Court Decides FDA Can’t Regulate Device as Drug

The distinction between a drug and a device is a critical one: drugs and devices are subject to different regulatory schemes, with the drug pathway being significantly more onerous and expensive.  User fees alone for a generic drug total $300,000 for the first year compared to only around $7,600 for devices – user fees for drugs approved under the 505(b) pathway are even more expensive, totaling more than $2.5 million in 2019.  Drugs are also subject to a much more rigorous pre-market review process, as well as different post-market compliance requirements.  Given these differences, the jurisdictional designation of a product is of great importance.

On Friday, the U.S. District Court for the District of Columbia rejected FDA’s attempt to regulate one of our client’s medical products as a drug, because the product met the definition of a device.

While the Federal Food, Drug, and Cosmetic Act sets forth a definition of “drug” and a definition of “device,” FDA has taken the position that it has discretion to regulate any product meeting the definition of “device” as a drug.  FDA’s position was based on the “overlap” in the definition of drug and device.  The Act, in relevant part, defines “drug” to include:

articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals

21 U.S.C. § 321(g)(1).  It defines “device” to have the same intended purpose, but provides a key statutory distinction: a device does not achieve “its primary intended purposes through chemical action within or on the body of man” and “is not dependent upon being metabolized for the achievement of its primary intended purpose.”  But because the drug and device definitions both include articles “intended for use in the diagnosis” of disease, FDA has taken the position that all articles meeting the definition of a device also meet the definition of a drug.  Under this interpretation, it is only by the grace of the agency that any particular medical device is not regulated as a drug.  For more on this topic, see Jeff Shapiro’s blogpost from 2018 on this issue.

While FDA claimed to have taken the position since 1997 that all contrast agents will be classified as drugs, and regulated as such, only recently has anyone challenged it.  Our client Genus Medical Technologies (“Genus”) of St. Louis, Missouri manufactures barium sulfate, an orally administered contrast agent used in radiographic procedures.  Represented by Hyman, Phelps & McNamara P.C., Genus filed a Complaint in the U.S. District Court for the District of Columbia in March 2019 challenging FDA’s classification of barium sulfate as a drug.  While admitting that barium sulfate met the statutory definition of device, FDA nonetheless issued Genus a Warning Letter for marketing an unapproved drug.  Genus submitted a Request for Designation making the point that, because the product did not achieve its primary intended purposes through chemical action on or in the body or through metabolization, the product must be regulated as a device under the statute, even though a competitor’s barium sulfate products are regulated as drugs.  FDA rejected this approach and stated – without actually classifying barium sulfate – that barium sulfate would be regulated as a drug.  So, after years of trying to reason and/or negotiate with FDA, Genus filed suit alleging violations of the Administrative Procedure Act.

Last week, the Court granted Genus’s Motion for Summary Judgment.  Judge Boasberg held that FDA’s theory of unfettered discretion to regulate devices as drugs contradicts the plain language of the FDCA.  Relying on the canons of statutory interpretation, the Court held that FDA’s interpretation that the diagnostic product is a drug — even if it plainly falls under the device definition — would render superfluous the device definition in the statute.  Judge Boasberg explained that the drug-device distinction would be meaningless under FDA’s interpretation:

If a product that meets both definitions is nonetheless treated as a drug, then the device-drug distinction would be rendered meaningless. Put otherwise, the FDA could classify any diagnostic device as a drug because no limiting principle would trammel its authority. That would turn the statutory scheme on its head.

Memorandum Order at 13.  Employing Step 1 of the framework established by the landmark Supreme Court decision on application of statutory terms by administrative agencies (Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984)), Judge Boasberg determined that “[i]n the end, the plain text dictates the result here. Congress readily could have afforded the agency discretion to determine which of these pathways a product must take. . . But it did not do so here.”  Id. at 14.

Judge Boasberg rejected FDA’s argument that the intended use definition overlap implicitly grants the Agency discretion to decide whether to regulate a device as a device or a drug.  FDA based its argument on the evolution of the drug and device definitions, which once explicitly excluded devices from the definition of drug but was later redrafted to remove that express exclusion.  FDA argued that this revision awarded the Agency the discretion it sought, but Genus pointed out that this revision was made only to enable combination drug/device products to be regulated as drugs where appropriate.  The Court, once again, agreed with Genus, stating “Congress’s intent was not — as the FDA would have the Court believe — to delegate unfettered discretion to the FDA to regulate all devices as drugs.”  Memorandum Order at 16.  The Court also rejected FDA’s reliance on case law (predominantly Bracco Diagnostics, Inc. v. Shalala, 963 F. Supp. 20 (D.D.C. 1997)) that implicitly granted FDA the discretion it sought, as those cases arose in different contexts and under different permutations of the drug and device definitions.   In the end, the Court held that such discretion is not implicitly in the statute nor is the statute ambiguous enough to support such an interpretation.

This is a big win for industry in limiting FDA’s discretion.  The decision supports the proposition that, despite some level of deference by federal courts to agencies, the plain meaning of the FDCA places strict limits on FDA’s administrative decisions, and courts will reject FDA’s administrative decisions when they run counter to clear statutory meaning (likewise, a decision from the Fourth Circuit Court of Appeals almost exactly five years ago held FDA had failed to properly apply clear statutory provisions (a blogpost on that decision is linked here).  More immediately though, the decision effectively mandates that FDA regulate as a device any product that “does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.”