Life Sciences Companies See New Path Open for Challenging FDA Decisions

A U.S. Supreme Court ruling which overturned the famous Chevron ruling by deciding courts should not defer to an agency’s interpretation of the law is likely to usher in a new era of both opportunity and risk for life sciences companies seeking to review FDA decisions. Michael Varrone explains.

A recent Supreme Court ruling may make it easier for life sciences and food companies to successfully challenge decisions by the U.S. Food and Drug Administration (FDA) on matters, including the agency’s ability to extend its authority over new classes of products and claims of regulatory exclusivity. The June 28 decision in the case of Loper Bright Enterprises v. Raimondo (Loper Bright) is expected to make the decision of regulators, such as the FDA, subject to increased litigation and judicial scrutiny.

The Loper Bright case overturned the famous 1984 Supreme Court decision in Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc. (Chevron), a case which established a framework that has guided judicial reviews of agency action for four decades. According to Chevron, if a court determined that the meaning of the law in question was unclear, the court should defer to the agency’s interpretation of the law, so long as it was reasonable. This summer’s Loper Bright ruling, however, found that Chevron was incompatible with the text of the Administrative Procedure Act (APA). In Loper Bright, the Supreme Court said that courts reviewing agency actions “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.”

The Loper Bright decision will have a significant impact on how lower courts evaluate challenges under the APA to the FDA’s rulemaking and other agency actions. It is likely to increase both the frequency of such challenges and their odds of success. Affected areas will likely include challenges to the FDA’s market exclusivity determinations and challenges to the scope of the FDA’s authority to regulate a particular product, for example, questions about what constitutes a “dietary supplement.” One of the first FDA-related cases to be decided under Loper Bright is expected to be a to the FDA’s authority to regulate laboratory-developed tests as “devices.”

However, the Supreme Court’s opinion emphasized that the APA “does mandate that judicial review of agency policymaking and factfinding be deferential.” Justice Amy Coney Barrett gave the example of the difference between a drug and a supplement, suggesting that although the product category definitions are a matter of statutory interpretation, “which category one thing fell in might be a question of policy for [the FDA].” The Supreme Court also acknowledged that Congress retains the ability to “delegate … authority to an agency consistent with constitutional limits,” and that a reviewing court may use the agency’s interpretation to “help inform [its] inquiry.” Finally, the Court emphasized that the Loper Bright decision was not an invitation to revisit settled cases.

These caveats notwithstanding, given the stakes involved it is advised that the FDA-regulated companies should be actively evaluating the risks and opportunities that Loper Bright may present in terms of both litigation and advocacy before the agency.

More details of the legal arguments can be found here.

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