On June 28, 2024, the U.S. Supreme Court overturned the Chevron doctrine in its highly anticipated opinion in Loper Bright Enterprises v. Raimondo, No. 22-451, 603 U.S. ___, marking what is arguably the most significant doctrinal shift in federal administrative law in the last half-century.
In 1984, the Supreme Court held that in cases involving judicial review of administrative agencies’ statutory interpretation, courts should apply a two-step framework. First, courts were to determine whether Congress had “directly spoken to the precise question at issue.” If the answer was no, then courts were required to uphold the agency’s decision unless the decision was not a “reasonable” construction of the statute. As post-Chevron jurisprudence developed, judicial deference to agencies’ statutory interpretations deterred companies from challenging agencies in court. And although the Chevron two-step framework does not require that courts always agree with an agency’s statutory interpretation, agencies almost always prevailed in cases where a statute was susceptible to different meanings so long as a court could find that the agency’s interpretation was “reasonable.”1
Now, the Supreme Court challenges this assumption. In Loper Bright, the Court departed from its long-standing doctrine and held that judicial review of agency action under the Administrative Procedure Act “may not defer to an agency interpretation of the law simply because a statute is ambiguous.”2 Rather, courts “must exercise their independent judgment.”3
What does this mean for FDA-regulated industries?
For the last several decades, agencies have developed regulations, policies and enforcement discretion in a judicial environment that generally has favored agency expertise. Chevron was particularly consequential for questions of statutory interpretation that require “scientific and technical judgements” that govern science-based agencies such as the U.S. Food and Drug Administration (FDA).4 Now that the Supreme Court has eroded the importance of agency expertise in statutory interpretation, the FDA (and other agencies) must grapple with how to fortify policy. Below, we summarize potential effects that Loper Bright could have on FDA policies that have either directly or indirectly relied on the deference that courts have given to agencies for the past 40 years and the possible resulting impacts on the industries that the FDA purports to regulate.
I. Product jurisdiction
One of the FDA’s roles is to determine if certain products are within its jurisdiction and, if so, which regulatory pathway is most appropriate for the product’s pre-market review and/or post-market oversight. Without the Chevron doctrine, courts may have more freedom to interpret the boundaries between drugs; devices; biologics; dietary supplements; human cells, tissues and cellular- and tissue-based products; cosmetics; and products that do not fall into any of these categories. Likewise, industry stakeholders will have more opportunities to challenge the FDA’s interpretation of those boundaries.
A salient example is the FDA’s new policy on laboratory-developed tests (LDTs). Recently, the FDA issued a final rule that amended the definition of “device” under the Federal Food, Drug and Cosmetic Act (FDCA) to include in vitro diagnostics offered as LDTs.5 Under the Loper Bright precedent, a court’s interpretation of the FDCA’s definition of “device” would not be subject to agency deference, and industry groups and LDT manufacturers will likely have a better chance of successfully challenging the FDA’s position.
Loper Bright could also limit the FDA’s ability to influence the court’s interpretation of the FDCA’s definitions of “drug” and “device.”6 This will especially impact emerging areas of technology that the FDA is still understanding how to regulate, such as digital health applications and software as a medical device.
FDA decisions and interpretations over the regulation of food (and food safety rules), tobacco and cosmetics could also be in jeopardy.
II. FDA standards for drug approval
We could also see additional challenges to the FDA’s drug approval process. While historically, the FDA has required two adequate and well-controlled clinical trials as a basis of approval, in 1997, Congress authorized the FDA to accept “data from one adequate and well-controlled clinical investigation and confirmatory evidence.”7 Though the FDA has issued guidance about what types of data can constitute substantial evidence for approval, Loper Bright gives companies a better chance of challenging the boundaries of the FDA’s case-by-case requirements for approval, especially when an application is supported by only one clinical trial.
III. Guidance documents
The FDA has, over the past several decades, increasingly relied on guidance documents to achieve regulatory objectives. Although FDA guidance does not carry the force and effect of law, the FDA can more easily issue guidance documents that do not need to go through the long and cumbersome administrative rulemaking process (although draft guidance documents remain subject to public commentary). It is possible that, in light of the Supreme Court’s decision in Loper Bright, the FDA will further increase its reliance on guidance documents and forego rulemaking as such rules will not be entitled to Chevron deference.
IV. Pace of regulation
Finally, Loper Bright will likely further limit the FDA’s ability to move quickly and address changes in the industry. Industries impacted by the FDA have often expressed frustration at the FDA’s pace and inability to quickly provide guidance and clarity to stakeholders. Loper Bright will inevitably cause FDA leaders and lawyers to re-think their strategies and to conduct even more review of proposed regulation before taking action. Additionally, regulations that are eventually promulgated by the FDA may be under increased scrutiny by the White House and the Department of Justice to ensure that risk is adequately assessed with respect to the FDA’s statutory interpretation before issuance of a draft or final rule.
V. Conclusion
Ultimately, it remains to be seen how and to what extent the Loper Bright decision impacts the FDA and the industries and products regulated under the FDCA. Our team will continue to monitor developments at the FDA and provide updates on what we believe will be ongoing challenges from the industry to assess regarding, among other things, considerations for product development and regulatory compliance. In the meantime, if you have any questions regarding the Supreme Court’s decision, please do not hesitate to reach out to any of the authors on this alert for further discussion or to contact the Reed Smith lawyer with whom you regularly work.
- Liam Bendicksen, Aaron S. Kesselheim & C. Joseph Ross Daval, FDA and Chevron Deference: A Case Review, 78 Food Drug L.J. 371, 374 (2023).
- Loper Bright, slip. op. at 35.
- Supra note 1.
- Supra note 2.
- 21 C.F.R. section 809.
- 21 U.S.C. 321.
- 21 U.S.C. 355(d).
Client Alert 2024-148
