Exploring Critical Business and Legal Issues across the Healthcare and Life Sciences Industries
Exploring Critical Business and Legal Issues across the Healthcare and Life Sciences Industries

Three Digital Health Trends Affecting Investors in 2021

Private equity deal volume hit a low in the first half of 2020 as the pandemic slowed the US and global economies. But toward the end of the year, deals began picking back up, particularly in the digital health space.

COVID-19 forced healthcare providers to shift from in-person to virtual care, and technology was the vehicle to make that switch possible. Investors noticed, and more deals focused on companies specializing in telehealth, remote patient monitoring and other technology platforms that facilitate communication among specialists.

Expect this trend to continue in 2021, and keep these three factors in mind when evaluating the digital health landscape.

Easing of Laws and Regulations Surrounding Telehealth and Digital Health

Both telehealth and digital health are highly regulated, as every state has laws and regulations that govern how care is provided virtually and how those services are billed. In response to the pandemic, we’ve seen flexibility with these laws and regulations, and the Biden administration has signaled that it might make some flexibilities permanent.

Investment opportunities will likely increase as a result of the Biden administration’s willingness to lower some of the longstanding barriers to coverage and payment for virtual services, including telehealth, remote patient monitoring and other related services. That’s a positive sign for firms looking at healthcare through the lens of a technology solution.

Reallocation of Resources Due to Vaccine Rollout

Since the onset of the pandemic, labs have conducted a huge volume of testing and have had to ramp up personnel and other resources. Plus, the vast majority of COVID-19 tests must be ordered by a physician or nurse, further straining available resources.

While testing will likely continue in some capacity for a long time, the number of tests will presumably decline steadily as more people are vaccinated. That means capacity will open up, both for healthcare providers who were ordering the tests and for lab companies that were performing them. As a result, firms should begin asking themselves:

  • Where are there opportunities to shift focus and resources previously devoted to testing?
  • What other conditions lend themselves to at-home testing?
  • Where can companies shift efforts that were previously focused on reviewing orders?

Addressing Mental Health and the Other Epidemic

COVID-19 obviously emerged as the foremost health emergency of the past year. But it’s important to remember that the United States is still in the midst of an opioid addiction epidemic.

On top of that, COVID-19 has been hard on many people’s mental health. In response, many employers have made mental health a higher priority, and that trend is likely to continue, even as employees return to the workplace. In 2021, investors are likely to continue to emphasize digital health tools and service offerings that are focused on mindfulness and behavior health.

To learn more from Lisa and other thought leaders about the healthcare investing landscape heading into 2021, you can view a recording of The Deal’s webinar here.

McDermott Will & Emery and EY during the 2021 J.P. Morgan Healthcare Conference: Hospital and Health Systems: Legal and Financial Trends

Leading professionals Gary Burke (Partner, Forensics, EY), Sandy DiVarco, and Jennifer Geetter (Partners, McDermott Will & Emery), Mike J. India (Managing Director, EY-Parthenon) and Matthew Weiss, MD (EY-Parthenon Managing Director, Health care, Ernst & Young LLP) discussed critical legal, regulatory and financial trends facing hospitals and health systems with moderator, Charlie Buck (Partner, McDermott Will & Emery).

Below are the top takeaways for McDermott Will & Emery and EY during the 2021 J.P. Morgan Healthcare Conference: Hospital and Health System: Legal and Financial Trends, click here to access the full webinar.

Access the PDF here.

Many regulatory requirements were relaxed in respond to the COVID-19 public health emergency. There has been much discussion regarding the extent to which these restrictions will “snap back” after the end of the public health emergency, because the public health emergency has highlighted the value of certain delivery models.
“I think there is going to be streamlining in some of these regulatory structures. So when we look at what’s going to be durable, hopefully we will see changes in the process that will make it easier for hospitals and other providers to respond and to remain on top of things,” said Sandy DiVarco, Partner, McDermott Will & Emery. “When the public health emergency expires, there’s a big concern that a number of these flexibilities and other regulatory waivers are going to go away, but as we’ve already seen in some areas like telehealth flexibilities and enhanced telehealth reimbursement, there are changes being made now to make some of these changes permanent, or at least for a longer period of time,” she continued.

With many workers planning to retire or shift to other roles once the pandemic is over, turnover and attrition will be a problem within the industry. There will also be a need to help move skilled labor across state lines to fill gaps in the workforce.
“I think we’re going to see significant attrition in the healthcare workforce due to burnout from the pandemic on top of preexisting stress and dissatisfaction,” stated Matthew Weiss, MD, EY-Parthenon Managing Director, Health care, Ernst & Young LLP. “While liberalizing regulations around telehealth and practice across state lines may mitigate the impact, clinical labor costs will continue to rise at the same time as provider organizations try to improve their financial position in the face of the pandemic. In addition, we’ve learned a lot of lessons from the changes in patterns of care related to the pandemic that call into question the impact and necessity of certain services, which may decrease utilization long term.”

The acceleration of telehealth will have broad ranging impacts. As the virtual experience improves, patients and consumers will demand similar convenience for their in-person visits. Digital health tools also need to be more integrated into care delivery. “When we talk about digital health, we want to pull back a little bit to frame what we mean and the different ways that these digital tools can be used,” said Jennifer Geetter, Partner, McDermott Will & Emery. “I would suggest that one thing we need to do is reimagine our whole delivery system. We will need a true digital strategy as opposed to something that’s used only occasionally or as a fancy add-on. So rather than having episodic digital encounters, we want to think about how we move this at the enterprise level, where we have a range of tools, a range of technologies and support beyond episodic care,” she continued.

Hospitals and health systems are reevaluating their core competencies and considering what functions that can outsource or place, potentially, in joint ventures. Non-core business can also become of source of revenue if offerings are extended to other parties. “The strategy still largely remains the same for providers, which is centered around trying to reach more patients.” said Mike J. India, EY-Parthenon Managing Director, Health care, Ernst & Young LLP. “I think what’s interesting though, is that there’s growing comfort levels that we see with providers loosening their definition of what it actually means to reach more patients. Should their role be to treat the patient and/or be the channel or enabler for the patient to be treated? That’s a question that we see them wrestling with, and probably one that they’ll wrestle with more, as we think about reshaping the way care is increasingly delivered with digital tools.”

To catch up on all of the sessions at the McDermott Will & Emery and EY during the 2021 J.P. Morgan Healthcare Conference, please click here.

EU Parallel Trade Permit: Who Has Burden of Proof that Plant Protection Products and Biocides Are Identical?

On 15 December 2020, the French administrative court specified who bears the responsibility to prove that two plant protection products are deemed identical, even in their packaging boxes, in the context of submitting an extension of a parallel trade permit.

Gritche, a French cooperative company specialised in the wholesale of chemical products, has been entitled to a parallel trade permit since 13 December 2014. The permit allows it to import a wheat and barley fungicide called “Tipi” from the United Kingdom. On 27 June 2017, the company filed an application for an extension to the French Agency for Food, Environmental and Occupational Health & Safety (ANSES) in order to be able to import Tipi from Hungary. The product to be imported under the name “Tipi” holds a marketing authorisation on the Hungarian market under the name “D.” granted to Syngenta AD. Gritche considered that this product D. (which would be imported from Hungary under the Tipi name) was identical to the fungicide D. that Syngenta France SAS is allowed to sell on the French market.

On 31 July 2018, the ANSES reached its conclusions regarding the extension request for Tipi’s trade permit. The ANSES estimated that the active ingredients found in the Hungarian product D. and the one authorised in France under the reference D. had the same origin, and that both products’ composition was identical. However, the ANSES stated that the information at its disposal did not make it possible to ascertain whether the packaging was identical. Thus, the origin extension request of the trade permit had not met the requirements under article 52 of EU regulation No 1107/2009 or under French regulations. The ANSES therefore denied the French cooperative its extension request for the Tipi permit.

On 5 October 2018, the Association of Users and Distributors of Agrochemicals in Europe made an appeal to the administrative court on behalf of Gritche against the ANSES’s refusal.

The administrative court considered that “article 52(3) of EU regulation No 1107/2009 states that Member States shall on request provide each other with the information necessary to assess whether the products are identical within 10 working days of receiving the request.”

However, “Gritche argues that the ANSES failed to observe the provisions under article 52 of the above-mentioned regulation. The claimant states that it cannot be held responsible for missing information on the packaging boxes since the ANSES should have gathered these information from the Hungarian authorities.”

On the other hand, “it follows from some documents in the file that, subsequent to the reception of the application to the permit’s extension, the ANSES sent a letter requesting explicit information regarding the packaging’s size, volume and type of material for the D. product. Hungary sent the related information to the ANSES, including the packaging box’s composition, but did not mention the exact material which had been used, instead only writing “plastic”. In response, even without being required to do so, the ANSES sent a letter to the Hungarian authorities asking them to precisely state the plastic material used for the packaging boxes. Their response did not bring any additional information. Considering all these elements, the ANSES did not make any illegal decision by relying only on “the available elements,” nor by not registering a new information request under article 52(2) of regulation No 1107/2009.”

Contrary to the company’s claims, the procedure for granting a parallel trade permit was interrupted from the day the request for information was sent to the competent authority of the Member State of origin. In addition, the company was not able to prove that the materials used in both products were identical or equivalent. The burden of proof is the company’s responsibility. By considering all these elements, the ANSES had the right to deny extending the Tipi’s parallel trade permit to Hungary, based on article 52 of EU regulation No 1107/2009, and for reasons relating to the safety of human and animal health and the environment.

Lawsuits Don’t Make Vaccines… and Other Lessons from AstraZeneca’s Agreement with the EU Commission

Key Take-Away: To avoid ambiguity, parties drafting manufacture and supply agreements should explicitly set out the factors that they deem relevant in assessing a party’s efforts. The manufacturing party may wish to explicitly mention its commitments to other purchasers and expected technical difficulties. This is particularly true in the field of biotechnology where problems in development and early stages of production are common

Vaccines are finally offering hope that the COVID-19 pandemic, which has claimed millions of lives and bulldozed the way we lived “before,” will come to a halt. However, even as the efficacy data is reported and companies obtain regulatory approval, there is another hurdle: global demand far outstrips production capacity.

In this febrile context, AstraZeneca has announced that due to production problems at a Belgian site, it will not deliver to EU member states the expected number of doses of its vaccine, which was granted a conditional marketing authorization in the EU on January 29, 2021. To bolster its contention that AstraZeneca is in violation of its obligation to supply the scheduled doses of vaccines, the EU Commission published a redacted version of the Advance Purchase Agreement for the Production, Purchase and Supply of a COVID-19 Vaccine in the European Union (the APA), which the Commission negotiated and signed on behalf of Member States on August 27, 2020.

What does the agreement say about AstraZeneca’s obligations to supply the vaccines? And what lessons can be gleaned for those negotiating manufacturing and supply agreements in the field?

read more…

Managed Care Spotlight: 2020 Year in Review and 2021 Outlook

The past year saw significant developments in managed care regulation at the federal and state levels and we anticipate the rapid pace of change will continue through 2021. In this webinar, we analyzed the most significant legal developments affecting health plans in 2020 and explored what to expect in 2021. Our thought leaders discussed the impact of managed care regulations on a broad range of industry subsectors, from plans and providers to vendors and pharmacy benefit managers.


  • The Biden administration seeks to set a tone of order and predictability in its COVID-19 relief and response efforts. These efforts include a swath of executive orders on topics such as data aggregation, support for the National Guard and strategies for vaccine distribution. The acting secretary of Health and Human Services also recently sent a letter to state governors stating that the agency will likely extend the public health declaration—and its attendant regulatory flexibilities—through 2021.
  • The direct contracting model is the next step in the evolution of the Medicare accountable care organization portfolio. The model allows participating organizations to take on a greater level of financial risk, including the Centers for Medicare & Medicaid Services’ version of global capitation. The direct contracting global or professional options may be particularly attractive to managed care organizations, because these options allow new entrants with low or no fee-for-service beneficiaries.
  • The coming year will likely see a continued trend toward financial risk assumption in value-based contracting. Within this trend, there are two common variations. In one, the provider or intermediary entity takes on broad financial risk for a large patient population with diverse demographics and health statuses. In the other common variation, risk sharing is focused on specific populations, such as individuals with a particular disease or significant chronic conditions.
  • Plan/provider joint venture health plans will continue to pick up steam in 2021. These arrangements allow the provider organization to have an economic interest in a health plan without having to build out administrative capabilities. In turn, the plan is able to align itself with a key provider network in one or more markets and potentially take advantage of co-branding opportunities.
  • Managed care organizations should prepare for the implementation of the No Surprises Act, which authorizes a suite of reforms to mitigate surprise billing. Signed into law on December 27, 2020, as part of the Consolidated Appropriations Act of 2021, the legislation applies to group health plans, issuers offering group or individual insurance, and providers. The implementation of the Act will involve multiple rulemakings, and the final rules likely will raise preemption questions, as many states have their own statutes and regulations regarding surprise billing.

Watch the recording and download the slides here.