Regulatory Update | Understanding FDA Jurisdiction

Can FDA Really Do That? Understanding FDA’s Jurisdiction

BY Philip Crooker, J.D. Vice President, Technical, Regulatory & Access, Parexel - 1.23.20 -

On August 29, 2019 the US FDA sent a Warning Letter to Shanghai Institute of Pharmaceutical Industry (SIPI) (see the Warning Letter).  The FDA charged the firm with refusing a pre-announced surveillance and pre-approval CGMP inspection under the statutory authority found in section 501(j) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) and 21 U.S.C. 351(j).  This section gives the FDA authority to deem that drugs are adulterated if they are manufactured, processed, packed, or held in an establishment and the owner, operator, or agent delays, denies, limits, or refuses an inspection (for further information on how FDA interprets this section of the statute see the guidance document Circumstances That Constitute Delaying, Denying, Limiting or Refusing a Drug Inspection here).

The Warning Letter also set off a flurry of articles in the trade press, in part because the firm publicized its response to the Warning Letter.  In its response, The Pink Sheet reported that the firm argued that the inspection was inappropriate because there had been no formal contract with the applicant who apparently listed the firm in its drug application to the FDA and the applicant included testing results issued by SIPI in the marketing application submitted to the FDA (see the article from The Pink Sheet).  All of this raises a question about a fundamental issue – when does FDA have jurisdiction to enforce the law? Who’s right in this case – FDA or SIPI?

Here’s a short primer on understanding FDA jurisdiction1. Once we know what the rules are, we can take another look at the Warning Letter sent to SIPI and better understand who has the better case here.


FDA authority is limited.

  • FDA’s regulatory authority comes from Congress’s constitutional power to regulate interstate commerce.  The U.S. Supreme Court has construed the commerce clause extremely broadly.  As a result, Congress appears to retain virtually unlimited power to regulate the production and sale of drugs. See Wickard v. Filburn, 317 U.S. 111 (1942).

Interstate commerce is required.

  • Because all the prohibited acts listed in the FDCA are limited to articles that have moved, are moving or will be moving in interstate commerce, the FDA’s enforcement powers are limited to articles introduced into or while in interstate commerce or while held for sale after shipment in interstate commerce.

Interstate commerce is broadly defined.

  • The FDCA also extends to any intrastate economic activities having a substantial effect on interstate commerce.  Federal court decisions have found that the FD&C Act requirement that articles be in interstate commerce poses “no obstacle” to FDA enforcing the Act with respect to seemingly wholly intrastate activities. See Gonzales v. Raich, 545 U.S. 1 (2005) affirming the Supreme Court’s decision in Wickard to construe the commerce clause extremely broadly.

Interstate commerce is presumed but can be challenged.

  • FDA does not have the initial burden to demonstrate jurisdiction in court.  The connection with interstate commerce required for jurisdiction to enforce the requirements of the FDCA is presumed to exist.  This is, however, a rebuttable presumption.  21 U.S.C. § 379(a) (2016).

There are several ways to find a connection with interstate commerce.

  • A product’s link with interstate commerce may arise from many activities.  For example, a product may be introduced into interstate commerce by directly selling and shipping the good into another state, contracting to do so, or even by selling or shipping a good with the knowledge that it will enter another state.
  • To initiate an enforcement action, the FDA must prove only that the goods have been introduced into interstate commerce or that the manufacturer intends to introduce goods into interstate distribution. 21 U.S.C. § 334(a)(1) (2016).  Intent at the time of shipment is crucial to determination of essential character of a shipment as interstate. Id. citing Texas v. United States, 866 F2d 1546, 1556 (5th Cir.1989).  Submitting a marketing application, like an establishment registration and listing, can be evidence that a facility intends to or does manufacture a product that is intended to be a drug. 21 C.F.R. §207.77(c) (2018) (emphasis added).  The FDA defines manufacture to include testing or control procedures applied to the final product and defines a manufacturer to include control laboratories and contract laboratories. 21 C.F.R. §207.1 (2018).

Ownership of the product is not necessary for FDA jurisdiction.

  • Having title to goods is not a prerequisite to imposing the FDCA public protection mechanisms on those who handle violative products within the act’s scope. See United States v. Wiesenfeld Warehouse Co., 376 U.S. 86 (1964).


Let’s unpack the facts in the case and see how they stack up against the rules to see who has the better argument.

  • FDA has the presumption of jurisdiction in its favor.
  • By submitting the marketing application to the FDA, the product owner provided the FDA with evidence that it intended to manufacture and place into interstate commerce a product that would be considered a drug.
  • Even though SIPI was not involved in the shipping or holding of drugs, it apparently had performed some analytical testing of components of the drug product or the drug product itself, so SIPI was acting as a manufacturer by conducting those analytical testing procedures.
  • And those analytical test data were apparently included as part of the marketing application submitted to FDA.

Whether or not SIPI had a formal contract in place with the applicant is irrelevant and extraneous to the determination of FDA jurisdiction.  FDA encourages parties engaged in contract manufacturing to develop and execute quality agreements that describe and support contract manufacturing arrangements.

However, the CGMP regulations do not require using quality agreements. The regulations only require that the quality unit’s responsibilities and procedures be in writing and that they be followed (see the FDA guidance Contract Manufacturing Arrangements for Drugs – Quality Agreements here).

Furthermore, commercial contracts such as master services agreements (MSA) or supply agreements that include general business terms and conditions such as confidentiality, pricing or cost issues, delivery terms, or limits on liability or damages are outside the scope of FDA jurisdiction and inspection authority (see 21 U.S.C. § 374(a)(1)). 

At the end of the day, FDA had jurisdiction to initiate the Warning Letter because:

  • The marketing application that was submitted to FDA provided evidence of intent to place a drug into interstate commerce; and
  • That application included analytical data generated at SIPI; and
  • Any claims that SIPI did not have a formal contract in place with the applicant holder – either in the form of a quality agreement or other commercial contract – is irrelevant to the case.

Although this case garnered more publicity than other cases where FDA has issued Warning Letters for firms that delay, deny, limit or refuse an inspection, FDA’s jurisdiction to send a Warning Letter here with these facts is rather clear and not contentious.  

This case should put both applicants and contract service organizations on notice that clear and prompt communication about roles and responsibilities for CGMP operations that will be used to support the review of marketing applications and routine commercial production is fundamental and essential to meet CGMP requirements and to have the freedom to operate without further constraints from FDA.




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