Last June, the United States Supreme Court issued four landmark decisions that curbed executive agency powers. Those decisions are changing the way agencies, including FDA, exercise their rulemaking and enforcement authorities. Regardless your position on the correctness of the holdings or the reasoning behind them, Loper Bright, Jarkesy, EPA v. Ohio, and Corner Post have fundamentally altered the scope of agency authority. Last week, the U.S. Supreme Court heard oral arguments in a combined case that may add a fifth decision to the starting lineup of how we discuss agency limits—or, at least, litigation about agency limits—going forward.

FCC v. Consumers’ Research, consolidated with SHLB Coalition v. Consumers’ Research is a challenge concerning a constitutional legal principle called the nondelegation doctrine. According to its advocates, Congress cannot constitutionally delegate its authority to executive branch agencies without clear guidelines and limits. It’s born of Article I, Section 1, “All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.” “All” means all, according to the doctrine’s advocates, and courts should view delegations with extreme prejudice, especially those dealing with the collection of money. Absent an “intelligible principle to which the person or body authorized to” act, the judiciary should forbid delegation. The precedent requiring an intelligible principle for delegation is almost a century old and little used, but legal groups are trying to revive it.

Here, Congress has charged the FCC with collecting fees from voice service providers to fund a nonprofit corporation that, in turn, subsidizes phone and internet services in underserved rural areas. The respondents challenged that law in several federal suits around the county, claiming it’s akin to an unconstitutional tax. The case comes to the Supreme Court after Consumers Research lost before panels in the Fifth, Sixth, and Eleventh Circuits. A win before an en banc rehearing in the Fifth Circuit provided the split needed to move their case to SCOTUS.

We note that in Loper Bright, SCOTUS overturned the Chevron doctrine in part because it ruled that the National Marine Fisheries Service lacked the Constitutional authority to impose financial burdens on fishing vessels. In Jarkesy, SCOTUS ruled that the SEC lacked the Constitutional authority to impose civil penalties on defendants absent a jury trial. Both arose from executive agencies collecting money. That common thread makes for a stronger challenge because taxation and revenue are not traditionally executive branch functions. To that point, last week’s oral argument focused largely on the manner in which FCC raised funds for the nonprofit at the center of the case, and how those funds were managed.

If SCOTUS brings back the nondelegation doctrine, perhaps the Court will limit its ruling to how agencies collect funds. That potentially implicates FDA’s user fee programs. As of now, though, it’s too soon to know if the Court would stop there, or if broader challenges are afoot. Either way, a revival of the nondelegation doctrine potentially introduces a number of constitutional issues for FDA, adding yet another limiting layer on agency authority. Loper Bright throttled how agencies like FDA can interpret their regulatory power; Consumers’ Research potentially allows future litigants to question whether they should even have the power in question in the first place.

Like FCC, FDA relies on broad statutory authority from Congress under a unique statute. The scientific and policy issues within FDA’s jurisdiction have long been thought of as so complex that delegations to FDA and other federal agencies were necessary to protect public safety. But combined with end of agency deference, the resurrection of the nondelegation doctrine may add another aspect to the shift in oversight we are navigating as a country.

We’ll have another post in June, after the decision is handed down.

That’s a play on an old acronym, in service of a point. A few weeks ago, HHS released a press release stating that FDA had been directed “to explore potential rulemaking to revise its Substances Generally Recognized as Safe (GRAS) Final Rule and related guidance to eliminate the self-affirmed GRAS pathway.” That seems like an unenviable task in light of the clear language of the statute and the agency’s prior concessions that it lacks explicit authority to require premarket approval or even notification of GRAS status.

Under § 201(s) of the Federal Food, Drug, and Cosmetic Act, GRAS is a state of being, based on expert consensus or on common use in food prior to January 1, 1958, not a status conferred by FDA.  If you never got around to reading Center for Food Safety v. Becerra, now would be a good time to catch up. In that pre-Loper Bright case, FDA successfully defended its 2016 GRAS final rule. FDA and the court agreed that “the law does not require manufacturers to get preapproval before using a substance the manufacturer believes to be GRAS.” Instead, FDA has the power to take enforcement action if it does not agree with a person’s GRAS determination. Some highlights from the opinion are quoted below (citations and internal quotations omitted):

• As the Government correctly points out, the FDCA does not impose mandatory GRAS notification on manufacturers or require FDA to review industry GRAS conclusions in advance of marketing.
• The Government argues that the FDCA is silent on whether the manufacturer must notify FDA of GRAS conclusions.
• [A]s amicus curiae SFIC points out in its brief, FDA has a long-standing record of interpreting the FDCA to exempt GRAS substances from premarket review. Indeed, the system in place before the GRAS Rule was also voluntary. Similarly, as the Government notes, Congress has amended the Food Additives Amendment but has never amended the language to require mandatory GRAS submissions.
• Plaintiffs argue that the statutory text specifically speaks on the issue because the Food Additives Amendment requires that in order to determine whether a food additive is safe, the FDA shall consider … the cumulative effect of such additive in the diet of man or animals, taking into account any chemically or pharmacologically related substance or substances in such diet, and the FDA cannot make this determination without information about current exposures to substances already present in food. Plaintiffs’ strained interpretation is unpersuasive—this language does not have an unambiguous meaning; it is dubious to think that Congress used such language to require manufacturers to inform FDA of GRAS determinations without explicitly saying so. Congress does not, one might say, hide elephants in mouseholes.

The court ultimately sided with FDA, based in part on a Chevron analysis that somehow proceeded to step two, at which the court deferred to FDA’s interpretation of the statute as reasonable. Cue Loper Bright, which we’ve blogged about here and here. Under the standard of review articulated in that decision, one can reasonably wonder how a regulation to eliminate GRAS self-affirmation could survive judicial review, given the underlying statutory text and the government’s concessions highlighted above.

In short, GRAS looks like it’s here to stay, absent an amendment to the FD&C Act. Pressure for such an amendment is building, in part because states are considering jumping into the fray (see, e.g., New York’s Senate Bill S1239A a/k/a the Food Safety and Chemical Disclosure Act, which would require reporting of GRAS substances). As they say, be careful what you wish for. Among the merits of the existing framework is its efficiency, and that merit now looms larger than ever. As the HFP continues to bleed personnel, it will become even harder for the program to maintain its core functions, let alone take on new ones.

Last week, U.S. Senators Amy Klobuchar (D-MN) and Chuck Grassley (R-IA) announced the introduction of two bills we’ve seen before: (1) S. 1096, the Preserve Access to Affordable Generics and Biosimilars Act; and (2) S. 1095, the Stop Significant and Time-wasting Abuse Limiting Legitimate Innovation of New Generics Act (“Stop STALLING Act”).  While the focus of this post is S. 1096, we note that S. 1095 would authorize the Federal Trade Commission (“FTC”) to initiate a civil action against any person or entity that submits a baseless petition to FDA with the intent that the Agency’s review of the petition would delay the approval of a generic drug, a biosimilar biological product, or certain other new drugs (see here).

As we’ve discussed previously, the Preserve Access to Affordable Generics and Biosimilars Act, which addresses drug and biological product patent settlement agreements, has been floating around Congress in some form for about 20 years – since well before the U.S. Supreme Court declined to hold, in FTC v. Actavis, Inc., 133 S. Ct. 2233 (2013), that so-called reverse payment settlement agreements are presumptively unlawful.

The latest iteration of the bill would, like prior versions, amend the FTC Act to add new Section 27.  The latest iteration of proposed Section 27 in S. 1096 says that “[i]t shall be a violation of this section for a party to enter into, or be a participant to, an agreement, resolving or settling, on a final or interim basis, a patent claim in connection  with the sale of a drug product or biological product, that has anticompetitive effects,” and that an agreement “shall be presumed to have anticompetitive effects” if:

(i) an ANDA filer or a biosimilar biological product application filer receives anything of value, including an exclusive license; and

(ii) the ANDA filer or biosimilar biological product application filer agrees to limit or forgo research, development, manufacturing, marketing, or sales of the ANDA product or biosimilar biological product, as applicable, for any period of time.

And, as in prior versions there are, of course, some narrow exceptions and exclusions:

[I]f the parties to such agreement demonstrate by a preponderance of the evidence that—

(i) the value described in subparagraph (A)(i) is compensation solely for other goods or services that the ANDA filer or biosimilar biological product application filer has promised to provide; or

(ii) the procompetitive benefits of the transfer of value described in subparagraph (A)(i) and the agreement by the ANDA filer or biosimilar biological product application filer to limit or forgo research, development, manufacturing, marketing, or sales of the ANDA product or biosimilar biological product described in subparagraph (A)(ii) outweigh the anticompetitive effects of the transfer of value described in subparagraph (A)(i) and the agreement by the ANDA filer or biosimilar biological product application filer to limit or forgo research, development, manufacturing, marketing, or sales of the ANDA product  or biosimilar biological product described in subparagraph (A)(ii).

In addition, proposed Section 27 would not “prohibit a resolution or settlement of a patent infringement claim in which the consideration that the ANDA filer or biosimilar biological product application filer, respectively, receives as part of the resolution or settlement includes only one or more of” the items listed in the bill (e.g., payment of reasonable litigation expenses).

But then come the newly revised penalties provisions:

(4) CIVIL ACTION.—In addition to any proceeding under section 5, if the Commission has reason to believe that a party has violated this section, the Commission may bring, in its own name by any of its attorneys designated by it for such purpose, a  civil action against the party in a district court of the United States to seek to recover any of the remedies of civil penalty, mandatory injunctions, and such other and further equitable relief as the court deems appropriate.

(5) CIVIL PENALTY.—

(A) IN GENERAL.—Each party that violates or assists in the violation of paragraph (1) shall forfeit and pay to the United States a civil penalty sufficient to deter violations of paragraph (1), but in no event greater than 3 times the value received by the party that is reasonably attributable to the violation of paragraph  (1). If no such value has been received by the NDA holder, the biological product license holder, the ANDA filer, or the biosimilar biological product application filer, the penalty to the NDA holder, the biological product license holder, the ANDA filer, or the biosimilar biological product application filer shall be sufficient to deter violations, but in no event shall be greater than 3 times the value given to an ANDA filer or biosimilar biological product application filer reasonably attributable to the violation of this section.

(B) AMOUNT.—In determining the amount of the civil penalty described in subparagraph (A), the court shall take into account—

(i) the nature, circumstances, extent, and gravity of the violation;

(ii) with respect to the violator, the degree of culpability, any history of prior such conduct, including other agreements resolving or settling a patent infringement claim, the ability to pay, any effect on the ability to continue doing business, profits earned by the NDA holder, the biological product license holder, the ANDA filer, or the biosimilar biological product application filer, compensation received by the ANDA filer or biosimilar biological product application filer, and the amount of commerce affected; and

(iii) other matters that justice requires.

(C) REMEDIES IN ADDITION.—Remedies provided in this paragraph are in addition to, and not in lieu of, any other remedy provided by Federal law. Nothing in this section shall be construed to limit any authority of the Commission under any other provision of law.

These penalty provisions, like the penalty provisions we commented on in the 2024 version of the Preserve Access to Affordable Generics and Biosimilars Act, raise some pretty significant concerns in light of the U.S. Supreme Court’s decision in SEC v. Jarkesy, 144 S. Ct. 2117 (2024) (see our previous post here), as well as a recent Executive Order (EO 14215), titled “Ensuring Accountability for All Agencies.”  Let us count the ways . . . .

First, S. 1096 has some pretty significant Constiutionality concerns. The bill allows the FTC to proceed before an Administrative Law Judge, a process that implicates both the separation of powers and the Seventh Amendment.

In Jarkesy, the U.S. Supreme Court reemphasized that the Seventh Amendment to the U.S. Consitution protects the right to a jury trial in federal court.  That right extends to clams enforced by federal agencies, such as FTC.  Under the Seventh Amendment and Jarkesy, a jury trial must be provided on liability before civil monetary penalties that are legal in nature can be assessed.  S. 1096 permits the FTC to seek civil monetary penalties for purportedly anticompetitive patent settlements.  Those penalties are clearly legal in nature—and therefore trigger the Seventh Amendment under Jarkesy—because they are punitive treble penalties.  Further, S. 1096 specifically permits the FTC to continue to use its administrative process to determine that a company has violated the new rules on settlements.  When the FTC uses its administrative process, it is acting as the investigative body, prosecutor, administrative judge, and appellate body.  Under current law, the FTC Commissioners and its ALJs are insulated by statute from presidential removal, raising separation of powers concerns that are currently being litigated in the courts.  And whatever the outcome of those challenges, the use of the ALJ process to determine liability for civil penalties is plainly not permitted under Jarkesy.

S. 1096 contemplates that the FTC will file a civil action in district court.  But that process is still problematic constitutionally if it denies a right to a jury trial, especially if it comes after liability has been determined against the same company in an ALJ proceeding.  Indeed, S. 1096 does not mention a jury trial anywhere, and instead expressly assigns a number of findings to the judge in a bench trial.  It’s not unreasonable to assume that the FTC would oppose any request for jury trial given this language.

Second, S. 1096 contradicts EO 14215 by permitting the FTC to seek civil monetary penalties without sign-off by the U.S Attorney General (“USAG”).   EO 14215 requires employees of agencies, like the FTC, to consult with the USAG on interpretations of the law and removes any agency authority to advance its own legal positions without consultation.  The Department of Justice (“DOJ”) has an existing referral process whereby the FTC must first consult with the USAG before filing a case in federal court for civil penalties.  But despite EO 14215 and the existing referral process, S. 1096  permits the FTC to unilaterally proceed without consultation with DOJ or the USAG.  It also permits the FTC to sue using its own attorneys rather than DOJ attorneys, again in direct conflict with EO 14215.  (As an aside, this also raises separation of powers and constitutionality concerns because it allows penalties to be imposed by commissioners who are neither fully answerable to the President nor shielded from outside influence.)

Third, S. 1096 imposes an irrebuttable presumption that will likely severely chill procompetitive patent settlement agreements.  In Actavis, the FTC argued that pharmaceutical settlements should be subject to a presumption of anticompetitive effect.  The Supreme Court directly rejected the FTC’s argument, stating that “[t]he FTC urges us to hold that reverse payment settlement agreements are presumptively unlawful and that courts reviewing such agreements should proceed via a “quick look” approach, rather than applying a ‘rule of reason.’ . . . We decline to do so.”  But despite the U.S. Supreme Court’s rejection of a presumption, S. 1096 now includes a seemingly irrebuttable presumption.  Indeed, rather than looking at a patent settlement agreement as a whole in assessing procompetitive benefits, S. 1096 requires examining the procompetitive benefits of the “transfer of value” and the “agreement to limit or forgo” marketing.  No court has ever adopted this interpretation of patent settlements, and the U.S. Court of Appeals for the Fifth Circuit declined such an interpretation in 2021 in Impax Laboratories, Inc. v. FTC, 994 F.3d 484 (5th Cir. 2021).  By ignoring the patent settlement agreement as a whole, S. 1096 severely disincentivizes procompetitive patent settlements that include numerous procompetitive features, including waivers of regulatory exclusivity, that will now be ignored under the balancing test.

Fourth, S. 1096 contradicts longstanding statutory authority on the statute of limitations for civil monetary penalties.  Under 28 U.S.C. § 2462, the statute of limitations for civil monetary penalties is five years from the occurrence of the penalized conduct.  But S. 1096 imposes a new and longer statute of limitations for patent settlements.

Fifth, S. 1096 would significantly expand the universe of affected parties.  Here’s what the bill from the last Congress stated: “The Commission may initiate a proceeding to enforce the provisions of this section against the parties to any agreement resolving or settling, on a final or interim basis, a patent claim, in connection with the sale of a drug product or biological product” (emphasis added).  But the new version goes further: “It shall be a violation of this section for a party to enter into, or be a participant to, an agreement, resolving or settling, on a final or interim basis, a patent claim in connection  with the sale of a drug product or biological product, that has anticompetitive effects” (emphasis added).  That potentially creates personal liability and is not unlike California’s Preserving Access to Affordable Drugs law that respect.

Although we imagine that sponsors and co-sponsors of S. 1096 will continue to press on for passage of the legislation, the flaws above seem fatal to implementing any new Section 27 of the FTC Act.

Trade and national press have reported that recent changes in FDA staffing levels have already led to  slower responses to calls and emails.  According to reports, which were published before the most recent reports of HHS staff level reductions and tumultuous changes in leadership, FDA staff were missing minor deadlines.  This coupled with more recent reports raised the specter of FDA falling short of user fee goals.

Although reviews teams’ workload has not decreased, resources have. FDA leadership will inevitably need to make some difficult choices, including internal guidance on which assignments teams should prioritize and which can be temporarily or indefinitely delayed, or completely shelved.

A less robust schedule of external meetings and slower pace of publications of Guidance to Industry may further slow communication to sponsors who eagerly await information critical to inform their development programs.

While it may be hard to see the upside to less information from FDA, Albert Einstein famously stated, “In the middle of difficulty lies opportunity.”  As FDA itself navigates through turbulent times, companies will need to anticipate potential issues with what may be less direct, thorough, and prompt feedback from FDA. Just as important will be the need to respond expertly, efficiently and meaningfully to FDA concerns. Therein lies the opportunity.

While much may be in flux, the central tenet of drug development remains the same, develop drugs that are safe and effective drugs for patients, through streamlined, efficient, and cost-effective development programs. Key to achieving those goals is the ability to anticipate FDA feedback and concerns.

As we continue to closely follow inevitable additional changes, sponsors should consider how to best anticipate and adapt. Patients and their families are counting on it.

On March 31, 2025, U.S. District Judge Sean D. Jordan ordered that FDA’s Laboratory Developed Tests (LDT) Final Rule be vacated and set aside, in its entirety. That Rule sought to codify FDA’s view that LDTs are medical devices subject to FDA regulation under the Food, Drug, and Cosmetic Act (FDCA) and then phase out, over a four-year period, FDA’s purported policy of “enforcement discretion” for such tests.

Plaintiffs Association for Molecular Pathology (AMP) and Dr. Michael Laposata (both represented by Hyman, Phelps & McNamara, P.C.) had sued FDA, HHS, the FDA Commissioner, and the Secretary of Health and Human Services last year, alleging that the LDT Rule conflicted with the text, history, and structure of the Federal Food, Drug, and Cosmetic Act (FDCA) and the Clinical Laboratories Improvement Amendments (CLIA). Their case was later consolidated with a similar lawsuit filed by the American Clinical Laboratory Association (ACLA) and HealthTrackRX Indiana, Inc.

The Court ruled in favor of all Plaintiffs and against the federal defendants. In the Court’s words:

The final rule contemplates expanding FDA’s jurisdiction to cover laboratory-developed test services as medical “devices” under the FDCA. That expansion is foreclosed by the text, structure, and history of the FDCA and CLIA. Congress considered the unique regulatory issues raised by clinical laboratories and the tests they develop and perform. It addressed those issues through the comprehensive but distinct statutory regime of CLIA, not through the FDCA. And Congress vested authority over those regulations in CMS, not in FDA.

This decision is a clear win not only for the Plaintiffs, but for the laboratories that the now-vacated Rule threatened to shutter, and most importantly the patients who would have lost access to countless cutting-edge tests.

AMP and Dr. Laposata were represented by a team at Hyman, Phelps & McNamara, P.C., including Directors Michael Shumsky, Jeff Gibbs, Allyson Mullen, and Sara Koblitz, and Associates Steven Gonzalez and Sarah Wicks.

Expect another blog from us in the coming days that will provide a more detailed discussion of what this decision means for healthcare practitioners, the laboratory industry, and the public.

On March 18, 2025, the U.S. Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) launched a significant initiative called Operation Stork Speed to bolster the availability and safety of infant formula in the United States (link, link).  This initiative seeks to address the ongoing challenges families face in ensuring they have access to safe, reliable, and nutritious infant formula and is described by HHS Secretary Kennedy as critical to the pursuit of Make America Healthy Again.

Enhancing Infant Formula Safety and Quality

As explained in the joint HHS/FDA press release, FDA’s primary goal is to ensure that infant formula products are safe, of high nutritional value, and consistently available for families that rely on them, and FDA is committed to providing caregivers the confidence that the formula their children consume is wholesome and nourishing during critical stages of development.

Key Actions Under Operation Stork Speed

In the announcement, FDA briefly outlined the following six key actions it plans to undertake under Operation Stork Speed.  Presumably, details will follow as each action gets further underway.  Specific timelines were not provided.

1. Nutrient Review:  FDA is launching the first comprehensive review of infant formula nutrients since 1998.  This review will help update the nutrient requirements for infant formulas, ensuring they meet the evolving needs of infants.
2. Increased Testing for Contaminants:  To enhance safety, FDA will increase testing for heavy metals and other contaminants in infant formula, as well as other foods commonly consumed by young children.
3. Policy Extensions:  FDA is extending its personal importation policy, offering families more options for sourcing safe infant formula from trusted global suppliers.
4. Encouraging Transparency:  FDA is working closely with manufacturers to ensure clearer labeling and increased transparency regarding ingredients and nutritional information on formula packaging.
5. Open Communication:  To further bolster transparency, FDA will regularly correspond with consumers and industry stakeholders to announce important developments related to infant formula, including information regarding nutrients and health outcomes.
6. Collaboration with Research Bodies:  FDA is collaborating with the National Institutes of Health and other scientific organizations to address research gaps in formula feeding and its long-term health impacts on infants and children.

HHS and FDA state that the animating reasons for Operation Stork Speed are to ensure that infant formula is not only safe but also continuously available, providing families with peace of mind that their infants receive the essential nutrients they need to thrive.  Curiously, the announcements make no reference to the Long-Term National Strategy to Increase the Resiliency of the U.S. Infant Formula Market that FDA announced in January.

At present, it’s not clear how Operation Stork Speed will be implemented in light of ongoing attrition in FDA’s Human Foods Program and the competing food-related priorities that are being teed up by Secretary Kennedy.  We will continue to monitor Operation Stork Speed’s progress and report on any further developments.

Our good friends Virginia and West Virginia have become the first states in the nation to restrict the availability of foods containing certain synthetic colors (or in FDA parlance, certain colors subject to certification). You can read more about the particulars here and here. Although the states cited concerns over safety, FDA had continued to stand behind the safety of synthetic colors  – including the recently banned Red No. 3, which fell victim to the Delaney clause. (You can read up on that decidedly unscientific standard here.)

No matter. FDA’s stance on the safety of synthetic colors no longer seems determinative. A couple of weeks ago, Politico reported on a meeting between HHS Secretary Kennedy and food industry executives in which the Secretary pressed for discontinuance of synthetic colors. The state bans – and there are more looming – add considerable fuel to that fire.

Lost in the face of this onslaught is the fact that the FD&C Act lays out a deliberate process for revocation of the approval of a color additive. That could prompt one to explore legal theories in support of a challenge to these bans, but that presumes that a worthy challenger would be willing to step forward. In the current environment, such a challenger would need a mighty thick skin. The more realistic question left to ponder is which ingredients or classes of ingredients will be targeted next.

Last year, FDA issued a letter to the medical device industry warning medical device firms of concerns related to fraudulent and unreliable laboratory testing data in premarket submissions, which we blogged about here.  This was followed last September with warning letters issued to two Chinese firms performing biocompatibility testing, citing violations of 21 C.F.R. Part 58 – Good Laboratory Practices Nonclinical Laboratory Studies, regarding concerns about the quality and integrity of data generated by the labs.

FDA has recently issued an updated Notifications on Data Integrity – Medical Devices.  Within the Notification, FDA references a General Correspondence Letter (GCL) sent on February 26, 2025.

In the GCL, FDA notes it has identified multiple test reports from studies that include “cytotoxicity studies that contain identical or nearly identical results from different dates, sensitization studies (Guinea Pig Maximization Tests) that contain identical sets of guinea pig pretreatment body weights for different groups on different dates, and a large animal safety and performance study for a staple line reinforcement device that contains implausible bleeding assessments and pre-to-post procedure weight gains in Bama pigs.”  FDA states that it has no reason to believe that any data are reliable.  The GCL indicates that data will be rejected until the lab demonstrates that the issues described are adequately addressed.

FDA’s Notification states that it has identified unreliable testing data during review of 510(k)s, which has resulted in FDA being unable to clear the device.  As in the earlier letter to industry, the current FDA Notification recommends that sponsors of device studies and manufacturers of devices “carefully evaluate the third parties they engage to conduct safety, performance, and cybersecurity testing and to independently verify all testing results before submitting to the FDA.”  As discussed in the previous post, this is easier said than done given many firms lack in house expertise, and it is impossible to identify if data in a report received may be identical to data that the third party has provided to another sponsor.

Given FDA’s continued focus on data integrity, sponsors should check to be sure there have been no issues raised with third party labs they are using prior to testing.  We’ll continue to follow this issue.

In August 2023, the U.S. Department of Health and Human Services (“HHS”), based on the federal Controlled Substances Act’s (“CSA’s”) Eight Factor Analysis, recommended that the Drug Enforcement Administration (“DEA”) reschedule marijuana from schedule I to schedule III.  The U.S. Department of Justice subsequently conducted a separate Eight Factor Analysis and concurred with HHS’ rescheduling recommendation.  DEA published a Notice of Proposed Rulemaking (“NPRM”), signed by Attorney General Merrick Garland, proposing to reschedule marijuana in May 2024 that elicited over 43,500 comments.  In January a public hearing began to receive factual evidence and testimony on whether marijuana should be rescheduled.  The hearing is currently on hold pending an appeal by several of the parties.

There exists confusion as to what rescheduling marijuana to schedule III would mean so we thought we would clear up some of the misunderstanding about schedule III requirements.

Even scheduling to less restrictive schedule III would continue to have significant implications for marijuana-related businesses.  The NPRM states that if marijuana is rescheduled to schedule III, “the regulatory controls applicable to schedule III controlled substances would apply, as appropriate, along with existing marijuana-specific requirements and any additional controls that might be implemented, including those that might be implemented to meet U.S. treaty obligations.”  Schedules of Controlled Substances: Rescheduling of Marijuana, 89 Fed. Reg. 44,597, 44,621 (May 21, 2024).

Unless marijuana is descheduled, that is decontrolled entirely, or there are marijuana-specific exemptions, even after rescheduling to schedule III, marijuana cultivators, producers, and processors, distributors, importers, exporters, dispensers, and practitioners, will be subject to specific regulatory requirements under the CSA and DEA regulations.  Requirements will vary depending on the registered business activity.

If rescheduled to schedule III, marijuana businesses would be required to obtain DEA registrations, take initial and biennial inventories of marijuana on-hand, maintain transaction records, file theft and significant loss reports, and label and secure products appropriately.  Dispensing marijuana to patients, as required for other schedule III substances, would require a prescription issued for legitimate medical purpose by a DEA-registered and state licensed practitioner.  21 U.S.C. 829(b).  Pharmacists would be required to exercise their corresponding responsibility under the CSA to ensure that marijuana is prescribed and dispensed for legitimate medical purpose.  21 C.F.R. § 1306.04(a).

Marijuana activities would be subject to CSA criminal prohibitions under 21 U.S.C. §§ 841-844.  Schedules of Controlled Substances, 44,621.  Marijuana would also remain subject to applicable provisions of the Food, Drug and Cosmetics Act.  Id.

Marijuana down-rescheduled to schedule III would still be regulated for legitimate medical, scientific and industrial use.  Rescheduling would not authorized marijuana for adult recreational use.

On Friday, March 21, 2025, FDA announced that it was further delaying the effective date for the ACNU final rule until May 27, 2025. We wrote about the December 26, 2024 publication of the final rule (89 FR 105288) here.  Originally, the Nonprescription Drug Product with an Additional Condition for Nonprescription Use (ACNU) final rule was to become effective January 27, 2025. However, shortly before the effective date, on January 20, 2025, during his first day in office, the President issued a memorandum titled, “Regulatory Freeze Pending Review” which ordered that with respect to rules that had been published in the Federal Register, but had not taken effect, agencies consider postponing the rules’ effective dates for 60 days from the date of the memorandum (i.e., until March 21, 2025) for the purpose of reviewing any questions of fact, law, and policy the rules may raise.  FDA then delayed the effective date. The effective date has now been delayed again for another approximately 60 days with the exact new date depending on when the notice is published in the Federal Register.

As we have also previously reported, many in industry were disappointed with the final rule when FDA declined to address several significant issues identified in the comments to the proposed rule including the “fail first” approach that requires FDA to make the determination that labeling alone is insufficient to ensure the safe and effective nonprescription use of a drug. Additionally, FDA’s interpretation of a clinically meaningful difference between a prescription drug and a nonprescription drug when the only difference is the existence of an ACNU raises interesting legal issues that may merit additional fleshing out.

Whether FDA is able to use this additional time to address any of these or other substantive issues remains to be seen, as does whether the next deadline leads to another delay, the regulation becoming effective or something else entirely.  It’s already been a long time coming. Despite the proclamation requiring the repeal of ten regulations for every new one regulation, the new Secretary of Health and Human Services has expressed support for policies that enhance consumer access to self-care options including safe and effective OTC drugs, so it is not out of the question. Moreover, assuming the final rule does eventually come into effect, how it is applied may not be quite how it was envisioned originally.

Integral to the careful balance Congress struck when passing the Hatch-Waxman Amendments, the patent term extension (PTE) is intended to restore patent life that was consumed during regulatory review of an FDA-regulated product.  Even though the PTE provisions established in the Drug Price Competition and Patent Restoration Act are forty-plus years old, courts are still grappling with questions about how to best implement the Patent Term Extension.  And just last week, a new question was answered by the Federal Circuit: how is a patent term extension calculated for a reissued patent?  Is it based on the issue date of the original patent or the reissued patent?

On March 13, 2025, the Federal Circuit ventured into the world of reissued patents and PTE.  (FDA has already been there, of course, with respect to 180-day exclusivity.)  In Merck Sharp & Dohme Corp. v. Aurobindo Pharma, Ltd. et al., the Court looked at the term “the patent” in the PTE statute at 35 U.S.C. § 156(c) to assess whether the regulatory review period should be calculated using the issuance date of the original patent or the reissued patent.  The question is important because the result of that determination could drastically reduce the amount of patent term to be restored.

Questions of the applicability of the PTE statute to reissued patents arose because Plaintiff-Appellee Merck sought extension of a patent listed in the Orange Book after approval of its BRIDION (sugammadex), indicated to reverse neuromuscular blockade, that initially was issued in December 2003 but reissued in January 2014 with the original claims and twelve new claims relating to the drug product.  Merck applied for a patent term extension on the reissued patent, claiming the start of the regulatory review period as April 2004 and termination at the approval of the BRIDION NDA in December 2015.  With this long regulatory review period, the PTO granted the statutory-maximum five-year patent term extension.  This PTE calculation was based on the original patent, but generic filers challenged that decision, arguing that the issuance date of the reissued patent is the operative date for calculating the regulatory review period.  In the generic filers’ view, the regulatory review period should have started in January 2014 when the patent was reissued rather than in April 2004, when the IND was opened, because the reissued patent did not exist in April 2004.  The plain text of 35 U.S.C. § 156(c), the generic filers contended, required the PTO to calculate the regulatory review period based on the issue date of “the patent” for which PTE was sought, which, in this case, was the reissued patent.  The District Court disagreed with generic filers, finding that 35 U.S.C. § 156 should be read in light of the rest of the statute, and that “the patent” in subsection 156(c) must refer to the original patent rather than the reissued patent.

The Federal Circuit upheld the District Court’s position, noting that the language of 35 U.S.C. § 156 “standing alone is ambiguous” and “unclear whether ‘the patent’ refers to the original or reissued patent.”  So the Federal Circuit looked at the “the specific context in which that language is used, and the broader context of the statute as a whole.”  Specifically, the Court focused on the purpose: “to compensate pharmaceutical companies for the effective truncation of their patent terms while waiting for regulatory approval of new drug applications.”   The Court thus explained that interpreting “the patent” in 35 U.S.C. § 156(c) is the best reading, as it “compensates Merck for the period of exclusivity lost due to regulatory delay.”   The Court continued: “[t]here is no reason why the Hatch-Waxman Act’s purpose would be served by disabling extensions of the unexpired term solely based on a patent holder’s decision to seek reissue, and Aurobindo offers none.”  Thus, “[t]he only construction that comports with the purpose of the Hatch-Waxman Act is one that extends PTE to patent owners who were actually disabled from benefiting from patent protection during the pendency of regulatory review.”  Accordingly, in the context of reissued patents, “the patent” in subsection 156(c) refers to the original patent based on the purpose and context of the PTE provisions.

The American Conference Institute’s 21st Annual Paragraph IV Disputes is scheduled to take place from April 29-30, 2025 at The Altman Building in New York, NY.  Widely recognized as the industry gold standard, the conference unites leaders from brand-name and generic drug companies, alongside federal judges, the U.S. PTO’s PTAB, the FTC, and the FDA, to tackle the critical legal, regulatory, and business issues shaping pharmaceutical patent litigation.  Those of us in the Hatch-Waxman community look forward to attending this premier conference.  It’s always a kind of “family reunion” – a “Cheers”-type atmosphere where everyone knows your name.

Focusing on pre-suit strategies, case filings, final adjudications, and everything in between, this conference provides unparalleled insights and actionable takeaways for navigating the complex and high-stakes world of Paragraph IV disputes.  Key topics to be addressed this year include:

• Status of the Inflation Reduction Act and Future Drug Price Negotiations
• AI’s Impact on Drug Discovery and Patent Law
• Focus on Litigation and Agency Decisions Following the Demise of the Chevron Doctrine in Loper V. Raimondo
• Exploring the On-Sale Bar and Applicability of Prior Art
• Orange Book Delisting Attempts
• Navigating ODP and Patent Family Dynamics

Hyman, Phelps & McNamara, P.C.’s Kurt R. Karst will speak at a two-part session: Part I – Chevron Overturned: Examining Challenges Against the FDA and How the Death of the Doctrine Could Impact Drug Approvals and Exclusivities; and Part II – Anticipating the New Administration’s Impact on FDA Policies and Regulations.

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount.  The discount code is: D10-999-FDA25.  You can access the conference brochure and sign up for the event here.  We look forward to seeing you at the conference!

Hyman, Phelps & McNamara, P.C. Director Ricardo Carvajal will be moderating a session at the Food and Drug Law Institute’s (“FDLI’s”) upcoming 1-day conference on Food and Dietary Supplement Safety and Regulation, scheduled to take place on March 25. Join us for timely, in-depth discussions of current issues arising in litigation, food ingredient regulation, and labeling. The agenda and registration information are available here. To save 15%, sign up with the discount code SaveOnFood25.

The American Conference Institute’s 12th Annual Legal, Regulatory, and Compliance Forum on Cosmetics & Personal Care is scheduled to take place from March 27-28, 2025, at the New York City Bar Association, New York, NY.  The conference is the premier event on cosmetics and personal care products, where industry leaders will provide essential updates on compliance with Modernization of Cosmetics Regulation Act of 2022 (MoCRA), state legislative reforms, and new FTC advertising guidelines.

This event provides a comprehensive guide to the latest developments affecting articles intended for cleansing, beautifying, promoting attractiveness, or altering the appearance.  Key highlights for 2025 include:

• Navigating MoCRA’s New Requirements and FDA Enforcement Actions
• Addressing ESG Risks and Environmental Marketing Claims in the Beauty Industry
• Comprehending the Impact of Extended Producer Responsibility (EPR) and Recyclability Regulations on Manufacturing and Packaging
• Tackling Contaminants: Benzene, PFAS, and Asbestos Safety Concerns
• Managing Influencer Marketing and FTC Compliance in Advertising
• Exploring Global Market Entry: Regulatory Challenges in China and Latin America
• Safeguarding Data Privacy and Trade Secrets in the evolving AI-driven landscape

Hyman, Phelps & McNamara, P.C.’s John Claud will speak at a session titled “Beauty in Developing World Markets: Contrasting Opportunities and Challenges in the Latin American and Chinese Cosmetics Markets,” where he will explore two areas of global focus for the cosmetics industry: Latin America and China.

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-999-FDA25.  You can access the conference brochure and sign up for the event here.  We’ll see you at the conference!

In the past three months, FDA has released two guidance documents related to artificial intelligence (AI) enabled medical devices: (1) a final guidance titled Marketing Submission Recommendations for a Predetermined Change Control Plan for Artificial Intelligence-Enabled Device Software Functions (PCCP Guidance, which we blogged about here) was issued in December 2024; and (2) a draft guidance document titled Artificial Intelligence-Enabled Device Software Functions: Lifecycle Management and Marketing Submission Recommendations (Draft AI Guidance, which we blogged about here) was issued in February 2025.  Both guidance documents recommend data management practices for collecting data for use in developing, tuning, and testing an artificial intelligence model and making changes to said model.  Data management practices encompass data collection, processing, storage, annotation, control, and use, and are an important means of identifying and mitigating bias in AI models, thereby ensuring the integrity of the health data output by these models.

We were struck by the level of detail expected by FDA for processes related to data management, especially for data collected and used early in development to train an initial AI model, which may occur before a manufacturer decides to move forward with device development under design controls.

While there is a natural tendency to speak of research and development (R&D) as a single activity, in practice there is often a line between the initial research performed in the “sandbox” to establish technological feasibility and the development work needed to bring the technology through testing, manufacturing, and market entry.  The former may not follow a rigorous and controlled process, but if technology developed in the sandbox shows promise, it moves from research to development, where a formal design controls process is followed to establish requirements, specifications, processes for manufacturing and/or maintenance, and to conduct verification and validation testing.

For non-AI-enabled devices, the early feasibility research may not directly affect the development process, i.e., the final, finished device can be fully developed, transferred to a controlled manufacturing environment, and tested under a design controls process.  For software incorporating AI models, however, FDA notes that the performance and behavior of AI systems rely heavily on the quality, diversity, and quantity of data used to train and tune them, which means there is an FDA expectation that developers will have controls in place for data management even before they know if the technology will ever leave the sandbox.

Here, we will describe the recommendations in FDA’s guidance documents for collection and processing of data that will be used for training, tuning, and testing AI models and what to include in a marketing submission for AI-enabled software. Before training begins, a Data Collection Protocol (DCP) may be developed and is specifically recommended as a section within a modification protocol within a PCCP.

The DCP should describe how data will be collected, including the inclusion and exclusion criteria for data.  The inclusion criteria may include elements such as, but not limited to, the patient’s age, weight, height, race, ethnicity, sex, and disease severity, consistent with the intended patient population for the final product, which may not be known in the early days in the sandbox.  Although bias may be difficult to eliminate completely, FDA recommends that manufacturers, as a starting point, ensure that the test data sufficiently represents the intended use (target) population of a medical device.  FDA notes the use of data collected outside the U.S. (OUS) is another potential confounding factor to be considered in data collection.  OUS data may introduce bias if the OUS population “does not reflect the U.S. population due to differences in demographics, practice of medicine, or standard of care.”  The DCP may also define the sources of the data (e.g., inpatient hospital, out-patient clinic), date range for the data, and location of the data collection sites (e.g., different geographical locations), along with any acquisition conditions (e.g., data acquisition device).  The DCP should define if data will be collected prospectively or retrospectively, and whether data will be sequentially acquired or randomly sampled.  Some disease conditions may not be as prevalent and the DCP should describe any enrichment strategies to ensure subgroups are represented.  The DCP should follow applicable regulations governing human subject protections, where applicable. In the context of a PCCP, the DCP should also address when new data should be acquired and/or older data removed to ensure the datasets remain current with respect to acquisition technologies, clinical practices, changes in the patient population, and disease management.  A robust DCP can help ensure data used to train AI models are unbiased and representative, which will promote generalizability to the intended use population and avoids perpetuating biases or idiosyncrasies from the data itself.

The manufacturer should have defined processes in place to assess the quality of the data collected under the DCP, including processes to ensure data consistency, completeness, authenticity, transparency, and integrity.  If data are excluded because of data quality issues, the rationale and criteria for the exclusions should be documented in the DCP. This is important as FDA will expect the data used for training to be representative of the type of data that could be used in clinical practice with the final product. In addition, the manufacturer should define if the process for the checking data quality is a manual or automated process. The DCP should address if there are missing data elements (e.g., if an image was obtained but patient demographic information is not available) and when it is acceptable and/or when data quality issues warrant an investigation before proceeding.

If the data collected will be annotated (e.g., adding labels or tags to raw data), as is done in semi-supervised or supervised machine learning, the annotation process and credentials of the annotators should be documented.

Another important element of the DCP is defining what data will be used for training, tuning, and testing the AI model, the independence of the data (e.g., sampled from completely different clinical sites), and any data cleaning or processing performed on the training or tuning data.  The manufacturer should have processes in place that define how the datasets will be stored and who will have access to each dataset.  This should include controls to prevent unauthorized access and manipulation of the data.  The test data should be sequestered, not cleaned, and not used for the development of the AI Model with a process in place to prevent unauthorized access.

In order to evaluate the AI model output, manufacturers may need to establish a reference standard.  A reference standard is the “most suitable standard to define the true condition for each patient/case/record.”  A reference standard may be used during “training, tuning, testing or all three.”  When using a reference standard, the manufacturer should define how it will be determined and the uncertainty associated with that method.  For example, if clinical interpretation is the reference standard, the manufacturer should define the qualifications of the clinician performing the interpretation, number of clinicians, data provided, and how the results will be combined and/or adjudicated.

As data used in the research sandbox can impact the final AI-enabled medical device, developing robust data management practices in the early stages of AI model development are important to avoid problems and costly rework later in development.  Doing so will help ensure a more generalizable model and a more seamless transition from the research sandbox into design controls and, ultimately, a future market authorization.