Posted: 21 Aug 2017
Date Written: August 16, 2017
Congress creates federal administrative agencies, crafts their fundamental organizational structure and mission, and bestows upon them authority to perform tasks such as rulemaking, adjudication, investigation, and licensing. Often, Congress expressly directs an agency to perform a specific task within a timeframe subject to carefully enumerated factors or considerations. Many times, however, an agency is left with much discretion, either express or implied, to determine appropriate action within the scope of their authority, the statutory language, the Constitution, and procedural laws. It is in these instances that the Supreme Court’s deference precedent has flourished, setting forth when a court ought to defer to an agency’s reasonable interpretation of the statute that it administers when the statute itself is silent or ambiguous. As muddled and disputed as this deference case law is, it probes an important area of agency behavior: when an agency affirmatively acts to interpret law. However, citizen petitions and litigation reveal that agencies, and especially the U.S. Food and Drug Administration (FDA), also decide not to interpret language within a statute or regulation even though such interpretation would facilitate effective and consistent industry response.
Nowhere is this behavior more prevalent on the part of the FDA than with statutory language that implicates a connection between the agency’s regulatory tasks and patent law. This article uses two recent examples of high-stakes litigation in the life sciences realm that demonstrates the reluctance of the FDA to wade into issues regarding patents and procedural directives within legislation. The first example involves risk evaluation and mitigation strategies (REMS) in the context of drugs and biologics, established in the Food and Drug Administration Amendments Act of 2007. The REMS example is addressed in the legal literature and will serve a guiding function for the second example, which has not yet populated the legal literature but raises similar issues. The second example involves the Biologics Price Competition and Innovation Act (BPCIA), enacted as part of the Patient Protection and Affordable Care Act of 2009. Both examples are instances in which Congress directed the FDA to oversee a regulatory process and provided a statutory framework that involved the use of patent information as part of that process. Both also resulted in protracted litigation.
Part I of the article will discuss relevant administrative law and case precedent regarding required agency action, inaction, and failure to act. This part will also address the role of citizen petitions in requesting an agency to act and the legal implications of an agency response or lack thereof. Part II will describe the relevant language in each of the two examples: REMS and the BPCIA, linking the statutory language to agency behavior, and scrutinizing the impact on competition and consumer access. This part will also examine the relationship of the FDA and the U.S. Patent & Trademark Office as a crucial part of drug and biologic approval generally, and in the two specific examples. Part III will delve into the REMS litigation and current status in the courts, as well as Congressional response in the form of proposed legislation. Part IV will similarly delve into the BPCIA ligation, which culminated in the June 2017 Supreme Court Sandoz v. Amgen decision, highlighting challenges for the future. Part V will suggest several meaningful mechanisms to ameliorate the problems identified in Parts II-IV.
This article contributes to the literature in three ways. First, it explores FDA behavior through the lens of administrative law and practice, particularly tied to the Administrative Procedure Act and relevant case law. Second, it delves into two real-time instances in which the FDA’s silence has significantly contributed to anticompetitive action from life science companies that negatively impacts consumers. Third, it urges that the FDA’s reluctance to provide interpretation stems from a misunderstanding of the agency’s role in patent policy and process that supports new drug and biologic review and approval. Acknowledging existing scholarship assessing this reluctance, it goes further by arguing that the FDA take the initiative to play a more dominant role in interpreting the statute going forward.
Suggested Citation: Suggested Citation
Paradise, Jordan, Regulatory Silence at the FDA: Impact on Drug and Biologic Competition (August 16, 2017). Available at SSRN: https://ssrn.com/abstract=3020383