Podcast - A Post-Election Checkup: FDA Policy and Regulation

Michael Werner: My name is Michael Werner, and I am a partner at Holland & Knight in the Washington, D.C., office. This is a podcast that Holland & Knight has recorded about the implications of the elections from this past November. I am joined by my colleague, Sara Klock. We are both experts in FDA regulation and legislation that affects all FDA-regulated products, whether they are drugs, devices, biologics, food or supplements. We're going to be talking for a few minutes about the impact of the elections and what we see going forward in terms of FDA policy enacted by the agency itself or perhaps legislation enacted by Congress. I'm going to start by asking Sara a couple of questions, and then I am going to talk a little bit about Congress. Sara, my first question to you is that we've seen the FDA over the last year or two take some steps around regulation of technologies that use digital health technologies and incorporate artificial intelligence and machine learning. Do you anticipate the FDA remaining engaged on those issues?

FDA and Digital Health Products

Sara Klock: Of course I do. You know, this is an evolving area of law and technology. Typically we see these types of products regulated as medical devices and software. The agency recently finalized two draft guidances into final guidance surrounding digital health products. While they're final today, they probably won't be the same document in two or three years because the technology is evolving faster than the FDA can act. The agency often makes determinations after the technology already exists, but it's 100 percent a hot topic. I expect it only to continue to be a priority for the agency.

Michael Werner: Yeah, and one thing that Sara and I do working with clients is we integrate what's happening in Congress with what's happening at the agency. Very often, the two branches of government influence each other. We saw many of the efforts of the agency in the digital health space come to fruition or be catalyzed by FDA legislation in that 21st Century Cures Act. In the most recent user fee bills, the FDA committed to implementing various programs, one of which has to do with medical devices. They certainly did it in the context of drugs and biologics, but also where the FDA committed to taking steps to promote greater interaction between the agency and product developers. It's a typical complaint from product developers that they don't necessarily understand what FDA is requiring of them in terms of data from their protocols. It's frankly a typical complaint from the agency that product developers don't provide them the information that they need or ask for. In this round of user fee negotiations, we've seen a couple of proposals, both from the device industry and from the drug industry, about that, and FDA has agreed. Sara, is this a complaint that you've seen from clients as well trying to better understand FDA requirements? I know that you and I have talked to a lot of companies about this, but may be helpful if you talk for a minute about some strategies that are useful going forward.

Sara Klock: The agency has a digital health web page and a checklist that industry can use to determine whether or not they think their product is regulated by the FDA. In my experience it's insufficient to just follow that and make a determination. We often see companies not understand the regulatory landscape and make a determination that their product is not, in fact, regulated by the FDA. Then they go and make some sort of claims or advertisement that suggests otherwise. Then they have to hire us to walk back what's going on. I actually think a better approach here is more comprehensive. It's more of a ask for permission, not for forgiveness. Where you hire either outside counsel or consultants to fully understand what the technology is doing, what the company wants the technology to do, how it is marketed and how are the consumers of that technology using it. What we would typically do is we spend a good amount of time deep diving into the product, the product development, the product marketing, and try to figure out an appropriate regulatory strategy, whether that be full FDA approval or clearance. We're putting it into a bucket where there's a little bit more discretion, less oversight and helping companies work through the pre-market side, but then also the post-market side and making sure that everything is, in fact, in compliance.

I actually think a better approach here is more comprehensive. It's more of a ask for permission, not for forgiveness. Where you hire either outside counsel or consultants to fully understand what the technology is doing, what the company wants the technology to do, how it is marketed and how are the consumers of that technology using it.

Post-Election Impact on FDA Policy and Regulatory Behavior

Michael Werner: So one of the direct question[s] that we get asked a lot, certainly leading up to Election Day and now post-Election Day, is whether the change in the Congress will impact FDA policy and regulatory behavior. Of course, the Senate remained in Democratic hands. There's still going to be changes in the Senate that may impact the issues that the FDA-regulated entities have to deal with. That's because the chair of the committee, Senator Murray from Washington, has been rumored to be interested in stepping down and taking the chairmanship of the Appropriations Committee or another committee. If that happens, the next person in line to be chair of the so-called Health Committee would be Senator Sanders from Vermont. Senator Sanders has shown to have a different perspective on the drug industry and the device industry than Senator Murray. Many people know that Senator Sanders prides himself on being kind of a little bit of an iconoclast, and I don't think people in the industries think of him as a friend of the industry. His ability to shape the committee agenda, which has jurisdiction over FDA issues, could have a very interesting impact on what legislation Congress takes up next year and the activities it takes on. That's true on the Republican side as well. Senator Burr from North Carolina, who was the lead Republican on the committee, has retired. So there will be a new Republican in that top spot on the committee. What you're going to have is a completely new leadership on the Senate Health Committee. That means that the committee may have a slightly different focus than it's had in the past. Some issues that might be in play include oversight of the pandemic response and whether we need to reinforce our public health infrastructure. We could see the committee take up issues such as cannabis regulation or even the regulation of psychedelic drugs. There will be the Animal Drug User Fee Act (ADUFA) that the Congress is going to take up next year because that program has to be reauthorized. So there will be FDA legislation, and what that legislation looks like remains to be seen. Certainly if you work with or for a company that develops FDA-regulated products, definitely something to keep an eye on. Then in the House the Republicans took over. That means there will be a new chair of the Energy and Commerce Committee, which is the committee that has jurisdiction over FDA in the House. That will be Cathy McMorris Rodgers, a Republican from Washington. Brett Guthrie, a Republican from Kentucky, will take over the health subcommittee of the Energy and Commerce Committee. Frank Pallone, who has been the chair of the committee the last several years, he'll stay in the top Democratic spot, but he won't be the chair of the committee. Now, McMorris Rodgers and Guthrie and Pallone all work well together. But nonetheless, when you're the chair of the committee, you have greater influence. I think in contrast to what I said about Senator Sanders, McMorris Rodgers and Guthrie have historically been a little bit more friendly to product developers than Pallone. We should see some interesting opportunities for legislative changes in FDA policies, whether they be regulation or changes to the federal Food, Drug and Cosmetic Act (FD&C Act). I think in terms of oversight of the FDA, we might anticipate that the Republicans in the House will have oversight hearings around, again, pandemic response and future pandemic responses. But they might take a different tenor than in the Senate, where the committee will be run by Democrats. There will be a lot of things that we need to be watching from the congressional side and how they influence whether FDA is going to move. I mentioned cannabis, so I'm going to flip it back to you, Sara. You know that there's been a lot of back and forth over the last several years about regulation of cannabis products, but the FDA has kind of held firm that the active ingredients in products that contain THC cannot be used legally in supplements. Do you anticipate FDA changing its policy around cannabis and products with THC and cannabinoid in it?

We should see some interesting opportunities for legislative changes in FDA policies, whether they be regulation or changes to the federal Food, Drug and Cosmetic Act (FD&C Act). I think in terms of oversight of the FDA, we might anticipate that the Republicans in the House will have oversight hearings around, again, pandemic response and future pandemic responses. But they might take a different tenor than in the Senate, where the committee will be run by Democrats. There will be a lot of things that we need to be watching from the congressional side and how they influence whether FDA is going to move.

FDA's Role in Regulation of Cannabis Products

Sara Klock: That's a, that's a great question. It's actually not an FDA policy. I think that's what the misnomer with industry is, is that FDA is just being difficult. When in fact, the only way you would actually change if CBD could be used in a food or a dietary supplement, would be to amend the FD&C Act, or create some specific regulation on point. Because the FD&C Act prohibits an ingredient that is used in a drug or a clinical trial to then be used in a food or dietary supplement. The only way we would see change here is legislative, not regulatory.

Michael Werner: So that's another example of how Congress and the FDA kind of interact on this. Congress keeps pushing FDA to, say, loosen its requirements and allow for private companies that make products with cannabinoids or THC in it to be more available as foods or supplements. To Sara's point, the FD&C Act actually prohibits them from doing that. We would need Congress to take action. What will be interesting is if Congress pushes to try to take that action, what the FDA response would be. The FDA has said that they haven't really seen very many legitimate medical uses of cannabis except in very limited situations. It will be interesting to see if Congress tries to do it, whether the FDA objects or tries to work with them on a compromise, don't you think?

The FDA has said that they haven't really seen very many legitimate medical uses of cannabis except in very limited situations.

Sara Klock: Yeah, I do. I actually think a really good example here to illustrate that FDA can and will work with a legislative pathway, is laboratory developed tests because that is currently something that the agency doesn't regulate, for better or for worse. The FDA would like different or additional oversight over laboratory developed tests and has been working with Congress to have legislation here. I think a laboratory developed tests in cannabis or in different buckets, but it does show that the agency can and will work with Congress when they think it's necessary.

Michael Werner: I'm glad you brought up laboratory developed tests because of course, we saw during the pandemic this issue come to the surface. It had been bubbling around for a while, and it came to the surface again in the context of COVID testing. For those who don't know what we're talking about, it's the idea that FDA regulates tests like medical devices. If you're a test developer, you need a 510(k) clearance to market the product. That is not true for so-called lab developed tests, which historically were tests that were developed in a single lab, usually an academic institution, that they are regulated under the Clinical Laboratory Improvement Amendments (CLIA) and overseen by the Centers for Medicare & Medicaid Services (CMS). They were never seen as being a part of FDA's jurisdiction. But what's happened is as the testing industry has grown and there's greater and greater use of genome sequencing tasks and the like, the classification of our product as a lab developed test versus a test that requires a 510(k) has started to get blurry. To Sara's point, FDA has at various points put forward ideas about ways they want to regulate tests either differently or perhaps subject so-called lab developed tests to greater regulation. There is this proposal in front of Congress now, the VALID Act, which would address this issue, but it's unclear whether in the waning days of this congressional session whether they'll be able to enact it. However, it does raise one question, Sara, which is we've seen a lot of companies come forward or be concerned about how their test is regulated. So it may be useful to just spend a minute talking about how we help companies in those situations.

How Holland & Knight Can Help

Sara Klock: We do this regularly, whether that test or product be a regulated medical device or a laboratory developed test. It's similar to what we were talking about with software products as medical devices. Our analysis is really dictated on how the technology is used and marketed. We work with companies to get them where they want to go. So if they want their test to not be an FDA-regulated medical device, then we help them structure and situate their product into the regulatory parameters that exist today. Whereas if you want your product to actually be a regulated medical device, and there's pros and cons to both. If you're a genetic test and you want to be able to advertise your product as an FDA-cleared product, I think the advertisement is probably a little bit better, a little bit stronger than a laboratory developed test. It requires more substantiation, it requires more process and paperwork, and more time to get 510(k) cleared. We can assist on the 510(k) application. We can help craft marketing, we can assist in reviewing advertisements and websites. Our entire goal is to get the client where they want to be, but also educate them on how to get there.

We work with companies to get them where they want to go. So if they want their test to not be an FDA-regulated medical device, then we help them structure and situate their product into the regulatory parameters that exist today.

Michael Werner: That's absolutely right. The point that I want to emphasize from what Sara was talking about was the point about how we really work with our clients to get them where they want to be. Because, as she said, there sometimes are advantages to being regulated as a device. There are sometimes when a company may want to be regulated or classified as a lab developed test. That's true in the digital health space, that's true in a lot of the medical device spaces. That's a big part of how we assess clients. I should say that we do a lot of a similar kind of approach in the context of tissue engineered products where in kind of an analogous way, FDA will regulate certain cell therapy products or tissue engineered products by saying that the cells are more than minimally manipulated. They're processed, they go through some kind of manufacturing, and therefore a biologics license application is required, which means a company is going to have to do clinical trials, etc. Then there are a whole class of other products that are just selling tissue-based products where the cells and tissue are not processed in such a manner that FDA would consider them BLA required. It's a similar kind of approach that Sara and I take, which is kind of analyzing the products, analyzing the technology and then matching that with FDA's regulations as written, as well as what we know about FDA's behavior. We reference previous experiences and how they've regulated products in the past and do the same kind of analysis to help our clients get to where they need to be. It's actually kind of a model that we use with devices, drugs and biologics. Sara, do you want to add anything to that?

Sara Klock: I would just also add that we do the same thing for food supplements and cosmetics. I think FDA has these frameworks in each essentially center that allow companies to explore different regulatory pathways to market, and we assist clients to get to their best fit.

Michael Werner: Right, and each of those situations is unique based on what a product developer is trying to accomplish in the market and what their business goals are. In many ways, we're able to use our experience to develop the best approach for each. Sara, you have any closing words for the podcast? I think we've just tried to give the listeners a rough outline of what we expect from the agency post-election and what some of our clients' experiences have been and what folks need to be preparing for as they go forward. Any closing words, Sara?

Closing Thoughts

Sara Klock: The only thing I will add to all of this is that I think that industry experienced a little bit of a pause of FDA enforcement, whether that be warning letters, inspections, recalls, and the last six months have shown that FDA is back and better than ever. Just a word to the wise, if I was in industry, I would expect an inspection very shortly. If we're not being compliant, there is a potential to receive a warning letter, inspectional findings or a recall. So we're always here to either help work through the regulatory process and ask for permission or ask for forgiveness when the warning letter comes.

Just a word to the wise, if I was in industry, I would expect an inspection very shortly.

Michael Werner: Thanks, Sara. Thanks to all who are listening, our contact information will be made available. We look forward to hearing from you and helping you.