10th Anniversary The Hatch-Waxman Practitioners Think Tank on Paragraph IV Disputes - Loper Article

What Challenges Will FDA Face in a Post-Chevron World?

By Brenda Sandburg August 6, 2024 The US Supreme Court’s decision eliminating Chevron deference for federal agencies is expected to have enormous repercussions for the Food and Drug Administration as it faces a potential surge in lawsuits challenging its regulations and policies on a range of issues, from drug approvals to drug exclusivity and off-label use.

The Supreme Court’s June 28 decision in Loper Bright Enterprises v. Raimondo overruled its 1984 opinion in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. In Chevron, the high court held that if courts find that a statue administered by a federal agency is ambiguous about an issue, they should defer to the agency’s interpretation of it.

In Loper, the court held 6-3 that this deference cannot be squared with the Administrative Procedure Act, which requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority. “Chevron cannot be reconciled with the APA by presuming that statutory ambiguities are implicit delegations to agencies,” the opinion, written by Chief Justice John Roberts, Jr., states. “Courts may not defer to an agency interpretation of the law simply because a statute is ambiguous.”

Legal experts say it may take years to see how courts implement the decision. But they expect FDA will be more cautious and take more time in formulating policies to avoid legal challenges.

“I think FDA and all federal agencies are worried that more and more of their decisions are going to be second-guessed, and that they're going to find themselves in court a lot more often than they had in the past only because they won't be getting the deference that they had traditionally been getting,” Chad Landmon, chair of Polsinelli’s Hatch-Waxman and Biologics Practice, said.

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Drug Approvals and Exclusivities Landmon said FDA decisions based on the agency’s interpretation of a statute, such as decisions relating to a drug’s exclusivity — for dosage form, new chemical entity, orphan drug or 180-day generic drug exclusivity — are more likely to be challenged. He said FDA and industry are particularly concerned about whether courts will defer to the agency’s scientific determinations.

“I think that judges will look at the safety and effectiveness determinations and defer to the agency on the pure scientific conclusions. But I think judges may be a little more willing to go under the tent and say, “what did you consider to get there and were your considerations consistent with what the statute says and the authority that Congress has given you?” Landmon stated. “I think that’s kind of a big open question going forward.”

Eva Temkin, a partner at Arnold & Porter and former FDA associate chief counsel and policy advisor, said the question she has been asked most often about the Loper decision is what it means for drug approvals. “I think we don’t fully know yet,” she said.

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She noted that the Supreme Court distinguished between APA review of agency actions on legal questions and review of factual decisions. The majority said the APA specifies that courts, not agencies, will decide “all relevant questions of law” arising on review of agency actions but mandates “that judicial review of agency policymaking and factfinding be deferential.”

Temkin said whether the data in a new drug application or biologics license application demonstrates substantial safety and efficacy can be a legal question, a fact question, or both, and in some cases there might be room for courts to revisit what is enough evidence to be deemed substantial.

Many interpretive issues could come under scrutiny in the wake of Loper, Temkin said, including FDA’s drug exclusivity, intended use, and combination product regulations. She noted that the Supreme Court further expanded the regulations that parties may challenge in its July 1 decision in Corner Post, Inc. v. Board of Governors of the Federal Reserve System.

In that case, the court held 6-3 that the statute of limitations for bringing a civil action against the United States under the APA does not begin to run until the plaintiff is injured by a final agency action. The Eighth Circuit had held that the statute of limitations period begins upon publication of the regulation. But for Corner Post, Temkin said, challenges would focus on relatively recent regulations. “Now new entrants to the market have the opportunity to bring a challenge based on the time of injury as opposed to the time of the rulemaking, which opens the door to challenging things like the intended use regulations,” she said.

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Will Previous Cases Be Reopened?

The Supreme Court said that by overruling Chevron, it did not call into question prior cases that relied on the Chevron framework. The holdings in those cases are still subject to stare decisis, the doctrine that courts will adhere to precedent in making their decisions.

However, as the majority did in overruling Chevron based on finding that the decision was misguided and unworkable, lower courts could apply such factors in overruling other decisions.

Landmon said in cases involving mostly a legal review of an interpretation of a statute, a company could bring the same or similar challenge in a different circuit. “I think they’re still potentially ripe for legal challenges without deference in a post-Chevron world,” he said.

One such case involving a statuary interpretation is Catalyst Pharmaceuticals, Inc. v. Becerra. The US Court of Appeals for the Eleventh Circuit found that FDA misinterpreted the Orphan Drug Act in approving Jacob’s Pharmaceutical Company’s Ruzurgi (amifampridine) for treatment of a rare immune disorder in pediatric patients when Catalyst had orphan exclusivity for its amifampridine product Firdapse for treatment of adults with the same condition.

While many FDA decisions could now be open to second-guessing, Temkin said clarity and predictability remain very important to industry. “I don’t think that industry wants a free-for-all. I think that there will be reasonable challenges brought based on statutory text where previously there may have been concerns about overcoming deference, or maybe there will be a decision in a litigation to seek a preliminary injunction,” she said.

As for the practical effect of the ruling on FDA, Temkin expects the agency will issue less rulemaking because there will be less of an incentive to do so without deference. Landmon said it remains to be seen whether the agency will pursue decion-making through guidance. He noted that some think the agency will do so because guidances are not binding while others think guidances are more questionable in the wake of Loper.

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Agency May Be Persuasive on Some Questions At issue in Loper was whether agencies have more expertise than judges to interpret the statutes they administer. The majority asserted that Chevron’s presumption that Congress implicitly delegated to agencies the authority of interpreting statutory ambiguities “is misguided because agencies have no special competence in resolving statutory ambiguities. Courts do.”

Justice Elena Kagan rebutted this in her dissent, joined by Justices Sonia Sotomayor and Ketanji Brown Jackson.

“In one fell swoop, the majority today gives itself exclusive power over every open issue — no matter how expertise-driven or policy-laden — involving the meaning of regulatory law,” Kagan asserted. “The idea that courts have ‘special competence’ in deciding such questions whereas agencies have ‘no[ne]’ is, if I may say, malarky.”

Kagan said “agencies often know things about a statute’s subject matter that courts could not hope to. The point is especially stark when a statue is of a ‘scientific or technical nature.’”

For example, she pointed to the case of determining when an alpha amino acid polymer qualifies as a “protein.”

“I don’t know many judges who would feel confident resolving that issue,” Kagan stated. “But the FDA likely has scores of scientists on staff who can think intelligently about it, maybe collaborate with each other on its finer points, and arrive at a sensible answer.”

In February 2020, FDA issued a final rule on the definition of “biological product,” which states that the term protein means any alpha amino acid polymer with a specific defined sequence that is greater than 40 amino acids in size.

Temkin said the majority left open that courts might find certain kinds of agency decision-making to be persuasive. "There might still be room for courts to find agencies persuasive on some kinds of questions,” she said. “I think we just don’t really know where the contours of that are going to end up shaking out.”

ACI will be covering the challenges facing FDA in the wake of the Loper decision at The Hatch-Waxman Practitioners Think Tank on Paragraph IV Disputes in Chicago Oct. 15–16.

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Paragraph IV Disputes The ANDA Litigation Strategy Symposium for Brand Name and Generics

For more information, please contact: Joanna Chung Associate Director of Marketing American Conference Institute | The Canadian Institute | C5 j.chung@americanconference.com

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October 15–16, 2024 | Chicago, IL

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