The VALID Act & 21st Century Cures 2.0: What Industry Needs to Know

Just before the July 4 recess, legislators in the House and Senate put down two important markers for biomedical legislation expected to be in play for next year’s Food and Drug Administration (FDA) User Fee Amendments (UFA) discussions in Congress.

• The Verifying Accurate Leading-edge IVCT Development (VALID) Act of 2021 (H.R. 4128/S. 2209), introduced for the second time by Sen. Richard Burr (R-NC), Sen. Michael Bennet (D-CO), Rep. Larry Bucshon, M.D. (R-IN), and Rep. Diana DeGette (D-CO), would establish a new regulatory framework for the review and approval of diagnostic tests (introduced text) (section-by-section summary). The VALID Act has evolved over the years, and the latest draft incorporates technical assistance from FDA as well as stakeholder feedback.
• The same week, Rep. DeGette, along with Rep. Fred Upton (R-MI) released their “21^st Century CURES 2.0” draft legislation (discussion draft text) (section-by-section summary). The draft builds off of Reps. Upton and DeGette’s landmark 21st Century Cures Act, which was enacted in 2016, and includes a number of bipartisan provisions intended to support, and increase access to, medical innovation.

Neither of the bills are “must pass” items required to be taken up by Congress, and with a summer and fall legislative calendar expected to be dominated by infrastructure, appropriations and the National Defense Authorization Act (NDAA), it is unlikely that either will receive significant committee consideration this year. However, in 2022, Congress must pass the next iteration of the UFA reauthorizations in order to fund various activities across FDA, providing a likely vehicle for either to become law, in whole or in part. While none of the Congressional supporters of the bills chair the relevant committees of jurisdiction—the Senate Committee on Health, Education, Labor, and Pension (HELP) and the House Energy & Commerce (E&C)—Sen. Burr serves as the HELP Committee Ranking Member giving him a key position of influence on timing, process, and substance in how the committee considers both bills. Reps. DeGette, Upton and Bucshon serve on E&C, and while they don’t hold a gavel or Ranking Member title, they have a history of moving bipartisan health legislation, often in coordination with outside supporters, through the legislative process and ultimately to the President’s desk.

VALID Act Reintroduction

The 2021 version of the VALID Act closely resembles the version introduced at the beginning of the COVID-19 pandemic in March 2020. Like last year’s iteration, the VALID Act of 2021 would unequivocally give FDA authority to regulate diagnostic tests and most of their constitutive components under the Federal Food, Drug, and Cosmetic Act by creating an entirely new product category, in vitro clinical tests (IVCTs), for all in vitro diagnostics (IVD) and Lab Developed Tests (LDTs). The new risk-based framework attempts to clarify and recalibrate regulatory authorities between the FDA and the Centers for Medicare and Medicaid Services (CMS), which draws its authority from the Clinical Laboratory Improvement Amendments (CLIA) of 1988. Currently, FDA asserts jurisdiction over LDTs, pursuant to the Medical Device Amendments of 1976, but the agency exercises enforcement discretion in most instances as long as the tests are developed, validated, and performed within an individual, CLIA-certified lab and performed at the direction of a licensed healthcare provider. The sponsors of the legislation argue the pandemic has only further highlighted the need to clarify FDA’s authority.

The bill’s reintroduction has drawn praise from the Advanced Medical Technology Association (AdvaMed) and was also well-received by the College of American Pathologists (CAP). The American Clinical Laboratory Association (ACLA) is continuing to review the legislation, while other organizations have come out in favor of a competing proposal (the VITAL Act) from Sen. Rand Paul (R-KY) that would completely remove LDTs from FDA’s authority. The VITAL Act currently has no Democratic cosponsors, nor has a House version been introduced.

While the VALID Act of 2021 tracks closely to last year’s version, there are changes - some of which are in recognition of lessons learned from the pandemic, and others that simply reflect agency and industry input. Notable changes include:

• Emergency Use Authorizations during a public health emergency:
• The bill makes clear that under certain conditions, diagnostic tests used during a declared public health emergency, such as the ongoing pandemic, may be authorized for emergency use and do not need to be approved by FDA before they are used to diagnose an emerging threat.
• Definition of “High Risk” IVCTs:
• The current draft modifies the definition of a “high-risk” IVCT in several ways, including: 1) it would only apply to those uses “intended” by the test developer, 2) “potential” has been dropped as qualifier from “unreasonable risk” for serious harm or death from an inaccurate result, and 3) a delay of life-supporting or life-sustaining medical treatment caused by an inaccurate result must now be “significant.”
• Further, FDA’s analysis of whether a test is “high risk” must now account for the degree to which the technology is “well-characterized” and the performance criteria are “well established.”
• An exception to “high-risk” has been added where “mitigating measures” have been established to prevent, detect, or otherwise mitigate the risk of inaccurate results.
• Definition of “Low Risk” IVCTs (which are exempt from pre-market review):
• The current draft modifies the definition of a “low-risk” IVCT in the following ways: 1) it too only applies to tests when used as “intended” by the developer, 2) allows for additional circumstances (such as the availability of confirmatory tests), and 3) makes clear that appropriate “mitigating measures” may overcome potential “serious adverse health consequence[s].”
• Lowers the standard for the Humanitarian Exemption (HE) from premarket review:
• The requirement that HE tests are “not intended to diagnose a contagious disease or condition that is highly likely to result in fatal or irreversibly debilitating outcome . . .” has been struck.
• Technology Certification (Tech Cert):
  • Modifies the categories that would or would not be eligible for Tech Cert, which is intended to allow for the development of tests within the same scope of a representative test’s approval without going back through FDA review each time. Notably, several “high risk” IVCTs, including “first-of-a-kind” and certain “direct-to-consumer” tests, could potentially qualify for Tech Cert provided mitigating measures are in place.
  • The Secretary must now issue regulations (rather than guidance) to implement.

• Implementation and Transition:
• The public meetings required under the Act must now be held within one year (rather than two) of enactment.
• Final guidance regarding applicability must now be completed within two years of enactment rather than four.

While incremental, the changes in the revised VALID Act language signal a recognition that the scientific and clinical history, including peer reviewed literature and consensus standards, should be a consideration in an assessment of the risk level that a regulated test poses to patients. Similarly, the recognition that mitigating measures could be applied to first-of-a-kind technologies represents a step in the right direction toward enabling innovative companies to find a regulatory pathway to market similar to the de novo classified 510(k) technologies which have been permitted to enter the market with special labeling and other controls short of PMA approval under the current FDA medical device framework.

CURES 2.0

Bill authors Reps. Upton and DeGette began soliciting input for CURES 2.0 in 2019. The concept draft currently in circulation incorporates a number of provisions to continue federal response to the COVID-19 pandemic, improve federal preparedness for future pandemics, and make permanent reforms at FDA and CMS.

Notably, the CURES 2.0 draft includes $6.5 billion to establish President Biden’s proposed Advanced Research Projects Agency for Health (ARPA-H), and $25 billion in authorizations for investment in private research institutions. The objective of ARPA-H is “[t]o make pivotal investments in breakthrough technologies and broadly applicable platforms, capabilities, resources, and solutions that have the potential to transform important areas of medicine and health for the benefit of all patients and that cannot readily be accomplished through traditional research or commercial activity.”. President Biden called for the creation of ARPA-H during his joint address to Congress in April, but left many of the details on the structure and purpose of the new agency up to Congress. The proposal has bipartisan support, and it is likely that other Congressional power centers, such as appropriators, will play a significant role in determining its size and scope. To this point, the CURES 2.0 draft leaves its section on ARPA-H as a placeholder, only including five priorities to be incorporated in its development. Including one of the President’s key healthcare priorities in the package provides a strong leverage point to build bipartisan support and generate momentum for committee action. While Rep. Anna Eshoo (D-CA), who chairs the E&C Health Subcommittee, has suggested she may introduce standalone ARPA-H legislation, and the Administration is already requesting funding, Reps. Upton and DeGette will continue to push for these policies to be considered as a whole package.

Below, please find summaries of notable provisions:

TITLE I—PUBLIC HEALTH

Further Understanding the Implications of Long COVID

• Directs the Secretary of HHS to conduct a survey, to be sent to Congressional committees, regarding long COVID. The survey would poll patients self-identifying as having long COVID symptoms and assess sources of health coverage, long-term care coverage, and disability coverage for long COVID and related symptoms.
• Directs the Secretary of HHS to convene a series of national virtual meetings with relevant stakeholders (including health plans, providers, medical researchers, patient and consumer advocates, and developers of diagnostic and therapeutic products) to serve as the basis of future work on long COVID.

National Strategy to Prevent and Respond to Pandemics

• Directs the President, through the Secretary of HHS, implement a national strategy to prevent and respond to pandemics.
• The strategy must address the following: (1) strategies for testing; (2) methods of data sharing; (3) strategies to enable Americans to return to work safely; (4) modernizing and expanding domestic drug manufacturing, including through continuous manufacturing; and (5) developing and administering vaccines, therapeutics, and other medical supplies.

Pandemic Preparedness Rare Disease Support Program

• Directs the Secretary of HHS, through the Health Resources and Services Administration (HRSA) in coordination with the Centers for Disease Control and Prevention (CDC), award grants to organizations to develop a pandemic preparedness plan regarding the following: (1) challenges faced by patients; (2) potential challenges for organizations during future pandemics and public health emergencies; (3) plans to overcome said challenges, including for patients, their families, and providers; and (4) efforts to partner with local, state, and federal governments to promote coordinated pandemic response. Authorizes $25 million, for each of FY 2022 through 2024, for grants under the program. Such grants will be prioritized for rare disease or condition organizations.

Vaccine and Immunization Programs

• Authorizes $25 million, for each of FY 2022 through 2024, for the CDC to conduct a vaccine and immunization awareness campaign.
• Authorizes $25 million, for each of FY 2022 through 2024, for the CDC to strengthen immunization information systems.

Developing Antimicrobial Innovations

• The pandemic has only further highlighted the looming public health threat posed by antimicrobial resistance. Thus, Cures 2.0 would direct the Secretary of HHS to establish a Committee on Critical Need Antimicrobials. The Committee would include members representing the National Institute of Allergy and Infectious Diseases (NIAID), Biomedical Advanced Research and Development Authority (BARDA), Veterans Health Administration (VHA), Department of Defense (DOD), CDC, FDA, and CMS.
• Directs the Secretary of HHS, in consultation with the Committee to: (1) develop a list of infections for which new antimicrobial drug development is needed; (2) develop regulations outlining favored characteristics of antimicrobial drugs including that they are evidence based, clinically focused, and intended to treat infections for which antimicrobials are needed.
• Develops a process by which manufacturers of such antimicrobial drugs can contract with the federal government for procurement of doses of such antimicrobial drugs.
• Creates a hospital grant program to support hospital and inpatient efforts to judiciously use antimicrobial drugs.
• Appropriates $11 billion for FY 2022 for activities under this section.

TITLE II—PATIENTS AND CAREGIVERS

Educational Programs and Training for Caregivers

• Authorizes the Secretary of HHS to award grants for education programs and trainings to caregivers to augment care teams and complement clinical visits. Such programs will include training on: (1) specialized training in medication adherence and injections; (2) complementary strategies to ensure adherence to physical and occupational therapy regimens: and (3) nutritional compliance.
• Authorizes $25 million for each of FY 2022 through 2024 for such grants.

Increasing Health Literacy to Promote Better Outcomes for Patients

• Directs the Secretary of HHS, through CMS, issue a request for information on how CMS can work with stakeholders to promote increase patient health literacy.

Increasing Diversity in Clinical Trials

• Directs the Secretary of HHS, through FDA, to issue to Congress within 90 an updated report on increasing diversity in clinical trials.
• Directs the Government Accountability Office (GAO) conduct a study on how HHS addresses barriers to participation by individuals from underrepresented populations in clinical trials, and formulate recommendations for addressing such barriers.
• Directs the Secretary of HHS carry out a public awareness campaign to drive diverse participation in clinical trials.

Patient Experience Data

• Directs the Secretary of HHS to require manufacturers of drugs granted an exemption for investigational use to collect standardized patient experience data as part of clinical trials pursuant to such exemption.

  Ensuring Coverage for Clinical Trials Under Existing Standard of Care

• Includes Patient Centered Outcomes Research Institute (PCORI) clinical trials among the clinical trials for which Medicare can cover patient’s costs of participation.

TITLE III—FOOD AND DRUG ADMINISTRATION

Report on Collaboration and Alignment in Regulating Digital Health Technologies

• Directs the Secretary of HHS, through FDA, to submit a report to Congress on efforts to ensure collaboration and alignment across FDA with respect to regulation of digital health technologies. The report should include descriptions on: (1) the use of digital endpoints for regulatory review; (2) acceptance of decentralized trials; (3) use of digital health technologies in patient-focused product development; and (4) use and validation of digital health technology tools.

Grants for Novel Trial Designs and Other Innovations in Drug Development

• Directs the Secretary of HHS, through to FDA award grants for incorporating complex adaptive and other trial designs into clinical protocols and drug applications and the collection of patient experience data in drug development. The grants should prioritize the use of digital health technologies and real world evidence.

FDA Cell and Gene Therapy

• There have been growing concerns regarding the burden and pace of gene and cell therapy development. Thus, Cures 2.0 directs the Secretary of HHS, through FDA, to submit a report to Congress on the following: (1) foreseeable challenges to FDA with respect to cell and gene therapies and how FDA will address these challenges; (2) additional resources and authorities FDA needs to address these challenges; (3) the current state of cell and gene therapies regulated by FDA, including the amount, status, and addressed therapeutic areas of applications.

Increasing Use of Real World Evidence (RWE)

• Building on years of efforts to encourage the development and use of RWE to speed drug development, Cures 2.0 directs the Secretary of HHS to, within 6 months of enactment, issue guidance on the use of real world evidence in evaluating drug safety and effectiveness. Such guidance should consider: (1) special and underrepresented populations; (2) acceptable endpoints and outcomes measures; (3) data quality standards; (4) data transparency requirements; and (5) study design considerations.
• Directs the Secretary of HHS to, within 1 year of enactment, identify approaches for HHS to use real world evidence in research and regulation and purchase of health care products and services.
• Directs the Secretary of HHS to establish a Real World Evidence Task Force.

Improving FDA-CMS Communication Regarding Transformative Tew Therapies

• Upon the designation of a product as a breakthrough therapy, fast track product, or a product eligible for accelerated approval, directs the Commissioner of FDA and Administrator of CMS to maintain communication and coordinate decision-making regarding approval and coverage decisions.

Establishment of Additional Intercenter Institutes at the Food and Drug Administration

• Directs the Secretary of HHS to establish two additional Intercenter Institutes at FDA.
• The first institute will focus on a group of common diseases meeting the following criteria: (1) negatively affects at least one major body system; (2) represents a major disease burden; (3) represents a leading cause of mortality or disability; (4) affects at least an estimated 50 million American annually; (5) contributes to increasing health care expenditures; (6) for which COVID-19 exacerbates symptoms or causes serious complications; and (7) for which medical products are FDA approved at a lower rate than for other diseases.
• The second institute will focus on a group of rare diseases, meeting the following criteria: (1) affects individually fewer than 200,000 people; (2) over 90% of such diseases have no FDA-approved therapy; (3) affects in total over 30 million Americans; and (4) over 50% of patients are children.

IND Application Not Needed to Initiate Accelerated Approval

• For breakthrough therapies and regenerative advanced therapies, Cures 2.0 would allow for preliminary clinical evidence, including from clinical trials conducted outside the US, to be used before or after the submission of an Investigational New Drug (IND) application.

Guidance Regarding Development and Submission of Chemistry, Manufacturing, and Controls Information for Expedited Approval

• Directs the Secretary of HHS to issue draft revised guidance to provide clarity regarding the development and submission of chemistry, manufacturing, and controls information, relating to breakthrough therapies, fast track products, accelerated approval, and regenerative advanced therapies.

Post-Approval Study Requirements for Accelerated Approval

• Allows for use of clinical evidence, patient registries, and real world evidence to satisfy post-approval study requirements for accelerated approval.

TITLE IV—CENTERS FOR MEDICARE & MEDICAID SERVICES

GAO Study and Report

• Directs the GAO to submit a study on HHS actions to enhance coverage and reimbursement approaches for innovative technologies and better harmonize and integrate the operating structure of the Medicare program.

Strategies to Increase Access to Telehealth Under Medicaid and Children’s Health Insurance Program

• Directs the Secretary of HHS to issue guidance to states to clarify strategies to overcome existing barriers and increase access to telehealth under the Medicaid program.

Extending Medicare Telehealth Flexibilities

• Extends “originating site” flexibilities for telehealth services to include any site at which the eligible telehealth individual is located when receiving services, including the patient’s home.
• Permits the Secretary of HHS to extend eligibility to procure telehealth services to any provider.

Coverage and Payment for Breakthrough Devices Under the Medicare Program

• Would codify CMS’s Medicare Coverage of Innovative Technology (MCIT) Final Rule, which creates a Medicare coverage pathway for innovative technologies.

Secretary of Health and Human Services Report on Coverage for Innovative Technologies

• Directs the Secretary of HHS, in collaboration with CMS, to submit a report to Congress for innovative technologies, including: (1) a definition for digital alternatives to treatment and therapies, including wearable and digital applications; (2) a standardized process for determining which technologies meet the definition and coverage of such digital alternatives; and (3) an innovative system for payment.

Secretary of Health and Human Services Report on CMS Computer Systems

• Directs the Secretary of HHS to submit a report to Congress on the current state of computer systems of HHS and the costs of replacing such symptoms or hiring contractors or other third-parties to solve for deficiencies in such systems.

Expanding Access to Genetic Testing

• Directs the Secretary of HHS to develop a demonstration program to expand access to genomic sequencing services for children with rare diseases.
• Requires a study by the National Academy of Medicine on the impacts of genomic sequencing on health care.

Medicare Coverage for Precision Medicine Consultations

• Includes genomic precision medicine consultation provided by a qualified clinical pharmacists to Medicare benefits.

Prohibiting the Use of Geographic Tracking Features and Biometrics Within Medicaid Electronic Visit Verification Systems

• Prohibits the use of geographic tracking features within Medicaid electronic visit verification systems.
• Leaves the applicable date for this provision bracketed.

TITLE V—RESEARCH

Advanced Research Projects Agency for Health

• The discussion draft outlines the following five priorities in development of ARPA-H.

1. Tackle challenges requiring large scale, sustained coordination.
2. Create new capabilities (e.g., technologies, data resources, disease models).
3. Support high-risk exploration.
4. Overcome market failures through innovative solutions, including financial incentives.
5. Complement NIH’s existing research portfolio and mission and the private sector’s research initiatives.

Research Investment to Spark the Economy

• Authorizes $25 billion for awards from federal agencies for research investments, $10 billion of which is reserved for HHS.
• Awards can be used to complete or expand ongoing research, including research interrupted by the COVID-19 pandemic.
• New awards can be made to research institutions, laboratories, or other individuals to conduct research on the effects of the COVID-19 and future potential pandemics, pandemic preparedness and response, and improving pandemic forecasting.

Conclusion

While both Cures 2.0 and diagnostic regulatory reform have a long legislative road ahead, they will undoubtedly influence next year’s user fee legislative debate. Accordingly, stakeholders should avail themselves of opportunities to provide input to relevant member and committee offices.

© Arnold & Porter Kaye Scholer LLP 2021 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.