Executive Orders Limit Federal Agencies in using Guidance Documents for Enforcement

Further Limits on The Use of Guidance for Enforcement – How Will FDA React?

BY Phillip Crooker, J.D., Vice President, Technical, Regulatory & Access, Parexel - 10.23.19 -

On October 9, 2019, the President signed two executive orders that address how the federal government develops guidance and limits the use of guidance in civil administrative enforcement actions.

The executive orders have been published in the Federal Register and can be found here and here.  The gist of the orders puts limits on how a federal executive agency – including the FDA – can use guidance documents to create and enforce binding regulatory standards. 

The first order – Promoting the Rule of Law Through Improved Agency Guidance Documents – essentially directs government agencies to adopt good guidance practices. For the most part, the FDA has already enacted these good guidance practices that are outlined in the executive order through its implementation of the regulations at 21 CFR § 10.115. 

The second order – Promoting the Rule of Law Through Transparency and Fairness in Civil Administrative Enforcement and Adjudication – is more likely to affect the FDA’s current approach to enforcement actions for drugs. There are two significant elements in this order that potentially affect how FDA can conduct enforcement actions. 

  • When an agency takes an administrative enforcement action, engages in adjudication, or otherwise makes a determination that has legal consequence for a person, it must establish a violation of law by applying statutes or regulations.  The agency may not treat noncompliance with a standard of conduct announced solely in a guidance document as itself a violation of applicable statutes or regulations (from Sec. 3 of the order - emphasis added).
  • Before an agency takes any action with respect to a particular person that has legal consequence for that person, including by issuing to such a person a no-action letter, notice of noncompliance, or other similar notice, the agency must afford that person an opportunity to be heard, in person or in writing, regarding the agency’s proposed legal and factual determinations.  The agency must respond in writing and articulate the basis for its action (from Sec. 6 of the order – emphasis added). 

There are at least two potential areas in human drug enforcement actions where the first element could apply to FDA – and that is the use of International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (ICH) Q7A and “import alerts” (otherwise known as detention without physical examination). 

  • The first potential area is the agency’s approach to determining what are used as CGMP standards for the manufacture of API and API intermediates. ICH Q7A is a guidance document published by FDA that contains current good manufacturing practice (CGMP) recommendations for active pharmaceutical ingredients (API) and API intermediates (see the Federal Register notice here). 

FDA routinely issues Warning Letters to manufacturers of API and API intermediates and uses ICH Q7A as the basis for the charges presented in the Warning Letter. For a recent example, see the Warning Letter issued to Lantech Pharmaceuticals Ltd. on August 8, 2019 here.

In cases such as these, FDA appears to be contradicting the recent executive order that prohibits an agency treating noncompliance with a standard of conduct announced solely in a guidance document as a violation of the applicable statute or regulation because even though ICH Q7A was published in the Federal Register it only contained non-binding recommendations that were never published as regulations after notice and comment rulemaking.

Unlike the CGMP regulations for drug products found in 21 CFR §§ 210 and 211, the FDA has never published a set of regulations that provide the industry with binding rules that interpret the statutory CMGP requirements found in the FDCA as applied to API and API intermediates.

  • The second potential area is the agency’s use of import alerts. Import alerts are used to identify a manufacturer or shipper as the source of a product that appears to violate requirements in the Food Drug and Cosmetic Act (FDCA). The alert instructs FDA field personnel to detain without physical examination all imports that meet the criteria set forth in the alert. Products will continue to “appear” to be in violation of the FDCA until the violation is corrected (see FDA Regulatory Procedures Manual Chapter 9). 

According to FDA, import alerts are documents that provide “guidance” to the field personnel (for example, see Import Alert 66-40 for Detention Without Physical Examination of Drugs From Firms Which Have Not Met Drug GMPs).  Import alerts can be imposed separately from an advisory action such as a Warning Letter or can be used in combination with other administrative and enforcement actions.

Similar to the agency’s use of the ICH Q7A guidance, the FDA again appears to be contradicting the terms of the recent executive order when it imposes the sanction of an import alert based solely on guidance.  There have also been a handful of court cases that challenged the FDA’s use of a specific import alert as guidance (Bellarno Int’l, Ltd. v. Food & Drug Admin., 678 F. Supp. 410 (E.D.N.Y. 1988); Community Nutrition Inst. v. Young, 818 F.2d 943, 947-48 (D.C. Cir. 1987); Syncor Int’l Corp. v. Shalala, 127 F.3d 90, 93-94 (D.C. Cir. 1997).

Courts have characterized import alerts as regulations that violate the notice-and-comment provisions for rulemaking and have struck down the use of guidance to impose import alerts in some of these challenges.  These decisions appear to align with the order’s instructions to administrative agencies to establish violations of law only by applying statutes or regulations. 

The second element raises questions about whether the FDA would need to alter its procedures and timelines for assessing compliance cases.  At the moment, any manufacturing site that is inspected by FDA for CGMP compliance will receive a classification letter from the agency no later than 90 days after the conclusion of the inspection.  This was a commitment from the agency to regulated industry as part of the Generic Drug User Fee Program II legislation and the FDA has applied it to all inspections regardless of whether the sites fall within the boundaries of GDUFA II or The commitment letter from FDA to industry can be found here.

If the facility is classified as Official Action Indicated (OAI), then the agency has determined that the facility may be subject to a regulatory or administrative enforcement action.  The 90-day letters do not indicate what, if any, additional action the FDA will take and a firm is not typically given any additional notice before receiving a regulatory or enforcement action such as an import alert or Warning Letter.  The template for the 90-day letter for facilities that are classified as OAI can be found here.

It is arguable that the agency will now need to include an additional step when it has assessed a case and determined that a Warning Letter or other regulatory or enforcement action is warranted.  For example, rather than simply sending a Warning Letter following a 90-day letter with an OAI classification without any further communication with a firm may not be permissible under the second executive order. 

When FDA finds that a manufacturer has significantly violated FDA regulations, FDA notifies the manufacturer (see the FDA Regulatory Procedures Manual (RPM) Chapter 4).  The Warning Letter identifies the violation, such as poor manufacturing practices.  The FDA’s use of the Warning Letter would likely be similar to or the same as the use of a notice of non-compliance which was specifically mentioned in the second executive order.

Under the terms of the second executive order, it is possible that the FDA would need to provide adequate notice and an opportunity for a firm to be heard and present evidence prior to issuing a Warning Letter or taking another form of administrative enforcement action.  The agency would also need to adequately respond in writing to the firm’s presentation of any evidence before proceeding to further stages of enforcement such as issuing a Warning Letter.  There may also be an argument that the FDA would need to provide a firm with similar notice and opportunity prior to issuing a 90-day OAI letter if the agency determines that the OAI classification falls under the definition of an action with a legal consequence.

The second executive order also contains an exception for the opportunity to contest an agency action prior to the government acting.  Under Section 6(c) of the order, an agency may proceed without prior notice and opportunity to be heard where necessary because of a serious threat to health, safety, or other emergency.  The FDA may interpret the order in such a way that this exception applies to its current procedures for administrative enforcement actions.

For example, because Warning Letters are used only when there are significant regulatory violations, FDA could argue that the use of a Warning Letter falls within the boundaries of a serious threat to health or safety. However, the RPM indicates that Warning Letters are not appropriate when the violations are intentional and flagrant or the violation presents a reasonable possibility or injury or death (see RPM Chapter 4). 

It will take some time for the FDA to analyze and interpret these orders and then announce and implement any newly required procedures.  In the meantime, regulated industry should be aware of these potential issues when facing administrative enforcement actions and consider whether the agency is complying with them.

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