On June 28, 2024, the U.S. Supreme Court unequivocally declared “Chevron is overruled.” In Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce,1 the 6-3 majority dismantled the administrative law principle that afforded federal agencies wide deference over their statutory interpretations. The majority upended four decades of precedent by holding that courts shall not defer to an agency’s interpretation of the law simply because the statute is ambiguous. The Supreme Court’s reversal of the Chevron doctrine stands to have potentially far-reaching implications across various federal agencies, including the U.S. Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (e.g., ongoing lawsuits challenging the Medicare drug price negotiation program under the Inflation Reduction Act). This client alert summarizes some key takeaways and implications for the FDA and the life sciences industry.
Wilson Sonsini Goodrich and Rosati issued a separate client alert discussing the limited implications of the Supreme Court’s decision on the U.S. Patent and Trademark Office.2
The End of the Chevron Era
The Chevron doctrine, an administrative law principle born from the eponymous 1984 Supreme Court case,3 was used by courts to review agency actions involving rules carrying the force of law (e.g., rules issued through notice-and-comment rulemaking and formal adjudications).4 The Chevron doctrine provided a two-step inquiry. Under step one, a court asks whether Congress “has directly spoken to the precise question at issue.”5 If so, then that is determinative and the court must enforce the “unambiguously expressed intent of Congress.”6 But if the statute is ambiguous or silent with respect to the specific issue, then under step two, the court must defer to the reasonable interpretation of the agency charged with implementing that law—even if the court would have reached a different conclusion.7 The Chevron doctrine relied on the presumption that agency personnel (e.g., scientists, engineers, and technical experts) have more expertise than generalist judges in determining the meaning of unclear statutes.8
The Chevron doctrine has been cited in thousands of cases over the past four decades, including disputes involving the FDA. For example, the Chevron doctrine has led courts to uphold the FDA’s interpretations of, among others:
the meaning of “protein” under section 351 of the Public Health Service Act (PHSA);9
the applicability of various marketing exclusivities, including exclusivities for new drugs with active ingredients that have not been approved in another New Drug Application, orphan drugs, and generic drugs under the Federal Food, Drug, and Cosmetic Act (FD&C Act);10
the circumstances for conditioning tentative generic drug approvals under the FD&C Act;11
the labeling carve-outs for generic drugs under the FD&C Act;12
the current good manufacturing practices for dietary supplements under the FD&C Act;13 and
the premarket review process for food additives generally recognized as safe under the FD&C Act.14
But the majority in Loper Bright reasoned that the Chevron doctrine was inconsistent with the Administrative Procedure Act (APA), the law enabling a court to check agency action that is not in accordance with law or exceeds an agency’s statutory jurisdiction, authority, or limitations.15 It also scrutinized Chevron’s premise to be misguided. It asserted that “agencies have no special competence in resolving statutory ambiguities. Courts do.”16
Importantly, the majority did not completely jettison the relevance of an agency’s interpretation of the law. The majority maintained that a court must exercise its independent judgment in determining the meaning of a statute, even ambiguous ones.17 As part of that task, a court may consider an agency’s statutory interpretation and even give the agency’s judgment great weight in a particular case depending on the thoroughness of the agency’s consideration, the validity of its reasoning, and its consistency with earlier and later pronouncements (the so-called Skidmore doctrine).18 But a court “need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”19 As such, the continuing validity of the Skidmore doctrine may help to maintain the status quo for longstanding agency rules and interpretations, especially in uncontested areas.
Key Takeaways and Implications for the FDA and the Life Sciences Industry
When reviewing the FDA’s regulations developed through notice-and-comment rulemaking, courts will no longer defer to—but may consider—the FDA’s reasonable interpretation of the laws that the FDA administers. Such laws include the FD&C Act and the PHSA.
The Supreme Court’s decision does not automatically overturn the 40 years of cases that upheld agency actions in reliance upon the Chevron framework. The majority noted that its decision simply calls into question whether those cases were correctly decided.20
Litigants will be emboldened to bring challenges against the FDA over agency actions, such as regulations promulgated through notice-and-comment rulemaking. In particular, litigants will have greater odds contesting such regulations based on the FDA’s statutory interpretations than they previously did during the Chevron era. Litigants will likely bring such cases quickly to cement favorable, binding judicial decisions. Relatedly, some litigants will have the opportunity to challenge agency actions that went into effect over six years ago, which is the default statute of limitations for bringing suits against the United States under 28 U.S.C. § 2401. On July 1, 2024, the Supreme Court issued its decision in Corner Post Inc. v. Board of Governors of the Federal Reserve System.21 The majority held that, for purposes of the statute of limitations, a claim brought under the APA accrues when the plaintiff is injured by final agency action; not when the agency rule is promulgated.22
By comparison, litigants may be hesitant to mount new challenges against the FDA’s actions that do not require administrative discretion. Even before Chevron, courts recognized the FDA’s valuable scientific and technical knowledge and field-based experience.23
Generalist judges must become more comfortable making uncomfortable decisions involving highly scientific and technical subject areas. While judges may be familiar with interpreting complex laws, they will be expected to grapple with new and challenging questions to discern the meaning of the FD&C Act or PHS Act.24 If judges waver, there may be inadvertent consequences on future cases, the FDA’s mission to protect the public health, and the highly regulated life sciences industry. And if judges reach different conclusions in different jurisdictions, there will be circuit splits to navigate.
The FDA will likely take more time to promulgate new or amended regulations. Before engaging in notice-and-comment rulemaking, the FDA must carefully think about how it could defend its actions in court. The FDA may already have started to consider its options given that the Supreme Court appeared receptive toward overturning or narrowing the Chevron doctrine during oral arguments in January 2024.
Industry stakeholders will be watching closely as the post-Chevron era begins to take shape. There is swirling uncertainty about the FDA’s ability to timely provide clarity over laws that are indeed ambiguous. This may acutely affect stakeholders working on the cutting edge of innovation, such as products that use artificial intelligence and machine-learning. There is also interest in how the Loper Bright decision will affect the pending legal challenge against the FDA’s controversial LDT Final Rule. In that case, the plaintiffs dispute the FDA’s statutory interpretation of the FD&C Act by treating LDTs as medical devices.25
Industry stakeholders will also adapt and react to the new landscape. Industry stakeholders, as well as the FDA, may be motivated to lobby Congress to enact laws that more clearly prescribe authorities to the FDA or that codify the Chevron doctrine.
Contact Us
For questions regarding FDA regulatory strategy and implications of these Supreme Court cases and ongoing developments on FDA-regulated companies, please contact Eva Yin, Jonathan Trinh, or any member of Wilson Sonsini’s FDA regulatory, healthcare, and consumer products practice.
[1] Nos. 22-451 and 22-1219, slip op. at 1 (June 28, 2024).
[2] See R. Torczon et al., Client Alert, U.S. Supreme Court Administrative Law Decisions Raise Questions for U.S. Patent and Trademark Office Proceedings, Wilson Sonsini Goodrich & Rosati (July 1, 2024), https://www.wsgr.com/en/insights/us-supreme-court-administrative-law-decisions-raise-questions-for-us-patent-and-trademark-office-proceedings.html.
[3] Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).
[4] U.S. v. Mead Corp., 533 U.S. 218, 230 (2001).
[5] Chevron, 467 U.S. at 842.
[6] Id. at 842–43.
[7] Id. at 843.
[8] See id. at 865; Loper Bright, slip op. at 2 (Kagan, J., dissenting).
[9] See Teva Pharms. USA v. U.S. Food & Drug Admin., 541 F. Supp. 3d 66, 105–06 (D.D.C. 2020).
[10] See, e.g., Eagle Pharms., Inc. v. Azar, 952 F.3d 323, 340 (D.C. Cir. 2020) (orphan drugs); Amneal Pharms. LLC v. Food & Drug Admin., 285 F. Supp. 3d 328, 347 (D.D.C. 2018) (generic drugs); Ferring Pharms., Inc. v. Burwell, 169 F. Supp. 3d 199, 219 (D.D.C. 2016) (new drugs).
[11] See Ranbaxy Labs., LTD v. Burwell, 82 F. Supp. 3d 159, 190 (D.D.C. 2015).
[12] See Otsuka Pharm. Co. v. Burwell, No. GJH-15-852, 2015 U.S. Dist. LEXIS 56344, at *27 (D. Md. Apr. 29, 2015).
[13] See Alliance for Nat. Health US v. Sebelius, 775 F. Supp. 2d 114, 130 (D.D.C. 2011).
[14] See Ctr. for Food Safety v. Becerra, 565 F. Supp. 3d 519, 539 (S.D.N.Y. 2021).
[15] Loper Bright, slip op. at 18–35; see 5 U.S.C. § 706(2)(A) and (C).
[16] Loper Bright, slip op. at 23.
[17] Id., slip op. at 14.
[18] Id., slip op. at 16–17; see Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).
[19] Loper Bright, slip op. at 35.
[20] Id., slip op. at 34–35.
[21] No. 22–1008, slip op. at 1 (July 1, 2024).
[22] Id., slip op. at 10 and 23.
[23] See, e.g., Weinberger v. Bentex Pharms., Inc., 412 U.S. 645, 653–54 (1973) (noting that “[t]he determination of whether a drug is generally recognized as safe and effective . . . necessarily implicates complex chemical and pharmacological considerations” and is “the kind of issue[] peculiarly suited to initial determination by the FDA”).
[24] See Loper Bright, slip op. at 5 (Kagan, J., dissenting).
