In 2016, Congress passed the 21st Century Cures Act (Cures Act), which contained provisions to help accelerate medical product innovation while reducing regulatory burden, as well as to increase efforts for critical research and increase the involvement of patients and their perspectives in research and the product development process. The Cures Act specifically provided the US Food and Drug Administration (FDA) authority to modernize product development and review, and create greater efficiencies and predictability in product development and review. In June 2018, in response to this congressional mandate and corresponding new authorities, as well as reauthorizations of FDA’s user fee agreements, FDA made a series of announcements for a proposal to modernize new drug development.

Highlights of FDA’s initial proposal included:

  • Focusing on recruiting talent across disciplines;
  • Building multidisciplinary teams for more efficient collaboration;
  • Prioritizing operational excellence through a single and consistent review process;
  • Improving knowledge management through enhancements to information technology and honed expertise within review divisions;
  • Emphasizing safety and risk-benefit analysis before and after approval; and
  • Incorporating the patient voice into product development.

As articulated by former FDA Commissioner Scott Gottlieb, “[a] principal aim of these proposed changes is to elevate the role of . . . scientists and medical officers to take on even more thought leadership in their fields.”  The agency contemplates implementing organizational and structural changes that make drug review divisions more therapeutically-focused to promote efficient review and transparency in – as well as patient and stakeholder access to – the review process. According to the agency, these and other changes that are part of the Cures Act will result in a 20 percent improvement in efficiency.

Continue Reading Modernizing FDA’s New Drugs Regulatory Program – Reviewing the Guidance Ecosystem and Implications for Life Sciences Companies

What is your favorite part about your health policy work at McDermott+Consulting? 

We have a deep bench of experts on a wide variety of health policy issues. This allows our team to be involved in so many different aspects of health policy – and that is my favorite part. There is no “normal” or “typical” day here. We work on different types of projects (advocacy, stakeholder engagement, strategic planning, for example) for different clients, including hospital systems, diagnostics, rural health, physician groups and others, in any given day. It keeps me on my toes and gives me an opportunity to learn new things every day.

What is the biggest opportunity and greatest challenge facing clients in your area of focus today? 

The biggest opportunity and greatest challenge facing clients today is the same: the unsettled health policy landscape. The politics around health policy are not as clear cut as they used to be, even just a few years ago. This puts clients in a unique position to shape and influence policy in ways that were not necessarily available a few years ago. On the other hand, there is little ability to predict what happens next. , It can be challenging to navigate and understand where to focus and how to deliver your message when the politics become murky but, that is what we are here for!

Continue Reading Five Questions with a Health Policy Specialist: Rachel Stauffer of McDermott+Consulting

Drew Elizabeth McCormick
Associate
Office: Boston
Years at Firm: 2

What is your favorite part about practicing health care law at McDermott? 

I get to work with world class lawyers on cutting edge issues and help our clients navigate the challenges of succeeding in a very dynamic, heavily regulated industry. I am constantly being challenged and learning new things, all while having the honor of helping guide our clients in transforming health care.

What is the biggest opportunity and greatest challenge facing clients in your area of focus today? 

Definitely the ability to take on risk and succeed in a value-based payment paradigm. We are seeing many shifts in the industry, which are largely being driven by fundamental changes in reimbursement structures away from fee for service. Compounding this, the regulatory framework is lagging behind in many regards, creating tensions and uncertainty that our clients lean on us to help them resolve.

Continue Reading Five Questions with a Health Lawyer: Drew Elizabeth McCormick

The current environment for healthcare transactions is fiercely competitive with high prices, tough deal terms and limited time for proper due diligence. In terms of both value and number of deals, 2018 was the biggest year for health care private equity (PE) since the financial crisis. More large cap PE firms are moving into the small and mid-cap space, increasing competition. At the same time, non-health-care entrants are competing with US and international PE, especially in the area of physician practice management and other related health care services.

Faced with this stiff competition, sponsors are getting more creative in their healthcare partnerships, whether that means partnering with management teams on new strategies, partnering with large strategics or even with one another.  These innovative collaborations can open up more investable opportunities, including public to privates and secondary trades among sponsors.

Even with these creative new opportunities, submitting a winning bid for a health care services business in a hotly contested auction can be a Herculean task. When outbidding the competition is not an option, here are some tips to help differentiate your offer:

Continue Reading Tips for Winning Competitive Health Care Auctions

Anisa Mohanty
Associate
Office: Washington, DC
Years at Firm: 3

What is your favorite part about practicing health care law at McDermott? 

I started out pre-med in college, but I quickly realized what excited me was the intersection between science, medicine, policy and law. Many of our clients are at the forefront of shaping policy in the life sciences space through their innovations, and the quality of our health care practice means we have the opportunity to partner with and support them in really exciting projects. I am grateful for the breadth and depth of knowledge and experience of my colleagues—it pushes me to be a better, smarter and savvier lawyer.

What is the biggest opportunity and greatest challenge facing clients in your area of focus today?

Because our clients are addressing some of the most complex challenges in healthcare and healthcare delivery, often there aren’t straightforward regulatory paradigms for their businesses. Our clients want to do the right thing, but that can be challenging because their regulators haven’t yet articulated how they will enforce the law as it applies to their services and solutions. Digital health is a great example of this and there’s a lot of opportunity to advocate for our clients so that regulators can take industry perspectives into account when finalizing regulations.

What kind of client work gets you most excited when it comes across your desk?

I love when a client has a service or product under development that has real potential to address an unmet public health need. It goes without saying that the American healthcare system is incredibly complex, but if I’m doing my job well, piece-by-piece, I’m helping to untangle it so our clients can deliver meaningful therapies and solutions.

Continue Reading Five Questions with a Health Lawyer: Anisa Mohanty

In today’s competitive and fast-paced life sciences dealmaking environment, buyers and investors are often unable to spend as much time on due diligence as they might like. Market players are often highly focused on the science itself and, as a result, may pay less attention to issues such as supply chain, intellectual property components and reimbursement. However, addressing these topics at the due diligence stage is critical—they can cause a deal to unravel if left unexamined, regardless of the strength of the science.

Due diligence standards and considerations vary significantly across life sciences subsectors— pharma, medical devices, digital health and AI are each governed by unique regulatory structures and operate in very different deal landscapes. Buyers and investors are well advised to consider end-game issues such as reimbursement options, protection for valuable IP and pathways to commercialization early in the planning process. Framing the areas of diligence focus around the value drivers of their target deal model and key contract elements requiring verification will allow buyers to leverage their diligence findings into an informed, forward-thinking action plan.

Reimbursement. When evaluating a potential life sciences transaction, it is never too early to start thinking about reimbursement. Due diligence should take into account the commercialization channel for the product and include engagement with data sources on alternative therapies and their reimbursement. If the product in view is entering an existing market, conversations with reimbursement specialists can help a buyer determine the best path to reimbursement. A product that is opening a new market, however, is more challenging and requires larger amounts of data.

Intellectual Property. The strength and security of the IP portfolio is central to the M&A discussion and in some cases will influence the deal outcome and valuation itself. Taking a deep dive into IP-related matters—including contracts and consulting agreements—is important for reducing risk, but can also be very expensive. Companies should plan their IP diligence strategy around their specific business needs. Careful attention to contracts—whether with development partners, manufacturers, or parts suppliers—is a critical element of IP due diligence, because it prevents surprise IP ownership claims from arising just as a transaction is about to conclude.

Leadership. The target company’s management team should be another key area of focus of diligence efforts to ensure a smooth transaction. In early-stage life sciences companies, for example, the founding CEO may be a scientist or an engineer with little experience building or leading a company. Considering whether the company has the right people with the right skillsets to successfully manage the company through every stage—preclinical, clinical, and commercial—is critical to success.

Sell-Side Considerations

Is there a marketplace for this innovation? What does that buyer’s current portfolio look like and what other acquisition targets are they considering? What are the options for reimbursement? Are the IP licenses set up with a view to the eventual commercialization partner? While first-time life sciences entrepreneurs and company founders may be surprised to face these types of end-game questions so early on in the process, a realistic picture of the final result is vital for both the company’s strategic plan and a successful transaction. Early-stage and emerging companies should be proactive in contemplating diligence issues so they are prepared to answer questions from investors and buyers. This advance work will prepare companies so they can either provide answers when due diligence issues arise during the course of the transaction or identify a path to developing solutions. Such planning should take into account the ultimate buyer and how the specific product or company will fit into the broader life sciences landscape in the future.

It is never too early to get a head start on diligence so that all parties are well prepared to come to the deal table. Evaluating the competitive landscape and commercialization pathways early on can help buyers and sellers alike identify potential problems, work to mitigate risk, and ultimately create efficiencies that will save time and money in the long run.

Erika Mayshar
Partner
Office: Los Angeles
Years at Firm: 2

What is your favorite part about practicing health care law at McDermott? 

When I moved to McDermott, I was proud to be joining the nation’s top health care law practice,   but the industry rankings don’t tell the whole story. The breadth and depth of expertise are backed by a collegial and innovative culture that builds strong relationships among colleagues and clients. Health lawyers at McDermott truly enjoy their work and working with each other.

What is the biggest opportunity and greatest challenge facing clients in your area of focus today? 

Industry disruption in health care is an ongoing reality for boards of directors and health system leadership. Being able to respond to moving-target opportunities is a challenge for leaders facing fast-paced regulatory change and economic pressure. The challenge is to determine what type of change makes sense for each organization – not to embrace disruption for the sake of staying current, but to seek opportunities that further the corporate mission and then implement change with meaningful stakeholder involvement. Tax-exempt nonprofit hospitals face additional hurdles, both cultural and legal, but are continually finding new ways to serve their communities and collaborate with for-profit businesses in creative ways.

Continue Reading Five Questions with a Health Lawyer: Erika Mayshar

International law firm McDermott Will & Emery was named 2019 “Healthcare Team of the Year” by Chambers USA at its awards ceremony celebrating legal excellence. This is the fourth time McDermott has received the honor – more than any other law firm in the awards’ history.

The “Healthcare Team of the Year” award comes on the heels of McDermott’s industry-leading health practice garnering a national Band 1 ranking in the Healthcare category of the 2019 edition of Chambers USA for the 10th consecutive year – also the only firm to hold that distinction.

“Our team is dedicated to helping health care companies push the boundaries of what it means to be innovative,” said McDermott Will & Emery Partner and International Head of McDermott’s Health Industry Advisory Group, Eric Zimmerman. “Receiving Chambers’ “Healthcare Team of the Year” award is a powerful testament to that work and to our passion for contributing to the health care and the legal industries at the highest levels. Thank you to our clients and to Chambers for recognizing McDermott again this year.”

McDermott Will & Emery is the nation’s leading healthcare law firm. The Health Industry Advisory group is the only health practice to receive top national rankings from U.S. News – Best Lawyers “Best Law Firms,” Chambers USA, The Legal 500 US and Law360. The practice was also recognized by Chambers as “Health Team of the Year” in 2010, 2013 and 2017. McDermott has held the top spot in PitchBook’s League Tables as the most active firm for healthcare private equity since 2017.

About Chambers USA

Chambers USA covers all the states in the U.S. Law firms that have a national presence are also ranked in Nationwide tables (which focus on those firms that are the country’s best in their respective areas of practice). Chambers USA rankings and editorial commentary are based on independent research, and interviews with clients and other purchasers of legal services. Chambers & Partners is one of the premier directories for legal services and in a recent survey of 20,000 in-house counsel over half reported that their directory of choice when reviewing law firms and individual lawyers is Chambers & Partners.

Pharmaceutical outsourcing has emerged as a robust—and rapidly growing—subsector of the life sciences industry. As the push for efficiency continues, more pharmaceutical, biotech and medtech companies are turning to contract research organizations (CROs), contract development organizations, medical affairs outsourcing and other service providers for help bringing products to market, manufacturing and distributing products, and improving quality. This trend is creating exciting new opportunities for investors in this burgeoning space.

Several factors are driving this growth in pharmaceutical services outsourcing:

  • Pharma companies are becoming more comfortable with outsourcing. Of outsourced service providers, CROs have the highest penetration, with approximately 50 percent of clinical trials outsourced. Other areas of outsourcing are far less penetrated, however, offering ample opportunity for investment. Consider researching opportunities in health economics or outcomes research market access, for example.
  • The current health care/pharma environment is rich for pharma outsourcing. Biotech is thriving: capital is readily available, and the US Food and Drug Administration regulatory environment for approval of new products is favorable. On the pharmaceutical front, ongoing consolidation has fostered an efficiency mindset. And across the health care and life sciences space, big data is being harnessed in new ways that make outsourcing easier and more efficient than ever.
  • We are in a period of great market fragmentation. The market is starting to skew toward earlier stage rather than big pharma companies. Trials also are increasingly designed with an emphasis on subpopulations and advanced analytics (such as specialty drugs targeted to specific genotypes). Traditional pharma often lacks the specialized skillset to design trials with this level of specificity and therefore can greatly benefit from an outsourcing partner.
  • The number of small pharma and biotech companies has surged over the last decade. Many of these companies have limited resources and staffing, and therefore must outsource tasks such as clinical trials, production of clinical lots and, ultimately, commercial services. In turn, outsourcing companies have developed and expanded their range of service offerings to cater to the specific needs of these smaller pharma/biotech companies.
  • Specialty drugs and personalized medicine have proliferated, and they require extra messaging to encourage patient compliance. For a specialty drug that is very personal to the patient, and very expensive to develop, there is a huge incentive for drug companies to motivate that patient to continue taking the drug as instructed. Outsourcing companies can fill the communications gap by offering payment services, adherence messaging and coaching. Biotechs—which are leading innovation in the area of personalized medicine more than big pharma—also need to run lean and efficiently, since the cost of these drugs is so high. Outsourcing companies can tackle real world data analytics to demonstrate effectiveness and help secure reimbursement.

When evaluating a potential investment in a pharmaceutical outsourcing company, investors should consider the following key points:

  • The company’s team and executive leadership. The CRO space in particular features unique staffing prerequisites: a combination of deep knowledge of the science (to be able to engage with biotech and pharma executives) and keen operations sensibilities (to ensure processes run smoothly and margin is maximized). There is a limited candidate pool with this particular skillset, so it is important that the target organization have adequate measures in place to incentivize and retain key talent in a competitive labor market.
  • Regulatory diligence. How does the outsourcing company manage regulatory oversight and compliance? Do they collect and manage data properly? How do they remediate adverse events?
  • Underlying customer base and pipeline. Look for organizations that have a solid portfolio of existing customers and pipeline of new potential customers or products to work with. The underlying customer base of an outsourcing provider impacts its ability to collect on high-margin products and build value, Successful outsourcing organizations are forward-thinking and have a thorough understanding of their market and their customer’s products, and therefore make attractive targets for investment.

Save the Date! McDermott’s 2019 Life Sciences Dealmaking Symposium & Venture Capital Investing Bootcamp will be held October 15-16 in Cambridge, MA. Click here for details.

Kate McDonald
Partner
Office: Washington, DC
Years at Firm: 6

What is your favorite part about practicing health care law at McDermott? 

The health care regulatory work we do is cutting edge. From the largest health care companies to the smallest start-ups, our clients tend to be highly sophisticated and they come to us with high stakes questions that have no easy answers. We help clients navigate a complex web of health care regulations to implement innovative business models or bend the cost curve. The work I do is intellectually challenging and I love partnering with my crazy smart colleagues to solve problems. This is what keeps me coming back to work day after day.

What is the biggest opportunity and greatest challenge facing clients in your area of focus today? 

There is so much innovation occurring in the health care market today, and in particular in the managed care industry. Health insurers are partnering with an increasingly diverse set of business partners in an effort to provide higher quality care more efficiently, while actually keeping people healthier and improving their experience in the health care system – both of which inure to the benefit of both health insurers and consumers. While health care payors are at a critical intersection and have a unique opportunity to influence changes in the system, figuring out the best way to do that is also the greatest challenge for these companies. Health care is really complex – there is no magic bullet or easy solution, but I am optimistic that some of the innovations that shake out of this transformative time will have lasting and beneficial impacts.

Continue Reading Five Questions with a Health Lawyer: Kate McDonald