E-cigarette lawsuit may imperil FDA’s regulation of medical products

The FDA frequently makes use of guidance documents to guide life sciences companies’ development and compliance activities. However, a lawsuit set to go before the Supreme Court later this year could put FDA’s use of guidance documents at risk, after the Fifth Circuit Court of Appeals found that FDA’s decision to go against advice it had provided to e-cigarette manufacturers violated several legal doctrines. Life sciences companies have more at stake in the case than they might think.

First, let’s talk about the case of FDA v. Wages and White Lion Investments and why it’s being litigated

• Under a 2009 law known as the Family Smoking Prevention and Tobacco Control Act (The Tobacco Control Act), the FDA was authorized to create a new regulatory framework intended to reduce the use of tobacco by young people. At the core of this law was authority which permitted FDA to “deem” a product to be subject to its authorities. This approach was intended to allow FDA to be flexible to accommodate new types of tobacco products that might rise in popularity over time. For example, the FDA used this authority in 2016 to “deem” electronic cigarettes (or “electronic nicotine delivery systems” – ENDS) to be subject to the Tobacco Control Act.
• The Tobacco Control Act framework requires an applicant seeking to market a new tobacco product into interstate commerce to seek FDA authorization; the applicant must demonstrate the product “would be appropriate for the protection of the public health.” This standard, in other words, seeks to effectively replace products that pose significant health risks (such as cigarettes) with products that pose less significant health risks. There are basically two criteria by which FDA is supposed to evaluate this balance of risk: The agency weighs the likelihood that the product may serve as an aid by which current smokers quit or switch to a less dangerous alternative, or that the new product is less enticing or addictive to new users.
• As with FDA’s evaluation of medical products, regulators make determinations about new tobacco products based on evidence, including from “well-controlled investigations” and other “valid scientific evidence” submitted to the FDA. Applications for authorization are submitted as part of a Premarket Tobacco Product Application (PMTA).
• While that’s how the law is supposed to work, in practice, the FDA – a public health agency – has been generally unwilling to authorize PMTAs. To date, FDA has granted Marketing Granted Orders to just 45 products, of which 24 have been ENDS, better known as electronic cigarettes. To put that number in context, the FDA has received (and rejected) millions of PMTAs. Most of these products are for flavored tobacco products.
• These rejections have resulted in litigation against the FDA, including the case underlying FDA v. Wages and White Lion Investments (White Lion). In short, in September 2021 the FDA rejected a PMTA submitted by Triton Distribution, which was seeking authorization for flavored e-liquids used in e-cigarette products. FDA determined that the liquid flavors – which included pink lemonade, sour grape, Crème Brulee and a cotton candy flavor – were a risk to youth populations. Further, the company did not submit “robust and reliable evidence” that the flavors would be effective in aiding adult smokers to quit smoking combustible tobacco products, according to the FDA, and did not believe that mitigation efforts would be effective at restricting the use of the products from youth smokers.

Following FDA’s rejection, Triton Distribution sued the FDA in federal court, eventually leading to a major setback for the agency

• At issue was what the court called the “surprise switcheroo” to which the FDA subjected Triton Distribution. Initially, in a guidance document published by the agency, it had told companies they would not be required to submit certain types of evidence in support of their applications and indicated that marketing plans for the products would be essential to approval. However, the FDA then subsequently rejected Triton’s PMTA based on a lack of effective evidence, and did not evaluate its marketing plans.
• According to a decision by the U.S. Court of Appeals for the Fifth Circuit, FDA’s instructions had led industry on a “wild goose chase” in which it had first issued instructions in the form of guidance, watched as industry followed those instructions, then then “FDA turned around, pretended it never gave anyone any instructions about anything, imposed new testing requirements without any notice, and denied all one million flavored e-cigarette applications for failing to predict the agency’s volte face.”
• Much of the Fifth Circuit’s 85-page ruling took a scathing view of the FDA’s use of guidance documents, and in particular the agency’s belief that the documents were not binding on the agency. To quote one memorable segment of the Fifth Circuit’s decision: “Then FDA denied that its voluminous guidance documents and years-long instructional processes meant anything. Why? Because, the agency said, it always reserved the implied power to ignore every instruction it ever gave and to require the very studies it said could be omitted, along with the secret power to not even read the marketing plans it previously said were ‘critical.’”
• The Fifth Circuit ruled against the FDA, writing that its actions relative to its guidance had been arbitrary and violated a “fair notice doctrine” requiring administrative agencies “to give the public fair notice of their rules before finding a violation of them.” It also indicated that FDA violated a “change-in-position doctrine” under the Administrative Procedures Act requiring the FDA to “display awareness that it is changing position,” and to not “deny or downplay the shift.” This was true, the court wrote, even despite the documents having “all manner of disclaimers, qualifiers, and cautionary language” indicating that its recommendations were nonbinding. Finally, it found a violation of what it called the “good faith reliance doctrine,” whereby it could not “fault a party for relying in good faith” on the previously established decision.
• The FDA petitioned the Supreme Court for a hearing on the Fifth Circuit’s decision, and the court agreed to a hearing in the case during its next term, which begins October 7, 2024. The FDA’s brief in the case was filed in late August, in which it argues that the Fifth Circuit’s theory that it violated “good faith” and “fair notice” doctrines were incorrect interpretations of law in general, and the Administrative Procedures Act in particular. Among the most troubling parts about the Fifth Circuit’s decision, the FDA wrote, was its stance that “a private party is entitled to rely on its own interpretation of agency guidance, even if that interpretation is wrong, so long as that interpretation is reasonable.” As the Fifth Circuit wrote: “not only must [FDA’s] understanding of the [guidance] be reasonable, but the manufacturers’ understanding of those rules also must be unreasonable.” However, the agency argues that the court “has never held that a court may canonize a private party’s reasonable but incorrect interpretation of agency guidance.”

While the case is focused on FDA’s tobacco authority, life sciences stakeholders should pay close attention to what’s at stake

• In short: If the Fifth Circuit’s decision is upheld, FDA’s incentive to make use of guidance documents could be limited. At present, FDA issues guidance in an attempt to give industry a general sense of its best thinking on matters of science or legal interpretation of a specific term of art. While statute (i.e., law) gives the FDA its overarching authority, the high-level interpretations of these legal frameworks are interpreted by the agency in rulemaking – guidance documents, in contrast, usually provide more granular interpretations, advice and information about how researchers, industries and even regulatory staff should apply these frameworks into individual scenarios and research programs. While authorizing statute and regulation are administratively (and legislatively) difficult to update, guidance documents allow the agency a more flexible avenue that can be updated at the regulator’s own discretion as science, technology, or even the regulator’s own experience changes.
• FDA’s guidance documents typically include a standard disclaimer indicating that the document “represents the current thinking of the FDA on this topic. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.” But according to the Fifth Circuit, that disclaimer isn’t worth as much as the actual advice the FDA provides and doesn’t excuse FDA from changing its mind in the future.
• While FDA rarely makes changes in guidance that are as significant in scope as its tobacco guidance, which affected more than one million applications, it regularly makes changes to its guidance for life sciences products that are similar in effect. For example, FDA might suddenly issue guidance emphasizing that companies should conduct testing that was previously only recommended. It might overhaul a clinical testing guidance focused on a particular disease area, indicating that it is no longer accepting of an endpoint that was recommended in a prior guidance document. And it regularly withdraws or replaces guidance documents.
• The problem, then, is that life sciences companies are theoretically affected by the same issues of doctrine that Triton was. FDA doesn’t necessarily give companies “fair notice” of changes in policy that guide its review of new product applications. Companies may be engaged in lengthy and costly clinical trials that adhere to previous best practice established by a guidance document when such changes are made, in theory creating an agency violation of the Fifth Circuit’s concept of a “good faith reliance” doctrine. And the FDA rarely points out when it has changed its approach, violating what the Fifth Circuit deems a “change-in-position” doctrine.
• This could leave FDA vulnerable to legal challenges in instances where a company is developing a product and following the FDA’s published guidance, and then the agency changes that guidance or chooses not to approve the product. This is not an uncommon occurrence. Because development programs for many medicinal products span years – even decades – it is relatively common that FDA’s standards for a specific disease area, a general development pathway, or some other aspect of the regulatory process will evolve over time.
• In practical terms, following the Fifth Circuit’s interpretation would pose significant challenges for the FDA, whose approach to regulation requires flexibility and the ability to shift approaches based on new evidence and experience. If the FDA is required to adhere to existing guidance despite its reviewers believing that a medicine or medical device is unsafe or ineffective, it could have negative implications for patients and the health care system. Ultimately, FDA might also decide that publishing overly-specific guidance is not worth the trouble, which could slow the development of some medical products – and especially products for which there is significant uncertainty and for which guidance is most helpful.
• If FDA can’t publish guidance without a court attempting to hold the agency to its non-binding advice, then regulators may prefer to offer advice that is even less binding, such as cryptic verbal advice offered in public forums. In fact, life sciences companies often respond to FDA guidance asking for more granularity and specificity in the recommendations, especially for guidance documents that focus more on “best practices” or a series of guiding principles than recommending specific test methods, acceptability criteria or study designs, as having these documents available from the FDA lessens the guess work for developers.
• Or, as the FDA argued in its brief to the court: “By automatically resolving all such ambiguities against the agency, the Fifth Circuit’s approach discourages agencies from providing guidance in the first place—an outcome that, in the long run, harms rather than helps regulated parties.”
• Whether the Fifth Circuit’s interpretation of FDA’s authority and use of guidance is upheld is now in the hands of the Supreme Court, which is set to hold oral arguments in the case of FDA v. Wages and White Lion Investments later this fall.

To contact the author of this analysis, please email Alexander Gaffney ( agaffney@agencyiq.com)
To contact the editor of this analysis, please email Laura DiAngelo ( ldiangelo@agencyiq.com) or Kari Oakes (koakes@agencyiq.com).

Key Documents and Dates

• Fifth Circuit opinion
• FDA Brief
• FDA v. Wages and White Lion Investments