The Food & Drug Administration’s (FDA) enforcement discretion policies play a critical role for Life Science companies. These exemptions allow companies to deliver innovative products quicker to the public and help address unmet medical needs without undergoing the traditional approval process, which is extensive and can take decades. However, as recent world events have led to more widespread regulatory changes, insurance professionals are seeing greater risks to insureds. As an industry leader, it’s important to stay up-to-date with regulatory changes and ensure your company is protected in the event an enforcement discretion policy is implemented or revoked.
The FDA is one of the oldest consumer protection agencies in the U.S and is currently responsible for regulating food, drugs, medical devices, radiation-emitting products, vaccines, blood and biologics, animal and veterinary, cosmetics and tobacco products.1 Updates and changes to FDA regulations can have an impact on the testing, development, manufacturing and distribution of Life science companies and their products.
What Is Enforcement Discretion?
As an agency responsible for ensuring public health and safety, if the FDA believes a product risk is low or could have a significant benefit to the public, it will exercise enforcement discretion on certain requirements allowing a company to bypass its typical regulatory pathway. Enforcement discretions can be applied in a variety of ways, including downgrading the level of regulation, waiving compliance with certain regulatory requirements or issuing a notice of enforcement discretion under specific circumstances.
In addition to enforcement discretion, the FDA can approve an emergency use authorization (EUA). An EUA makes medical supplies, like vaccines, more available for use during public health emergencies. Under an EUA, the FDA may allow the use of unapproved medical products to treat or prevent serious or life-threatening diseases or conditions.2
“Both enforcement discretions and emergency use authorizations make it possible for a manufacturer to sell their product outside the traditional regulatory environment. The emergency use authorization applies in a public health emergency, where the enforcement discretion could apply to something that is considered low risk to patients, but there is still a medical need,” said Lauren Goren, the executive life science team lead at The Hartford. These exemptions play an important role in allowing companies to deliver innovative products more quickly to the public without undergoing the traditional approval process which is extensive and can take decades.
Products That Fall Under Enforcement Discretion
There are a range of products that could fall under an enforcement discretion. Over the years, laboratory developed tests, medical software and Drug Efficacy Study Implementation (DESI) products have been included in these policies.
“Pharmaceutical products, over-the-counter products and various types of software that are used in medical devices are some of the main classes of business that we see fall under an enforcement discretion,” said Goren.
COVID-19 Materials
When the COVID-19 Public Health Emergency (PHE) began, the FDA applied a policy of enforcement discretion to several products, allowing companies to address the global crisis including protective equipment (PPE) products, like face masks and hand sanitizer.3
Many of the enforcement discretion approaches and EUAs issued in response to the pandemic expired along with the end of the PHE, as they were intended to expand access and availability of products, not to permanently replace current regulations.
Medical Software
For many software functions that pose minimal risk to patients and consumers, the FDA will exercise enforcement discretion. This includes device software functions that help patients and users self-manage their disease or condition without providing specific treatment suggestions.
There are a variety of examples of medical software currently under enforcement discretion:
- Software functions that use a checklist of common signs and symptoms to provide a list of possible medical conditions and advice on when to consult a health care professional.
- Software functions that prompt a user to enter which drug they would like to take concurrently and provide information about whether interactions have been seen in the literature.
- Software functions that provide historical trending and comparison of vital signs (body temperature, heart rate, blood pressure or respiratory rate).
DESI Products
The Drug Efficacy Study Implementation (DESI) was a program started in 1962 to ensure pharmaceuticals were approved for both safety and efficacy prior to marketing. Prior to 1962, products were approved for safety only.
“The FDA has done significant reviews of DESI products and for some there is no evidence of efficacy. This leads companies through additional reviews and approvals.
Understanding Your Exposure With Enforcement Discretion
Velut explains a large portion of products that fall under enforcement discretion are typically excluded from standard product liability policies, which creates a gap in coverage for companies. “There needs to be an increase in education around coverage gaps. Considering the complexity of enforcement discretion, it is important to understand how your insurance company will provide coverage for products that would fall under this policy”.
While companies want to produce lifesaving products quickly to help patients, it is important to understand the risks and how insurance can help protect your business. For example, Enforcement Discretion Exception coverage addresses common gaps by including coverage for products that are subject to such a policy. This helps provide protection for developing, manufacturing and testing new products that have not gone through the current standard FDA approval process.
“Business leaders need to understand what coverages their company needs if their product falls under an enforcement discretion versus a full FDA approval,” said Velut.
Impacts to Life Science Companies
Because FDA enforcement discretion policies push these products to market without traditional reviews, authorizations and clearance, life science companies need to be aware of the risk associated.
“Overall, the life science industry is going to see more advancement over the coming years. There is research being done on regenerative medicine and various tissue products. I expect as we see more medical innovation there will be an increase in the usage of an enforcement discretion approach. That is why it is important for life science companies to educate themselves and protect their products,” said Goren.
1 “What Does The FDA Regulate?,” U.S. Food & Drug, January 2022
2 “Understanding the Difference Between FDA Enforcement Discretion and EUAs,” FDA Imports, May 2020
3 Federal Register, “Tenth Amendment to Declaration Under the Public Readiness and Emergency Preparedness Act for Medical Countermeasures Against COVID-19”
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