages and, when appropriate, work with them to ensure the availability of high quality materials and services that contribute to the manufacture of [medically-necessary products] MNPs.”

Those plans are a vital safeguard, given that under federal regulations (21 CFR 211.28(d)) persons who are sick “shall be excluded from direct contact with components, drug product containers, closures, in-process materials, and drug products until the condition is corrected or determined by competent medical personnel not to jeopardize the safety or quality of drug products.”

However, no such guidance document exists for medical device facilities, even those producing medically necessary products. The FDA’s Quality System Regulations also don’t contain any provision excluding sick staff from participating in the manufacture of a product.

Should the coronavirus spread in the US, the regulatory system itself may find itself in need of medical attention as well.

Issue #7

How does the FDA keep track of the proliferation of false claims by charlatans?

One unfortunate side effect of any public health emergency is an increase in the number of false claims about products purporting to treat, mitigate or prevent disease.

For the 2019 outbreak of SARS-CoV-2, the FDA has already said it has seen evidence of some companies fraudulently marketing their products as being effective at treating the virus.

“We have established a cross-agency task force dedicated to closely monitoring for fraudulent products and false product claims related to COVID-19 and we have already reached out to major retailers to ask for their help in monitoring their online marketplaces for fraudulent products with coronavirus and other pathogen claims. Products sold are subject to FDA investigation and potential enforcement action if they claim to prevent, treat, or cure COVID-19 and have not been evaluated by the agency for that intended use. The task force has already worked with retailers to remove more than a dozen of these types of product listings online. Several have already responded that they plan to monitor for coronavirus claims. The Agency is committed to taking action to prevent unscrupulous actors from marketing unlawful products related to this outbreak.”

Those retailers include companies like Amazon, which reportedly pulled more than a million items from its online store that claimed to be helpful in treating or preventing the virus.

Amazon’s actions speak to a larger regulatory challenge: The FDA is less able to regulate the marketplace than it used to be.

Traditionally, the agency has been able to oversee a significant proportion of commerce by tracking direct-to-consumer advertising on television and in print media, such as newspapers.

Now, most advertising is micro-targeted and spread across the internet, which makes it substantially more difficult to determine who is seeing an advertisement and for which product. That advertising can be targeted to an individual’s search history, purchase history, demographic information and more.

Even as the FDA looks to remain proactive, unscrupulous sellers could easily be avoiding it by targeting consumers and patients on social media accounts. In such circumstances, the FDA would find it almost impossible to discover improper advertising without widespread assistance by those viewing the ads.

To respond, the FDA will need to work closely with not only brick-and-mortar retailers, but also online retailers, social media giants and digital advertising platforms to ensure the American public isn’t swindled by those trying to illegally profit from consumer fears.

To contact the author of this analysis, please email Alec Gaffney.
To contact the editor of this analysis, please email Laura DiAngelo.