Well, don’t say we didn’t tell you what was coming.

Day 2 of the Pharmacy Compounding Advisory Committee (PCAC or the Panel) Meeting (mostly) followed in the footsteps and at the pace of Day 1 (see our prior coverage of Day 1).  Over the course of the day, the Panel worked through three more nominated peptides for possible inclusion on the Section 503A bulk drug substances list, ultimately recommending two—Epitalon and Semax—for inclusion, while declining to recommend Emideltide (the delta sleep-inducing peptide, aka “DSIP”). Was the DSIP “no-vote” the sacrificial lamb here?  As on Day 1, the real drama was less in the vote counts than in the recurring, and still-unresolved, question that FDA pressed from the outset: When a prescriber writes a prescription for one of these peptides, does anyone actually know what the patient is receiving?

FDA: “A Volvo with NASCAR Specs”

FDA opened by reprising its Day 1 themes and answering questions the Panel had raised the day before. The Agency reminded the Panel that none of these substances is an FDA-approved drug, that any clinical investigation would require an IND, and that 503A compounders are not required to submit adverse event reports, so the Agency simply does not receive that information.  FDA asked the Panel to weigh the absence of information as its own data point.

FDA’s Russ Wesdyk leaned into an analogy, likening the exercise to picking a car that is safe for your teenager: The manufacturer makes the nomination, but you may end up with “a Volvo with NASCAR racecar specs,” the same nameplate over a different amino acid count and molecular weight.  The name is fixed; the numbers under it are not.  Turning to “characterization,” FDA noted that “TB500,” a substance discussed on Day 1, typically refers to a 17-amino-acid fragment, but exact sequences and molecular weights vary between vendors, prompting the pointed question, “When you write a script for TB500, what form do you think your patients are receiving?  Does anyone know?”  The Agency stressed that it lacks the authority to define what TB500 is, drawing a comparison to the possibility that the most widely used form of a peptide might not even be the form its inventor discovered or patented (if even a patent were to exist).

“Process” v. “Substances” v. “Application” – What are we doing here?

Panel members quickly zeroed in on the “mechanics” of a peptide.  Panel member Kevin Zacharoff, a Clinical Assistant Professor and Course Director of Pain and Addiction at the Renaissance School of Medicine at Stony Brook University, asked whether the Panel was being asked to evaluate the process for making a peptide or specific compounds within it, noting uncertainty over whether a vote concerned one substance or many forms of a substance sharing a common name.  FDA acknowledged the difficulty: because these are “common name” substances with many possible forms, the open question from Dr. Zacharoff persists, “What form exactly do you want me to put on the list?”  When asked who regulates that question, Russ Wesdyk’scandid answer for the Agency was that one “would need to ask a lawyer.”  Well, being lawyers here, the answer is somewhat unclear; but we can take a good guess.

Panel members also underscored the limits of the record before them.  FDA explained that there is no drug “application” here; there’s only a public nomination, reviewed based on whatever information is submitted (often less than ideal), supplemented by what the Agency can find in the public domain.  As Panel member and patient representative Joshua Mailman, observed, because there is no common dosing schedule, route of administration, or tracking of drug interactions, none of the data generated in the 503A context could support a conventional FDA drug approval process.  FDA’s Office of New Drugs agreed that such information might be supportive of an IND or NDA but could not supplant the clinical evidence of safety and efficacy that approval requires.

Emideltide (DSIP): Not Today

The Panel’s discussion of Emideltide drew sharp opposition—but we note so did the Panel’s discussion of many of the nominated peptides.  Public Citizen’s Mary Ezren strongly supported FDA’s assessment against inclusion, flagging that the common name covers different active molecules, that there are immunogenicity concerns tied to incomplete impurity data, and that the efficacy data are flawed (i.e., small trials, with nothing more recent than 1992).  Dr. John Hertig, Chairman of the Board for the Collaborative for Evidence-Based Medicines, echoed that the sole supporting study is over 30 years old, and warned that once a substance is on the list, the Panel “loses control” over what is ultimately for them a binary choice.

Proponents offered a mix of history and anecdote—one speaker recounted the peptide’s 1977 discovery in the cerebral venous blood of rabbits and its role in regulating sleep architecture without inducing sleep, and others emphasized longevity and circadian applications.  Former Puerto Rico Governor Ricardo Rosselló cautioned that “waiting for perfect certainty” is itself a consequential policy choice.  Rosselló made this point for each substance discussed on Day 2.

The vote on Emideltide (free base and acetate) failed, 6 in favor to 7 against, with 1 abstention.  Dissenting members cited low-quality efficacy evidence, poor characterization, the existence of approved therapies, and the complexity/uncertainty of the dosing regimen.

Epitalon: A Relatively Narrower “Yes”

Epitalon fared better.  Opponents pressed on carcinogenicity—noting a proposed mechanism theoretically linked to cancer via telomere signaling, a concern amplified by chronic dosing—and on the regulatory patchwork that would result from leaving the substance to the states.  There was also a pointed exchange over whether Epitalon is registered in Russia as a dietary supplement, which FDA said it would look into.

The vote on Epitalon passed, 7 in favor to 4 against, with 1 abstention.  Several members in the majority stressed that they were applying 503A criteria—not Phase I or general NDA standards—and would defer to the physician and pharmacist to guide individualized care.

Semax: The (Relatively) Clearest Track Record

Semax drew perhaps the most developed proponent case, anchored by its purported three decades of international use, its mechanistic story (upregulation of neural growth factor BDNF and its receptor TrkB), and study data around neuroprotection and cerebral ischemia.  FDA countered that the available literature—much of it in Russian—often lacked the routes of administration, dosing, and study details needed to verify the study’s claims/outcomes.  In addition, Brian Serumaga, Acting PCAC Chairperson and USP representative, flagged a health literacy risk: the common name could easily be confused with Semaxanib, a distinct compound.

The vote on Semax passed, 8 in favor to 5 against, with 1 abstention.  Members in the majority framed their votes as recognizing a decision “patients are already making” and bringing it into a regulated framework of licensed pharmacies and testing.  Dissenters pointed to weak preclinical evidence, characterization concerns, and the risk of steering patients away from evidence-based therapies for serious conditions.

FDA: Creating—NOT Restoring—Access

Threaded through the day was a recurring correction from FDA.  As FDA’s Matthew Lash, Acting Director of the Office of Compounding Quality and Compliance, explained, Section 503A, enacted in 1997, permits compounding of a bulk substance only through one of three pathways—when a substance is a component of an approved drug, subject to a USP monograph, or included on the bulks list—and these peptides fall outside the first two.  FDA pushed back on the framing that adding them would “restore” post-2023 access, characterizing it instead as the “first time creating legal access,” with uncertain consequences for the scale of availability.  The Agency also emphasized that the withdrawal of the underlying nominations (specifically, all industry nominations had been withdrawn in the months prior to the PCAC meeting) was not a factor in its evaluation, and urged members not to weigh it in their votes.

Takeaways for Industry

Day 2 concluded leaving compounders, prescribers, and manufacturers with a predictable set of open questions.  Two more peptides advanced toward the 503A bulks list Category 1, bringing the total from this PCAC meeting to six; but the votes were relatively close and the Panel’s own members repeatedly acknowledged the tension between individualized patient access and the significant evidentiary and characterization gaps FDA identified.  With FDA confirming that this is a notice-and-comment rulemaking in which it will analyze the full record—including materials submitted after its June 2026 evaluations—the proposed rule, not the Panel’s recommendations, will be where these debates are ultimately resolved.  And with FDA signaling that additional peptides are already queued for a future PCAC meeting, this is just the beginning.

But What’s Next Here?

The compounding and peptide industry is chomping at the bit concerning who can make it across the finish line fastest.  We need FDA to determine—quickly—any needed next steps.  If not, the “gray/black market” production and distribution will continue.  And one of the reasons the PCAC meeting occurred—as addressed through multiple comments over two days—is to rein in the gray/black market and create some guardrails for use.  One option would be placing these “approved” peptides on FDA’s interim Category 1 list (along with all other API awaiting rulemaking) and, as a condition to FDA’s grant of enforcement discretion, put some clear procedures in place at least on a temporary basis.  Some thoughts include (for these peptides only) but are not limited to requiring adverse event reporting, and appropriate, sourcing, grading, identification, and release testing of the bulk substances.

See what we did there?

Well, readers, some big things have taken place.  “Big things” have happened: we previewed these for you in our two-part FDA’s Pep(tide) Rally! What Compounders and Industry Need to Know blog posts (Part I, Part II).

Yesterday, on Day 1 of FDA’s Pharmacy Compounding Advisory Committee (PCAC or Panel) Meeting, the assembled Panel voted to approve for inclusion on the list of bulk drug substances that may be used in compounding under section 503A of the FDC Act (the so-called Category 1 list) the first four of seven bulk drug substances to be considered during this two-day meeting.

With no exaggeration, this is a “sea change” and the “moment” for peptides; it’s just hard to imagine FDA would reverse course given the current administration’s MAHA agenda and HHS Secretary Robert F. Kennedy Jr.’s open support for wider access to peptides (see, for example, his noteworthy appearance on the Joe Rogan podcast, where important drug policy is now announced….).

The PCAC recommended inclusion of four of the most talked-about peptides on the market—BPC-157, KPV, TB500, and MOTS-c.  For BPC-157, KPV, and TB500, the Panel split 8 to 6, with one abstention, reaching that same 8-6-1 result separately for both the free base and the acetate forms.  MOTS-c cleared by a narrower 7-5-2 margin.  The votes are “advisory,” but they are notable because they run flatly against the recommendation of FDA’s own scientific review team.  You can access information about the PCAC, including FDA’s briefing documents, here.

By way of background, the nominations for all of the substances to be considered for inclusion had actually been withdrawn by their nominators at the eleventh hour, with no accompanying explanation; however, the Agency elected to evaluate each substance on its “own initiative,” prioritizing them for consideration given the level of public interest.  We believe that sponsors withdrew the nominations so that their use(s) would not be arguably or otherwise limited to the nominated “indications” should they be added to Category 1.  A multidisciplinary team drawn from the Office of Compounding Quality and Compliance (OCQC), Office of Pharmaceutical Quality (OPQ), and Office of New Drugs (OND)—including OND’s Office of Specialty Medicine (OSM) and Division of Rare Diseases, Pediatrics, Urologic, and Reproductive Medicine/Specialty Medicine (DPT-RPURM/SM)—assessed each substance against FDA’s review criteria and, balancing safety in the context of the proposed use, recommended against their inclusion on the 503A list.

Running through all of the FDA presentations was a foundational concern: identity and characterization of the substance.  As FDA put it, you cannot build meaningful quality standards until you can answer the deceptively simple question of “what is BPC-157?”  FDA repeatedly stated that these are substances described in the literature with a variable number of amino acids and no settled salt, ester, or free base form.  Because different salts and esters of the same active moiety can carry very different physicochemical, toxicological, and PK/PD properties, the Agency stressed that identity and characterization are not technicalities but prerequisites to any compounding standard(s).

The public hearing captured the broader fault line between FDA and non-Panel speakers/Panel members.  Clinicians, telehealth prescribers, and suppliers largely urged a “yes with guardrails” approach, including an FDA-evaluated “greenlist” of FDA-registered API suppliers (NOTE: API suppliers are not, and never can be, “FDA-approved” as many speakers repeatedly referred to them).  The pro-peptide participants also advocated a need for legitimate prescriber-patient relationships, mandatory MedWatch adverse event reporting (NOTE: FDA lacks this congressionally delegated statutory authority to require 503A ADE reporting), and enhanced disclosure that the preparation is compounded—effectively arguing that a blanket prohibition simply pushes patients to an international and research-use-only grey market.  On the other side, public health voices, including but not limited to CSPI’s Peter Lurie and Public Citizen’s Nina Zeldes, opposed inclusion, pointing to inconsistency with FDA’s own compounding standards, safety risks (six of the seven nominated peptides were nominated at least in part for injection, which raises a host of safety concerns), the availability of approved alternatives, and the risk that 503A “listing” would be misunderstood by patients as an FDA “approval.”  Public health speakers also warned that any Category 1-type listing would set a precedent for bypassing approval and strip the incentive to develop these substances under the IND framework.  Pressed on this, FDA invoked its integrity and cautioned that erosion of trust in the Agency’s safety and effectiveness determinations would, itself, endanger public health.

The two remaining substances taken up on Day 1 drew their own distinct debates.  The peptide TB500 was promoted largely for wound healing, tendon and ligament repair, and recovery.  Supporters, including clinicians who described it as part of the so-called “wolverine stack” taken alongside BPC-157, again urged a regulated 503A pathway over the grey market.  FDA and several panelists focused on a potential cancer signal, although FDA acknowledged there are no studies on TB500 itself (… Did we just write that?  No studies?).  Nonetheless, the Panel voted 8-6-1 to recommend inclusion of both the free base and acetate forms, with dissenters citing the paucity of efficacy data, concerns about overlap with tumor progression, and the substance’s proposed use as an injectable.

MOTS-c, a mitochondrial-derived peptide, closed out Day 1.  Opponents—including the Partnership for Safe Medicines, Public Citizen, and the Collaborative for Evidence-Based Medicine—argued that the substance lacks scientific backing, is not well characterized, and that listing would amount to a large, uncontrolled human trial without necessary adverse event reporting.  The Partnership for Safe Medicines’ Shabbir Imber Safdar framed the proponents’ case as a set of myths: that listing gives patients quality-made peptides, that patients will choose licensed dispensers when licensed options exist, and that FDA can permit measured access with guardrails.  On the last point, he said FDA lacks the resources to enforce the guardrails supporters proposed.  Georgetown University’s Adrienne Fugh-Berman was blunter still, calling MOTS-c not merely a harmless supplement but a poorly characterized experimental drug, and arguing that market interest is a reason to study a substance, not to legalize it.  In the closest vote of the day—which, in these authors’ opinions, didn’t feel all that close in the moment—the Panel recommended inclusion of the free base and acetate forms by a 7-5-2 margin, with two members abstaining.  As with all votes taken, victory cheers rang from the audience when PCAC read out the results.

A few points worth keeping in mind as this plays out.  First, the vote is advisory and one input among many; FDA has said it will continue reviewing the comments and data submitted through the docket and will announce any final decision through notice-and-comment rulemaking, not at the PCAC Meeting.  Second, while PCAC recommendations usually track FDA’s ultimate decision, the Agency has gone the other way at least once before, according to Matthew J. Lash, Acting Director, OCQC.  For now, the Committee has SPOKEN, and these four substances appear slated for inevitable inclusion on the 503A list—although timing is still a major question for industry stakeholders.  One question that likely merits a rather immediate answer is whether FDA will place these substances immediately on its interim Category 1 list—as it has with all of the other substances it has reviewed with much less fanfare.  And will it exercise enforcement discretion if compounders start compounding them immediately, like it has with all other substances the PCAC and FDA placed on the Category 1 list?  We bloggers hope FDA’s decision on these gating issues comes promptly as we are sure that the compounding pharmacies are fully primed to the opportunities these decisions present; and they welcome guardrails.

We believe Day 1’s results portend further good news for the peptide industry and consumer market today—stay tuned for our post covering Day 2!

Hyman, Phelps & McNamara, P.C. (HPM) is pleased to announce that Abdie Santiago has joined the firm as an Associate.

Mr. Santiago advises healthcare and life sciences clients on a broad range of healthcare regulatory and compliance matters, including fraud and abuse issues, federal drug pricing and  government healthcare programs, and healthcare transactions.

Prior to joining HPM, Mr. Santiago counseled life sciences and healthcare clients at two AmLaw 100 firms, where he advised on matters involving Medicaid, Medicare Parts B and D, and the 340B Drug Pricing Program. His experience includes counseling clients on drug pricing and reimbursement strategy, negotiating commercial agreements, supporting healthcare and life sciences transactions, and advising on government investigations, audits, enforcement matters, and federal healthcare compliance.

Jeffrey Wasserstein, co-head of the healthcare practice, said “We’re thrilled to have a lawyer of Abdie’s caliber and experience join HPM and expand and support our healthcare fraud and abuse and drug pricing practice.”

Mr. Santiago earned his J.D. from Stanford Law School and his Master of Public Policy from Stanford University. He received his A.B., cum laude, from Princeton University. He is admitted to practice in the District of Columbia and Tennessee.

Hyman, Phelps & McNamara, P.C. (HPM), the nation’s largest law firm dedicated exclusively to FDA and life sciences law, is pleased to announce that Gayatri Rao, M.D., J.D., M.B.E. has joined the firm as a Director.

Dr. Rao brings a rare combination of experience spanning, nearly a decade of leadership at the U.S. Food and Drug Administration, executive leadership within the biotechnology industry and private practice.  Her practice focuses on advising biotechnology and pharmaceutical companies on FDA regulatory strategy and medical product development, with particular experience guiding innovative therapies for rare diseases from early development through market approval.

Most recently, Dr. Rao served as Chief Regulatory Officer and Chief Development Officer at Rocket Pharmaceuticals, where she led regulatory and development strategy across multiple gene therapy programs. During her tenure, she played a key leadership role in the development and FDA approval of KRESLADI™ (marnetegragene autotemcel), gaining firsthand experience navigating the scientific, regulatory, and commercial challenges facing emerging biotechnology companies.

Prior to joining Rocket Pharmaceuticals, Dr. Rao spent nearly ten years at FDA, including seven years as Director of the Office of Orphan Products Development. In that role, she oversaw the Orphan Drug Designation Program, helped implement the Rare Pediatric Disease Priority Review Voucher Program, and worked to advance orphan drug policy and international regulatory collaboration. Earlier in her FDA career, she served as Associate Chief Counsel, advising the agency on medical devices, combination products, human subject protection, and other complex regulatory matters.

“Gayatri’s career reflects the kind of multidisciplinary experience that our clients need to shape and propose innovative development programs to FDA. Her leadership at OOPD and in biotechnology gives her an exceptional understanding of the scientific, regulatory, and strategic decisions at every stage of development, from Pre-IND through approval. We are thrilled to welcome her to HPM, where her experience will further elevate our work helping clients advance much-needed therapies for patients with rare diseases,” said James Valentine, J.D., M.H.S., Director at HPM.

Dr. Rao’s multidisciplinary background uniquely positions her to counsel clients on every stage of the product lifecycle.  Her experience as both a regulator and industry executive provides clients with practical, business-focused guidance informed by firsthand decision-making.

“I am thrilled to join Hyman, Phelps & McNamara,” said Dr. Rao. “Throughout my career, I have been passionate about helping bring innovative therapies to patients, particularly those with rare diseases and significant unmet medical needs. HPM’s unparalleled reputation in FDA law and regulatory strategy make it an ideal place to continue serving clients as they navigate today’s increasingly complex regulatory landscape.”

Dr. Rao earned her J.D. from the University of Pennsylvania Law School, M.D. from Rutgers New Jersey Medical School, and a Master of Bioethics from the University of Pennsylvania School of Medicine. She is admitted to practice in the District of Columbia and New York.

With Dr. Rao’s addition, HPM continues to expand its nationally recognized capabilities in FDA regulatory law, gene therapy, biologics, orphan drug development, and strategic counseling for life sciences companies.

Controlled substances are critical to patient care, but hospitals have always been vulnerable to their diversion by trusted employees.  In a number of recent cases, employees have been able to divert considerable quantities of controlled substances undetected over extended periods of time.  These incidents resulted in overdoses and deaths, patient undertreatment, multimillion-dollar civil monetary penalties, and comprehensive remedial settlements.  The Drug Enforcement Administration asserted that the hospitals’ noncompliance with mandatory recordkeeping, reporting, and security requirements enabled the diversion.

Larry Houck ‘s presentation, “Hospital/Healthcare Facility Controlled Substance Diversion: Recent Case Studies,” focuses on several of those high-profile cases and discusses how hospitals can prevent and detect employee diversion of controlled substances. The presentation on this timely topic, at the World Conference Forum’s 2026 Opioid & Fentanyl Abuse Management Summit in Chicago on July 20th-21st.

Mr. Houck will present on:

• How employees in several high-profile cases diverted significant controlled substance quantities;
• Red flags the hospitals missed;
• Safeguards for minimizing internal diversion risks; and
• Best practices for maximizing diversion detection.

Click here for information about WCF’s Opioid & Abuse Management Summit.

For years, debates over the 340B Drug Pricing Program have played out primarily through litigation, agency guidance, and stakeholder advocacy. Congress, by contrast, has largely remained on the sidelines. That may be changing. Within two weeks, lawmakers in both chambers released significant reform proposals that would address some of the program’s most disputed issues, including patient eligibility, contract pharmacies, transparency requirements, and pricing mechanisms.

On June 25, Senate HELP Committee Chairman Bill Cassidy released a discussion draft of the 340B Drug Pricing Integrity and Affordability for Patients Act (“340B for Patients Act”). Less than two weeks later, a bipartisan group of House Energy and Commerce Committee members introduced the Strengthening the Exercise of Controls and Upgrading Requirements for Efficiency in 340B Act (“SECURE 340B Act”). The proposals are notable not only for their timing, but also for their level of detail. At approximately 88 pages and 142 pages, respectively, they reflect extensive legislative development across many of the issues that have defined recent 340B policy discussions. Although the two proposals differ in important ways, both reflect growing bipartisan interest in codifying rules that have been the subject of years of regulatory uncertainty and litigation.

Where the Proposals Align

Both proposals would narrow and formalize the definition of a 340B patient, generally requiring a documented provider-patient relationship and an outpatient encounter within the previous 24 months. Both would also establish statutory frameworks for contract pharmacy arrangements (discussed below), expand transparency requirements, and impose new compliance obligations on covered entities.

The proposals similarly share a focus on demonstrating patient benefit. Each includes patient-affordability provisions aimed at ensuring that 340B savings translate more directly into reduced patient costs.

Where They Differ

The most significant differences for drug manufacturers involve discounting methodology and contract pharmacies. Those differences come against the backdrop of a broader debate over the role of rebates in the 340B Program. Beginning in 2024, several manufacturers sought to replace traditional upfront discounts with rebate-based models that would require covered entities to purchase drugs at a higher price and later receive a rebate equal to the difference between that price and the 340B ceiling price. Those efforts prompted litigation over HRSA’s authority to approve or reject rebate models, an issue that is still under review at the appellate level. The manufacturer rebate initiatives also led HRSA to establish a limited rebate model pilot program in 2025, although that pilot program was subsequently vacated on Administrative Procedure Act grounds and remanded to HHS by a federal district court. HRSA is still contemplating a possible rebate alternative, having issued a request for information on a rebate model earlier this year.

The Senate’s 340B for Patients Act would permit manufacturers to provide 340B pricing through upfront discounts, rebates, or an HHS-administered claims repository. The SECURE 340B Act instead would continue the current requirement of upfront discounts and impose a four-year moratorium on rebates while establishing an independent clearinghouse to validate claims and prevent duplicate discounts. The bill ties continuation of the moratorium to the clearinghouse’s performance, effectively making the future availability of rebates dependent on the success of that data infrastructure.

The proposals also differ sharply on contract pharmacies. The Senate draft would limit disproportionate share hospitals, free-standing cancer hospitals, and rural referral centers to five contract pharmacy arrangements and generally require those pharmacies to be located within the covered entity’s service area. The House bill imposes no such limits and would prohibit manufacturers from restricting access based on a covered entity’s use of contract pharmacies.

The House proposal also addresses a wider range of patient-facing issues, combining financial-assistance requirements with provisions related to medical-debt collection and reporting practices.

Neither proposal addresses another significant issue currently facing the 340B Program: Medicare reimbursement. On July 2, CMS proposed reducing Medicare Part B reimbursement for 340B-acquired drugs from ASP plus 6% to ASP minus 33.4% beginning in CY 2027. The proposal follows an acquisition-cost survey conducted by CMS and revisits a longstanding policy dispute that culminated in the Supreme Court’s 2022 decision, in American Hospital Association v. Becerra, 596 U.S. 724, invalidating the agency’s previous reimbursement cuts. While reimbursement policy is distinct from the reforms contemplated by the Senate and House proposals, the CMS rulemaking underscores that key questions regarding the scope and operation of the 340B Program remain under active consideration across multiple branches of government.

Why It Matters

Manufacturers, covered entities, contract pharmacies, and third-party administrators all face meaningful policy implications under either Congressional proposal. For manufacturers, the principal questions concern rebate models, claims verification, and contract pharmacy access. For covered entities, the proposals would create substantial new reporting, audit, and compliance obligations. Contract pharmacies and TPAs would also need to adapt to new statutory requirements governing participation, data reporting, and compliance oversight.

Perhaps most importantly, the emergence of detailed proposals from both the Senate and House suggests that congressional interest in 340B reform has moved beyond oversight and into active legislative development. The Senate discussion draft can be viewed as a natural outgrowth of Chairman Cassidy’s multi-year investigation of the program and the Senate HELP Committee’s 2025 report, which called for greater transparency, clearer patient-benefit standards, increased oversight of contract pharmacy and TPA arrangements, and more explicit statutory direction for program administration. Whether either proposal will advance in its current form remains uncertain. Taken together, however, they suggest that congressional attention is increasingly focused on establishing clearer statutory rules for a program that has long been shaped by agency guidance, administrative action, and litigation.

Looking Ahead

Chairman Cassidy has requested stakeholder feedback on the Senate discussion draft (with comments due August 28, 2026), while the SECURE 340B Act begins the normal legislative process in the House. As those discussions continue, attention will likely focus on whether Congress can reconcile the competing approaches to rebates, claims administration, and contract pharmacy oversight. For now, the proposals offer an early look at the policy issues that appear to be attracting the greatest congressional attention, including patient eligibility, contract pharmacies, transparency, and program administration.

Last week, FDA’s Civil Money Penalty (CMP) authority suffered its most severe blow to date: the U.S. Court of Appeals for the Fifth Circuit vacated FDA’s imposition of a CMP, against a retailer for selling unauthorized tobacco products, as unconstitutional under the Seventh Amendment and SEC v. Jarkesy, 603 U.S. 109 (2024).  Texas Tobacco Barn, LLC v. HHS (5th Cir. June 30, 2026).  If you’ve been following our multiple prior posts on this subject (here, here, and here), you know this is something we’ve been keeping keen eyes on.  Let’s recap where things stood before this decision, break down the (2-1) panel decision itself and its notable dissent, and consider what may come next.

First, to recap: two lower courts in Texas had found FDA’s tobacco CMP provisions unconstitutional, but the damage to FDA was limited because they only ordered party-specific relief, and were not more broadly binding.  But we observed that this case was pending before the 5^th Circuit, and if FDA lost it, “even if such a ruling only purports to offer party-specific relief . . . FDA would be much harder-pressed to continue business as usual given the broader precedent set by such a decision.”  Well, now it has.

The Decision – Majority and Dissent

Texas Tobacco Barn challenged a CMP imposed through an administrative proceeding for selling e-cigarette/vape products that had not first obtained FDA’s premarket authorization. The panel majority held that the CMP violated the petitioner’s 7^th Amendment right to a jury trial.

Central to that ruling was the finding that the “public rights exception” to the jury requirement, i.e., for rights that “historically could have been determined exclusively by the executive and legislative branches,” did not apply. Maj. Op. (quoting Jarkesy).  It found no broad “public health” category fitting into the public rights exception, and dismissed the prior Supreme Court “public rights” cases on which FDA relied.  It also considered the “substance” of the action, which it had discussed in an earlier part of the opinion.  Asking whether the type of claim FDA brought bore a “close relationship” to a historical “common law cause of action,” the court answered yes. It reasoned that FDA’s CMP action, which sought to enforce sales of tobacco products without FDA’s premarket authorization and thus rendered them “adulterated” and “misbranded” tobacco products under its statute (see 21 U.S.C. §§ 387b(6)(A), 387c(a)(6)), was “analogous” to historical private common law actions for the sales of “unwholesome” food and drink, and a “cheat action” for such products sold with false representations.  In short, “[w]hile these common law actions are not ‘identical’ to the FDCA, they confronted the ‘same basic conduct’ as the modern statute: selling adulterated or misbranded consumables.”  In sum, since the majority found no public rights exception, Jarkesy and the 7^th Amendment require a jury trial. Because this case came from a single petition from a CMP, the court simply ordered the vacatur of FDA’s imposition of that CMP (and nothing more).

Not so fast, said the dissent.  In its view, HHS had never advanced the broad “public health” exception the majority criticized, so that piece was largely a straw man; and it more favorably looked on the “public rights” cases FDA cited.  As for the “common law cause of action” piece, the dissent focused on a part of Jarkesy the majority did not: “the Seventh Amendment does apply to novel statutory regimes, so long as the claims are akin to common law claims.” Dissent Op. (quoting 603 U.S. at 139).  On that relationship, the dissent accused the majority of drawing too large a circle to find its fit.  The conduct for which FDA brought the action, the dissent pointed out, was the sale of tobacco products that did not go through FDA’s “novel premarket authorization process.”  That fundamentally distinguished it from the common law actions the majority had identified: “The problem with the majority’s analysis is that TTB was not accused of selling an unwholesome product or misrepresenting anything about the product.” Yes, the statute uses the terms “adulterated” and “misbranded” in categorizing such a violation, but that shouldn’t make a difference: regardless of the legal label, there was “nothing akin to a pre-sale authorization regime at common law, nor any authority for [the] leap from targeting unwholesome food products and deceit in food sales to targeting a failure to pre-authorize.”  In the dissent’s view, since that important nexus was not met, the public rights exception was satisfied, and there should be no constitutional problem with the jury-less CMP here.

Our Take

At bottom, the main difference between the majority and the dissent — and in the debate around the “public rights exception” more broadly — boils down to the “level of generality” (Dissent Op. at 22) with which common-law analogues should be viewed to determine whether they are closely enough related.  In the majority’s view, “adulterated and misbranded” is the right level, because FDA’s scheme here still ultimately is one that seeks to protect public health (from the dangers of selling unauthorized and therefore potentially harmful tobacco products). In the dissent’s, that’s not good enough: after all, “all statutes target harms in some sense, and ultimate harms of the kind the majority alludes to—harms to the public health from food, cheating—are perennial. At this level of generality, it is no surprise that the majority can identify ‘various’ common law actions that are ‘analogous’ to the one at issue here.”  Like many legal questions, how thinly the analytical salami is sliced can make all the difference; and in our prediction, the Supreme Court is still likely to be the ultimate salami-cutter here.

(That said, there may be still other arguments on either side that could ultimately carry the day: for example, if a court only focuses on specific categories of “public rights” with a “serious and unbroken historical pedigree” (Maj. Op., quoting Justice Gorsuch’s Jarkesy concurrence), then FDA may fare poorly; but if instead it focuses on the fact that premarket authorization operates more like a ‘licensing scheme’ for conduct Congress could outlaw entirely, then FDA may fare better (see Dissent Op. at 26-27 n.11.))

This discussion raises another interesting question.  While FDA has brought many tobacco CMP actions for sales of unauthorized (historically almost always e-cigarette/vape) products, FDA brings far more for underage buyer purchases, sometimes colloquially called a “sale and fail”: the sale of tobacco products to buyers under 21 years old, and the failure to verify their age with ID before doing so — violations which also render tobacco products “misbranded.” See 21 U.S.C. §§ 387f(d), 387c(a)(7)(B); 21 C.F.R. § 1140.14.  All the tobacco CMP litigation challenges we’re aware of have involved unauthorized products; it is interesting to consider how the analysis might shake out for the sale and fail. That is, would a common-law analogue for an action involving sales to a certain type of purchaser be more or less similar than those involving premarket authorizations?  Would it matter, under either the majority’s or the dissent’s method of analysis?  Or to keep the analogy going, if we’re talking about cutting salami here, what happens when you bring the cutter over to your pepperoni?

As we’ve written before, FDA has used tobacco CMPs as a powerful tool to obtain compliance, as it works both to combat the rash of unauthorized tobacco products in the U.S. market, and tries to keep tobacco products out of the hands of children and young adults. We’ll leave those questions for another day while we go grab a snack, but we’d be loathe to miss the hoagie for the fillings here.

What’s Next

After this first Circuit Court loss, FDA has two big decisions to make: whether to seek rehearing and/or certiorari to the U.S. Supreme Court from the decision, and whether and how to go forward with tobacco CMPs. If past is prologue, FDA will likely continue to zealously defend its CMP scheme in court, especially with a thoughtful dissenting opinion to bolster it.  Assuming FDA does not get this case reheard and overturned by the 5^th Circuit, and the mandate issues, that court could issue rulings in the currently-stayed Wulferic and Vaping Dragon cases further piling on the precedent now set.  The D.C. Circuit’s decision in D and A is still looming too, and the presence of a circuit split (or not) always affects the cert calculus.

In terms of FDA’s pursuit of CMPs going forward, we wrote back in early December that FDA’s pursuit of tobacco CMPs, even after one court loss, appeared to proceed apace. In our research for this blog, however, we observed a potential shift: while FDA continues to pursue new enforcement (in the form of Warning Letters and CMP Complaints) for underage buyer sales of various tobacco products including e-cigarettes, and existing CMP proceedings of all types appear to be moving apace, we could not find evidence on its website of any new CMPs for unauthorized e-cigarette sales since mid-December 2025.  (We note though that FDA has not updated its website since May 31, 2026). Whether this shift (assuming it is a real one) might derive from an assessment of litigation risk from these Jarkesy cases, or from a change in policy or enforcement priorities, we do not know.  But whatever the reason, that potential shift may blunt the immediate effects of this decision on FDA’s day-to-day workings in the realm of unapproved e-cigarettes, with its effects on FDA’s future tobacco CMP enforcement otherwise (for underage sales, and outside the 5^th Circuit’s jurisdiction, perhaps) remaining to be seen — though we already see some new underage sale CMP Complaints being filed even after the decision.

As always, we’re keepin.g our eyes peeled

Well, it’s here, it’s happening.  The Unified Agenda of Regulations has been updated to include a proposed rule, “Transparency in Direct-to-Consumer Advertising” to remove the (so-called) “adequate provision loophole” from the prescription drug advertising regulations in 21 C.F.R. §202.1(e)(1)(i)(B).  The proposal appears to be set for publication in December 2026 and is intended to force pharmaceutical companies to include a full brief summary within the drug’s broadcast ad (not through direction to a website, toll-free number, etc.,).  If finalized, this could effectively ban DTC broadcast ads by making them so lengthy as to be cost prohibitive.

This effort is hardly a surprise and is in response to the presidential memorandum, FDA  press release, and HHS Fact Sheet that we previously blogged on here and here in September, simultaneous with FDA’s “DTC Crackdown.”  As we noted back in September, FDA continues to mischaracterize adequate provision as a “loophole,” omitting the fact that broadcast ads already contain a “major statement” of key risks, and positioning this proposal as “improving consumer understanding” – when, in reality, it does the opposite.  Over a decade ago, FDA advised industry on the following as it pertained to consumer directed brief summary requirements:

To provide better and more actionable information for consumers, FDA believes that the brief summary should focus on the most important risk information rather than an exhaustive list of risks and that the information should be presented in a way most likely to be understood by consumers.  Thus, FDA strongly recommends against the use of the traditional approach to fulfill the brief summary requirement in consumer-directed advertisements, an approach in which risk related sections of the PI are presented verbatim, often in small font.

While this position was with regard to print advertisement (where consumers could take their time to read the print provided), one would expect the same policies regarding consumer comprehension to hold true for broadcast media.  So much for “improving consumer understanding.”  But hey, let’s not let the truth get in the way of a good story.

The FDA acknowledges that it anticipates this rule to be economically significant, with annual costs exceeding $100 million.  It is also likely to lead to litigation.  We’ll wait and see what ultimately gets published and how industry will respond.

The American Conference Institute’s (“ACI”) 13th Annual Summit for Women Leaders in Life Sciences Law returns July 29-30, 2026, at the Seaport Hotel Boston in Boston, Massachusetts.

ACI’s Summit for Women Leaders in Life Sciences Law is dedicated to providing the invaluable opportunities for networking and collaboration with the chance to meet, engage with, and learn from over 350 attorneys and executives from the biotech, pharmaceutical, and medical device industries and keep you up-to-date on the latest developments and challenges in the industry.

This year’s summit is bigger than ever, featuring:

• A Fireside Chat with FDA and EMA, focused on key agency initiatives and leadership in the public sector
• CEO Spotlight Interviews with Arivee Vargas (CEO & Found of Humble Rising, and Former Executive Coach at Vertex Pharmaceuticals) and Lara Sullivan (Board Member, President & CEO of Pyxis Oncology)
• Discussions on Navigating MFN Drug Pricing, TrumpRX, Direct-to-Patient Models, Commercial Disruption, Tariff Turbulence, AI-use in Product Development and Workflows, and more
• Intimate Roundtable Discussions on Multigenerational Workforces, Personal Branding, Self-Advocacy, and Leadership and Retention
• A Brand-new Interactive Workshop: the Boardroom Experience – A Live Board Meeting Simulation for Aspiring Board Members, facilitated by Diana Markaki-Bartholdi (Founder of the Boardroom)

Don’t miss the event that has been connecting women leaders in life sciences law for over a decade.

Hyman, Phelps & McNamara, P.C.’s Sara W. Koblitz will be speaking at a panel session, titled “Navigating the New Landscape of Direct-to-Consumer Advertising and Influencer Marketing in the Life Sciences Industry.”

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-FDA26. You can access the conference brochure and sign up for the event here.  We look forward to seeing you at the conference.

On June 24, 2026, the Fifth Circuit denied a petition brought by VDX Distro (VDX), an e-cigarette company, asking the court to review FDA’s decision to reject marketing authorization for its e-cigarette products. See VDX Distro, Inc. v. FDA, No. 24-60537 (5th Cir. 2026).

By way of background, e-cigarettes, considered a healthier alternative to combustible cigarettes, have been very popular among the younger generations, including children as young as middle schoolers. This phenomenon has been largely attributed to the various child-friendly flavors in which they have been made available. A 2024 survey found that a whopping 87.6% of middle and high schoolers who vape opted for non-tobacco-flavored products, with “fruit” leading the polls and “candy” a not-so-close second.

FDA has long been concerned with this trend, publishing a guidance document in 2020 in which it laid out its enforcement priorities for e-cigarettes and stressed that “flavors increase youth appeal of tobacco products.” On the other hand, the benefits of e-cigarettes in helping current smokers quit, or at the very least, providing a less dangerous alternative to combustible cigarettes, cannot be ignored. Thus, FDA has found itself in a delicate balancing act between helping adult smokers quit and preventing young people from starting.

In response to this quagmire, FDA adopted a “comparative-efficacy standard,” used to determine whether a tobacco product is “appropriate for the protection of the public health” (or APPH). Under this standard, a company wishing to market non-tobacco-flavored products must show that it is more successful than tobacco-flavored products in encouraging adult smokers to switch to e-cigarettes or to quit smoking entirely. “Only then would a non-tobacco-flavored e-cigarette’s benefit to adults outweigh its risk to minors.”  VDX Distro, at 6.

Now to the Fifth Circuit case. VDX applied for market authorization for its menthol-flavored e-cigarette products. (Note that as per the Family Smoking Prevention and Tobacco Control Act (TCA), without FDA approval, e-cigarette companies cannot legally market their products). FDA denied the request, finding that VDX failed to prove that the benefits of the menthol-flavored products to adult smokers outweigh the risks to youths. VDX petitioned the Fifth Circuit for review of FDA’s decision.

In a 19-page decision, the Fifth Circuit rejected each of the four challenges brought by VDX, ultimately denying its request for review.

First, VDX claimed that the delegation by Congress of deeming authority to FDA on the issue of what constitutes a tobacco product violated the major questions doctrine. The Court found that VDX conflated the major-questions doctrine with the nondelegation doctrine, which “is squarely foreclosed.”

Next, VDX claimed that the TCA’s requirement that FDA deny pre-market applications unless it is APPH is unconstitutionally vague. The Court disagreed, stating that because the APPH standard does not prohibit conduct, but rather, sets a standard through which FDA assesses applications for marketing authorization, the “unconstitutionally vague” standard does not apply.

Third, VDX argued that the comparative-efficacy standard is in fact a “tobacco product standard,” which FDA is authorized to promulgate under the TCA, but only through notice-and-comment rulemaking. The Court disagreed, classifying the comparative-efficacy standard as “a balancing test, not a ban.”  More specifically, under the TCA, a “tobacco product standard” draws “hard-and-fast lines as to certain attributes of tobacco products” while the comparative-efficacy standard is “a methodology developed by FDA to apply the TCA’s APPH standard.”  FDA simply chose to interpret the APPH standard more narrowly for non-tobacco-flavored e-cigarettes. Thus, notice-and-comment rulemaking is not required. To support its position, the Court cited the 2025 Supreme Court case, FDA v. Wages and White Lion Investments, in which the Supreme Court categorized the APPH standard as “inherently comparative,” allowing for comparisons “between different types of new tobacco products that may attract new smokers.” Wages, 604 U.S. at 578-79.  The Fifth Circuit further noted that the Wages decision supported that agencies may develop regulatory standards through either adjudication or rulemaking.

Last, the Court rejected VDX’s claim that FDA’s denial was arbitrary and capricious, in violation of the Administrative Procedure Act (APA). More specifically, VDX claimed that FDA relied on stale data, impermissibly focused on adult and youth populations, rather than the TCA required “population as a whole,” and arbitrarily applied the APPH standard to VDX’s marketing plan. The Court rejected each argument, holding that (1) FDA was aware that the current data showed a decline in youth smoking but determined it was still a problem, (2) the TCA permits FDA to focus on subpopulations, and (3) FDA reviewed VDX’s marketing plan and adequately explained why it was insufficient, namely, that it did not propose anything FDA has not previously considered and found insufficient and that it lacked safeguards to prevent youths from obtaining the products.

In sum, the Court was happy to reject each of VDX’s four arguments one by one.

It is interesting to compare this case with FDA’s decision on May 5, 2026 to authorize the marketing of four non-tobacco-flavored electronic nicotine delivery systems (ENDS), including two non-menthol-flavored products. FDA found that the applicant, Glas, Inc., sufficiently demonstrated its ability, through access-restriction and age-verification technology, to mitigate access of its products among youths. This marked the first time FDA authorized non-tobacco and non-menthol ENDS products, and gives us an idea of the types of safeguards FDA considers sufficient with regards to preventing access to youths. See here.

Even more interesting is that FDA approved these ENDS products even though they did not meet the requirements of the comparative-efficacy standard. FDA summarized its decision in a memo, explaining that “[c]entral to these decisions was the FDA’s conclusion that the device access restrictions sufficiently mitigate the risk to youth such that the four applications for blueberry, mango and two menthol flavored e-liquid products did not need to demonstrate an added adult benefit relative to tobacco-flavored ENDS.” We note that Glas did provide a product-specific randomized actual use study to prove comparative efficacy, but FDA found that “the data did not demonstrate statistically significant differences in the rates of complete switching among adult smokers or significant cigarette reduction between the flavored new products compared to tobacco-flavored ENDS.” FDA approved the products anyway.

Based on FDA’s 28(j) letter sent on May 14, 2026, the agency views this approval as further support that its comparative-efficacy standard falls under the TCA’s adjudicatory framework rather than its rulemaking provision (“[t]he authorizations reflect that FDA is engaged in case-by-case adjudication, weighing the risks and benefits of each individual product to determine whether marketing the product would be appropriate for the protection of the public health.”). VDX disagrees, writing its own 28(j) letter in response and claiming that FDA still applied its “check-the-box fatal flaw review,” since Glas provided a comparative-efficacy study.

The Fifth Circuit has ultimately decided that FDA was acting within its adjudicatory powers when it denied VDX’s marketing application.

It will be interesting to see what happens next and we will be sure to keep you posted!

This third installment of our series analyzing the rider provisions in the fiscal year 2026 appropriations legislation continues our examination of key FDA policy directives embedded in congressional committee reports. This post focuses on provisions related to medical devices, pharmacy compounding, GLP-1 medications, and food-areas where Congress has expressed heightened interest in FDA enforcement, regulatory clarity, and patient safety. As with prior installments, these rider provisions, while non-binding, offer valuable insight into congressional priorities and potential areas of future regulatory focus for FDA-regulated industries.

Devices

Cybersecurity of Diabetes Medical Technologies

The Committee expresses concern about the safety, quality, and cybersecurity of diabetes medical technologies imported from the People’s Republic of China—specifically connected insulin delivery systems, glucose monitors, and related components. The Committee directs FDA to utilize its “full oversight and enforcement authority” over Chinese-manufactured diabetes medical technologies, including through targeted inspections, import alerts where appropriate, and rigorous evaluation of cybersecurity vulnerabilities. FDA is further directed to report back on its activities to monitor, evaluate, and mitigate safety, quality, and cybersecurity risks associated with these products.

Device Remanufacturing Safety and Awareness

The distinction between device remanufacturing and servicing has long been debated and discussed, primarily because remanufacturing “has implications for the regulatory responsibilities of entities performing these activities.” FDA issued a final guidance in May 2024 to provide clarity on the distinction between “servicing” and “remanufacturing” of a device.

The Committee acknowledges FDA’s work on medical device remanufacturing and servicing requirements, including the May 2024 final guidance, and directs FDA to provide a report detailing the agency’s efforts to implement the guidance. The report should outline outreach efforts to inform independent servicers about their responsibilities, cover FDA’s surveillance of servicers and remanufacturers, summarize inspections and enforcement actions taken, report on whether the guidance has increased establishment registrations or 510(k) submissions by remanufacturers, and explain how FDA is addressing concerns that the guidance might be misinterpreted to permit unsupervised device modifications by third parties.

Copper Intrauterine Devices (IUDs)

The Committee notes reports of potential adverse mental health effects associated with copper IUDs, including symptoms linked to elevated copper levels. The Committee encourages FDA to review available clinical evidence and patient safety data and evaluate whether updates to device labeling or patient information are warranted. Based on publicly available information, there does not appear to be any studies that provide a direct, causal link between copper IUDs and mental health concerns, and we would hope that FDA would require such a showing before requiring labeling or other updates.

Laboratory Developed Tests (LDTs)

The rider related to LDTs is perhaps one of the most interesting, as it indicates that Congress is seemingly unaware of significant developments in this area. In May 2024, FDA issued a final rule to explicitly bring LDTs within the definition of medical devices subject to FDA oversight. On March 31, 2025, a U.S. District Judge ordered that the rule be vacated and set aside, which FDA did on August 6, 2025. Notwithstanding this action of nearly one year ago, in its report the Committee notes that FDA’s final rule on LDTs represents a “significant shift” in regulatory expectations for patients, physicians, and laboratories and risks “greatly altering the U.S. laboratory testing infrastructure and reducing patient access to information that informs their healthcare decision making.” The Committee directs FDA to suspend its efforts to implement the rule and continue working with Congress to modernize the regulatory approach for LDTs. Since the rule has already been vacated, this is one directive FDA is free to ignore.

OTC Diagnostic Tests

The Committee notes existing OTC diagnostic tests that would improve accessibility for Americans and encourages more frequent testing of common infections. FDA is directed to provide a briefing no later than 180 days after enactment on efforts to expand access to OTC diagnostics, including an update on the pipeline, with attention to products addressing infections for which no OTC diagnostic is currently authorized. While this aligns with FDA’s growing emphasis on expanding care delivery in the home, it is inconsistent with FDA’s approach to home specimen collection and diagnostic devices, which have been subject to significant evidentiary expectations primarily driven by concerns regarding variable home environments and lay user performance. It will be interesting to see whether FDA provides the briefing in the timeline directed by the Committee and how, if at all, the comments made in that briefing might reduce the regulatory burden on home collection devices.

Compounding

503A Pharmacy and 503B Outsourcing Facility Inspections

The rider states that the Committee is “concerned about FDA inspection delays” for 503A pharmacies and 503B outsourcing facilities. At first read, this wording would suggest that the concern is related to completing 503A/503B inspections. However, the Committee is requesting a report that addresses resolution timelines for inspection observations and warning letters.  Ideally, this report will help remedy a known issue, as compounding inspections and warning letters frequently remain open for several years.

Shortages

As has been expressed in other riders, the Committee is concerned about drug shortages, which it considers a patient safety issue, and urges FDA to continue to utilize the regulatory flexibility provided by Congress to quickly respond to drug shortages by allowing 503A pharmacies and 503B outsourcing facilities to compound those products.  FDA has communicated its expectations for Compounding when Drugs are on FDA’s Drug Shortages List, which is also addressed by statute, so the Committee is presumably not looking for anything “new” here.

Hormones

FDA should engage with compounders and other stakeholders as it reviews recommendations from the National Academies of Sciences, Engineering, and Medicine (NASEM) report on the Clinical Utility of Compounded Hormones to “help ensure access to compounded drugs for patients who need them.”  The report does not define what level of “access” to compounded hormones FDA should preserve, or how FDA should balance access concerns against any safety, efficacy, or evidence gaps identified in the NASEM review.  This is notable because the NASEM report found there is insufficient evidence to support the overall clinical utility of compounded bioidentical hormone therapy (cBHT) as treatment for menopause and male hypogonadism symptoms and recommended restricting the use of cBHT preparations.

Animal drug compounding

The Committee focuses on FDA’s implementation of Guidance for Industry #256, Compounding Animal Drugs from Bulk Drug Substances and encourages FDA to collaborate with State boards of pharmacy, pharmacy organizations, and accreditation bodies to develop inspectional guidelines that are shared with inspected pharmacies and applied consistently. The Committee also encourages FDA to consult practicing veterinarians and adequately consider their concerns when evaluating nominations and making decisions for the List of Bulk Drug Substances for Compounding Office Stock Drugs for Use in Nonfood-Producing Animals.

GLP-1s

Counterfeit Medicines

While the rider provision is titled generally, the Committee’s concern is specific to import of counterfeit GLP-1 API and finished dosage forms from China or “other foreign countries.”  Earlier this week FDA posted a statement on its Concerns with Unapproved GLP-1 Drugs Used for Weight Loss which reiterates some of the same concerns and also references its prior alert on counterfeit Ozempic (semaglutide) found in U.S. drug supply chain.

Safe and Effective GLP-1 Products

This provision reiterates the same concerns noted above about imported GLP-1 API and also calls out the “mass marketing” of compounded GLP-1 products—a topic that has garnered much FDA attention over the past year.  FDA posted a communication earlier this week on this topic (FDA to Telehealth Companies: What to Know When Promoting Compounded Drugs), along with another tranche of warning letters to telehealth marketers of compounded GLP-1 products.  FDA also published similar telehealth warning letters in September 2025 and early March 2026.  The Committee also communicated a clear expectation that it expects FDA to refer “egregious cases” related to the mass marketing of compounding GLP-1 to DOJ for civil and criminal enforcement.  The provision closes with a direction for a briefing from FDA on the agency’s coordinated strategy for addressing these concerns within 60 days.

Food and Feed

The report includes many provisions related to food, ranging from infant formula to standards of identity, to cell-cultured meat products, certified food color additives, state bans of food ingredients and food chemical safety.  Too many to discuss.  Below are some provisions that caught our eye.

Infant Formula

Infant formula safety and supply chain integrity seem to be on top of the Committee’s mind.  FDA regulates infant formula more strictly than other food, as it often is an infant’s only source of nutrition at a critical stage of life.  Not surprisingly, the law and regulations for infant formula require strict pre-market scientific review, set mandatory nutrient minimums, and direct FDA oversight.  However, the 2022 national shortage, caused by unsanitary conditions at a formula plant that led to a voluntary recall and temporary production stop, showed gaps in FDA oversight, and a fragile supply chain.  FDA has taken several actions to address these issues.  Among other things, it implemented a long-term strategy to increase market resiliency by encouraging international harmonization and streamlining the pre-market review for foreign formulas.  However, despite FDA’s efforts, confidence in infant formula safety remains an issue; earlier this year, there was yet another recall related to infant formula.

The report includes several provisions regarding infant formula requiring reports on FDA initiatives and directing FDA to take additional actions.  It directs FDA to report on its efforts to streamline the approval of domestic manufacturers and increase and diversify the domestic supply of infant formula.  It further requests a report showing that FDA’s oversight of foreign infant formula manufacturers is on par with domestic manufacturers. As for biotechnology and clinical research mentioned in Part 1, the Committee appears to be concerned about possible overreliance on manufacturers in countries of concern, such as China.  Specifically, the Committee orders FDA to report, within 90 days of enactment of the law, on rates of infant formula importation for the last decade and, in consultation with USDA, an assessment of  various issues including “what national security risks are associated with rising importation levels of a critical food like infant formula, . . . particularly from countries of concern such as the People’s Republic of China, and increased U.S. reliance on this; . . . and what guidelines or caps, if any, Congress should consider for foreign infant formula imports.”

Although the Committee is supportive of FDA’s efforts through Operation Stork Speed it wants FDA to conduct a study that expands on activities under Operation Stork Speed and “evaluate[s] the need for additional testing of microorganisms and pathogens, heavy metals, chemical contaminants, and microbial hazards, as well as the adequacy, frequency, transparency, and reporting requirements to FDA and Congress of current testing practices throughout the supply chain, . . . .”  In addition, it directs FDA to work with others, including academia, “to better understand the toxic element levels in different foods” and identify or develop “grower-led solutions to further reduce toxic element levels at the source.”

Food Chemical Safety 

Food chemical safety is another hot topic. The report includes provisions related to state bans of food ingredients, food additive safety, and color additives.

On the topic of certified color additives (or as the Committee calls them “harmful food dyes”), the Committee mandates that FDA prepare “a report on any actions taken by the agency to phase out, or to assist states in phasing out, . . . from the nation’s food supply: (1) Red No. 40. (CAS 25956-17-6). (2) Yellow No. 5. (CAS 1934-21-0). (3) Yellow No. 6. (CAS 2783-94-0). (4) Blue No. 1. (CAS 3844-45-9). (5) Blue No. 2. (CAS 860-22-0). (6) Green No. 3. (CAS 2353-45-9). (7) Orange B. (CAS 15139-76-1). (8) Citrus Red 2. (CAS 6358-53-8).”

As we previously reported, several states have introduced laws banning certain ingredients and laws requiring certain warning statements.  The Committee is concerned that the resulting patchwork “threaten[s] FDA’s unified Federal food safety system and the interstate commerce of food and beverage.” It reaffirms “FDA’s role in determining the safety of food and the nation’s food and beverage supply.”

The committee is supportive of FDA’s actions regarding food chemical safety such as new (proactive) post-market review of food ingredients that it previously approved or were determined to be safety for their intended use(s) “to complement FDA’s existing food chemical safety programs.”  https://www.fda.gov/news-events/press-announcements/fda-finalizes-food-chemical-safety-post-market-assessment-program-launches-reassessment-bht-ada.

Ultraprocessed Foods

The “Make America Healthy Again” movement has targeted ultra-processed foods (UPFs) as a leading cause of chronic disease.  However, there is no clarity on what exactly constitutes a UPF.  The committee acknowledges that FDA has issued a request for information but cautions against rushing the process.  It encourages FDA to conduct additional research on UPFs to assure that any definition is evidence-based and does not inadvertently misclassify nutrient-dense foods.

Standards of Identity

Somewhat surprisingly, sprinkled throughout the report are several provisions related to standard of identity for certain foods, including the standard of identity for canned tuna which has been lagging (the proposed rule dates from 2023), standards of identity for dairy products (a continuing issue notably because of the prevalence of plant-based dairy alternatives), a standard of identity for natural cheese, a standard of identity for olive oil requested by petition in 2022, an update to the standard for Brix value and percentage of allowable C. reticula for pasteurized orange juice, FDA’s draft guidance for plant-based product labeling, and compliance policy regarding labeling of blended seafood products made primarily with fish protein.

Animal Food 

HR 8646 amends the FDC Act to include a provision declaring food ingredients used in animal food safe for use if they are in included in AAFCO’s 2024 Publication for that use and FDA has not raised any safety concerns.  This provision is similar to the provision in the Pet Food Uniform Regulatory Reform Act (PURR Act) of 2025. However, it is no longer limited to ingredients for pet food (originally defined as cats and dogs).  The amendment essentially codifies FDA’s current enforcement policy regarding AAFCO-defined animal feed ingredients. HR 8646 also includes a preemption provision barring states from directly or indirectly establishing, maintaining, implementing, or enforcing any authority or requirement relating to the labels, labeling, or advertising of animal food as it relates to “natural” claims.  Whereas for human food ingredients there is a push to require a notification to FDA for any ingredient that is GRAS (i.e. self-GRAS is disfavored as “secret-GRAS”), the amendment specifies that animal food manufactures will not be required to notify FDA about their determination that an ingredient is GRAS for use in animal foods.

*          *          *

As with the provisions discussed in Parts 1 and 2 of this series, the device, compounding, GLP-1, and food riders examined above are non-binding, and their ultimate effect will depend on whether they survive conference negotiations and how FDA chooses to respond. Taken together, however, they reflect heightened congressional interest in enforcement, import safety, cybersecurity, and patient access across the device and compounding landscapes, and a particular focus on the counterfeiting and mass marketing of GLP-1 products. Like the drug and cross-product riders we covered earlier in the series, these directives offer a meaningful window into congressional priorities and the likely future areas of FDA regulatory focus that stakeholders across the FDA-regulated industries would be well advised to continue to monitor. This concludes our three-part look at the FY 2026 appropriations riders, and we will be watching closely to see which of these priorities ultimately translate into concrete agency action.

This is the second in our series analyzing the riders attached to the FY 2026 Labor-HHS Appropriations Bill. This installment examines the drug-related provisions, which cover a wide range of topics from accelerated approval and rare disease therapies to biosimilars and opioid regulation. The Committee’s report reflects ongoing congressional priorities while also addressing persistent industry frustrations and emerging regulatory challenges. Below, we summarize the key drug-related provisions and offer our analysis of what they may mean for sponsors, manufacturers, and the broader pharmaceutical landscape.

Accelerated Approval

The Committee encourages FDA to continue the use of accelerated approval where there is unmet medical need. However, it has identified inconsistencies regarding accelerated approval between CDER and CBER and requests a report within 120 days describing the steps FDA can take to ensure equal treatment is given to an accelerated approval application regardless of Center.  While each application is unique, these inconsistencies have been a common frustration for sponsors.  We strongly applaud these efforts to ensure the greatest consistency possible to provide much needed predictability for sponsors relying on accelerated approval.

Cell and Gene Therapies

The Committee also encourages FDA to support the development of genetically modified cell-based therapies, including with increased predictability and efficiencies in the IND process as well as scalable delivery on the manufacturing side. These are common obstacles for complex biologic products, and although the language here makes it sound as if this is a simple fix, we hope this leads to progress in an area where these development programs are often stalled.

Genetically Targeted Technologies

The report also contains an interesting rider directing FDA to reconsider product classifications for genetically targeted technologies, including siRNAs and ASOs, which are currently approved under the NDA process under the Federal Food, Drug, and Cosmetic Act (“FDCA”). The report suggests that these products share more in common with products approved as BLAs under the Public Health Service Act (“PHS Act”) and that this may be the more appropriate pathway to account for their more complex characteristics, including manufacturing.  Although there are many similarities between how these products are regulated, there are some specific distinctions including approaches to characterize and control product quality.  Reclassification would also be a shift away from the Hatch-Waxman/generic drug framework, with its 5 years of new chemical entity exclusivity (among other exclusivity periods) and 505(b)(2) applications, to the biosimilar framework with 12 years of reference product exclusivity and no comparable 505(b)(2) pathway.  If this reclassification were to occur, it would have a significant impact on the regulation and approval of follow-on products for the product types affected, similar to the shift made in 2020 to approve insulin and other similar products under BLAs.

Rare Diseases

There are a number of provisions aimed to encourage the development of rare diseases.  This includes specific provisions to encourage the development of acceptable endpoints for Angelman syndrome, congenital myotonic dystrophy, and hypoxic ischemic encephalopathy.  Additionally, the Committee acknowledges the increased challenges of designing clinical trials for Duchenne Muscular Dystrophy (“DMD”), particularly given the growing number of approved therapies that have improved the natural history.  However, the Committee urges FDA to explore ways to continue to use natural history controls for DMD trials rather than requiring placebo controls.

More broadly, the Committee also expresses concern that sponsors of rare disease therapies are often required to conduct traditional clinical trial designs, which can be ethically and practically problematic.  The Committee urges FDA to consider these issues and to explore alternatives, including single-arm studies, when randomization to placebo is infeasible or unethical.  The report expresses the urgency of the Committee that FDA ensure there are no undue delays in the development and review of rare disease therapies, including cell and gene therapies.  Additionally, the report stresses the importance of regulatory consistency that takes into account the inherent challenges of rare disease drug development.  The Committee also cites the Rare Disease Innovation Hub as having a positive impact on FDA internal processes regarding rare disease regulation (and we agree)!

Medical Countermeasure Priority Review Voucher

The report also describes the importance of the Material Threat Medical Countermeasure (“MCM”) Priority Review Voucher (“PRV”) program, which provides a transferable voucher on approval to qualifying products intended for use to prevent or treat harm from a biological, chemical, radiological, or nuclear agent identified as a material threat, or harm resulting from the administration of a product against such agent.  FDA’s authority to issue new MCM PRVs expired in 2023 with little subsequent movement toward reauthorization (unlike FDA’s authority to issue Rare Pediatric Disease (“RPD”) PRVs, which was ultimately renewed in 2026 following its expiry in 2024).  However, the report states that “[t]he Committee anticipates reauthorization of this program,” and directs FDA to continue supporting the MCM PRV framework until then.  During the period of time when FDA’s authority to issue RPD PRVs had expired, it continued to grant RPD designations to help ensure a smooth transition when it was reauthorized.  As there is no similar MCM designation in the statute, we wonder what FDA’s continued support of the MCM PRV framework will look like until reauthorization.  Regardless, we are glad to see some movement toward renewal of this important program after years of quiet, although we will have to wait and see what ultimately happens.

Illegal Import of Unapproved Drugs

The Committee is tackling illegal imports of unapproved new drugs in the rider, expressing “deep concern” about the health risks posed.  The Committee indicates it is awaiting a “comprehensive report addressing this issue, including safety risks, verification challenges, enforcement actions, and recommendations for strengthening oversight.”

The Committee’s concerns come after FDA’s recent denial of a Citizen Petition requesting FDA provide a clear position statement on importation activities by alternative funding programs, which are typically employer-sponsored health plans that rely on the import of unapproved, lower cost, foreign-sourced versions of FDA-approved drugs.  An investigative news report previously exposed these programs and their risks.  FDA has stated that imports of unapproved drugs are generally prohibited, and maintains an Import Alert (IA 66-57) to prevent these importations.  FDA has also issued Warning Letters to companies that have facilitated the import of these drugs (see, here and here).  That said, these alternative funding programs now leverage FDA’s personal use import policy to help facilitate access to lower cost drugs and rely on FDA’s case-by-case import enforcement discretion. While FDA’s personal use import policy (as articulated on its website and in the Regulatory Procedures Manual Ch 9) does not apply if treatment is otherwise available domestically, and FDA has stated that its policy “does not state that the cost of an FDA-approved prescription drug is a consideration for FDA personnel,” there is clearly a disconnect, as these alternative funding programs have been wildly successful at facilitating the import of unapproved, foreign-sourced versions of FDA-approved drugs.

Perhaps in response to these concerns, on June 15 FDA authorized Colorado’s drug importation program under section 804 of the FDCA, which would permit Colorado’s importation of 20 prescription drugs from Canada.  Colorado is the second state to have a section 804 import program authorized by FDA; Florida’s program was authorized in early 2024.  Despite authorization, Florida has not been able to successfully import any drugs from Canada through the program and has repeatedly requested (and been granted) authorization extensions.  We are interested to see whether the Committee’s interest in illegal imports spurs a greater crackdown by FDA on personal use imports as well as new section 804 import program authorizations.

Electronic Prescribing Information

Two riders address dissemination of electronic prescription drug information: 1) a rider addressing patient prescribing information encourages FDA to finalize the proposed rule for Patient Medication Information (“PMI”)with the option to deliver electronically; and 2) a rider directing FDA to develop an electronic prescribing information (“PI”) framework within 12 months of enactment of the Act.  These provisions stand in stark contrast to language included in appropriations bills passed by Congress since 2015 prohibiting FDA from taking any action that would allow or require PIs to be distributed electronically.

The pharmaceutical industry has long advocated for FDA to permit electronic distribution of PI; Pharma companies argue that electronic PIs would allow for more timely updates to safety information, reduce printing and distribution costs, improve accessibility for healthcare providers who increasingly rely on digital resources, and align U.S. practices with those in other major markets that have embraced electronic labeling.

The paper industry has vigorously opposed any move away from paper PIs. This standoff has persisted for nearly a decade, frustrating FDA’s efforts to modernize drug labeling. FDA has expressed interest in electronic labeling solutions, noting that paper inserts are often discarded unread, printed in small font that is difficult to read, and may contain outdated information if labeling has been updated since the batch was manufactured. The agency has pointed to pilot programs and stakeholder feedback supporting electronic alternatives.

The current appropriations riders represent a potential turning point. Whether these provisions survive conference and final enactment—and whether the paper industry mounts another lobbying effort to reinstate the prohibition—remains to be seen.

OTC Drug Monographs

The Committee calls out FDA for the continued lack of weight-based dosing instructions for children 6 months to 2 years in OTC single-ingredient acetaminophen despite the recommendations of the Advisory Committee in 2011.  One of our bloggers had this on her bingo card for an early action following OTC Monograph Reform but it still has not happened.  Noting that action on this issue is listed on FDA’s nonbinding annual forecast of planned monograph activities, the Committee directs FDA to provide an update within 90 days of enactment on timing on amending this monograph.

With respect to the sunscreen monograph, the Committee urges FDA to expeditiously finalize the proposed order issued earlier this month for the first new sunscreen ingredient in decades and also directs FDA to update its data requirements for sunscreen ingredients to allow for consideration of “modern testing methodologies,” such as real world evidence and nonanimal testing alternatives.  These are issues that industry has struggled with FDA about for more than 15 years.

Homeopathy

FDA is directed to provide a briefing within 120 days of enactment on its enforcement policies and statutory interpretation related to homeopathic products.  Although homeopathic drugs do not appear to have been a priority for FDA for quite some time, and the language of the FDCA seems to us straightforward, the Committee takes issue with FDA’s position that all homeopathic medicines are drugs subject to drug-specific requirements.

Opioid Abuse Generally

The Committee continues to support FDA’s role in addressing opioid abuse through the Opioids Action Plan, the Opioid Policy Steering Committee, and significant regulatory actions.  The Committee expects FDA to support development of alternative and non-addictive alternatives to opioid analgesics and, where opioids are medically necessary, to continue incentivizing abuse-deterrent formulations.  The Committee also broadly states that the federal government should promote the full suite of treatment options, including abstinence-based models and non-opioid medications, and continue to support naloxone distribution among trained, licensed healthcare professionals and emergency responders.

OA REMS

For the Opioid Analgesic (“OA”) REMS, the Committee directs FDA to study and evaluate data to develop appropriate specifications for in-home disposal systems that may be required under the OA REMS.  If FDA determines that the OA REMS should be modified to add in-home disposal system requirements, the Committee expects FDA to communicate that determination promptly to opioid analgesic manufacturers.  This does not come as any surprise, as FDA stated it was “continuing to explore other innovative in-home drug disposal methods” when it approved a modification to the OA REMS to provide for prepaid drug mail-back envelopes in October 2024.

Biosimilar Interchangeability

FDA, in June 2024, issued a draft guidance proposing that switching studies may no longer be necessary to demonstrate interchangeability of biosimilars, as comparative analytical and clinical data may be sufficient when applicants can provide adequate justification.  Because that guidance remains in draft form, the Committee directs FDA to finalize the recommendations in the guidance to allow for an interchangeability designation without switching studies.  The hope in implementing this approach to interchangeability is to increase patient access to medications, to bolster innovation by reducing development costs, and to encourage manufacturer investment in biosimilar production.

Biosimilar Single, Shared System REMS

The FDCA has required the exploration of a Single, Shared System Risk Evaluation and Mitigation Strategy (“SSS REMS”) for small molecules for years to increase efficiencies for stakeholders and applicants through shared development and implementation costs; however, there is no corresponding provision in the PHS Act requiring biosimilar manufacturers to attempt to negotiate a SSS REMS with their reference product sponsors.  The Committee urges FDA to consider implementing SSS REMS for biosimilars and their reference products to drive increased biosimilar development, expanded patient access, and savings for patients and the healthcare system.

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As with all appropriations riders, the real impact will depend on whether these provisions survive conference negotiations and whether FDA follows through on the Committee’s directives.

Stay tuned for Part 3 of our series, which will address additional provisions affecting devices, food, and compounding.

On May 1, 2026, the House Committee on Appropriations submitted House Report 119-632 to accompany H.R. 8646—the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act for Fiscal Year 2027, which passed on June 4, 2026. The report serves as the Committee’s explanation of the accompanying bill, setting forth funding levels, programmatic directives, and policy priorities across the U.S. Department of Agriculture (USDA), the Food and Drug Administration (FDA), the Commodity Futures Trading Commission (CFTC), and the Farm Credit Administration (FCA). Given that of these acronyms our blog has only FDA in the title, it should come as no surprise that we are focused only on the FDA provisions, of which there are plenty—so many that we needed to split the post into three parts.  The first, published today, will cover a few key provisions from the Act and the cross-product riders. Post 2 will look at the drug-specific provisions (including biosimilars). And Post 3 will look at everything else, including devices and compounding.

To start, the Act itself includes several provisions that preclude the use of funds in various ways.  Relevant to FDA, the bill specifically calls out animal research and human embryo research:

Animal Research

Two provisions reflect the continuing emphasis on moving away from animal testing with Section 781 prohibiting use of funds by FDA to issue or finalize guidance recommending or requiring testing in dogs and Section 782 prohibiting use of funds by the National Institute of Food and Agriculture within the Department of Agriculture to conduct or fund certain research involving a dog or cat.  Presumably cats were omitted from the FDA provision because they aren’t typically used in research for FDA regulated products.

There is also language in the report regarding New Approach Methodologies (NAMs), focused on limiting the use of animal testing. Much of this language backs FDA’s existing direction on NAMs, for example, the General Considerations for the Use of New Approach Methodologies in Drug Development draft guidance (CDER, March 2026). The Committee praises the Roadmap to Reducing Animal Testing and endorses the view that in vitro tests and computational models can, in appropriate contexts, provide reliable and human-relevant evidence. It then directs FDA to revise its regulations within a year to make clear, where applicable, that animal toxicology tests are not required to support clinical testing in humans, and recommends that the agency prioritize human or existing animal data and limit new animal testing to cases where comparing a method against animals is scientifically necessary and no other data will serve. Implicit in the instruction to “make clear” when animal testing is not required is a recognition that sponsors need transparency and predictability.

Research on Human Embryos

The other notable provision of the Act is Section 734, which prohibits the use of funds to receive a submission seeking an IND for a drug or biologic for research in which a human embryo is intentionally created or modified to include a heritable genetic modification and provides that no such investigational new drug application (IND) may go into effect.  While this type of research may not be widespread or typically involve an IND, it may represent a step into more prohibitive constraints in the future.

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Additionally, the House Report includes 143 FDA-related riders ranging from support for research and product approvals for specific diseases, to clinical trial recommendations, international inspection requirements, and animal testing prohibitions. While the whole report is worth a read, we are including below a discussion of the provisions we believe to be most significant and/or interesting.

As a starting point, there are a few themes that permeate the riders that are worth calling out:

What it means for the FDA. The report issues dozens of directive paragraphs ordering FDA to submit reports, conduct briefings, and take specific regulatory and enforcement actions across drugs, biologics, food, tobacco, and devices—often within specified deadlines (e.g., 60, 90, 120, or 180 days of enactment). While this language does not have the force and effect of law, “report language plays an essential role in the congressional consideration of appropriations measures and affects how federal agencies interpret and obligate the funds provided in those measures” and “agencies are generally expected to comply with a report’s directives.”

Alignment with administration policy. The report’s emphasis on deregulatory priorities, AI-driven efficiency in the approval process, and streamlining review pathways is broadly consistent with the current administration’s stated goals of accelerating access to safe products and leveraging technology to modernize federal operations. The Committee explicitly encourages FDA to utilize AI “to the fullest extent appropriate” for streamlined review and approval, and encourages coordination with the President’s U.S. Tech Force Team. However, dissenting views note that the bill includes “funding cuts to the Food and Drug Administration” and criticizes the bill’s “utter failure to address the bizarre and unscientific policies the administration has advanced on vaccines and other critical products.” The Committee also expresses concern about whether FDA has adequate staffing to accomplish its missions and references GAO reports, including one issued in early 2026, recommending improvements to staff retention and hiring; this is of course notable given the administration’s active role in significantly reducing FDA’s workforce over the last year and a half. The report also prohibits FDA from accepting certain clinical trial data generated from sites in covered nations (e.g., China), reflecting a supply-chain security and decoupling posture consistent with administration trade policy, but signaling the possibility of a significant new restriction on FDA’s regulatory authority in the future, which we discuss further below.

Tension with administration DEI rollbacks. Notably, several provisions in this report reflect regulatory priorities centered on diversity in clinical research and the health impacts of medical products on women and minorities—priorities that exist in tension with the current administration’s broad rollback of federal diversity, equity, and inclusion (DEI) initiatives. For example, the Committee commends FDA’s initiatives to increase the representation of women and minorities in clinical trials and directs FDA to continue implementing legislation requiring diversity action plans for Phase 3 studies and to provide guidance on overcoming barriers to participation in rural or underserved areas; this is particularly interesting given that FDA removed, and has not yet restored, its June 2024 draft guidance, Diversity Action Plans to Improve Enrollment of Participants from Underrepresented Populations in Clinical Studies, from its website. The Committee also directs FDA to report within 180 days on steps taken to avoid adverse drug events for women and minorities and urges the FDA Commissioner to explore a Women’s Health Innovation pilot program to ensure clinical trial design reflects the disease impact across the broader population and to accelerate bringing medical product innovations to women. These directives presuppose an FDA that is actively staffing, funding, and prioritizing diversity-focused regulatory programs. However, executive orders and agency-level policy changes curtailing DEI activities across the federal government may constrain FDA’s practical ability or institutional willingness to implement these provisions with full vigor. The result is a potential disconnect: Congressional appropriators are directing FDA to advance diversity and inclusion in clinical development and regulatory review, while executive branch policy pulls in the opposite direction. Healthcare and life sciences stakeholders should monitor whether these provisions are meaningfully enforced or effectively deprioritized in the current political environment, as the outcome will affect clinical trial design expectations, regulatory review timelines for products with diverse-population data, and the trajectory of women’s health innovation pathways at FDA. We note that despite the removal of the guidance on Diversity Action Plans, some sponsors have continued to submit them, and issues of diversity in clinical trials continue to be important in terms of ensuring that a clinical trial population is representative of and generalizable to the intended population for the product if approved.

Consequences of non-compliance. As noted above, appropriations committee reports do not, as a general matter, carry the force of law, and the directives therein typically rely on the “power of the purse” as an enforcement mechanism. However, the bill itself contains binding general provisions, and the Committee’s reporting requirements are backed by the implicit threat of reduced future funding, heightened oversight, and potential legislative riders in subsequent fiscal years.

With the above broad-brush strokes in mind, we discuss in greater detail seemingly significant provisions that affect multiple product types.

Cross-Product Provisions

Artificial Intelligence

During his tenure at the helm of FDA, Dr. Marty Makary spoke often about use of AI tools to aid reviewers in a variety of tasks, from summarizing meetings and locating studies to reviewing applications in record time. The Committee supports use of AI “to improve the efficiency, consistency, and transparency of regulatory review processes” and “encourages FDA to evaluate appropriate uses of artificial intelligence to streamline administrative functions, enhance data analysis, and support timely review of applications, including the redaction of confidential information from regulatory documents to increase public transparency.” Of particular interest, while the Committee encourages the use of AI to “clarify data requirements for approval,” it also states that FDA must maintain “that all regulatory decisions remain grounded in sound science and statutory authority.” As noted in the introduction above, the dissenting views in the report express concern with the “bizarre and unscientific policies” undertaken by the agency under this administration. While the Committee’s mandate to ground decisions in sound science and statutory authority is to be lauded, it remains to be seen who determines what constitutes “sound science and statutory authority” and whether the agency will have a different approach under Acting Commissioner Kyle Diamantis.

In a related provision, the Committee “encourages FDA to utilize AI to the fullest extent appropriate to ensure the most streamlined review and approval process, leading to faster access to safe products for Americans.” It also urges FDA “to formalize a dedicated, cross-center team of experts in AI-enabled drug development.” It is not clear why this should relate only to drug development; presumably FDA AI initiatives will pertain to all products over which FDA has oversight. It is also worth noting that Dr. Makary had a Chief AI Officer who departed along with Dr. Makary. To date, to our knowledge the role has not been filled.

The Committee directs FDA to provide a briefing update 180 days after enactment of the funding bill.

Foreign Inspections

One provision is titled “Foreign Medical Device Inspections,” but the language itself indicates a broader application to both drugs and devices. The Committee starts by expressing its concern specifically about medical device recalls from foreign facilities and directs FDA to strengthen its foreign inspection pilot programs to include medical device inspections, and then states that FDA should identify what, if anything, is needed to increase unannounced inspections of overseas drug and device manufacturers, with emphasis on facilities in China and India where quality issues are most prevalent. In particular, the Committee notes that FDA should enhance inspector language capabilities, technological resources, and staffing levels, and expects FDA to report within 180 days of enactment on concrete steps to integrate and improve these inspection programs, including unified metrics on inspection frequency, violation rates, and progress in eliminating the backlog of uninspected facilities. The report must detail specific measures available if efforts to conceal violations during inspections are discovered, and ensure imported devices consistently meet U.S. safety standards.

In a separate but related provision, the Committee encourages FDA to increase the frequency and rigor of international drug and device manufacturer inspections to be consistent with domestic manufacturer inspections.

China

Three riders highlight concerns with the growing role of China in biotechnology and clinical research. The most aggressive expresses concern about the growing influence of China over U.S. pharmaceutical supply chain and drug development, noting that in 2025 48% of “novel medicines licensed globally came from China” compared to 5% only 5 years ago and that clinical trial sites located in China operate in jurisdictions where patient “safety standards, human rights, and independence from state interference” cannot be verified and are not inspected by FDA.  Specifically, the Committee registers concern about FDA allowing this data to support INDs incentivizing the conduct of Phase I/II trials in China. In this rider, the Committee prohibits FDA from considering clinical data generated in support of an IND or a supplement by a clinical site located in a “covered nation” which currently includes North Korea, China, the Russian Federation and Iran.  The provision is to apply to applications submitted on or after one year from enactment of the Act.  Interestingly, while it is not entirely clear what it means to be “in support of an IND,” it does not appear intended to affect the conduct of Phase III studies in support of a new drug application (NDA) or biologics license application (BLA).  Although most companies do not plan to rely on a clinical study program with Phase III studies conducted entirely in China due to potential risks associated with the generalizability of data to the U.S. population, this signals an expanding risk associated with Phase I/II studies.

The second rider is in response to trends in early phase studies being conducted increasingly in China and Australia and directs FDA to revise its IND processes and data requirements for initial human trials to streamline administrative requirements, reduce filing burdens, and make them phase- and risk-appropriate and to consider developing a pilot program for lower-risk INDs more akin to Australia’s notification system.  FDA under former Commissioner Makary has already identified cutting the time to being able to initiate clinical trials as a goal.

The third laments the U.S.’s decreasing participation in standards setting bodies such as the International Council for Harmonization (ICH) while China’s participation has significantly increased and encourages FDA to continue working with ICH and other international standards setting bodies.

Clinical Trials

Accountability for Unsafe Drug Products and Medical Devices

The Committee is concerned with reports of companies knowingly withholding research showing their drug products or medical devices had adverse health outcomes. The Committee requests a briefing updating the Committee on “all investigations underway” to hold these companies accountable and an action plan to prevent future cover-ups of pertinent information in the approval process. It is not clear what the “reports” are that make this showing, and if this relates to FDA’s March 30, 2026, outreach to more than 2,200 sponsors and investigators associated with over 3,000 clinical trials that appear to be missing required results submissions to ClinicalTrials.gov. As noted in our blog post on that announcement, it is not clear that these companies are intentionally withholding results, or if the absence of results simply reflects a breakdown in process. It is also not clear how FDA could reasonably provide an update on “all investigations underway” to the Committee, given the large number of studies underway at any given time.

Alzheimer’s Clinical Trials

As a disease currently affecting approximately 7.4 million Americans, Alzheimer’s disease garners attention from both drug and device companies expending significant efforts to improve diagnostics and treatment of the condition. One challenge to their success is clinical trial design and enrollment. The Committee report recognizes this challenge and notes the “need to advance innovative and flexible clinical trial designs for Alzheimer’s disease and related dementias.” The Committee also discusses the need for diversity in Alzheimer’s clinical trials, particularly “to improve trial representation and ensure that study populations better reflect the individuals most affected by the disease.”

Real-World Data and Evidence

Over the last few years, FDA has repeatedly emphasized the importance of real-world data (RWD) and real-world evidence (RWE) and has published on its website drug, device and biologic product authorizations that used RWE. The Committee encourages FDA to expand the use of RWD and RWE—including electronic health records, claims data, registries, and digital health information—in the evaluation and approval of drugs, biologics, and medical devices. The Committee further encourages the agency to consider RWD and RWE as capable of supporting adequate and well-controlled studies and constituting substantial evidence of effectiveness, where appropriate.

Women’s Health

The Committee report includes several provisions that emphasize the importance of researching, studying, and developing products for women’s health, recognizing “that women’s health includes conditions and diseases that differently, disproportionately and/or solely impact the health of women” and that these differences “should be considered in bringing medical innovations to market.”

Specifically, one provision emphasizes the importance of advancing knowledge and research on ovarian health as a way to reduce the risk of developing certain chronic conditions. Another encourages FDA to “expedite innovation related to at-home self-collection tests that could increase and expand access to [cervical cancer] screenings for women.”

Perhaps most significantly, the Committee “urges the FDA Commissioner to explore operating a Women’s Health Innovation pilot program where professional expertise in women’s biology and innovation is applied to enhance efficiency in the approval process, ensure clinical trial design reflects the disease impact across the broader population, and accelerate bringing medical product innovations to women.” We are certain there are many companies at critical product development stages that would welcome the opportunity to participate in this pilot program.

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The FY2027 Appropriations Report reflects a Congress eager to shape FDA’s regulatory priorities—from promoting AI-driven efficiencies and strengthening foreign inspection programs to restricting clinical trial data from covered nations and advancing women’s health innovation. While these cross-product provisions set the stage for how FDA may operate across all product categories, the report also contains a significant number of riders specific to drugs and biologics. In our next installment, Riders on the Storm Part 2, we will dive into the drug-specific provisions, including those addressing biosimilars, accelerated approval, and other key areas of pharmaceutical regulation. Stay tuned.

On June 15, 2026, the U.S. Food and Drug Administration (FDA) issued a Warning Letter to Happiest Baby, Inc., the manufacturer of the SNOO Smart Sleeper bassinet system, following a July 2025 inspection of the company’s Los Angeles facility. The Warning Letter highlights several key points related to complaint handling, premarket notification requirements, field correction reporting, design changes, and unauthorized changes to the device’s intended use environment, with important lessons for device manufacturers of all sizes.

1. Bundling of Complaints: Why Grouping Multiple Complaints Undermines MDR Compliance

FDA cited Happiest Baby for failure to adequately establish and maintain procedures for receiving, reviewing, and evaluating complaints and for failure to maintain adequate records of complaint investigations. The core deficiency was the firm’s practice of “bundling”—grouping several distinct customer complaints related to the same overarching topic, e.g., the sleep sack being too large, together in the complaint system as a single complaint record. FDA reviewed 17 complaints during the inspection and found that 9 of 17 reflected this bundling practice, with the firm performing complaint handling activities (including complaint investigations and Medical Device Report (MDR) determinations) under a single complaint entry for multiple distinct events.

Bundling complaints can be problematic for several reasons. It can limit the extent of the investigation for each individual case, potentially masking safety signals that would be apparent if complaints were evaluated independently, thereby risking a single non-reportability determination being applied to events that, if individually assessed, might meet the threshold for mandatory MDR reporting. Bundling can also obscure the frequency and severity of particular failure modes, which are critical inputs to both MDR determinations and Corrective and Preventive Action (CAPA) evaluations, and undermine trending analyses that quality systems rely on to identify emerging risks.

2. Product Modifications After De Novo Authorization: Evaluating When a New Premarket Submission Is Required and Implementing Design Controls

Under 21 CFR 807.81(a)(3), a manufacturer must submit a new premarket notification (510(k)) before commercially distributing a device that has been changed or modified in a manner that could significantly affect its safety or effectiveness, or that constitutes a major change or modification in its intended use. FDA’s guidance document, Deciding When to Submit a 510(k) for a Change to an Existing Device, provides a decision framework for this assessment.

The SNOO Smart Sleeper was authorized under De Novo classification request DEN210039 with an indication specifying three sizes of sleep sacks: Small (5–12 lbs), Medium (12–18 lbs), and Large (18–25 lbs). FDA found that Happiest Baby had introduced two additional sizes—an X-Small Sleep Sack (4–8 lbs) and an X-Large Sleep Sack (23–25 lbs)—without submitting a premarket notification. FDA concluded that the X-Small Sleep Sack constituted both a change that could significantly affect safety or effectiveness and a major change in intended use. Notably, the firm first distributed the X-Small Sleep Sack in a beta program in direct response to customer complaints that the Small Sleep Sack was too large—the very same complaints it had bundled and found non-reportable. The X-Large Sleep Sack also constituted a change that could significantly affect safety or effectiveness, because babies in the weight range for the X-Large Sleep Sack also are within the bounds of the weight for the Large Sleep Sack, so the larger size may make it easier for an infant to break free from the sleep sack and assume an unsafe position in the bassinet.

FDA also cited Happiest Baby for failure to adequately establish and maintain procedures for the identification, documentation, validation or, where appropriate, verification, review, and approval of design changes before implementation. FDA viewed the sleep sack size changes and related product iterations as design changes that should have moved through formal design-control procedures—not merely customer service resolution, beta testing, or commercial rollout “based on equivalency to prior testing” and reliance on prior validation protocols, reports, and justifications.

The lesson for manufacturers is that complaint-driven modifications can trigger multiple, overlapping regulatory workstreams: complaint investigation, MDR assessment, CAPA evaluation, design-change control, and premarket submission analysis. A change intended to resolve a safety-related complaint should be documented through the design history file and supported by verification or validation before implementation or distribution.

3. Reporting Obligations Under 21 CFR Part 806: Corrections and Removals

Under 21 CFR Part 806, manufacturers and importers must report to FDA any correction or removal of a medical device initiated to reduce a risk to health posed by the device, or to remedy a violation of the Federal Food, Drug, and Cosmetic Act (FD&C Act) caused by the device that may present a risk to health. Such reports must be submitted within 10 working days of initiating the correction or removal.

FDA found that Happiest Baby had been sending replacement SNOO Smart Sleeper devices to customers who returned stained, soiled, or otherwise unsanitary units. FDA determined that this action constituted a correction or removal within the meaning of the regulation—it was initiated to reduce a risk to health posed by the device or to remedy a violation of the FD&C Act—and that the firm failed to file the required report.

This citation is a reminder that Part 806 reporting obligations can be triggered by activities that a manufacturer might not reflexively classify as a “recall.” Product replacement programs, refurbishment exchanges, and field service actions that address customer complaints may satisfy the regulatory definition of a correction or removal if they are undertaken to reduce a risk to health. Manufacturers should ensure that product replacements are evaluated under Part 806 to determine whether the replacements meet the definition of a correction or removal.

4. Change of Intended Use Location: From Home to Hospital

When FDA granted the De Novo request for the SNOO Smart Sleeper under DEN210039, it authorized the device “for home use by caregivers.” FDA found that Happiest Baby was marketing and distributing a “SNOO Hospital Bundle” to hospitals—a package that included the SNOO Smart Sleeper bassinet, a mobility cart, a reusable sealed mattress, mesh covers, sleep sacks, fitted sheets, and disposable cover sets. The Hospital Bundle was marketed with claims that it keeps sleeping babies safely on their backs—an intended use very similar to the authorized home-use indication.

FDA concluded that marketing the SNOO Smart Sleeper for use in hospital settings constituted a major change or modification in intended use and a change or modification that could significantly affect safety or effectiveness—for example, the mobility cart introduced new risks not evaluated in the original authorization, including reliance on wheel locks to prevent unintended movement and the potential for the cart to roll or tip over while an infant is in the bassinet.

Happiest Baby argued that the SNOO, when used in the hospital, was not a medical device because it was marketed exclusively as a soothing tool. FDA rejected this characterization, finding that the Hospital Bundle is a device, that its intended use is not a general wellness use, and that CDRH’s general wellness policy did not apply because the bundle did not present a low risk to safety.

This finding illustrates that the environment of use is a critical element of a device’s authorized intended use. Moving a device from home to clinical settings can fundamentally change the risk profile and require premarket evaluation. This also demonstrates that recharacterizing an authorized medical device as a “wellness” or “non-medical” product for a new market segment is unlikely to succeed when the product’s claims and function remain substantially the same as the authorized intended use.

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This Warning Letter identifies systemic vulnerabilities that can emerge in any medical device company. We are available to help ensure that your processes and systems are designed to mitigate the risk of a similar outcome.

Listing patent information in the Orange Book is one of the most important things you can do as an innovator sponsor to ensure that your property rights are respected.  And, of course, it’s statutorily required.  So that makes the new guidance FDA just issued on how to list your patents in the Orange Book—or rather how to properly fill out Forms 3542a and 3542—pretty important.  It’s not groundbreaking stuff if you’re familiar with the forms, but the submission is complicated when you’re not experienced with it.  This guidance serves to simplify it.

With the familiar Question and Answer format, the 3542 guidance begins by outlining the statutory requirement to submit drug product, drug substance, and method-of-use patent information both as part of an NDA or supplement and after approval.   Form 3542a should be used for applications in progress while Form 3542 is used for approved applications and can be submitted no later than 30 days after approval unless the patent issues after approval.  If a patent issues after approval of the NDA, the sponsor must submit a Form 3542 no later than 30 days after patent issuance.

If FDA identifies errors in a timely filed Form 3542, the NDA sponsor has 15 days from FDA notice to remedy the issues.  And if a sponsor is changing the description to an approved use code, the sponsor must submit Form 3542 within 30 days of the corresponding change to product labeling or within 30 days of a decision by the court or PTO that alters the construction of the patent’s method-of-use claim.

The guidance further reminds sponsors that the correct form must be used and filed within the 30-day window, with one issued patent per form.  The forms must be filed through the Electronic Submission Gateway and should not be sent any other way.  Nor should copies of patents be submitted.

There is little in the way of substantive advice in the new guidance, but it does highlight several recurring deficiencies that sponsors should watch out for:

• Failure to identify any applicable U.S. agent for either the patent owner or NDA holder;
• Failure to describe and clearly explain all changes made by the NDA holder to a use code listed for its drug product in the Orange Book.
• Failure to identify the specific subsections of the approved product labeling that describe the approved method of use claimed by the patent submitted.
• Failure to ensure the use code description matches the corresponding use code description in the Orange Book where the sponsor intends to use a use code identical to one already published in the Orange Book.

Remember that only listable patents can be included (drug substance, drug product, and method-of-use patents) and that FDA has strict timing rules for 3542 submissions.

Again, this guidance isn’t novel, but it is important because it gives sponsors a roadmap for timely and accurate Orange Book submissions.  Just don’t forget to use the correct form!