INSIGHT: Recent FDA Court Decision Shows Potential Impact of SCOTUS Deference Decision

Officially, the U.S. Supreme Court’s June 26 decision in Kisor v. Wilkie did not overturn Auer deference, which tells judges to defer to an agency’s interpretation of its own ambiguous regulation.

In Kisor, Justice Elena Kagan and the concurring justices repeatedly emphasized that the decision was not meant to reduce agency deference; it was just meant to clarify when agency deference should apply.

The manner in which the court applied Auer deference in Kisor, however, caused many to question whether Kisor would have a greater impact on agency deference than the court claimed it would.

A close reading of Braeburn Inc. v. FDA, the first court decision involving FDA deference since Kisor, provides support for that prediction.

Background of the Case

Braeburn concerned an FDA letter decision delaying final approval of Braeburn’s new drug application (NDA) for a monthly form of Brixadi. Brixadi is a buprenorphine opioid that is used to treat opioid use disorder (OUD). Buprenorphine has been approved to treat OUD since 2002 but only came in a daily dose form.

In late November 2017, the FDA approved Indivior’s May 2017 NDA for Sublocade, a monthly injectable form of buprenorphine. The FDA granted Indivior’s Sublocade application three years of marketing exclusivity under 21 U.S.C. § 355(c)(3)(E)(iii).

Braeburn filed its NDA for Brixadi in the Summer of 2017—for both weekly and monthly forms—and the FDA tentatively approved Braeburn’s application on Dec. 21, 2018. The same day, the FDA issued the letter decision, saying that Brixadi in its monthly form could not be approved because it was blocked under the three-year exclusivity period of Sublocade.

The FDA letter decision was based on the FDA’s interpretation of the phrase “for the conditions of approval” in 21 U.S.C. § 355(c)(3)(E)(iii). The FDA interpreted that clause to mean that the FDA cannot approve any NDA “that shares the exclusivity-eligible drug’s ‘innovation represented by its approved drug product that is supported by new clinical investigations essential to approval.’”

The FDA stated that the clinical studies used to approve Sublocade demonstrated the effectiveness of a monthly injection and was not limited by its “particular treatment initiation, dose adjustment schedule, or strengths.” And, the FDA stated that the features of the clinical studies used to approve Sublocade were not “meaningfully different” than those used in consideration of Brixadi monthly.

The Court’s Application of Chevron Deference

Braeburn challenged the letter decision in the U.S. District Court for the District of Columbia. The court relied heavily on Kisor in applying Chevron. For instance, the court quoted Kisor in its overarching explanation of Chevron deference, stating that step one, whether or not the statute is ambiguous, looks to determine whether there is “only one reasonable construction of a regulation.” The doctrine of Chevron deference directs judges to give federal regulators the benefit of the doubt when there is a question about what a statute requires.

At step two, the determination as to whether the agency interpretation was reasonable, the court quoted Kisor again in stating that the agency’s statutory interpretation “must come within the zone of ambiguity the court has identified after employing all its interpretative tools.”

The court determined that the FDA’s letter decision did satisfy step one of Chevron, as the phrase “conditions of approval” is not defined anywhere in the statute.

The court then provided four interpretations of “conditions of approval” that it found to fit within the zone of ambiguity:

1. exclusivity rights are only protected if a follow-on product matches every condition listed on the product’s label;
2. the indications or use that the FDA approved the drug for patient use;
3. the circumstances that the FDA found relevant to its determination that the drug should be approved for marketing; and
4. the characteristics of the drug that warranted exclusivity.

The court then moved to Chevron step two, citing Kisor to emphasize that an agency could fail here. And, ultimately, the court found that the FDA letter decision did fail at step two.

The court interpreted the FDA letter decision to state that “conditions of approval” meant that a follow-on product fails, “no matter the product’s differences, if the latter product incorporates the first’s innovative features.”

This interpretation, the court stated, was similar to the fourth option in the zone of ambiguity. Theoretically, the FDA’s interpretation was valid because it “respects the relationship between § 355(c)(3)(E)(iii)’s complementary clauses, Congress’s intent, and is a first step toward filling the statutory ambiguity.”

But, the court went on to find that the FDA had merely substituted one ambiguous term for another. The FDA had failed to say which factors in the clinical studies were important for its determination. The court concluded: “Once the FDA made its unguided decision that Sublocade’s innovation was a monthly depot to treat moderate-to-severe OUD, any other difference was necessarily irrelevant, even if those differences make Brixadi Monthly available to a patient population, for example, that Sublocade is not.” The FDA’s definition of innovation, the court feared, could lead to over-inclusiveness.

Potential Shift in Agency Deference

The Braeburn decision may indicate a potential shift in the way that courts will apply agency deference. The court vacated the FDA letter decision at Chevron step two because the FDA did not fully supply a standard to define its interpretation.

Even though the FDA had seemingly gone through the motions of providing an explanation of why its interpretation was reasonable, the explanation itself was not sufficient. Braeburn emphasizes a potential shift in agency deference post-Kisor—agencies certainly will not be entitled to deference just for being federal agencies.

Although only time will tell, we may be seeing a shift away from unbridled deference to agencies in the post-Kisor world.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Chad Landmon is a partner at Axinn, Veltrop & Harkrider LLP, where he chairs the firm’s Food and Drug Administration and Intellectual Property Practice Groups. He regularly litigates cases involving FDA issues and works with companies developing FDA-regulated products.

Alex Alfano is an associate at Axinn.

Ashton Copeland is a summer associate at Axinn.