The Potential Implications of Loper Bright for FDA and FDA-Regulated Industries

On June 28, 2024, the U.S. Supreme Court issued its much-anticipated opinion in Loper Bright Enterprises v. Raimondo,¹ overruling Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc.² and holding that courts reviewing agency action pursuant to the Administrative Procedure Act (APA) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.”³ The decision will have a significant impact on how lower courts evaluate challenges to the Food and Drug Administration (FDA) actions under the APA. The new framework is likely to increase both the frequency of such challenges and their odds of success by eliminating one way in which the government previously prevailed in such cases. We expect significant issues — including, for example, FDA’s ability to extend its authority over new classes of products and claims of regulatory exclusively — to be subject to increased litigation and judicial scrutiny. This new world is likely to present both opportunity and risk for those in FDA-regulated industries.

A. The Old Regime: Chevron Deference

The Supreme Court decided Chevron in 1984 and established a two-step framework that has guided judicial review of agency action for four decades. Where Chevron applied, Step One required the reviewing court to first determine whether the statute at issue was clear using the traditional tools of statutory interpretation. If the statute was clear, the court was required to apply the law as written regardless of a contrary interpretation from the agency. If the court determined that the meaning of the law was unclear, that Congress had left a gap to be filled, or that the question had otherwise been delegated to the agency, however, Chevron Step Two required the court to defer to the agency’s interpretation so long as it was reasonable.

The net effect of Chevron was that FDA was highly likely to prevail if the reviewing court found that the statute was ambiguous. Indeed, a study of federal appellate court decisions since 2000 found that FDA had prevailed in every appellate opinion that reached Chevron Step Two based on a finding that FDA’s statutory interpretation was “reasonable.”⁴ Among other things, this deference has had the effect of reducing the willingness of companies to challenge FDA’s actions, even if those actions appear inconsistent with congressional intent or the best reading of the relevant statute.

B. The New Framework: Loper Bright

As expected following oral argument, the Supreme Court in Loper Bright explicitly overruled Chevron in a 6–3 decision written by Chief Justice John Roberts. First and foremost, the Court found that Chevron was incompatible with the text of the APA,⁵ which states that “the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.”⁶ Second, the Court rejected the “presumption” that ambiguity should be assumed to be a delegation of authority to the agency.⁷ Third, the Court held that “agencies have no special competence in resolving statutory ambiguities,” but “[c]ourts do,”⁸ even if it “happens to implicate a technical matter.”⁹

With Chevron overruled, courts are now directed to “exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.”¹⁰

That said, the Court’s opinion leaves the door open to some forms of deference. First, the Court emphasized that the APA “does mandate that judicial review of agency policymaking and factfinding be deferential.”¹¹ At oral argument, for example, Justice Amy Barrett gave the example of the difference between a drug and a supplement, suggesting that although the product category definitions are a matter of statutory interpretation, “which category one thing fell in might be a question of policy for [FDA].”

Second, the Court acknowledged that Congress retains the ability to “delegate[] authority to an agency consistent with constitutional limits.”¹² In such situations, a reviewing court “must respect the delegation,” and its task is to ensure “that the agency acts within it.”¹³ This is likely to preserve some level of deference when FDA acts pursuant to an explicit delegation, for example, an express direction to promulgate regulations or guidance.

Third, even when the reviewing court is engaged in statutory interpretation, the court may use the agency’s interpretation to “help inform that inquiry.”¹⁴ This appears to be a return to so-called Skidmore deference, pursuant to which “an Executive Branch interpretation” may have “‘power to persuade,’” but not “‘power to control.’”¹⁵

Finally, the Court emphasized that overruling Chevron was not an invitation to revisit settled cases. It said that prior holdings “that specific agency actions are lawful” remain “subject to statutory stare decisis despite our change in interpretive methodology.”¹⁶

C. Implications for FDA-Regulated Companies

Many important decisions by FDA are based, at least in part, on statutory interpretations that will be subject to greater scrutiny under Loper Bright. Examples of FDA-related determinations that may now face additional or more formidable scrutiny:

• Agency Authority/Jurisdiction: Determining the scope of FDA’s authority to regulate a particular product is inherently an exercise in statutory interpretation. Jurisdictional issues such as, for example, what constitutes a “dietary supplement”¹⁷ have arisen in litigation. Under Chevron, courts have deferred to FDA’s interpretations where the relevant statutory text has been found to be ambiguous.¹⁸ The outcomes of these cases determine whether and how the products at issue will be regulated, including how the products can be manufactured, marketed, and imported. With so much at stake, FDA’s interpretation of these types of jurisdictional issues may be subject to more and/or stronger challenges under the less deferential Loper Bright standard. In fact, one of the first FDA-related cases to be decided under Loper Bright may be the pending challenge to FDA’s authority to regulate laboratory-developed tests (“LDTs”) as “devices.”
• Market Exclusivity: The law provides for various types of market exclusivity, including new chemical entity exclusivity,¹⁹ new clinical trial exclusivity,²⁰ pediatric exclusivity,²¹ orphan drug exclusivity,²² generic drug exclusivity,²³ new reference biological product exclusivity,²⁴ and interchangeable biologic exclusivity.²⁵ FDA’s determinations on the availability and duration of these exclusivity periods have significant financial consequences for manufacturers and competitors alike. It is thus no surprise that FDA’s exclusivity determinations have frequently been challenged in court, often with success.²⁶ Other disputes, however, have been resolved in FDA’s favor based on a perceived ambiguity in the relevant statute.²⁷ Under the Loper Bright framework, new challenges to FDA’s exclusivity determinations may have increased chances of success.
• Agency Rulemaking: Since Chevron, litigants have challenged FDA rulemaking on a range of issues. Often, the courts have sided with FDA pursuant to Step Two. For example, just two years after Chevron, the Supreme Court reversed the D.C. Circuit and sided with FDA, concluding that FDA’s interpretation of a statutory provision related to adulterated foods was reasonable.²⁸ In a more recent food-related case, the Southern District of New York rejected a challenge to FDA’s generally-regarded-as-safe rule (GRAS) pursuant to Chevron Step Two.²⁹ These types of challenges may have a greater chance of succeeding in a post-Chevron world.
• Drug Approvals: FDA-regulated entities may be more likely to test the boundaries of the new framework, including by challenging FDA’s drug approval determinations. For example, in order to obtain approval for a new drug, the FDCA states that applicants must provide “substantial evidence that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the proposed labeling thereof.”³⁰ In the past, courts have found this provision ambiguous and allowed FDA to impose additional requirements, such as a showing that the claimed treatment effect will be clinically meaningful.³¹ In the post-Chevron world, unsuccessful applicants may seek to challenge FDA’s approach under Loper Bright.

These are just a handful of examples of the types of FDA-related issues that may be litigated with different results under Loper Bright. The real-world impact of the decision, however, remains uncertain. Even before Loper Bright was decided, the Supreme Court had grown less likely to rely on Chevron to decide issues of agency statutory interpretation,³² and there is evidence that the lower courts had already become somewhat less likely to find statutory ambiguity and therefore less likely to reach Chevron Step Two. Nonetheless, given the stakes, FDA-regulated entities should be actively evaluating both the risks and opportunities that Loper Bright may present in terms of both litigation and advocacy before the agency. 

¹ 603 U.S. ___, No. 22-451 (June 28, 2024). The opinion decided both Loper Bright, No. 22-451, and Relentless, Inc. v. Dep’t of Com., No. 22-1219.
² 467 U.S. 837 (1984).
³ Loper Bright, slip. op. at 35.
⁴ Liam Bendicksen, Aaron S. Kesselheim & C. Joseph Ross Daval, FDA and Chevron Deference: A Case Review, 78 FOOD DRUG L.J. 371, 374 (2023).
⁵ Loper Bright, slip. op. at 21.
⁶ 5 U.S.C. § 706.
⁷ Loper Bright, slip. op. at 22.
⁸ Id. at 23.
⁹ Id. at 24.
¹⁰ Id. at 35.
¹¹ Id. at 14 (emphasis in the original)
¹² Id. at 35.
¹³ Id.; see id. at 17-18.
¹⁴ Id.
¹⁵ Id. at 25 (quoting Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944)).
¹⁶ Id. at 34.
¹⁷ See 21 U.S.C. § 321(ff)(3)(B).
¹⁸ See, e.g., Pharmanex v. Shalala, 221 F.3d 1151, 1160 (10th Cir. 2000) (deferring to FDA’s interpretation of the so-called drug preclusion clause of the definition of “dietary supplement”). But see Genus Med. Techs. LLC v. FDA, 994 F.3d 631, 643–44 (D.C. Cir. 2021) (finding the device definition in the Federal Food, Drug, and Cosmetic Act (FDCA) unambiguous and refusing to defer to FDA).
¹⁹ 21 CFR § 314.108(b)(2).
²⁰ 21 CFR § 314.108(b)(4)–(5).
²¹ 21 U.S.C. § 355a.
²² 21 U.S.C. § 360cc.
²³ 21 U.S.C. § 355(j)(5)(B)(iv).
²⁴ 42 U.S.C. § 262(k)(7).
²⁵ 42 U.S.C. § 262(k)(6).
²⁶ See, e.g., Eagle Pharm., Inc. v. Azar, 952 F.3d 323, 340 (D.C. Cir. 2020) (orphan); Braeburn Inc. v. FDA, 389 F. Supp. 3d 1, 27 (D.D.C. 2019) (new clinical trial); Amarin Pharm. Ir. Ltd. v. FDA, 106 F. Supp. 3d 196, 219 (D.D.C. 2015) (new chemical entity).
²⁷ See, e.g., Amgen Inc. v. Hargan, 285 F. Supp. 3d 351, 358, 373 (D.D.C. 2018) (rejecting manufacturer’s challenge to FDA’s denial of a request for pediatric exclusivity); Actavis Elizabeth LLC v. FDA, 689 F. Supp. 2d 174, 179–80 (D.D.C. 2010) (rejecting challenge by generic drug manufacturer to new chemical exclusivity granted by FDA to name-brand manufacturer).
²⁸ Young v. Cmty. Nutrition Inst., 476 U.S. 974, 980–82 (1986) (rejecting public interest groups’ argument that statutory provision required FDA to set a tolerance level for aflatoxin before allowing the shipment of aflatoxin-tainted corn).
²⁹ Ctr. for Food Safety v. Becerra, 565 F. Supp. 3d 519, 535–39 (S.D.N.Y. 2021) (rejecting public interest organizations’ argument that FDA’s failure to make GRAS notifications mandatory violated statutory provision).
³⁰ 21 U.S.C. § 355(d).
³¹ See, e.g., Warner-Lambert Co. v. Heckler, 787 F.2d 147, 153–54 (3d Cir. 1986); E.R. Squibb & Sons, Inc. v. Bowen, 870 F.2d 678, 684–85 (D.C. Cir. 1989).
³² For example, in two cases decided in 2022, the Supreme Court resolved issues of agency statutory interpretation without mentioning Chevron once, even though Chevron was invoked repeatedly at oral argument. See Am. Hosp. Ass’n v. Becerra, 596 U.S. 724, 739 (2022); Becerra v. Empire Health Found., 597 U.S. 424, 445 (2022).