With regulatory science always lagging innovation, ambiguity has long been a certainty at the FDA and is likely to become even more so as the pace of new technologies quickens.
As once-clear agency regulations are stretched to cover situations and technologies that were unthinkable when they were written, they can become more and more ambiguous over time, Chad Landmon, chair of the intellectual property and FDA practice groups at Axinn, Veltrop & Harkrider LLP, told BioWorld.
As a result, there are a lot of complaints about ambiguity in FDA regulations, Landmon said.
That's why last week's U.S. Supreme Court decision, in which it upheld Auer deference, matters to drug and device companies. Under Auer, courts hearing litigation involving agency action defer to the agency's interpretation of its regulations – when those regulations are ambiguous.
Although the case at hand, Kisor v. Wilkie, involved a denied Department of Veterans Affairs claim, Justice Elena Kagan, in writing the court's opinion, used FDA regulations as examples of how ambiguity creeps in over time and why agency expertise is important to a court's decision.
While bad drafting can result in confusing regulations, ambiguity also can occur "when the agency failed to anticipate an issue in crafting a rule (e.g., if the agency never thought about whether and when chest X-rays would count as a 'diagnosis')," Kagan said. In such instances, the agency can provide "insight into the analogous issues the drafters considered and the purposes they designed the regulation to serve," she added.
When it comes to scientific or technical issues, she said the agency is better positioned than judges to interpret an ambiguous rule. Referencing an FDA regulation that gives biopharma companies exclusive rights to drug products that contain "no active moiety that has been approved by FDA in any other" new drug application, she asked whether "a company created a new 'active moiety' by joining a previously approved moiety to lysine through a non-ester covalent bond."
"If you are a judge, you probably have no idea of what the FDA's rule means or whether its policy is implicated when a previously approved moiety is connected to lysine through a non-ester covalent bond. . . . Agencies (unlike courts) have 'unique expertise,' often of a scientific or technical nature, relevant to applying a regulation 'to complex or changing circumstances,'" Kagan wrote. (While the court's decision was unanimous, various justices concurred with different parts of the opinion.)
Leeway, but no free rein
In maintaining the precedent established decades ago, last week's Supreme Court decision will give agencies like the FDA more leeway to reinterpret their regulations over time, Landmon said. But that's only when Auer applies, he added, noting that the opinion doesn't give agencies free rein.
Instead, the justices followed a recommendation the solicitor general made during oral arguments in March and took the opportunity to clear up some of the mixed messages, as Kagan put it, that the Supreme Court has been sending about deferring to agencies. (See BioWorld, April 2, 2019.)
"Auer deference is not the answer to every question of interpreting an agency's rules. Far from it. . . . Auer deference is just a 'general rule'; it 'does not apply in all cases'. . . . When it applies, Auer deference gives an agency significant leeway to say what its own rules mean," Kagan said. "In so doing, the doctrine enables the agency to fill out the regulatory scheme Congress has placed under its supervision. But that phrase 'when it applies' is important – because it often doesn't."
So how are courts to decide when it applies? First, a court must determine whether an agency regulation is truly ambiguous. If it is, the next consideration is whether the agency's interpretation is reasonable. Then, the court must look at "whether the character and context of the agency interpretation entitles it to controlling weight," Kagan said.
While the justices refrained from creating an exhaustive test on determining when Auer deference is appropriate, they laid out a few guidelines:
• the regulatory interpretation must be the agency's authoritative or official position;
• the interpretation must in some way implicate the agency's substantive expertise;
• an agency's reading of a rule must reflect its "fair and considered judgment."
Kagan explained that "a court should decline to defer to a merely 'convenient litigating position' or 'post hoc rationalizatio[n] advanced' to 'defend past agency action against attack.'" It also shouldn't defer to a new interpretation from an agency "that creates 'unfair surprise' to regulated parties," Kagan said. In other words, an agency can't make new policy by reinterpreting an old rule.
Had the court struck Auer down, it could have had a huge impact, Landmon said, as it could have called into question past agency actions. As it is, the takeaway from the court's opinion is that agencies still shouldn't depend on Auer to defend their actions, Landmon added.