CARES ACT Reforms to Address Drug & Device Shortages - McDermott

CARES Act Reforms to Address Drug and Device Shortages and Updates to the OTC Drug Monographs



On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, into law in response to the COVID-19 pandemic. Among other healthcare-related provisions, the CARES Act addresses topics relevant to the US Food and Drug Administration (FDA), summarized here.

In Depth

 Drug Shortages and Device Shortages

The CARES Act amends section 506C of the Federal Food, Drug, and Cosmetic Act (FDCA) to require manufacturers of either (1) any “drug that is critical to the public health during a public health emergency” and (2) active pharmaceutical ingredients (APIs) used in any such drug to notify FDA of a “permanent discontinuance of the manufacture” or “interruption in the manufacture” of the drug or API, respectively. FDA previously only required manufacturers of drugs characterized as “life-supporting” drugs, “life-sustaining,” or “intended for use in the prevention or treatment of a debilitating disease or condition” to report drug shortages. At a minimum, manufacturers must identify:

  • The reasons for the discontinuation or interruption (and, where API is the cause, the source of the API and known alternative sources).
  • Whether “any associated device used for preparation or administration included in the drug” is the reason for the discontinuation or interruption.
  • The expected duration of the discontinuation or interruption.

Additionally, manufacturers of the above-described categories of drugs (including biologics) or APIs must create and maintain a redundancy risk management plan. This plan, subject to inspection by FDA, must identify and evaluate risks to the supply of the drug for each establishment.

As discussed below, the CARES Act also amends section 506C(g) of the FDCA to require FDA to expedite and prioritize the review of drugs if the agency concludes there is, or there is likely to be, a drug shortage.

Device Shortages

Notably, the CARES Act creates a new section 506J of the FDCA, which requires medical device manufacturers to report potential shortages or supply chain disruptions. As we previously discussed, there had been no analog to the drug shortage reporting requirements under FDCA 506C. Manufacturers of devices (1) “critical to public health during a public health emergency, including devices that are life-supporting, life-sustaining, or intended for use in emergency medical care or during surgery” or (2) for which FDA determines that “information on potential meaningful supply disruptions is needed during or before a public health emergency” now must report permanent discontinuances (except to the extent they result from an approved modification to the device) or interruptions likely to lead to a meaningful disruption in the supply of that device in the United States. Manufacturers must submit the notification, which includes reasons for the discontinuance or interruption, at least six months before the date of discontinuance or interruption or, if that is not possible, as soon as practicable.

As with drugs, FDA may prioritize and expedite inspections, premarket reviews or other submissions to FDA in the event of a shortage and may make a device shortage list available to the public.

Coverage of Testing and Preventative Services

The CARES Act contains provisions intended to ensure rapid access to COVID-19 diagnosis and prevention services, discussed in depth here.

OTC Drug Review

The CARES Act establishes section 505G of the FDCA, which clarifies the FDA approval process for certain over-the-counter (OTC) drugs marketed without an approved drug application under section 505 of the FDCA.

The CARES Act establishes a mechanism for FDA to issue administrative orders determining whether there are conditions under which drug products are either:

  • Exempt from the requirement under section 503(b)(1) of the FDCA that the drug be dispensed under the professional supervision of a licensed practitioner, or
  • The subject of minor changes in dosage form, where the applicant has satisfactorily demonstrated that the changes will not (1) affect the safety and effectiveness of the drug, or (2) materially affect the extent of absorption or other exposure to the active ingredient in comparison to a suitable reference product.

The administrative orders mechanism is meant to speed up the OTC Drug Review process, which previously involved a time-intensive three-phase rulemaking process to evaluate the safety and effectiveness of OTC drug products marketed in the United States before May 11, 1972. The advisory review panel for the first phase classified these OTC drugs as Category I (generally recognized as safe and effective (GRASE) for the claimed therapeutic use), Category II (not GRASE or unacceptable for the claimed indication) and Category III (those for which insufficient data was available to permit final classification).

The second phase involved FDA’s review of active ingredients in each class of drugs. Based on this, the agency published its conclusions in a tentative final monograph (TFM), subject to public notice and comment. The third and final phase was publication of final regulations in the form of OTC drug monographs. Any product containing active ingredients or indications not within this monograph require an approved new drug application (NDA) for marketing.


The CARES Act also adds other OTC drug-related provisions:

  • It amends section 502 of the FDCA so that an OTC drug product is considered misbranded if it (1) does not comply with the requirements under the newly established section 505G of the FDCA (including the requirement for OTC drugs to comply with any final OTC monographs) and (2) it is made in a facility for which there are outstanding fees required under section 744M of the FDCA.
  • It clarifies that the new section 505G of the FDCA does not apply to any nonprescription drug that was previously excluded by FDA from OTC Drug Review.
  • It clarifies that sponsors of sunscreen ingredients with pending orders have the option to seek review in accordance with the Sunscreen Innovation Act (SIA) or to seek review under the new monograph review process. The election must be made within 180 calendar days of the date of enactment of the CARES Act (March 27, 2020).
  • It requires an annual Congressional report to the Committee on Energy and Commerce of the House of Representatives and Committee on Health, Education, Labor, and Pensions of the Senate describing FDA’s progress in “evaluating the cough and cold monograph . . . with respect to children under 6” and “as appropriate, revising such cough and cold monograph to address such children through the [administrative] order process.”

OTC Drug User Fees

The CARES Act established an OTC Drug User Fee, subject to reauthorization in 2025. The new sections 744L to 744N apply to facilities identified as “OTC monograph drug facilit[ies]” and contract manufacturers of OTC drugs, as well as to those that submit an OTC monograph order request. The provision is a longstanding agency priority to improve oversight of OTC drugs through additional resources.


Under the CARES Act, manufacturers of OTC drugs could obtain 18 months of market exclusivity for their products, which could spur OTC drug innovation.

The CARES Act also creates section 512A of the FDCA, which allows expedited review of animal drugs through the new Priority Zoonotic Animal Drug designation. The designation is intended to address zoonotic diseases, diseases that spread from non-human animals to humans, before they cause harm to humans. This may be significant, as several of the most serious epidemics and pandemics of the 21st Century have been or are thought to be zoonotic diseases, e.g., swine flu, avian flu, severe acute respiratory syndrome (SARS), Ebola and COVID-19.