FDA does not have “inherent reconsideration authority” to reclassify medical devices without notice and a comment period, states the Federal Circuit Court of Appeals for the District of Columbia. The Court ruled Friday that the FDA may not “short-circuit” the statutory reclassification process after clearing a device for the market.
The case (available here) is being called a David v. Goliath type victory for industry, and an important reining in of FDA’s expansive interpretation of its own powers. Mark Duvall, the president of Duvall & Associates, which specializes in representing FDA-regulated companies, stated: “Our hope is that this Ivy Sports case will make industry and Congress revisit the giant we’ve created, called FDA, because like Goliath it’s clearly big, imposing and threatening to the existence of the device industry, especially the small companies who try to stand up to it.”
ReGen’s Callogen Scaffold
The Callogen Scaffold, a knee-repair device developed by ReGen Biologics (now Ivy Sports Medicine) spent years in various FDA pathways. ReGen eventually had its 510(k) cleared by the FDA in December 2008. The agency determined that the Scaffold was “substantially equivalent” to an existing device, and could thus be marketed in the US.
Shortly thereafter, a Wall Street Journal article questioned the FDA’s decision-making. “The recent approval of a new device to treat knee injuries followed a lobbying campaign that overcame repeated rejections by scientists within the FDA, agency documents show,” the article stated. Political pressure followed the WSJ story, and FDA’s newly appointed Acting Commissioner ordered an internal investigation of the Collagen Scaffold’s review process.
FDA eventually stated that while they had “no basis to question the safety of the device,” the clearance process had “procedural irregularities.” Dr. Jeffrey Shuren, who, as part of the Obama administration, succeeded the original head of FDA’s Center for Devices and Radiological Health from when the Scaffold was cleared, notified ReGen that the clearance of the Scaffold “was in error.” In order to “rectify this error,” FDA would rescind its substantial equivalence determination. That decision meant that the ReGen would have to withdraw Collagen Scaffold from the market.
ReGen filed suit in the D.C. District Court seeking review of FDA’s decision. During the pendency of the case, ReGen filed for bankruptcy. ReGen and its successor, Ivy Sports, challenged FDA’s decision to rescind the clearance as being procedurally flawed. They argued that FDA must follow the procedure laid out in statute in order to reclassify their device. FDA countered that the agency has “inherent authority” to rescind a clearance determination, and could thus avoid the procedures in place to provide notice to affected parties and the opportunity for comment.
The District Court sided with FDA, but the Appeals Court overturned the decision. They found that “FDA did not follow the proper statutory procedure for reclassifying a device.”
Regulatory Framework
To make their way to the market, medical devices must go through either one of two paths at the FDA. The “premarket approval” path involves more scrutiny, usually requires clinical research demonstrating the safety of the device, and can take a very long time.
The “premarket notification” path, found under Section 510(k) of the Food, Drug, and Cosmetic Act, is a more streamlined process that requires the new device to be “substantially equivalent” to a device already on the market. We just wrote an article on the FDA’s new guidance on the 510(k) review process, which stated that beyond similarity, FDA also weighs the benefits and risks of 510(k) devices. Devices that FDA deems less risky than existing devices may still be kept from clearance if they exhibit measurably less benefits.
Companies seeking to register their device with FDA submit a premarket notification, or a “510(k) application” in order to demonstrate the device is “substantially equivalent” to a device already approved by the FDA, also known as a “predicate device.” If FDA determines a new device is substantially equivalent to a predicate, the new device is cleared and subject to the same regulatory Class controls as the predicate. If not, the new device is classified into Class III–the “riskiest” class of devices–and subject to premarket approval of its safety and effectiveness.
A recent study found that it takes FDA 5 months to review and clear a medical device 510(k) application on the premarket notification pathway. This is the quick option.
What Happens When FDA Changes Its Mind?
During the time period relevant to the Ivy litigation, the statute 21 U.S.C. § 360c(e) stated: “Based on new information respecting a device, the Secretary may, upon his own initiative or upon petition of an interested person, by regulation (A) change such device’s classification, and (B) revoke, because of the change in classification, any regulation or requirement in effect . . . with respect to such device” (emphasis added). Because reclassification must be done “by regulation,” it must be done in accord with certain procedural requirements, including notice and comment.
If FDA finds that a device is no longer substantially equivalent to any existing Class I or Class II devices, that device is automatically reclassified as a Class III device. In other words, to revoke a substantial equivalence determination is to “change the classification,” 21 U.S.C. § 360c(e)(2), of that device.
The Court determined that this language essentially precluded FDA from simply backtracking on its original classification.
“[A]ccepting FDA’s assertion of inherent authority would render Section 360c(e) a dead letter in many cases because FDA could often reclassify a device without complying with the procedural requirements of that provision, in particular notice and comment.
“In short, because FDA concededly could have used Section 360c(e) to reclassify the Collagen Scaffold into Class III, it could not rely on a claimed inherent reconsideration authority to short-circuit that statutory process and revoke its prior substantial equivalence determination to achieve that same result.
“The practical significance of our holding on this point is limited but important. To reclassify under the statute, FDA must go through certain procedural hoops, including notice and comment…FDA obviously thinks notice and comment is unnecessary here, a not-uncommon sentiment among agencies that want to take action more promptly. But notice and comment helps to prevent mistakes, because agencies receive more input and information before they make a final decision. And notice and comment also helps ensure that regulated parties receive fair treatment, a value basic to American administrative law. So notice and comment, while somewhat burdensome, serves important purposes both generally and in this statute.”
Furthermore, the court noted that there was no finding of fraud or impropriety in the FDA clearance process:
“To state the obvious, not every wrong decision or ill-considered decision is tainted by misconduct…Here, the record indicates that the review process for the Collagen Scaffold was perhaps imperfect, but the supposed mistakes do not rise to the level of misconduct…For example, FDA’s report on the scaffold’s review process acknowledged that communications between members of the New Jersey congressional delegation and FDA officials were “not inappropriate.” [] And in fact, representing the interests of constituents is a key and proper part of the job of Representatives and Senators. Indeed, FDA received pressure from other Members of Congress to change the original reclassification decision. Not surprisingly, therefore, Members of Congress were on both sides of the question.”
“Similarly,” the court stated, “while the report identified mistakes in the expert panel proceedings, the report found no evidence that those supposed defects affected FDA’s decision.” They continued: “It is also notable that no senior leaders of FDA, executives of ReGen, or Members of Congress were disciplined for their involvement in the Scaffold’s review process. Yet if FDA actually rendered a decision tainted by misconduct – as opposed to simply reaching a mistaken decision or a decision it no longer agrees with – that misconduct must have been due to the legally or ethically wrongful actions of some person or persons.”
The court concluded that the FDA’s “inability or unwillingness to identify those wrongdoers” indicates that misconduct sufficient to potentially warrant FDA’s “inherent reclassification power” did not occur.
Analysis and Commentary
Medical device companies that develop an FDA-approved product under the 510(k) pathway should not have to worry that the agency will simply rescind their decision without any process. The court in this case recognized that granting FDA what it desired–inherent reconsideration authority–would ignore explicit statutory procedures to ensure companies receive “fair treatment,” what the court deems a “value basic to American administrative law.” There is a process in place for FDA to change a device’s classification, and FDA must follow that process.
The Ivy Court’s decision should alleviate some concerns over FDA’s ever increasing authority. The court understood that granting FDA the unfettered right to rescind a “substantial equivalency” determination would essentially allow FDA to reconsider any number of 510(k) devices currently on the market. This would be detrimental not only to countless companies–after all, FDA’s reclassification single-handedly bankrupt ReGen–but also to patients in need of new, innovative devices.
Notably, FDA never rescinds cases absent a finding of fraud in the clearance process, which is what made their reclassification of Callogen Scaffold surprising. Here, the court hinted at the possibility that were serious misconduct involved–and punished accordingly–FDA indeed could have exercised inherent authority. It will be interesting to see whether the FDA, in the future, takes swift action in punishing what they deem to be wrongful actions in order to show “misconduct sufficient [to warrant] FDA’s ‘inherent reclassification power.'”
“The impact of this case cannot be underestimated,” states Mark Duvall. “FDA not infrequently exceeds its statutory and regulatory authority often granting to itself powers and interpretations of law and regulations well outside the scope of that actually given to them.” He notes that this is not the first time that FDA has “had its interpretations of law and regulations checked.” He mentions the Washington Legal Foundation case, the IMS Health case, and the Caronia case, all focusing on 1st Amendment issues. “These cases all stand for the proposition that FDA is not always right in its interpretations,” he notes, “which can often be self-serving and extend authority to areas and plateaus not granted to them by Congress.”
We will continue to follow commentary around Ivy, and will be interested to see the effect of the case on the medical device industry.