In Short
The Situation: With the calendar officially turned to a new year several significant changes and regulatory initiatives are on the horizon at the Food and Drug Administration (“FDA”).
The Result: From labeling guidance for alternative protein foods products, to implementation of cosmetic reform, to advancements in artificial intelligence, supply chain security, and digital health tools, 2023 is poised to be an active year at the FDA. Not to be outdone, the Federal Trade Commission (“FTC”) is primed to trigger largescale changes as it ushers in updates to several foundational documents governing its oversight of the advertising and marketing of FDA-regulated products.
Looking Ahead: As the year unfolds, industry participants should remain diligent of the evolving regulatory landscape and mindful of key compliance dates and opportunities to provide important stakeholder feedback.
USPTO-FDA Initiatives
The FDA and the United States Patent and Trademark Office (“USPTO”) will continue to address drug competition and pricing matters in response to President Biden’s 2021 “Executive Order on Promoting Competition in the American Economy.” In 2022 letters, the USPTO and FDA forecasted initiatives to strengthen their relationship, expand resources for assessing drug patentability, and address instances of patent misuse to delay competition. Separately and together, the agencies plan to, among other things:
- Explore ways to ensure consistency in representations made to the USPTO and FDA, such as requiring patent applicants to submit relevant information that has been submitted to other agencies;
- Discuss concerns over practices referred to as “patent thickets,” “evergreening,” and “product hopping;”
- Create pathways for notification and information exchange for America Invents Act (“AIA”) proceedings on Orange or Purple Book-listed patents; and
- Provide FDA-led training to patent examiners about FDA resources available for prior art searches.
On January 19, the agencies held a public listening session to obtain feedback on their collaborations, including the current USPTO-FDA process for adjudicating PTE applications and public comment on such applications, method of use patents and associated FDA use codes, including with respect to carve outs (i.e., “skinny labeling”), the patenting of risk evaluation and mitigation strategies, and AIA proceedings’ intersections with Hatch-Waxman paragraph IV disputes and the Biologics Price Competition and Innovation Act “patent dance.” A likely critical topic for comment (due by February 6) will be on mechanisms to ensure consistency in representations before both agencies, such as through a duty of inquiry.
USPTO has already initiated public activities that may inform patent reform, including soliciting public feedback through February 3, 2023, on proposed initiatives directed at bolstering the robustness and reliability of patents.
Ongoing discussions and implementations of USPTO-FDA initiatives require close monitoring because of their potential impact on pharmaceutical patent prosecution and litigation and FDA regulatory processes.
Eyes on Marketing
The Federal Trade Commission (“FTC”) had a busy 2022 in advertising and marketing activities, as it continued to work alone and with FDA in pursuing enforcement actions against companies with FDA-regulated products. FTC shows no signs of slowing down in 2023. Not only did it join forces with FDA in issuing warning letters addressing the sale and marketing of CBD- and kratom-containing products as well as COVID-directed therapeutics, it has initiated activities to update or evolve its standards for product advertising. The new or pending guidance require industry attention—either through consideration in conjunction with current or anticipated marketing campaigns or by engagement on the potential implications of proposed changes.
- Health Products Compliance Guidance: In December 2022, FTC announced the release of its Health Products Compliance Guidance, which relays the government’s thoughts on ensuring health-related product claims are “truthful, not misleading, and supported by science.” The revised guidance now explicitly applies to the marketing of “any health-related product” (including “foods, over-the-counter (OTC) drugs, homeopathic products, health equipment, diagnostic tests, and health-related apps”) and includes important updates on claim substantiation and consumer standards.
- Green Guides: FTC announced it was seeking public comment on its Guides for the Use of Environmental Marketing Claims, which are intended to provide guidance to help marketers avoid potentially unfair or deceptive environmental claims. The Green Guides were last revised in 2012. FTC is seeking comment on an array of general questions related to the ongoing usefulness of the Green Guides and has requested comment on a number of specific claims (e.g., “compostable,” “degradable,” “recyclable,” “organic,” “sustainable”). The government reconsideration comes amid increasing actions to hold companies accountable for environmental claims and statements.
- Endorsement Guides: FTC also proposed updates to its Guides Concerning the Use of Endorsements and Testimonials in Advertising, which are designed to help businesses conform their endorsement and testimonial advertising practices to the requirements of the FTC Act. The proposed revisions include clarifications, new examples, and updates to reflect the growing use of social media and product reviews by advertisers in marketing. Among other changes, the proposed updates expand the definitions of “endorsements” to include “marketing” and “promotional” messages (including social media tags) and “product” to include a “brand.” FTC has also proposed adding new sections addressing consumer reviews and endorsements directed to children, and clarifies requirements related to disclosures.
Labeling of Alternative Food Products
The plant-based foods industry is expected to make up nearly 8% of the global protein market by 2030. One increasingly pertinent issue in this sector is the appropriate standard for labeling of plant-based alternative protein products. Traditional dairy and meat producers have argued that many existing plant-based food labels violate FDA regulations related to standards of identity or imitation foods and are likely to mislead consumers.
In early 2022 FDA announced plans to release two highly anticipated guidance documents in the calendar year: (i) Labeling of Plant-based Milk Alternatives, and (ii) Labeling of Plant-Based Alternatives to Animal-Derived Foods. While FDA took steps in 2022 to advance its guidance of Plant-based Milk Alternatives, going so far as to submit the draft guidance to the Office of Management and Budget (“OMB”) for review, neither guidance was publicly released, due in part to criticisms launched by Congress and the meat and dairy lobbies. Meanwhile, during the past few years, several states have proposed or passed various laws imposing labeling requirements on plant-based products generally. Several of these have been challenged in courts by parties asserting that the laws violate the First Amendment. Lawsuit results have been mixed.
Amid this patchwork of conflicting and inconsistent state laws, and lack of clarity from FDA on the appropriate labeling for such products, the federal regulatory landscape for plant-based labeling seems poised for big changes in 2023.
Implementation of the Drug Supply Chain Security Act
In the coming year, FDA will turn its attention to a new stage f the “Drug Supply Chain Security Act” (“DSCSA”), originally enacted in 2013. The DSCSA is intended to facilitate interoperable, electronic tracing of pharmaceutical products at the package level, in order to allow for the detection and tracing of harmful drugs throughout the supply chain. The countdown is on for FDA implementation of enhanced security requirements in November of 2023. Entities engaged in the sale, purchase, and transportation of pharmaceuticals must track products at the package rather than shipment level, and make available detailed transaction information. Paper-based tracing methods will no longer be permitted. As it moves towards these heightened security measures, FDA continues to assess the impact of these requirements on industry stakeholders, as well as on consumer access to applicable products.
Artificial Intelligence and Clinical Decision Support Software
This year will surely bring additional proliferation of artificial intelligence (“AI”) and related technologies than any year prior. As is the case in many industries, technologies designed for use in medicine have begun to incorporate artificial intelligence functionalities. FDA has recently clarified its interpretation of what type of AI-enabled “Clinical Decision Support” (“CDS”) software is considered a “medical device” and is thus subject to FDA regulation. FDA’s final guidance on the issue seems intended to regulate technology that purports to make independent clinical determinations, rather than technology which, for example, merely “enable[s] a healthcare professional to independently review the basis for recommendations that the software presents, but not rely primarily on those recommendations to make a clinical diagnosis or treatment decision regarding an individual patient.”
This distinction is based on a concern that providers might “over-rely on a suggestion from an automated system,” resulting in medical errors. Consequently, CDS software may not be considered a medical device if it simply assists providers in sorting through possible diagnoses or treatments, rather than providing “specific preventive, diagnostic, or treatment output.”
While FDA’s recent efforts indicate that the Agency is moving toward more oversight, it also continues to exercise enforcement discretion for low-risk devices. On September 28, 2022, the Agency established a Digital Health Policy Navigator to assist industry in determining whether a software product is the subject of FDA’s oversight.
Cannabis Regulations Are on the Horizon (Maybe)
Federal cannabis reform will continue to be a closely watched issue in 2023, as it was in 2022. Although federal legalization did not materialize last year, Congress did pass several pieces of legislation aimed at cannabis reform, including the Medical Marijuana and Cannabidiol Research Expansion Act, the first standalone cannabis reform passed by Congress in nearly 50 years, creating a new streamlined process to ease the barriers on conducting cannabis research and manufacturing cannabis for research purposes. Members of Congress, and in particular the Congressional Cannabis Caucus, have vowed to reintroduce several pieces of critical legislation in the next session, including those aimed at banking reform, expungement of criminal records, broad federal legalization of cannabis, and more limited regulation of cannabis-derived substances for food use.
FDA also appears poised to formally address its regulation of cannabis-derived products in 2023. According to FDA Deputy Commissioner Janet Woodcock, the agency plans to release an assessment on how the agency will or may regulate cannabis-derived substances, such as CBD and delta-8 THC, in foods and dietary supplements. Deputy Commissioner Woodcock was recently quoted in The Wall Street Journal, stating, “Given what we know about the safety of CBD so far, it raises concerns for FDA about whether these existing regulatory pathways for food and dietary supplements are appropriate for this substance.” Her response, coupled with previous agency statements regarding existing regulatory pathways, cast doubt as to whether FDA believes it can meaningfully regulate cannabis-derived substances in foods, beverages, and supplements without Congressional action specifically reforming the Federal Food, Drug, and Cosmetic Act.
Cosmetic Reform is Poised to Change the Industry
Tucked into Congress’s year-end $1.7 trillion Consolidated Appropriations Act, 2023 (omnibus spending bill), were major changes to FDA’s regulation of the cosmetics industry via the Modernization of Cosmetics Regulation Act (“MOCRA”). MOCRA amends the Federal Food, Drug, and Cosmetic Act by imposing several new requirements on cosmetic manufacturers and brands. MOCRA’s most significant reforms include: (i) adverse event recordkeeping, including serious adverse events reporting similar to the current requirements for dietary supplements and over-the-counter drugs; (ii) cosmetic facilities registration with FDA within one year of MOCRA’s enactment (which was December 29, 2022); (iii) submission of cosmetic product and ingredient information within a defined period of time and thereafter reported on an annual basis; (iv) creation of a defined safety standard that cosmetic products must meet in order to be introduced into commerce; (v) a requirement that companies maintain “adequate substantiation” establishing that a cosmetic is safe; (vi) a directive that FDA establish good manufacturing practices regulations governing cosmetic manufacturing facilities; and (vii) providing FDA with mandatory recall authority where the agency determines that use of an adulterated or misbranded cosmetic is likely to lead to serious adverse health consequences to users.
As 2023 unfolds, cosmetic industry participants should be vigilant of the impending sea change kicked off by MOCRA and take steps to affirmatively monitor FDA’s implementation in order to ensure timely compliance.
Three Key Takeaways
- Major changes are expected from FDA in 2023 that will impact nearly all regulated product categories.
- Companies navigating FDA regulated product space should be mindful of newly implemented regulations, agency guidance, and related Congressional activity that impacts their products and business and prepare for strategic Agency engagement.
- Companies with FDA-regulated products should be mindful of how shifting policies and Agency interpretations can create legal risk, not only of government action, but claims and complaints by consumers, users, and competitors.
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