Obama Signs 21st Century Cures Act, Adding $6.3 Billion For Medical Research

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President Obama has signed into law the 21st Century Cures Act. Enacted with overwhelming bipartisan support, the Cures Act:

  • Authorizes more than $6.3 billion in funding for medical research and drug development programs;

  • Provides for new programs and increased funding for mental health treatment and substance use disorder programs; and

  • Includes various Medicare provisions sought by health care providers.

FDA Provisions

The Cures Act aims to increase the speed by which new drugs are brought to market by streamlining clinical trials, allowing the use of patient data in the regulatory review process, and modernizing U.S. Food and Drug Administration (FDA) regulatory procedures.

The Cures Act authorizes $500 million in funding for the FDA over 10 years to minimize the time to supply new drugs and medical devices to patients in need. It concentrates on using a patient-focused drug development program that places increased significance on patient experience data in the FDA's review of new drugs. Under the law, the FDA must also issue new guidance on how sponsors should collect such patient experience data, so it can be considered in the sponsor's application.

The law aims to streamline clinical trials by requiring the FDA to issue new guidance on incorporating adaptive designs and new statistical modeling into new drug applications. The law also allows for the use of real-world evidence to support the approval of a new indication for previously approved drugs.

Among the many FDA-related provisions, the Cures Act creates a new FDA review pathway for biomarkers designed to decrease development time. Moreover, the bill allows sponsors of targeted drugs for rare diseases to use data for similar technology from approved applications when seeking FDA approval. In addition, the law will require pharmaceutical companies to institute compassionate-use policies for drugs meant for life-threatening conditions, expanding access of potentially life-saving medications to terminally ill patients. The Cures Act grants the FDA authority to accelerate approval for regenerative therapeutic products and expands its authority to apply the humanitarian device exemption. Moreover, the law requires the FDA to update lists concerning the regulation of Class I and Class II medical devices.

The provisions listed above are just a few of the many changes designed to improve the efficiency of the FDA and increase access to cutting-edge treatments.

Mental Health and Substance Use Disorder Programs

In addition to the FDA provisions, the Cures Act places an increased emphasis on mental health programs across the country. This is achieved through the creation of a new Assistant Secretary for Mental Health and Substance Use and improved access for early mental health treatment. The law will also establish the National Mental Health and Substance Use Policy Laboratory to study evidence-based practices and service delivery models to improve mental health treatments. Under the law, states will have increased flexibility when using Community Mental Health Services block grant funding to expand programs providing community mental health services. The bill allows for programs to divert individuals with mental illness from the criminal justice system, instead placing them in community-based treatment centers.

The Cures Act places particular emphasis on mental health parity and requires the Department of Health and Human Services to create a plan to strengthen state and federal mental health parity requirements. The law also requires the Centers for Medicare and Medicaid Services to conduct an annual report for five years detailing all serious violations with respect to compliance with current mental health parity requirements and mandates that the Government Accountability Office conduct a study of current health parity requirements and provide recommendations for improved enforcement and education.

Medicare Provisions

In addition to the FDA provisions, in what may be the beginning of the post-Affordable Care Act health care delivery reforms, the Cures Act addresses miscellaneous Medicare reforms that were of concern to certain Medicare Part A and B providers, including long-term care hospitals, continuing Medicare reimbursement for certain hospital-based outpatient departments, and Medicare Advantage plans.

Health Plan Implications

Employers sponsoring health plans should look for additional guidance on compliance with the Mental Health Parity and Addiction Equity Act, particularly with regard to non-quantitative requirements, such as the standards that apply for pre-certifying benefits. The Cures Act's new procedures for approving emerging drugs will, at some time in the future, begin to affect the formularies maintained under prescription drug plans. The Cures Act also specifically allows certain small employers to establish health reimbursement accounts to reimburse employees for the cost of individual health insurance, up to a prescribed dollar amount. These accounts would previously have violated requirements under the Affordable Care Act.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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