U.S. Life Sciences Regulatory and Compliance Outlook 2024 (Part I): FDA Enforcement and Litigation

Join Ropes & Gray’s life sciences attorneys for a podcast series exploring regulatory, compliance, and enforcement changes emanating from Washington, D.C. and the potential impact on life sciences companies in 2024. In this first episode, we focus on key issues to watch related to FDA enforcement and litigation in 2024. These include potential litigation over FDA’s planned final rule to regulate laboratory-developed tests (“LDTs”), the Supreme Court's review of FDA’s approval of mifepristone for medication abortion, litigation related to FDA discouraging the use of ivermectin in humans during the pandemic, and the potential effects of organizational changes in FDA’s Office of Regulatory Affairs (“ORA”) on inspections and enforcement.

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Transcript:

Greg Levine: Welcome to Non-binding Guidance, a podcast series from Ropes & Gray focused on current trends in FDA regulatory law, as well as other important developments affecting the life sciences industry. I’m Greg Levine, head of the life sciences regulatory and compliance practice group in Ropes & Gray’s Washington, D.C., office. I’m joined today by my partner, Josh Oyster, from the life sciences regulatory and compliance group based in Washington, D.C., and Beth Weinman, also based in Washington, D.C., counsel in our group and a former enforcement litigator from FDA’s Office of the Chief Counsel.

Today’s episode will be the first in our 2024 U.S. life sciences regulatory outlook podcast series. We will be discussing some key issues to watch related to FDA enforcement and litigation in 2024. These include:

• FDA’s planned finalization of a rule to regulate laboratory-developed tests (“LDTs”) and the likely legal challenges that will follow in the courts;
• litigation at the Supreme Court related to FDA’s approval of mifepristone for medication abortion, and the potential impact this decision could have on judicial deference to FDA decision-making more generally;
• ongoing litigation in Texas related to FDA’s statements during the pandemic discouraging the use of ivermectin in humans that could have broader impacts on FDA’s authority to issue public health warnings; and
• organizational changes in FDA’s Office of Regulatory Affairs (“ORA”) and ongoing policy developments that are likely to have a significant impact on FDA inspections and the enforcement actions that can result from such inspections.

Let’s start with the LDT topic. Josh, why don’t you first give us a quick refresher on what it is that FDA has proposed with respect to LDTs.

LDTs

Josh Oyster: Absolutely. Thanks, Greg. This is not the first time we’ve gotten together to talk about LDTs. As described in a prior client alert on our website, and in a podcast we did at the end of October, FDA’s proposed rule on LDTs would amend the definition of the term “in vitro diagnostic products” in FDA regulations to clarify that IVDs are medical devices under the Food, Drug, and Cosmetic Act (“FDCA”), including when the manufacturer of the IVD is a laboratory. As part of the proposed rule, FDA also plans to phase out the enforcement discretion that historically has applied to most LDTs. FDA’s proposed rule generated substantial comments from industry stakeholders, the health care community, and patients. FDA received more than 6,700 comments by the December 4, 2023, comment deadline. Notably, FDA had denied extension requests from industry stakeholders that sought more time in which to comment. Greg, now that the comments have been submitted, what do you foresee happening from FDA’s perspective?

Greg Levine: Certainly, FDA would like to finalize the rule as soon as possible, and we can see that from FDA’s denial of the request to extend the comment period, which you just mentioned, and which is fairly unusual. One consideration that may have motivated FDA in denying that extension request is concerns about the upcoming political elections, and the possibility that there could be a change in the political party that controls the U.S. Senate. FDA might be concerned that, if there’s a one-party Republican rule in Congress, Congress might prevent the LDT rule from taking effect under the Congressional Review Act. The politics on this issue don’t necessarily break down on clear partisan lines, but I think it’s fair to say that there’s reason for FDA to be concerned that Republican control of both houses of Congress is more likely to result in Congress taking that kind of action with respect to the LDT rule. This kind of rule would represent an extension of FDA regulatory authority into an area that historically it has not regulated.

Similarly, FDA might be concerned that a new presidential administration might withdraw the proposed rule if it’s not yet in effect, or not yet finalized. Of course, a new administration could always withdraw even a final rule, but that’s a more burdensome action to take and sustain legally than withdrawing a proposed rule. So, although FDA may not admit to such political considerations, they may create powerful incentives for the Agency to try to finalize that rule before this election season.

In the fall Unified Agenda, where federal agencies publish their plans for the upcoming year, FDA has on their schedule that they are targeting an April 2024 date for publishing the final rule. Of course, as a practical matter, that seems like a daunting challenge, given the number of comments they received, as you just mentioned, Josh. FDA has to address those comments, and has to do so in a way that will position it best to withstand judicial review if the rule is challenged in court, which does seem likely.

Another question is whether Congress will step in now to legislate. One could look at this as FDA challenging Congress to take action here. There’s been the VALID Act, which is legislation that has been developed and considered over a period of years now, that would create a new legal regime for regulating laboratory-developed tests. FDA’s proposed rule represents what FDA thinks it can do under its current legal authority, but many think that what’s really necessary here is to have clear Congressional legislation at the federal level to establish the legal system for regulating laboratory-developed tests. But, again, is that something that can happen this year? Can it happen in an election year? That may be a tough hill to climb. And then, if that doesn’t happen, we have new elections in November, and we’ll have to see where the politics align after that point.

Lastly, an interesting question to consider is what FDA will do, as an enforcement matter, with respect to particular LDTs that it finds concerning. If we assume that this is going to take some time, either because the LDT rule is not finalized by FDA, or it’s under legal challenge and not yet in effect, or even if you just look at the structure of the LDT rule itself, which takes a number of years to phase in various requirements, FDA has said that it has serious public health concerns about certain types of LDTs. So, is it going to wait for that entire process to play out before it’s going to take action with respect to some LDTs that it finds particularly concerning? So, all those are things that we’ll have to see how they develop during the coming year, and then, even after this year.

Beth, one of the points I had mentioned was the likelihood of litigation. When do you think we could expect to see that kind of litigation go to court?

Beth Weinman: Yes, that’s a good question. The minute FDA proceeds with an enforcement action, you know a case will be ripe. The authority for that enforcement could be immediately challenged, and there’s no real issue with timing. I think the real question is: If the rule is finalized but where there’s not any enforcement action on the table, can an action proceed at that point? The key legal question that would be addressed in a pre-enforcement challenge would be ripeness under the standard from the 1967 Abbott v. Gardner case, which includes a “hardship” element. Those seeking pre-enforcement review would need to show a “direct and immediate” impact from FDA action, such as that the regulation requires “immediate and significant changes” in conduct with the threat of serious penalties attached to noncompliance. If we have a situation where there are arguments that labs can make that they are impacted, upon finalization or shortly thereafter, it’s possible that their enforcement will be heard. I think we’re going to see a challenge very quickly after the rule is finalized—the question is whether or not that challenge will be heard.

Mifepristone Litigation

Greg Levine: Thanks, Beth. Let’s turn next to the litigation related to mifepristone, a drug that’s used for medication abortion. The Supreme Court is about to address this issue in the next few months. Josh, can you update us on what has happened there, and what it means for FDA potentially?

Josh Oyster: Absolutely. Thanks, Greg. The Alliance for Hippocratic Medicine (“AHM”), a physician organization, in conjunction with several other physician associations, sought a preliminary injunction ordering the suspension of certain FDA approvals of the drug mifepristone, which is intended for use in medication abortion, as you said. Mifepristone was originally approved more than two decades ago, in 2000. Since then, there have been several supplemental approvals affecting the product labeling and the conditions for distributing the drug. Following a preliminary injunction ruling in favor of AHM in the Northern District of Texas that would have stayed FDA’s approval of mifepristone, including the original 2000 approval, the Supreme Court stepped in essentially on an emergency basis, and stayed the stay order in April 2023. We have talked about those early developments in the case in a couple of client alerts on our website that you can look to for more details.

Following the April 2023 action by the Supreme Court the case was kicked back to the Fifth Circuit, where a decision on the merits of the district court’s stay was issued in August 2023. The Fifth Circuit affirmed in part and vacated in part, and what they essentially decided was that the plaintiffs did have standing to challenge the FDA’s changes to the mifepristone labeling and REMS that occurred in 2016 and in 2021. Those particular challenges were likely to succeed on the merits, in that, according to the Fifth Circuit, FDA’s actions were likely arbitrary and capricious under the Administrative Procedure Act (“APA”). The Fifth Circuit also held that the plaintiffs’ challenge to the original approval of mifepristone in 2000 was time-barred. The Court also found that the plaintiffs lacked standing to challenge the 2019 approval of a generic version of mifepristone. The overall upshot of the Fifth Circuit decision is that mifepristone for medication abortion, both branded and generic, would remain approved, but only under the approval conditions that existed before the 2016 changes to the labeling and the REMS. But because of the earlier Supreme Court stay in April, the Fifth Circuit decision in August didn’t have any immediate effect—it was still stayed pending further Supreme Court review.

Then, FDA and Danco, the manufacturer of branded mifepristone, a party in the litigation, petitioned for cert before the Supreme Court. The Supreme Court granted cert just a few weeks ago, on December 13. No date for oral argument has yet been set, but it should occur in the next few months, with the decision by the Supreme Court at the end of its current term in June. Notably, the Supreme Court denied a cross-petition for cert by AHM that had sought to reopen the consideration of the challenge to the original 2000 approval of mifepristone, so that particular issue technically is not before the Supreme Court at this time.

Greg Levine: What is the potential impact of this case beyond mifepristone? Does it have potential impacts beyond this one drug? How has the pharmaceutical industry or other life sciences industry segments responded to this case?

Josh Oyster: Industry’s been watching this case incredibly closely because of the potential far-reaching implications of any decision that might uphold what either the district court or Fifth Circuit has done. The holdings in the district court and the Fifth Circuit, if accepted by the Supreme Court, could have significant implications for FDA’s authority over drugs and other medical products. That could mean potentially reduced judicial deference to FDA’s expert determinations of safety and effectiveness in reviewing new medical products. It could mean less latitude for FDA to draw inferences from clinical trial data. And it could also potentially mean limits to FDA’s ability to exercise enforcement discretion. Because of these concerns, we’ve seen extensive amicus briefing by the pharmaceutical industry and other interested stakeholders at all levels of the litigation, including the Supreme Court. Just to cite a couple of examples:

• In the amicus brief from PhRMA (the pharmaceutical trade association) supporting FDA and Danco’s petition for cert, PhRMA said: “The Fifth Circuit’s decision threatens to chill pharmaceutical innovation by disrupting industry’s investment-backed expectations… The Fifth Circuit’s flawed decision rests on a basic misunderstanding of the FDCA. . . . Permitting courts to second-guess FDA’s judgments could destabilize the pharmaceutical and biotechnology industry.”
• Separately, a group of food and drug law scholars weighed in and said: “If allowed to stand, the Fifth Circuit’s decision will erode the drug regulatory system established by Congress in the FDCA and implemented by FDA through regulations, guidance, and well-established practice.”

It’s clear that the stakes are very high in this case, and industry will be watching very, very closely.

Switching gears a bit, I want to turn now to another case where a court—and specifically, the Fifth Circuit, again—has called into question FDA’s authority in certain respects. And that’s the Apter v. Department of Health and Human Services (“HHS”) case, or, as listeners are probably more familiar with it, the case involving FDA’s social media post telling the public that, “You’re not a horse.” Beth, what happened in that case, and how is it that FDA’s communications were called into question?

Apter v. HHS/Ivermectin Litigation

Beth Weinman: This is a very interesting case brought by three practicing physicians who treated COVID patients with ivermectin, and they were very unhappy with this social media campaign, that you just alluded to, so I’ll talk about that for a second. In December 2021, FDA published an informal consumer update noting that FDA had received multiple reports of patients who had required medical attention after self-medicating with the veterinary version of ivermectin, and the update directed consumers to talk to health care providers about available COVID-19 and other treatment options, not the “horse version” of ivermectin. But at the same time, FDA posted an FAQ and a series of social media posts, like the one that you referenced. And just to say because it’s so entertaining, the full quote had photos of a horse, and said, “You are not a horse. You are not a cow. Stop it, y’all.” And “Hold your horses, y’all. Ivermectin may be trending, but it still isn’t authorized or approved to treat COVID-19.” So, these posts caught a lot of attention.

The plaintiffs in this case prescribed the human version of ivermectin to patients in the course of their medical practice, and they alleged that FDA’s campaign interfered with their individual abilities to exercise professional medical judgment and harmed their reputations, and, in some instances, led to adverse professional consequences. So, they sued. They argued that FDA had exceeded its authority, that the posts were ultra vires under the Federal Food, Drug, and Cosmetic Act, and unlawful under the APA. They asked the district court to set the posts aside, and asked that FDA be barred from making such statements and directives in the future. The district court dismissed the case on sovereign immunity grounds. The Fifth Circuit reversed in September 2023, and held that, in fact, the plaintiffs could use the APA as a vehicle to assert their non-statutory ultra vires claims against FDA, and that those claims were not subject to sovereign immunity at all. While the case is procedurally a little bit complicated, and the APA discussion is a little confusing, the Fifth Circuit reasoned essentially that the post in question contained imperative rather than declaratory language, and that the government had not, in the court below, identified any colorable authority allowing it to make medical recommendations, at least without providing notice and the opportunity to comment first.

Josh Oyster: Thanks for that overview, Beth. What’s happening in the case now, following the Fifth Circuit’s decision in August?

Beth Weinman: The case was remanded back to the district court for a decision on the merits. We haven’t seen anything reported yet about what’s happened to that case on remand.

Josh Oyster: What might the broader impact of the Fifth Circuit’s decision be in other situations where FDA wants to issue public health warnings, or engage in social media communications with consumers about medical products?

Beth Weinman: Because of the procedural posture of this case, it’s not totally clear how binding the Fifth Circuit opinion is with respect to FDA’s “lack of authority” to make declarative statements. The Fifth Circuit essentially said that, in the court below, the government hadn’t presented its authority—so, in the absence of evidence of authority, the Fifth Circuit held that FDA didn’t have the authority. Now, it’ll be interesting to see what happens in the court below, and if there is more authority presented. But the implications are that other plaintiffs will pick up on this, that there’ll be copycat-like cases: Anybody who doesn’t like a statement that FDA makes can make an argument that FDA was being prescriptive, and, based on the Fifth Circuit’s opinion here, that FDA doesn’t have the authority to do so. But it’s not clear what’s going to happen in this particular case, going forward. I don’t think it ever occurred to FDA that it didn’t have the authority to make the statements that it made. FDA has and does make declarative statements and provide recommendations. So, I guess it remains to be seen whether FDA is going to change its behavior to mitigate its risk of having binding authority that it can’t make such statements. Provocative campaigns like this are useful for getting a message across, but the backlash that led to this case may be more than FDA bargained for.

Josh Oyster: Thanks, Beth. We’ve been talking a lot about the Fifth Circuit today, so I’ll add a brief mention of one more Fifth Circuit case where FDA suffered defeat. We don’t have time to discuss it in detail, but on January 3, a Fifth Circuit en banc decision stayed FDA’s denial of marketing applications for certain tobacco products, finding that the Agency’s decisions were arbitrary and capricious. The case is Wages and White Lion Investments, d/b/a Triton Distribution v. FDA. The Fifth Circuit’s opinion there attacks the Agency for issuing voluminous guidance and detailed instructions for filing these applications, then changing course midstream on the information and data that must be included, and then summarily rejecting the plaintiff’s applications despite the plaintiff’s purported compliance with the Agency’s instructions. The Fifth Circuit notes that the Agency’s conduct was “the regulatory equivalent of Romeo sending Mercutio on a wild goose chase—and then admitting there never was a goose while denying he even suggested the chase.” So, an interesting and colorful case there.

Greg Levine: Thanks, Josh. Certainly some judge’s clerk, or the judge, was having fun with that quote, and then they actually cited to the Romeo and Juliet play in the decision, which I thought was really funny. Let’s turn now to the final topic for today’s podcast. FDA has been making a number of statements lately about reorganizing the Office of Regulatory Affairs (“ORA”), which may have implications for both the current inspectorate, and potentially for FDA enforcement in the future. Beth, could you tell us about what we might expect to see in this area in 2024?

ORA Reorganization and Inspections

Beth Weinman: Yes. It’s a little hard to say because I don’t think any of us know exactly what this “reorganization” is going to look like, and we don’t know if it’s going to be approved. In FDA’s most recent update, in December, it announced that it submitted its proposed reorganization package to HHS for review. We’re waiting to hear if there’s going to be approval, and then, whether or not the transition plan will actually go off as expected. I think there is certainly a possibility that there could be hiccups that will get in the way of Agency inspections. Based on FDA’s statements, it seems like ORA is losing their policymaking authority. I think enforcement in the past has always been a two-headed monster, with ORA setting some of its own enforcement priorities, sending out inspectors, and taking regulatory action, and then also regulatory action coming from the product centers. It sounds like one of the implications of this reorganization will be streamlining priority-setting to the product centers, and the inspectorate will sort of become the army that goes out and implements more streamlined priorities. I think the Agency’s hope is that streamlining the organizations in this way will make for more efficient, and potentially more enforcement action that is geared at the priorities that come from the top. But, again, we don’t know how that’ll be implemented, and it might, in the short term, lead to reduced inspections if there are disruptions.

Greg Levine: We’re in the early days on that one—we’ll have to see what that looks like and then see how that develops in the future. What about on the topic of inspections? What should we be expecting in the coming year?

Beth Weinman: We know FDA is under pressure to bring its total inspection numbers up to pre-pandemic levels. It’s got to do that in a context where it’s still replenishing its investigator ranks—there were a lot of retirements and departures during the pandemic—and doing this in the context of structural organizational change, so it’s a tall order. Recent data suggest that the Agency is not quite where it wants to be—it’s not quite at pre-pandemic levels—though it’s doing better on the domestic front than the foreign inspection front. I will note that FDA recently issued two draft guidances in the fall, suggesting and discussing use of remote inspectional tools—suggesting those will be more common in the future, at least in helping direct FDA where it’s most important to send boots on the ground.

The first draft guidance was issued in September, and it addressed, at a very high level, the different types of remote tools that FDA is thinking about using, such as remote document assessments, remote interactive evaluations (“RIEs”), and then, reliance on foreign regulatory agency inspection reports. This guidance talks about use of these tools in assessment of good manufacturing practice (“GMP”) compliance at drug and biologics facilities.

The second draft guidance was issued shortly thereafter in October, and it addresses in significantly more detail what is involved in a remote interactive evaluation and suggests that that tool will be used in all types of inspections, not just GMP pre-approval inspections. According to the draft guidance, an RIE is a tool that involves remote visual observation of a product, facility, manufacturing operations, and records, whether through livestreaming of video or screensharing, and also involves virtual meetings.

The Agency seems to be intent on relying more on obtaining information from firms remotely, and no doubt the Agency hopes to use these tools to close the gap and inform inspections where travel is more difficult. Despite the highly detailed description of RIEs, FDA has actually only conducted 10 of these for GMP assessment purposes between April 2021 and September/October 2023, while 100 RIEs for bioresearch monitoring purposes in the same time have been conducted. We released an alert on these guidances shortly after they came out, and if anybody is looking for more information about them, they certainly can check out that alert.

Just to say another word on the foreign inspection front, we’re seeing in the news that FDA is really under pressure from Congress regarding its foreign drug inspection program. Greg, do you want to talk about that?

Greg Levine: Yes. This is an issue that has been in Congress’s crosshairs for a number of years, where there’s a feeling that domestic firms are regulated or inspected more frequently and more intensively by FDA, and there’s this unfair playing field. In the most recent development, the House Committee on Energy and Commerce sent a letter to FDA in July of last year requesting information about FDA’s foreign inspection programs and expressing concerns about the low number of foreign inspections, as well as an FDA decision to allow the temporary import of otherwise unapproved drugs from India and China to alleviate shortages. The letter noted that the largest number of warning letters go to firms in those countries, in India and China. It also expressed concerns about pre-announced foreign inspections. That’s been another big issue where the concern about the uneven playing field is that the foreign firms historically would get prior notice from FDA—that the FDA is coming in because they have to arrange visas, and they have to do all the logistics for the inspections—whereas, if you’re a domestic company, the FDA can just show up for a surprise inspection. So, there had been some work, on FDA’s part, to try to do some unannounced inspections overseas. In any event, this Congressional letter expressed concerns about FDA pre-announcing foreign inspections and suggesting that FDA had terminated a program in which they were doing some unannounced foreign inspections, but they didn’t realize that in 2022, FDA actually had renewed its pilot program for unauthorized drug inspections for India and China.

As of December 14, FDA still had not responded, and the Committee then gave FDA until January 5 to respond to the request, so we’ll see what happens. If no response is received, the House Committee says that they will issue a subpoena. So, we’re going to keep monitoring this situation.

Josh Oyster: One other quick development to mention before we go relates to the medical device quality management system regulation (“QMSR”). Two years ago, in February 2022, FDA published a long-awaited proposed rule that would harmonize U.S. quality system requirements for medical devices with the international ISO 1345 standard—FDA called this proposed rule the new QMSR. On January 5, FDA’s final QMSR rule cleared review by the White House Office of Management and Budget, and is expected to be released any day, but as of this recording, has not yet been released. We previously issued an alert summarizing the proposed rule when it was issued in 2022. It’ll be interesting to see how the final rule lays out the implementation timeline for the harmonized QMSR, as well as how FDA, if at all, addresses the impact of the new QMSR on its inspection approach for medical device manufacturers. Stay tuned there.

Greg Levine: This concludes the first episode in the outlook 2024 series from our life sciences regulatory and compliance practice group here at Ropes & Gray. Stay tuned for the next episode in our outlook series in the coming days. For more information about our practice, and other topics of interest to life sciences companies, please visit our FDA regulatory and life sciences practice pages at www.ropesgray.com. You can also listen to Non-binding Guidance and other RopesTalk podcasts in our podcast newsroom on our website, or you can subscribe to this series wherever you listen to podcasts, including on Apple and Spotify. Thank you again for listening.