In recent months, the U.S. Department of Health and Human Services (HHS) has challenged the traditional autonomy of the Food and Drug Administration (FDA) in unprecedented ways. It is not uncommon for a departing administration to complete various agenda items in its final days, and many such actions are intended to constrain policy choices available to the incoming administration. This pattern is sufficiently well-established that incoming presidential chiefs of staff have taken to issuing day-one memoranda freezing new and pending regulatory actions. Actions that are not within the scope of the freeze require other mechanisms to reverse, including potentially resource-intensive procedures prescribed by the Administrative Procedure Act (APA). The allocation of effort needed to reverse many of the actions taken by HHS to constrain the agency could be significant. Concerns about FDA’s regulatory autonomy and scientific independence have led to renewed discussion of FDA as an independent agency.
Background FDA is a constituent agency within HHS. The Federal Food, Drug, and Cosmetic Act (FDCA), FDA’s primary source of legal and regulatory authority, is a lengthy and exceedingly complex statute that variously empowers the Commissioner of Food and Drugs—the Senate-confirmed leader of the agency — the Secretary of HHS, and other officials within the department, to exercise regulatory, investigative, and enforcement powers to protect and promote the public health. Many of FDA’s actions are subject to the involvement of, and oversight by, other executive branch entities, including particularly HHS and the Office of Management and Budget in the White House. Typically, major regulatory and deregulatory actions require multiple sign-offs to assure that FDA is acting in concert with decisions made by politically accountable individuals reporting to the President of the United States. FDA is also subject to external checks from Congress through oversight and the appropriations process, with the Senate also playing a significant additional role through the Commissioner confirmation process. For decades, policy makers, regulators, and commentators have questioned this system of oversight and asked particularly whether the balance of power between HHS and FDA is correctly drawn. Although many instances of HHS interference have received prolonged and focused public consideration — a notable instance was the Secretary’s involvement in the decision to switch the women’s contraceptive product Plan B to partial nonprescription status during the Obama administration—at least an equal number have not received much attention and have not been challenged. During the George W. Bush administration, for example, the HHS Secretary articulated a “One HHS” policy, which included a range of internal actions to limit FDA’s autonomy such as recasting the FDA Office of the Chief Counsel (OCC) as fully within the Office of the Secretary and requiring OCC review of all warning letters issued by FDA offices. These kinds of administrative changes can dramatically limit FDA’s ability to exercise its primary jurisdiction and pursue its own notions of public health protection. HHS Actions Challenging FDA Autonomy HHS appointees began working to limit FDA’s autonomy early in the Trump administration, but were relatively constrained in their ability to bring the agency to heel. The Commissioner of Food and Drugs had his own White House relationships, experience in leadership roles in FDA and Centers for Medicare and Medicaid Services, significant bipartisan support, and a well-established public persona with a formidable social media following. Following his departure in April 2019, HHS officials encountered less resistance to regulatory reform and other proposals designed to limit FDA’s authority. In succeeding months, HHS reversed highly significant FDA policies affecting clinical laboratories and drug and medical device developers. Under the department-wide “Regulatory Reform Initiative,” HHS also consolidated decisionmaking in political appointees, altered federal civil service protections, and dramatically limited FDA’s rulemaking and guidance development authority. In the final full week of the Trump administration alone, the department reversed FDA’s selection of a senior career lawyer to serve as acting Chief Counsel1; published a “statement of policy” requiring FDA to “publish annually on its website” the number of days required for approval of new drugs beyond the statutorily-required 1802; exempted seven categories of class I medical devices from premarket review and proposed to exempt a further 84 generic types of device from such review3; and pushed forward a rule requiring performance appraisals for career scientists within FDA and the other HHS operating divisions every five years.4 On the final full day of the administration, HHS finalized a memorandum of understanding shifting regulatory responsibility for genetically modified animals intended for food and other agricultural purposes from FDA to the Department of Agriculture.5 Regardless of the perceived merits of any of these decisions, such a level of involvement in FDA decisions by department-level officials is highly unusual. Set forth below is a summary of key HHS regulatory reform actions and HHS actions specifically addressed to FDA. As noted below, the regulatory freeze memorandum issued by the White House Chief of Staff on January 20, 2021, will affect some of these actions. Others can and almost certainly will be addressed by FDA through various administrative means, though the mechanism used in any case, the contours of the FDA response, and the timing of the Agency’s action remain uncertain. Program-Specific Actions
- HHS Rescission of FDA’s Policies on Laboratory Developed Tests (LDTs)
One of the most significant ongoing policy debates affecting FDA in the past 30 years involves the agency’s authority over clinical laboratories engaged in diagnostic testing. Starting in approximately 1990, FDA began to assert that the Agency’s medical device authorities provided for active regulation of clinical laboratories on the ground that they were “manufacturing” in vitro diagnostic tests. This position has been contested in a range of contexts, including litigation. As of the beginning of the Trump administration, FDA generally permitted clinical laboratories to continue to operate without ongoing FDA oversight, with agency officials supporting the notion of a new legislative program specifically tailored to this category of medical technology. FDA’s hands-off approach was subject to the occasional departure, with agency officials seeking to up-regulate specific types of clinical laboratory testing based on public health needs — for example, pharmacogenomics tests used to support psychiatric drug selection decisions. At the beginning of the COVID-19 crisis, FDA used its emergency use authorization (EUA) authorities to review proposed clinical diagnostics regardless of whether they had been developed by traditional in vitro diagnostic device manufacturers or by a clinical laboratory acting largely outside of FDA’s medical device regulatory ambit. Although this approach was far from perfect, and tests of all types were the subject of ongoing regulatory assessment to assure that they performed adequately, it at least gave test developers a degree of predictability. It also facilitated the deployment of a wider range of testing options, which helped meet a critical need, particularly in the early days of the pandemic. HHS abruptly upended this uneasy state of affairs by issuing a statement in September 2020 requiring FDA to undergo notice-and-comment rulemaking before requiring premarket review of any laboratory-developed test. In other words, seemingly without predicate, departmental officials determined that they should resolve the jurisdictional dispute over clinical laboratory regulation by ordering FDA to stand down. The vehicle for this was a legal memorandum dated June 22 from the HHS General Counsel to the Commissioner of Food and Drugs, which provided an analysis of FDA’s statutory authority with respect to laboratory developed tests.6 Based on the memorandum, HHS “determined that [FDA] ... will not require premarket review” of such tests without first going through notice-and-comment rulemaking.7 FDA responded initially by declining, in a statement issued in October, to review EUA submissions for laboratory developed COVID-19 tests. In November, HHS ordered FDA to review these submissions, reportedly because of federal liability protections available to entities whose tests are marketed in accordance with FDA review. Citing resource limitations, career officials within FDA resisted the HHS policy that the agency allocate scarce premarket resources to these assays. Most recently, a consultancy announced that it had been awarded a contract to review the submissions in FDA’s stead.8 • HHS Rescission of FDA’s Unapproved New Drugs Initiative In 1962, Congress enacted legislation requiring premarket review for safety and efficacy as a condition of marketing any new drug in the United States. For decades, FDA has sought to implement the statute through the thoughtful application of the new drug approval requirements in a manner that took account of finite agency resources and the need for continued access to drugs that had been on the market without approval with no significant history of safety issues. Under FDA’s approach, among other things, the agency would generally seek to enforce the statute against entities marketing unapproved drugs once one competitor in the category successfully sought marketing authorization. (Unapproved products presenting safety issues were also prioritized for enforcement.) The resulting exclusivity had the unintended consequence of facilitating disproportionate price increases in a handful of high-profile instances, prompting unwanted attention from policy makers.9 In late November, HHS issued a notice of withdrawal of FDA’s policies and statements relating to the initiative.10 Citing drug price increases, HHS objected to the “period of de facto market exclusivity” provided to drugs approved under the unapproved drugs initiative, despite “rarely generating additional clinical evidence of safety or efficacy.”11 The notice became effective on December 25, 2020. In the notice, HHS requested comment from stakeholders regarding marketed products that potentially fall outside the scope of FDA’s statutory “new drug” authorities. The HHS action did not directly affect FDA’s ability to commence enforcement action against drugs marketed without approval. The offices within FDA responsible for the oversight of unapproved products marketed pursuant to purported grandfather or “generally recognized as safe/effective” status were likewise not affected by HHS’s action. • HHS Rescission of FDA’s Over-the-Counter (OTC) User Fee Announcement As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted in March 2020, Congress established the OTC Monograph Drug User Fee Program (OMUFA), in connection with a larger OTC Monograph Reform initiative, authorizing FDA to collect user fees from qualifying manufacturers of OTC monograph drug products and those submitting OTC monograph order requests.12 On December 29, 2020, FDA announced fee rates under the OMUFA program for fiscal year 2021 pursuant to the CARES Act.13 A trade association representing small distillers, which had repurposed their alcoholic beverage manufacturing facilities to supply hand sanitizer under a special COVID-19 program created by FDA, objected to the imposition of user fees.14 FDA, for its part, had determined that it could cooperate with Congress in implementing a technical amendment to the legislation to exempt such small businesses as the distillers from the OMUFA scheme. Although such fixes are routine, and the established nonprescription drug industry supported the legislation, HHS intervened to require FDA to revoke the notice in its entirety. HHS issued a statement explaining that the fees were not “cleared by HHS leadership, who only learned of it through media reports,” and indicated that the notice “has the force and effect of a legislative rule.”15 Consequently, the HHS Office of the General Counsel, concluded, the fee rates notice had to be withdrawn because only the Secretary could issue such a rule. HHS later announced that FDA’s notice has been withdrawn, stating that “FDA lacked the delegated authority to issue the Notice” and that the agency had “been ordered to cease further collection efforts related to” the OMUFA program pending further notification in the Federal Register, presumably from HHS. HHS Regulatory Reform Initiative
- September 15, 2020 Memo From Alex Azar to “Heads of Operating and Staff Divisions” Requiring Secretary’s Signature
By memorandum dated September 15, 2020, the HHS Secretary instructed the heads of the department’s operating and staff divisions, including FDA, to submit every regulation to the Secretary for approval — and signature. Formerly, regulations, many guidance documents, public notices, press releases, and myriad other FDA actions were subject to routine review by HHS and the Office of Management and Budget (OMB). Many, but not all, of these reviews were governed by statutory rules and executive orders providing for oversight of agency activities for purposes of evaluating economic effects and for other reasons. Under the September 15 memorandum, which is not publicly available, the Secretary reportedly notified all HHS components that “The authority to sign and issue any rule for which notice and comment would normally be required, irrespective of whether notice and comment is waived, is reserved for the Secretary.” Although HHS has publicly indicated that the new signature requirement will have no practical impact on agency timelines for issuing regulations or on substantive policy decisions, critics have expressed concerns. Indeed, the memorandum presaged consolidation of regulatory power in the Secretary’s office, as discussed above.16
- Good Guidance Practices
On December 7, 2020, HHS published a final rule entitled “Department of Health and Human Services Good Guidance Practices,” governing the release and maintenance of guidance documents through the department. In an accompanying preamble, HHS asserted that the new rules would “help to ensure that the public receives appropriate notice of new guidance and that the department’s guidance does not impose obligations on regulated parties that are not already reflected in duly enacted statutes or regulations lawfully promulgated under them.” The rule finalizes provisions originally proposed on August 20, 2020.17
The rule does not apply to guidance documents issued by FDA, which has had good guidance practice (GGP) regulations since 1997. Indeed, FDA had long been heralded as the standard-bearer for the use of subregulatory guidance to convey information to stakeholders consistent with applicable administrative law principles. Congress codified FDA’s approach to GGPs in key respects many years ago in 21 U.S.C. 371(h), and agency law practitioners have not typically identified FDA as requiring additional reforms in this area of regulatory activity.
Nevertheless, HHS indicated in the final rule preamble that FDA should amend its GGP regulations “to be consistent with the requirements” newly devised by HHS. The preamble also states: “The Secretary ... plans to amend FDA’s good guidance practices regulations ....” In the meantime, “FDA must comply with all requirements implemented in this HHS Good Guidance Practices final rule — to the extent not already incorporated in the FDA good guidance practices regulations — until the Secretary issues a final rule amending FDA’s good guidance practices regulations.” The aspects of the HHS final rule to which FDA would be newly subject under the Secretary’s approach “include, but are not limited to, the requirement that guidance documents issued after the effective date of this rule include a disclaimer clarifying that the contents do not have the force and effect of law (unless the FDCA or other statute authorizes the issuance of binding guidance), as well as the information fields specified at 45 CFR 1.3(a)(3)(iii); the requirement that all significant guidance documents be issued only following a public notice and comment period (unless an exemption applies); that all guidance documents be included in the HHS guidance repository and if not, they will be considered rescinded; and that all FDA guidance documents shall be subject to the petition process at 45 CFR 1.5.”
As with the memorandum requiring the Secretary’s signature, on the surface this maneuver is not particularly controversial. The final rule does, however, represent a significant departure from the respect ordinarily accorded to FDA’s use of guidance documents. The preamble language regarding changes that HHS will make to FDA regulations also reflects the shift of regulatory authority from the agency to the department.
- Retrospective Regulatory Review With Sunsetting
On November 4, 2020, HHS published a proposed rule seeking to require review of regulations on a regular basis under the Regulatory Flexibility Act (RFA).18 The final rule was issued on January 19, 2021.19 HHS explained that under the RFA, any regulation that is “significant” as defined in the legislation must be reviewed every 10 years, “to determine whether the regulation is still needed and whether it is having appropriate impacts.” HHS further indicated that any such regulation not so evaluated or reviewed would “expire.” In announcing the proposed rule, the department emphasized that the regular review of regulations under the RFA reflected a well-established and bipartisan conclusion that regulations should be kept current and regularly reviewed to assure that the cost-benefit assessments originally made for a regulation at inception remained valid. In the press statement accompanying the proposed rule, the Chief of Staff to the Secretary described the move as “the boldest and most significant regulatory reform effort ever undertaken by HHS.”20 The practical effect of the new requirement would be staggering. Under the department’s own estimate, more than two-thirds of the 18,000 HHS regulations already in effect (including FDA rules) would be subject to the new regulation and would need to be assessed. Of those, at least one in 10 would require an in-depth assessment involving a much more extensive allocation of agency resources. For this reason, the new regulations have been described as ill-timed given the continuing global COVID-19 public health emergency. Moreover, the reviews would need to occur primarily within two years of the rule’s effective date, which would, in principle, require FDA to divert staff resources from other activities during the first half of the Biden-Harris administration. Personnel Actions On October 21, 2020, President Trump issued Executive Order 13957, which created a new type of federal position, Schedule F.21 Currently, most federal employees occupy civil service positions that have legal protections before termination, such as notice, hearing, and appeal to the U.S. Merit Systems Protection Board. The order would allow federal agencies to categorize certain career federal employees as Schedule F and eliminate those protections, if the agency’s head determines the position to be of “a confidential, policy-determining, policy-making, or policy-advocating character and ... not normally subject to change as a result of a Presidential transition.” Critics claim the order could lead to the politicization of most civil service positions and convert the federal bureaucracy into a spoils system. In addition, “some observers [were] concerned that a cadre of political appointees will seek to burrow into their agencies though the new Schedule F appointment category.”22 Those individuals would be subject to dismissal only for serious misconduct following an initial probationary period.23 Some expressed concern that the order might have been intended to facilitate the President’s removal of certain high-profile career public health officials involved in the COVID-19 pandemic response.24 More recently, HHS became involved in backfilling the FDA Chief Counsel role, after FDA had already announced that the departing political appointee would be succeeded by a highly respected and experienced career lawyer with a 30-year tenure in the office, including past stints as Acting Chief Counsel.25 Looking Ahead Regulatory actions taken at the end of an Administration are always subject to review by the incoming leadership, and the typical mechanism involves a memorandum issued by the White House Chief of Staff. The Biden-Harris transition team announced in December that its version of the “regulatory freeze” would include both regulations and guidance documents “that can have enormous consequences on the lives of the American people.”26 The memorandum was issued on the afternoon on January 20, and as expected affects “actions taken by the Trump administration that will not have taken effect by inauguration day.”27 The sunsetting rule (discussed above) will be delayed, by virtue of its March 22, 2021, effective date.28 Actions taken by HHS that did not involve rulemaking—including the reversal of the long-standing FDA policies on laboratory developed testing and the unapproved drugs initiative—are not subject to the regulatory freeze, but could be reversed in reliance on separate agency powers. Executive orders can be revoked at any time.
The Biden-Harris administration named former state attorney general and 12-term congressman Xavier Becerra as HHS Secretary nominee but has not yet announced its permanent pick for Commissioner of Food and Drugs. Both inside and outside candidates are reportedly under consideration for that role.29 Most likely, FDA will be led by an experienced physician with a sophisticated understanding of agency operations; a sensitivity to the need for thoughtful engagement with Congress, HHS, and OMB; and a commitment to restoring FDA’s reputation and credibility with the American public. Public confidence in FDA, in decline in 2020, will need shoring up as the pandemic continues and the vaccine rollout moves forward. The Trump administration’s public statements about a vaccine, the emergency approval of hydroxychloroquine and its subsequent withdrawal, the abrupt policy shifts on COVID-19 diagnostics, and skirmishing over the public release of elements of pandemic-related FDA guidance to which the White House objected—all of these episodes have challenged FDA’s credibility as the world’s most rigorous and prestigious public health agency.30 In a Kaiser Family Foundation poll in September, a majority of respondents expressed concern that FDA would respond to political pressure from the White House by approving a COVID-19 vaccine without first assuring its safety and efficacy. Most respondents also reported that they would not get the vaccine even if it were available without charge, due to doubts over political pressure on regulatory decision making by the agency. HHS’s assault on FDA’s autonomy has been so sustained and comprehensive that calls to reconstitute FDA as a newly independent agency have assumed a new and bipartisan credibility, if not urgency. In January 2019, seven prior FDA Commissioners issued an extraordinary statement recommending an independent FDA.31 On Friday, January 8, 2021, Commissioner Stephen Hahn took the unusual step of publicly describing an independent FDA as properly “on the table.”32 On January 11, 2021, President Trump’s Commissioner of Food and Drugs (2017-19) Scott Gottlieb, M.D., stated publicly that he has been “disappointed to see HHS infringing on FDA’s public health prerogatives in the closing days of the administration.” HHS’s “unilateral actions will have long-term consequences” while the agency’s “stature is critical” to overcoming the COVID-19 pandemic emergency, Dr. Gottlieb observed. The durability and long-term effects of the department’s changes to FDA policy and its actions to limit the agency’s autonomy remain in question, but the public conversation about independence, public trust, and scientific integrity will continue.