The fall of Chevron and the potential implications for dietary supplements

On June 28, the Supreme Court issued its opinion in Loper Bright Enterprises v. Raimondo​ to overturn 40 years of deference to administrative agencies as held by Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc​.

In its 114-page ruling, the Supreme Court decided that it is the courts, and not federal agencies, that are best positioned to interpret ambiguity in the statute, even in areas where the agencies are the experts.

In his opinion, Chief Justice Roberts, writing for the majority, stated: “Under Chevron,​ a statutory ambiguity, no matter why it is there, becomes a license authorizing an agency to change positions as much as it likes, with “[u]nexplained inconsistency” being “at most . . . a reason for holding an interpretation to be . . . arbitrary and capricious.””

As such, the court called the Chevron ​deference “unworkable” and overruled it. 

Moving forward, the Administrative Procedure Act (APA) requires courts to “exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous”.

Daniel Fabricant, PhD, president and CEO of the Natural Products Association (NPA), told us that moving forward the APA becomes FDA’s friend because it governs the process by which federal agencies develop and issue regulations. It includes requirements for formal notice and comment rulemaking.

It should be noted that another standard known as Skidmore​ was upheld by the Court. Skidmore​ grants a measure of deference to an agency’s interpretation of a statute based on the “thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.”

Implications for dietary supplements​

So, what does it all mean for an industry like dietary supplements, which is regulated by federal agencies like the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC)?

“It would be great if Congress could be more precise with its language and to include less ambiguity, but that’s not how Congress works,” said Loren Israelsen, who was one of the key architects of the Dietary Supplement Health & Education Act (DSHEA). “Any law is always a compromise and ambiguity will always be there. To think otherwise is a very naïve way of thinking about Congress.”

Scott Bass, Partner at Sidley Austin, LLP and another key architect of DSHEA, told us: “People need to understand that what it [the Supreme Court opinion] says is that if there is an issue of statutory interpretation and if the statute is ambiguous, there is not going to be deference in Chevron anymore. But people need to understand that it's not getting rid of FDA expertise.”

NPA’s Dr. Fabricant concurred, adding that Chevron​ only ever applied to the interpretations of federal agencies to statutory ambiguity, and not to technical and scientific opinions.

“Industry wants FDA to be strong on the technical side, but this decision tells the Agency to leave all the other stuff to other dialogue,” said Dr. Fabricant.

While Bass described the decision as a “net-net good thing” for the dietary supplements industry, it’s still not clear exactly how the industry could challenge FDA on specific topics.

“This is a big deal. How it affects our industry, we don’t know yet,” said UNPA’s Israelsen.

The landscape is complicated by the FDA’s move away from rulemaking towards guidances for many dietary supplement issues, which may allow the Agency to state that such documents are not final agency actions and therefore may not be subject to deference.

Ivan Wasserman, managing partner at Amin Wasserman Gurnani, told us: “In this decision, the majority recognized that Chevron​ deference was not being consistently applied by the courts, and it is not 100% clear what DSHEA-related FDA interpretations would have been entitled to deference and in what contexts (certainly mere statements in guidance documents would not have). 

“Regardless, while some courts may still voluntarily give weight to FDA’s interpretations in some instances, they are generally no longer required to do so.” 

Specifics​

Looking at specifics, Matthew Zapadka, Partner at Arnall Golden Gregory, LLP, said that for Chevron​ to have applied there had to have been ambiguity in the statute and there isn’t much ambiguity in DSHEA.

For example, Sidley’s Bass said the innovation provision in DSHEA (found under the definition 201(ff)(1)(E):  “A dietary substance for use by man to supplement the diet by increasing the total dietary intake”) is not ambiguous, but "FDA is pretending it is".

“We wrote it that way to allow the industry to sell ingredients that weren't yet recognized as traditional vitamins, minerals, herbs, or food,” said Bass (it is also known as the “CoQ10 provision”).

“FDA misread this in the early 2000s. It's not ambiguous, but they are pretending it is, and that is inexcusable. I think Loper Bright​ will help us because that has to be changed,” he added.

Zapadka added that, based on his initial conversations, the Drug Preclusion, or the race to market provision (201(ff)(3)), appears to be the issue with the biggest target on its back.

“It [the Drug Preclusion] is a possible challenge, but I’m not so convinced that it’s so easy,” said Bass.

“There’s a lot of interest in testing the drug preclusion provision legally,” said Israelsen, “but let’s not do that too quickly or thoughtlessly.”

FTC, too?​

Bass added that the Loper Bright​ decision may also open up an interesting opportunity for industry to challenge what he called “Federal Trade Commission overreach on claims”.

“Right now, the Federal Trade Commission will often say we don't care about how FDA looks at substantiation for drugs versus supplements versus foods etc. or OTC drugs versus prescription drugs. It’s just competent, reliable, scientific evidence, whatever that means.” said Bass. “I think there's an opportunity here after Loper Bright​ to explore litigation challenging the Federal Trade Commission. I haven't talked to anybody about this and I don't know if it plays out, but I believe the conflict between the statutes and the ambiguity there is an interesting avenue.

“I believe that this decision is favorable for the dietary supplement industry that it provides opportunities to strengthen innovation, and also provides opportunities to require more certitude for the industry. As the supplement industry expands, we can rely more on interpretations that hopefully will stay in place for a longer time.”