Covered in this alert:
- Novel coronavirus declared a U.S. public health emergency
- Overview of federal public health powers
- The Emergency Medical Treatment and Active Labor Act (EMTALA), Stark Law, and other federal waivers
- Overview of state law police powers, including quarantine
- Relevant rules for disclosure of personal health information
- FDA emergency authorization for coronavirus diagnostic test
- Supply chain concerns and 340B pricing limitation
Authors: Scot T. Hasselman Celeste A. Letourneau Joseph W. Metro Lesley C. Reynolds Nicole J. Aiken-Shaban Jessica R. Christensen Rebecca E. Dittrich Arielle R. Lusardi Kristin B. Parker Janine R. Tougas
Since being declared a Public Health Emergency of International Concern by the World Health Organization (WHO) on January 30, 2020, and a public health emergency (PHE) in the United States by the U.S. Department of Health and Human Services (HHS) the next day, novel coronavirus (2019-nCoV, also known as "SARS-CoV-2") has garnered significant public attention. The outbreak of 2019-nCoV was first detected in mainland China in December 2019, and, as of February 11, 2020, 2019-nCoV has infected over 40,000 individuals in at least 25 countries, including five states in the United States. On February 11, 2020, the WHO named the disease caused by 2019-nCoV "COVID-19."1 The detection of a novel coronavirus2 has forced regulatory agencies, health care providers, and others to consider what steps should be taken to track diagnoses, prevent exposure, and otherwise control the public health impact of this virus.
In the United States, the declaration of a PHE empowered HHS to direct funding to: (1) enable the dissemination of information about the virus; (2) encourage research and development of diagnostic and treatment techniques; (3) improve screening and detection efforts; and (4) support state and local governments in efforts to control the virus.3 Working parallel to HHS, the Centers for Disease Control and Prevention (CDC) continue to monitor the outbreak closely, and the U.S. Food and Drug Administration (FDA) has already fast-tracked a diagnostic test for the virus through its emergency authorization power.4 The diagnostic test is only one example of the emergency activities we expect to see undertaken as federal and state agencies rush to respond to the 2019-nCoV outbreak.
In this alert, we provide an overview of the powers that enable federal and state governments to respond to a PHE, and the rules and regulations set forth by federal and state agencies regarding which health care providers, suppliers, and facilities may or must comply when a federal PHE has been declared, or an infectious disease outbreak occurs under state law.
State and federal health resources: deploying emergency measures to protect public health
In the event of a public health emergency, such as an infectious disease outbreak, state and federal governments have certain powers that enable them to respond to the incident and take action to protect the health of the public. These powers often flow down to health care providers by imposing new rules or relaxing old ones in light of the emergency circumstances.
(a) Federal public health powers
The Public Health Service Act (the Act) provides HHS with the authority to respond to public health emergencies.5 Under the Act, if the secretary of HHS determines that a disease or disorder presents a PHE or that a PHE - including significant outbreaks of infectious diseases or bioterrorist attacks - otherwise exists, the secretary is granted broad authority to take action as appropriate to respond to the PHE.6 Such action may include making grants, entering into contracts, and conducting and supporting investigations into the cause, treatment, and prevention of the disease or disorder.7 A PHE declaration lasts until the earlier of (1) the secretary's determination that the PHE no longer exists or (2) 90 days after the declaration is issued. The secretary also may extend the PHE declaration for an additional 90-day period or may terminate the PHE when they determine that the need for a PHE no longer exists.
With respect to 2019-nCOV, in addition to the actions discussed above that are authorized under the Act, the president has used his power under the Immigration and Nationality Act to implement temporary measures barring non-U.S. citizens who have recently visited China from entering the United States, other than immediate family members of U.S. citizens or permanent residents.8
Congress has established a Public Health Emergency Fund to respond to a PHE;9 while the federal government also may tap the Infectious Diseases Rapid Response Reserve Fund (the IDRRRF), the CDC spent much of the $105 million set aside in the IDRRRF to respond to the 2019 Ebola outbreak, as well as for initial planning and response to 2019-nCoV. Accordingly, there is little left to further address 2019-nCoV.10 Accordingly, the secretary of HHS notified Congress on February 2, 2020, that an additional $136 million may be necessary to combat 2019-nCoV, of which approximately $75 million would be allocated to the CDC, $52 million would be allocated to the assistant secretary for the CDC Center for Preparedness and Response, and $8 million for the HHS Office of Global Affairs. Congress has not yet authorized this additional funding, which could be used to fund grants to state agencies and health care providers through the applicable federal agencies' funding streams.
(b) Waivers from federal requirements when a PHE occurs
Health care providers may qualify for a waiver of certain federal health care program requirements during a declared PHE. Specifically, when the secretary of HHS declares a PHE and the president declares an emergency or disaster under the National Emergencies Act or the Stafford Act, the secretary of HHS may waive or modify Medicaid, Medicare, State Children's Health Insurance Program (SCHIP), and HIPAA requirements under section 113511 (an 1135 Waiver) of the Social Security Act (SSA). Rules and requirements that may be waived under this authority include, for example:
- Conditions of participation
- Preapproval for items or services
- Restrictions on telemedicine12
- State licensure requirements for purposes of receiving Medicaid, Medicare, and SCHIP reimbursement (this does not preempt state provider licensing laws and rules)
- Sanctions under EMTALA for redirecting an individual to a certain location for medical screening, provided that the actions do not discriminate based on the patient's ability to pay or source of funds
- Stark Law sanctions
The Centers for Medicare & Medicaid Services (CMS) approves 1135 Waivers on case-by-case bases, so providers seeking a waiver must apply to CMS for approval. Waivers or modifications under an 1135 Waiver may be granted retroactively to the beginning of the emergency period, or to any other subsequent date as determined by CMS. A CMS-approved 1135 Waiver ends upon the termination of the emergency period or 60 days after the waiver or modification is first published (subject to additional 60-day renewal periods until termination of the emergency period), unless the secretary determines that the waiver is no longer necessary.
In addition, Section 1115 of the SSA13 permits the HHS secretary to approve experimental, pilot, and demonstration projects to improve health care through waivers of SSA requirements (1115 Waiver). Under this authority, states may expand eligibility for individuals who would not otherwise be eligible for Medicaid reimbursement, cover services not typically covered by Medicaid, and use innovative delivery systems as part of a research or demonstration project. States must apply for an 1115 Waiver, and a PHE is not a requirement to apply or be approved - for example, Flint, Michigan has an 1115 Waiver to cover all people up to age 21 and pregnant women with incomes up to 400 percent of the federal poverty line until the Flint water system has been deemed safe.14 Thus, the 1115 Waiver process may provide another avenue for states to seek additional Medicaid coverage, and the related matching federal funds, to address the public health needs arising from 2019-nCoV and its resulting disease COVID-19.
Finally, under the Public Readiness and Emergency Preparedness Act,15 independent of any PHE declaration, the secretary also may provide tort liability immunity to entities and individuals involved in the development, manufacture, testing, distribution, administration, and use of countermeasures to combat diseases, threats, or conditions that constitute a present PHE or a credible risk of a future PHE.
(c) State public health powers
States generally have broad authority to engage in public health responses under their "police powers," enabling them to establish and enforce laws protecting the welfare, safety, and health of the public. Indeed, state laws and regulations frequently provide for certain disease control measures when a person or animal is identified as having a communicable disease or infection. Accordingly, health care providers, facilities, and organizations will want to be mindful of the restrictions and requirements imposed by the laws of the state(s) in which they operate - especially when considering whether to quarantine, isolate, or notify individuals about diagnosed cases of COVID-19.
For example, the Pennsylvania Department of Health (Department) regulations16 grant the Department the authority to mandate isolation or quarantine of individuals or animals for purposes of disease control. When the Department or its local health officer determines that a subject or their contacts will not fully comply with isolation or quarantine, the Department also may utilize placarding. Placarding involves the posting of signage or other notice warning of the presence of a communicable disease within the home or other building where the individual or animal is residing.
Pennsylvania regulations also include provisions specific to communicable diseases in children and staff attending schools and child care-group settings. These regulations provide for the exclusion of children and child-care staff members from such environments on the suspicion that a child or staff member has certain communicable diseases, or exhibits certain symptoms. They also include specified time frames for exclusion based on the disease in question.
Additionally, Pennsylvania requires the reporting of certain communicable and noncommunicable diseases, and certain infections, other diseases, or conditions within specified time frames. Windows for reporting vary based on the type of disease or infection, and the obligation to report can apply to health care practitioners, health care facilities, clinical laboratories, veterinarians, and group child care settings.17 These reporting requirements enable the Department to monitor the occurrence of such diseases, infections, and conditions in order to more rapidly identify and address potential outbreaks. They also help state public health agencies interface with the CDC through voluntary reporting in an effort to better track reportable diseases. While 2019-nCoV and its resulting disease, COVID-19, is not listed explicitly among the known communicable diseases subject to these regulations, the Department has issued health advisories to health care providers requiring all providers to notify the Department or the local health department authority of any patients under investigation for 2019-nCoV infection.18
(d) Current state responses to 2019-nCoV
States that have suspected or confirmed cases of COVID-19 have taken some action - albeit limited, at this time - to address the outbreak. For example, New York, which has identified several potential cases of COVID-19, has issued best practices guidelines to the state's health care providers and facilities.19 The state's Department of Health also hosted informational webinars for hospitals and providers in an effort to disseminate information about the virus and proper infection control and testing recommendations.20 Pennsylvania, which has not had any identified cases of coronavirus, has also issued guidance documents mirroring CDC guidance.21 Health care providers should be aware of any state guidance released now or in the future that could affect how providers address the outbreak.
Protecting - and disclosing - health information when faced with a PHE
HIPAA prohibits the use or disclosure of personal health information (PHI) without authorization from the patient, except in limited instances, such as when PHI is used or disclosed for treatment, health care operations, or payment purposes.22 HIPAA's restrictions apply to covered entities and business associates, meaning health care insurers, clearinghouses, and providers engaged in one or more electronic transactions, and entities creating, receiving, transmitting, or maintaining PHI on the covered entity's behalf. Given the public concern, media attention, and health care needs that accompany an outbreak, HHS' Office for Civil Rights (OCR) recently released a bulletin to remind HIPAA-covered entities and business associates of their obligations to protect PHI from unauthorized uses and disclosures even in cases of a viral outbreak, but also of the flexibility granted under HIPAA to protect the country's public health.23
Specifically, in the interest of public health, HIPAA permits covered entities to disclose PHI without an individual's authorization: (1) to a public health authority, such as the CDC or a local health department that is appropriately authorized; (2) at the direction of a public health authority, to a foreign government agency; and (3) to persons at risk of contracting or spreading the virus, if authorized by other law, such as state law. Accordingly, covered entities should carefully review their state regulations before determining whether it is appropriate to share PHI with others at risk of contracting 2019-nCoV.
HIPAA also permits covered entities to disclose an individual's PHI to the individual's family, friends, or others involved in their care, so long as the covered entity meets certain requirements, such as getting verbal permission from the patient. If verbal permission is not possible - because the patient is incapacitated, for example - a health care provider may disclose information about the patient's care if they determine that doing so suits the patient's best interest. These are not broadly sweeping permissions to speak with the public about an individual's care, however. For example, except in very limited circumstances, a covered entity may not disclose PHI - such as test results or patient status - to the media or public-at-large without written patient authorization. Thus, while a PHE may trigger more generous disclosure permissions under HIPAA, many of the obligations of covered entities to protect PHI still remain.
FDA and CDC: mobilizing tests, resources, and treatments to address a PHE
(a) Mobilizing testing resources to detect infections
On February 4, 2020, the FDA authorized a test to diagnose 2019-nCoV (Diagnostic Test) under its rarely used emergency authorization powers. The Diagnostic Test - developed by the CDC and previously used only in CDC laboratories - will now be available to qualified public health labs across the United States and throughout the world, as designated by the CDC. In the United States, this means only facilities that are certified to perform high-complexity tests.24
Notably, the FDA approved the Diagnostic Test in a shorter amount of time than tests it has approved for outbreaks in the past. China announced the existence of 2019-nCoV on January 7, 2020, and the FDA's emergency authorization for the Diagnostic Test came on February 4, 2020 - less than one month later. Conversely, authorizations to approve diagnostic tests in previous outbreaks, such as MERS, Ebola, and SARS, took seven to twelve months.
The increased rate of approval can be attributed partially to quicker access to specimens needed to develop the Diagnostic Test. Chinese health authorities released a draft genetic code of 2019-nCoV in early January, enabling the CDC to begin developing its test shortly thereafter. In a statement regarding the outbreak, FDA Commissioner Stephen M. Hahn, M.D. noted that, because the 2019-nCoV situation continues to evolve, "the ability to distribute this diagnostic test to qualified labs is a critical step forward in protecting the public health."25
Thanks to the FDA's emergency authorization, states and international partners already can order the Diagnostic Test from a CDC repository. If qualified, U.S. hospitals and health departments can now test on-site rather than send samples to the CDC. This will help prevent a backlog at the CDC in the event that cases of COVID-19 become more widespread in the United States. Hospitals and other health care providers should consider whether they are qualified to use the newly approved Diagnostic Test on-site.
(b) Challenges of no known cure and the race to develop a vaccine
With no known cure, China's National Health Commission has recommended that doctors primarily treat patients with a combination of Western antiviral medications, including those used to treat HIV. The Chinese government has recommended supplementing these antiviral treatments with traditional Chinese medicine (for example, Peaceful Palace Bovine Pill).26 After the SARS outbreak, various groups, including WHO, studied the use of traditional Chinese medicinal herbs in treating SARS, but there was no consensus regarding their efficacy. Without conclusive evidence, some experts are now concerned about the use of traditional Chinese medicines for the treatment of COVID-19, due to the lack of standardized testing or dosing. We note that, in the United States, it is not permissible for pharmaceutical manufacturers to promote the off-label use of their products, although medical professionals may prescribe medications for off-label uses in their independent medical judgment.
In light of 2019-nCoV's rapid international spread and no targeted and proven treatment for COVID-19, researchers are racing to generate a vaccine. In the United States, those working on a vaccine include: the Vaccine Research Center at the National Institutes of Health (NIH), National Institute of Allergy and Infectious Diseases at the NIH, CureVac, Johnson & Johnson, Moderna Therapeutics, and Inovio Pharmaceuticals. Scientists are hopeful that they can produce a COVID-19 vaccine in a relatively short period of time - potentially in just a few months. However, after the SARS outbreak in 2003, it took approximately 20 months after the release of the virus' genome before researchers had a vaccine ready for human trials. For the Zika epidemic, the timeline was six months. Notably, vaccines for two other coronaviruses, SARS and MERS, were not released, given the length of time it took to get through clinical trials. Researchers of a COVID-19 vaccine will want to be particularly mindful of navigating the FDA's regulatory pathways for the most efficient way to obtain vaccine approval.
Supply chain concerns: Will supply be able to keep up with demand?
Despite the relatively low number of confirmed cases of COVID-19 in the United States and Canada, health care manufacturers, distributors, and consumers - including individuals, hospitals, and clinics - are starting to anticipate supply chain issues stemming from the outbreak in China.
Although Wuhan is not China's largest site for pharmaceutical manufacturing, the city has become a hub for biopharmaceutical research and development, and the country provides to the United States roughly 80 percent of the active ingredients used to make medications in the United States.27 China also is a major global supplier of medical devices and medical supplies such as syringes, gloves, and face masks used by hospital caregivers and other health care providers to protect themselves and their patients from infection.28 The current quarantine measures affecting Wuhan have resulted in the suspension of exports from Wuhan and may lead to serious concerns with respect to the ability of manufacturers and distributors to produce and obtain pharmaceutical drugs ranging from antibiotics, chemotherapy drugs, and antidepressants, to medications to treat Alzheimer's and HIV/AIDs.
Because there is no publicly available information about the volume of critical medicines that originate in China, manufacturers should look closely at the source of their raw materials and consider diversifying the geographical origins of their suppliers.29 Likewise, distributors should endeavor to broaden their network of manufacturers to ensure that supply chain issues do not impact the individual consumer's ability to access critical medications and other health care products, especially in anticipation of the type of panic-buying that typically accompanies a PHE.
Within the United States, manufacturers also should monitor distribution channels and be alert for potential purchase spikes, hoarding, or other behavior that may facilitate gray markets or lead to temporary shortages or other supply chain disruptions. In the case of potentially significant products, manufacturers should consider reviewing their distribution agreements regarding contractual remedies in such cases or procedures for implementing restricted distribution plans. In the latter vein, pharmaceutical manufacturers should keep in mind that section 340B of the Public Health Service Act, which imposes a ceiling price that limits the amount a manufacturer may charge for drugs sold to specified health care facilities treating vulnerable patient populations, prohibits manufacturers from discriminating against 340B covered entities in such limited distribution programs. Because some drugs developed to treat COVID-19 may qualify under the 340B program, manufacturers should be mindful of these limitations in their distribution programs.30 Additionally, many states have enacted some form of pricing limits to prohibit manufacturers and distributors of pharmaceuticals and health care items from engaging in "price-gouging" during certain declared public emergencies. As a result, sellers of pharmaceutical and health care products should be cautious with respect to their pricing practices in the context of any supply shortages.
Federal and state governments generally have broad discretion in the event of a PHE to implement measures to protect the health and safety of the public. Further, states may take varying approaches in these contexts, which can differ from or be more restrictive than federal approaches. For additional information relating to any of the above topics, or if you have questions relating to state-specific responses to PHEs or 2019-nCoV, please contact an author of this client alert or any Reed Smith attorney with whom you work.
- See Coronavirus disease named Covid-19, BBC News, available at bbc.com/news/china (last updated February 11, 2020).
- 2019-nCOV belongs to the category of viruses known as coronaviruses, which includes the well-known coronaviruses Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS).
- See "HHS notifies Congress that it may tap millions of additional dollars for coronavirus response," The Washington Post (February 3, 2020), available at washingtonpost.com/health.
- See Megan Molteni, "The US Fast-Tracked a Coronavirus Test to Speed Up Diagnoses," Wired (February 4, 2020), available at wired.com/story.
- 42 U.S.C. section 247d(a).
- 42 U.S.C. section 247d(a).
- 42 U.S.C. section 247d(a).
- See Department of Health and Human Services, "Secretary Azar Delivers Remarks on Declaration of Public Health Emergency for 2019 Novel Coronavirus" (January 31, 2020), available at hhs.gov/secretary-azar; see also The White House, "Proclamation on Suspension of Entry as Immigrants and Nonimmigrants of Persons who Pose a Risk of Transmitting 2019 Novel Coronavirus" (January 31, 2020), available at whitehouse.gov/presidential-actions.
- 42 U.S.C. section 247d.
- Yasmeen Abutaleb & Erica Werner, "HHS notifies Congress that it may tap millions of additional dollars for coronavirus response," The Washington Post (February 3, 2020), available at washingtonpost.com/health.
- 42 U.S.C. section 1320b-5.
- 21 U.S.C. section 829.
- 42 U.S.C. section 1315.
- See Michigan Department of Health & Human Services, section 1115 Waiver - Medicaid Eligibility for Flint Residents (2020), available at michigan.gov/mdhhs.
- 42 U.S.C. section 247d-6d-247d-6e.
- See generally 28 Pa. Code chapter 27 (outlining requirements for the reporting of diseases, infections, and conditions and providing for disease control measures).
- 28 Pa. Code sections 27.22; 27.2; 27.24.
- See "Pennsylvania Department of Health, Updated Coronavirus (2019-nCoV) Collection and Shipping Guidance" (January 31, 2020) (noting that “Health care providers must contact the Pennsylvania Department of Health . . . or their local health department immediately to notify them of patients under investigation (PUI) for 2019 Novel Coronavirus (2019-nCoV)"), available at health.pa.gov/disease.
- New York Department of Health, "Governor Cuomo Outlines State Response to First Two Confirmed Cases of Novel Coronavirus in United States" (January 24, 2020), available at governor.ny.gov/news.
- New York Department of Health, "Governor Cuomo Outlines State Response to First Two Confirmed Cases of Novel Coronavirus in United States" (January 24, 2020), available at governor.ny.gov/news.
- Pennsylvania Department of Health, "Coronavirus Resources," available at health.pa.gov/disease. (last updated February 6, 2020).
- See 45 C.F.R. 164 et seq.
- HHS, Office for Civil Rights, U.S. Department of Health and Human Services, "BULLETIN: HIPAA Privacy and Novel Coronavirus" (February 2020).
- See note 4.
- FDA News Release, "FDA Takes Significant Step in Coronavirus Response Efforts, Issues Emergency Use Authorization for the First 2019 Novel Coronavirus Diagnostic: Critical Milestone Reached in Response to this Outbreak" (February 4, 2020), available at fda.gov/announcements.
- See Sui-Lee Wee, "In Coronavirus, China Weighs Benefits of Buffalo Horn and Other Remedies," The New York Times, available at nytimes.com/asia (updated February 6, 2020).
- See Steven Ross Johnson, "Coronavirus Scare Highlights Challenges in U.S. - China Supply Chain," Modern Healthcare (updated January 31, 2020), available at modernhealthcare.com/providers.
- See Maryn McKenna, "Amid Coronavirus Fears, A Mask Shortage Could Spread Globally," Wired (updated February 24, 2020), available at wired.com/story.
- See Michelle Cohen Marill, "The Coronavirus is a Threat to the Global Drug Supply," Wired (updated January 28, 2020), available at wired.com/story.
- See 42 U.S.C. section 256b.