Key Takeaways:
- The Supreme Court's recent decision striking down the decades-old Chevron1 doctrine in Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce ("Loper Bright")2 will have significant implications on how the Food and Drug Administration (FDA) operates going forward and the ability of regulated industry to challenge FDA decision-making.
- Loper Bright concluded that interpreting matters of law (as opposed to fact) are uniquely within the province of courts and that an agency's interpretation of a statute is not entitled to deference beyond "respect." Courts will be more likely to increase scrutiny of FDA decision-making where the agency's statutory interpretation is dependent on interpreting complex legal questions, as opposed to decisions surrounding definitions of scientific terminology.
- Developments regarding recent agency action in a number of areas, including drug vs. device determinations, interpretation of the Orphan Drug Act, implementation of the Accelerated Approval program, and regulation of laboratory-developed tests, may shed light on the scrutiny FDA's decision-making will undergo following the Loper Bright decision.
Background on Loper Bright
Under the Chevron doctrine, FDA and other agencies had significant flexibility to set policy where Congress left a gap or failed to speak clearly when enacting legislation—a common occurrence given the at-times sparse statutes that underly FDA's vast regulatory domain. Under the new standard established in Loper Bright, the Court stated that the Administrative Procedures Act (APA) codifies the "elemental proposition reflected by judicial practice dating back to Marbury: that courts decide legal questions by applying their own judgment." Under Chevron, an agency's interpretation of an ambiguous statute was permissible so long as it was reasonable—but now, under Loper Bright, "[S]tatutes, no matter how impenetrable, do—in fact, must—have a single, best meaning," the Court explained, and "if [an agency's statutory interpretation] is not the best, it is not permissible."
The impact of Loper Bright is limited by a few key principles that will be relevant in assessing the decision's impact on FDA.
Scope: The Chevron doctrine only applied to agency action carrying the force of law such as notice-and-comment rulemaking and formal adjudications. Therefore, the methodological shift ordained by Loper Bright should likewise directly impact only formal agency decision-making. Loper Bright is not technically binding on judicial review of informal agency actions such as guidance documents or policy manuals—but the Supreme Court's reasoning in Loper Bright reflects an emphasis that interpreting laws is "the proper and peculiar province of the courts," not agencies, basing its reasoning in separation-of-powers principles. Due to the interpretative nature of these statutory implementation tools, Loper Bright's holding must be considered even in these less formal publications.
Retroactivity: The Loper Bright decision explicitly notes that it does not "call into question prior cases that relied on the Chevron framework." The holdings of prior cases that underwent Chevron analysis are "still subject to statutory stare decisis," the majority wrote. "Mere reliance on Chevron," the Court continued, "cannot constitute a 'special justification' for overruling such a holding"—but "[c]ourts motivated to overrule an old Chevron-based decision," Justice Elena Kagan argued in dissent, "can always come up with something to label a 'special justification.'" The re-litigation of previously settled law is difficult to assess.
Timeframe: Challenges to rules under the APA have historically been limited by the APA's six-year statute of limitations from when a rule is finalized. However, in a separate decision also issued this term, Corner Post v. Federal Reserve3, the Supreme Court held that a right of action first accrues under the APA's six-year statute of limitations when the individual plaintiff is injured by final agency action – not when the agency action occurred. The combination of decisions will have dramatic implications for FDA-regulated industries, where new market entrants may have significant opportunities to challenge and disrupt longstanding agency rules.
Examining the Potential Impacts on FDA
Several aspects of FDA's work distinguish the potential impacts of Loper Bright on FDA from the potential impacts on regulatory agencies in general. Loper Bright directly addressed notice-and-comment rulemaking, and it is worth noting that FDA has promulgated voluminous regulations—some of which could be subject to challenge following Loper Bright and Corner Post—that set standards for drug and device applications, approvals, and other issues. Other common instruments of FDA policymaking—such as guidance and warning letters—were never governed by Chevron. But to the extent they rely on or provide additional context to regulations that were promulgated through notice-and-comment rulemaking, such agency actions would undoubtedly be subject to challenge if the underlying regulations are invalidated.
FDA often considers complex scientific questions when establishing and revising regulations. As Justice Kagan pointed out in her Loper Bright dissent, the agency has had to decide through rulemaking the definition of a "protein," and agency decisions surrounding similar types of definitions are regularly litigated. However, FDA rulemaking often also involves interpretations of the agency's legal authority, and its scientific and legal interpretations may be inextricably intertwined. In several recent cases, as well as a new and ongoing area of litigation, FDA has been challenged on statutory interpretation issues that relate to Chevron, with varying outcomes as described below.
Adjudicating Drugs vs. Devices
One significant area of binding adjudication for FDA is determining whether a product that may qualify as a drug or device should be regulated as one, the other, or both. In the 2021 case Genus Medical Technologies v. FDA,4 for instance, the manufacturer of a contrast agent challenged FDA over the agency's response to a request for designation (between regulation as a drug or device, known as an RFD) that the product was a drug. FDA had explained that it had regulated such contrast agents as drugs for decades, even though these products "may" also meet the statutory definition of a device, in order to regulate the products consistently under the same authority. The U.S. Court of Appeals for the District of Columbia Circuit found that FDA's approach failed Chevron analysis because the statute unambiguously required FDA to classify products that qualified as devices as such. Following Genus, FDA issued a request for information and comment regarding categories of products currently regulated as drugs that would potentially be required to transition to device status under the Genus decision.5
Congress stepped in before FDA concluded its analysis by enacting the Food and Drug Omnibus Reform Act of 2022 (FDORA), which gave FDA express authority to regulate contrast agents, radioactive drugs, and certain over-the-counter (OTC) drugs as drugs. Despite this legislative fix, potential issues still exist surrounding FDA's product classification decisions and individual manufacturers may now feel emboldened to challenge such decisions following the Loper Bright decision, which could cause damaging ripple effects on other industry participants.
Scope of FDA's Accelerated Approval Authority
In recent years, FDA's implementation of its Accelerated Approval authorities to approve drugs based on the expectation of success of confirmatory, post-marketing studies has been in the public spotlight. Section 506(c) of the FDCA (21 U.S.C. 356(c)) delineates FDA's authority for requiring such post-marketing studies following Accelerated Approval, and the FDCA was modified by FDORA to make several clarifications: FDA must specify at the time of approval the conditions for the post-marketing studies to be conducted, and the Secretary "may require, as appropriate" studies to be underway prior to approval or "within a specified time period." FDORA also provided FDA with more flexible withdrawal authorities and directed FDA to issue guidance on several topics relevant to the accelerated approval pathway, including a description of how to identify and address questions regarding novel surrogate or intermediate clinical endpoints, the use of novel clinical trial designs that may be used to conduct post approval studies, and its revised expedited withdrawal procedures.
As FDA considers various specific requirements it may impose through either policies or regulation following the enactment of FDORA, manufacturers seeking Accelerated Approval may see opportunities to challenge FDA's interpretation of its new authority. These challenges, however, would have to overcome the express delegations of authority the statute affords to FDA to fill in the gaps.
Interpreting the Orphan Drug Act
A complex area of statutory interpretation for FDA is the Orphan Drug Act, which provides significant benefits to sponsors of products that meet the agency's criteria as "orphan drugs" to treat rare diseases. In Catalyst Pharms., Inc. v. Becerra,6 the U.S. Court of Appeals for the Eleventh Circuit ruled that the orphan-drug exclusivity provision the Orphan Drug Act granted full orphan-drug exclusivity to an approved drug with an orphan drug designation for the entire rare disease, not merely the narrower indication for which it may have been approved. This departed from FDA's position that the exclusivity only applied to the indication for which the orphan drug was designated and approved. While FDA complied with the court's order with respect to the drug involved in Catalyst, it declined to modify its regulations for orphan-drug exclusivity, under the firm belief that its statutory interpretation of the Act allowed for narrower approvals.7
Following Loper Bright, manufacturers that may have considered challenging FDA's interpretation in other jurisdictions now have stronger arguments. FDA now must argue that its orphan drug exclusivity regulations are the "best" interpretation of the statute and not merely a permissible one. Congress, of course, can step in to thwart such challenges by revising the statute to align clearly with FDA's current policy regarding orphan drug approvals, and legislative proposals that would address this issue had been introduced even prior to Loper Bright.8 Other regulatory exclusivities granted by FDA, including new chemical entity (NCE) exclusivity, similarly rely on the agency to interpret the FDCA along with sometimes novel scientific concepts while determining whether or not to approve an application to market a drug.
Ongoing Litigation Regarding Laboratory-Developed Tests
In May 2024, FDA issued a final rule ("LDT Final Rule") expanding regulation of laboratory-developed tests (LDTs) by including them in the definition of "medical device" under the FDCA.9 The rule has already been challenged in the Eastern District of Texas by the American Clinical Laboratory Association (ACLA) and a private laboratory, HealthTrackRx.10 In their complaint, the labs challenge FDA's interpretation of the FDCA, highlighting the distinction between physical products and intangible services, FDA's history of distinguishing LDTs from devices, and Congress's decision not to enact legislation that would expressly grant FDA the authority to regulate LDTs as devices.
Without the benefit of Chevron deference, courts are no longer bound to defer to FDA's arguably plausible interpretation of LDTs as devices. After Loper Bright was issued, Senator Bill Cassidy wrote a letter to FDA reminding the agency of its obligation to apply the Loper Bright decision and avoid regulatory overreach and expressing his belief that FDA lacked authority to regulate LDTs as devices.11 Without explicit congressional authorization to regulate LDTs or a clear re-classification as with FDORA, FDA may be barred from regulating what it deems a growing public health priority in an expanding commercial space. Further, FDA may face greater challenges under Loper Bright in its LDT regulation because the agency has chosen not to actively regulate the products as devices for decades. The majority noted in Loper Bright that one weakness of the prior Chevron regime was courts' deference toward agencies that made use of ambiguities in statutes to change position as they wished – a criticism that those challenging the LDT Final Rule have made about FDA and are sure to include in their future arguments.
Conclusion
Following Loper Bright, FDA-regulated industry is likely to identify new opportunities to litigate agency policies that have been subject to controversy. FDA could also begin to shift some of its practices in response to the decision. For example, the agency could take more time to collect and consider comments before finalizing rules, recognizing that its rulemaking processes will be subject to more court scrutiny and must reflect the best understanding of the statute. As FDA's policies and interpretations are challenged more frequently, the agency will also need to rapidly adjust and update industry on new expectations, potentially leading to more rapid issuance of new and updated guidance documents. Over-reliance on guidance issued in response to these challenges may, however, result in greater uncertainty for regulated industry, because agency guidance is not binding and is subject to change.
Additionally, as Senator Cassidy's letter points out, Congress and FDA will likely need to work together to prepare legislative solutions where FDA could have previously relied on deference to its own interpretation of ambiguous statutory authority. FDA's policies, such as its decision to not broadly apply the Catalyst holding, will come under increased Congressional scrutiny along with susceptibility to new litigation. We will continue to monitor the impact of Loper Bright on FDA's regulations, policies, and other actions as these developments unfold.
Footnotes
1 Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).
2 Loper Bright Enters. v. Raimondo, 144 S. Ct. 2244 (2024).
3 Corner Post v. the Bd. of Governors of the Fed. Res. Sys., 144 S. Ct. 2440 (2024).
4 Genus Med. Techs. LLC v. U.S. Food & Drug Admin., 994 F.3d 631 (D.C. Cir. 2021).
5 86 Fed. Reg. 43,553 (Aug. 9, 2021).
6 Catalyst Pharms., Inc. v. Becerra, 14 F.4th 1299 (11th Cir. 2021).
7 88 Fed. Reg. 4086 (Jan. 24, 2023).
8 See, e.g., the Retaining Access and Restoring Exclusivity Act (RARE Act), S. 1214, 118th Cong.
9 89 Fed. Reg. 37,286 (May 6, 2024).
10 Complaint, Am. Clinical Laboratory Ass'n et al. v. U.S. Food & Drug Admin. et al., Case No. 4:24-cv-479 (E.D. Tex., May 29, 2024).
11 Letter from Bill Cassidy, M.D., Ranking Member, U.S. Senate Comm. on Health, Educ., Lab., and Pensions to Robert M. Califf, M.D., Commissioner of FDA (June 30, 2024). (https://www.help.senate.gov/imo/media/doc/loper_bright_letter_fdapdf.pdf)
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