Deference to Agency Decisions: Lessons from Recent Pharmaceutical Pre-emption Decisions

Deference to Agency Interpretation of Rules and Regulations

Regulatory pre-emption is not uncommon. For example, the Comp-troller of the Currency has issued a variety of rules that purport to pre-empt state consumer protection laws with respect to banking; the National Highway Traffic Safety Administration has issued pre-emption statements with proposed safety standards for cars; and the Consumer Product Safety Commission issued a mattress flammability standard that purports to pre-empt state tort law. See Banking Activities and Operations; Fuel Econ-omy Standards ' Credits and Fines ' Rights and Responsibilities of Manu-facturers in the Context of Changes in Corporate Relationships, 69 Fed. Reg. 77663 (Dec. 28, 2004); Real Estate Lending and Appraisals, 69 Fed. Reg. 1904 (Jan. 13, 2004); Standard for the Flammability (Open Flame) of Mat-tress Sets; Final Rule, 71 Fed. Reg. 13471 (March 15, 2006).

It is well-settled that where Congress has vested an agency with authority, it is not the courts' role to second-guess agency decisions on pre-emption. Courts hold this especially true where Congress granted authority based on the agency's expertise. Courts have held that an agency may communicate its intentions with regard to a particular regulatory scheme through statements in ”regulations, preambles, interpretive statements, and responses to comments,' as well as through the exercise of its explicitly designed power to exempt state requirements from pre-emption.' Medtronic, Inc. v. Lohr, 518 U.S. 470, 506 (1996) (Breyer, J. concurring in part and concurring in the judgment) (citing Hillsborough County v. Automated Med. Labs., Inc., 471 U.S. 707, 718 (1985)); see also Geier v. Am. Honda Motor Co., 529 U.S. 861, 881 (2000) (holding that the Department of Transportation's ('DOT') requirement that a certain percentage of cars have either airbags or some other type of passive restraint system pre-empts a state tort claim that a car without an airbag is defectively designed. The Court relied on the DOT's statement, set forth in a preamble accompanying the regulation in question, which made 'clear that the standard deliberately provided the manufacturer with a range of choices among different passive restraint devices').

This deference to agency interpretation is often called 'Chevron deference' based on the U.S. Supreme Court decision, Chevron, U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984). In Chevron, the Court held that since Congress had given the EPA broad discretion to implement policies of the Clean Air Act Amendments of 1977, and given the complexities of regulations regarding pollution-emitting devices, the Court would defer to the EPA's interpretation of its regulations. Id. at 866. The Court explained its decision to defer to the agency:

We have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer, and the principle of deference to administration interpretations has been consistently followed by this Court whenever decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in a given situation has depended upon more than ordinary knowledge respecting the matters subjected to agency regulations. Id. at 844 (citations omitted).

Similarly, in Auer v. Robbins, 519 U.S. 452 (1997), the underlying regulations (overtime pay requirements) gave specificity to a statutory scheme the Secretary of Labor was charged with enforcing, and reflected the considerable experience and expertise the Department of Labor had acquired over time with respect to the complexities of the Fair Labor Standards Act ('FLSA'). The Supreme Court held that the Secretary's interpretation of the salary-based test as applied to public employees was a permissible reading of the FLSA and thus had to be sustained. Id. at 458.

The Court held in Auer that an administrative rule may receive substantial deference if it interprets the issuing agency's own ambiguous regulations. In so deciding, the Court did not find persuasive the petitioners' argument that an agency interpretation that comes in the form of a legal brief is entitled to no deference. 'The Secretary's position is in no sense a 'post hoc rationalization' advanced by an agency seeking to defend past agency action against attack.' Id. at 462. There was no reason, in the Court's opinion, to suspect that the interpretation was anything other than 'the agency's fair and considered judgment on the matter in question.' Id. Finally, there was no reason to construe the agency interpretation 'narrowly.' 'A rule requiring the Secretary to construe his own regulations narrowly would make little sense, since he is free to write the regulations as broadly as he wishes, subject only to the limits imposed by the statute.' Id. at 463.

Further, in Horn v. Thoratec Corp., 376 F.3d 163, 169 (3d Cir. 2004), the Third Circuit held that requirements the FDA imposed on the ventricular device (a Class III medical device approved through the PMA process) were 'precisely 'the sort of concerns regarding a specific device' which the Supreme Court intimated would give rise to pre-emption under Section 360k(a).' In Horn, the defendant argued that the plaintiff's design defect and failure-to-warn claims were expressly pre-empted by '360k(a) of the MDA. The HeartMate', a heart pump providing circulatory support to the heart, underwent studies and clinical trials for 17 years. During that time, the manufacturer submitted more than 90 PMA supplements to the FDA and corresponded considerably with the FDA about its device. The FDA filed an amicus curiae letter brief in the Third Circuit, stating its strong interest in seeing its decisions regarding medical products implemented as promulgated. The Agency contended that the PMA process is detailed, covers every aspect of an approved product to assure reasonable safety and effectiveness, and creates specific federal requirements. The court concluded that there was 'no doubt' that the long PMA process undertaken by Thoratec 'imposed mandatory conditions ' pertaining to the HeartMate's manufacturing, packaging, storage, labeling, distribution and advertising [ ]' that triggered federal pre-emption. Horn, 376 F.3d at 170. The plaintiff's state tort claims were pre-empted because they sought to impose requirements that differed from the pervasive federal requirements.

Prior Inconsistent Statements

Opponents of pre-emption argue that deference should not be given to an agency position if it is contrary to prior agency policy. This argument typically does not carry the day. Indeed, the Supreme Court has recognized that an agency's view of the pre-emptive effect of its regulations may change over time as the agency gains more experience. In Chevron, the Court stressed it was of little note that the EPA had made prior inconsistent statements.

An initial agency interpretation is not instantly carved in stone. On the contrary, the agency, to engage in informed rulemaking, must consider varying interpretations and the wisdom of its policy on a continuing basis. Moreover, the fact that the agency has adopted different definitions in different contexts adds force to the argument that the definition itself is flexible, particularly since Congress has never indicated any disapproval of a flexible reading of the statute. 467 U.S. at 863-64 (emphasis added).

Based on the well-established law in this regard, Justice Charles R. Breyer in the Northern District of California, when confronted with the 'changed position' argument, concluded:

While the FDA's current view of the pre-emptive effect of its labeling regulations is a 180-degree reversal of its prior position, the Supreme Court has recognized that an agency's view of the pre-emptive effect of its regulations may change over time as the agency gains more experience with the interrelationship between its regulations and state law. In re: Bextra, at *11 (citing Hillsborough, 471 U.S. at 714-15; Chevron, 467 U.S. at 863-64).

Conclusion

The FDA's 2006 Labeling Rules have created substantial debate regarding the deference that should be afforded an agency with regard to its position on pre-emption. Should this issue reach the U.S. Supreme Court, the ultimate ruling will likely hinge on prior rulings by the Court on the degree of deference that is afforded to an agency's determination of its own rules.

In the final analysis, as Justice John Paul Stevens counsels in Chevron:

Judges are not experts in the field and are not part of either political branch of the Government. Courts must, in some cases, reconcile competing political interests, but not on the basis of a judges' personal policy preferences. In contrast, an agency to which Congress has delegated policymaking responsibilities may, within the limits of that delegation, properly rely upon the incumbent administration's views of wise policy to inform its judgments. While agencies are not directly accountable to the people, the Chief Executive is, and it is entirely appropriate for this political branch of the Government to make such policy choices ' resolving the competing interests which congress itself either inadvertently did not resolve, or intentionally left to be resolved by the agency charged with the administration of the statute in light of everyday realities. 467 U.S. at 865-66.

Vivian M. Quinn is a partner and Elizabeth A. Brophy an associate in the Product Liability Group of Nixon Peabody LLP, which has offices in New York City, Boston, San Francisco, Washington DC, and throughout New York state and New England. Their practices involve the health effects of food, chemical, and medical products, and they devote a significant amount of time to defending medical device and pharmaceutical companies as well as counseling clients regarding safety and regulatory compliance.

One question that has been raised in pre-emption decisions is the degree of deference to be shown an agency's explicit statement that it intends certain failure-to-warn claims to be pre-empted. For example, in the pharmaceutical arena, the Food and Drug Administration ('FDA') through the Department of Justice ('DOJ') filed amicus briefs in several lawsuits to reiterate its position on pre-emption of state law tort claims. In these briefs, the United States stressed that in the context of warnings, 'more is not always better.' Amicus Brief for the United States, Kallas v. Pfizer, No. 04-00998 (D. Utah Sept. 29, 2005) at 28. The FDA's regulation of prescription drugs ensures each drug's optimal use by requiring inclusion of only scientifically substantiated warnings. Id. Plaintiffs' failure-to-warn claims therefore 'stand as an obstacle' to the FDA's accomplishment of its congressionally mandated purpose of ensuring the public health and are therefore pre-empted. See Id. The FDA has also stated its position on pre-emption in the preamble to its Rulemaking for Labeling requirement, which became effective on June 30, 2006. See 21 C.F.R. '10.85(d)(1) (2006). See articles infra by Lasker and Le Gower.

Recent pre-emption decisions, many of which are discussed infra and in the October 2006 issue of this publication, have shown varying amounts of deference given to the FDA's position. See , e.g. , Colacicco v. Apotex, Inc., 432 F. Supp. 2d 514, 525 (E.D. Pa. 2006) (stressing that the FDA's final rule is entitled to considerable deference. See Le Gower article infra at 3); Jackson v. Pfizer , Inc., 432 F. Supp. 2d 964, 968 (D. Neb. 2006) (affording little to no deference to the FDA's repeated statements that, under the facts presented, pre-emption of plaintiffs' claims was required to protect the overall public health and safety and declining to give the amicus briefs filed by the FDA in prior Zoloft ' cases 'force of law'); In re: Bextra and Celebrex Marketing Sales Practices and Prod. Liab. Litig., Civ. Action No. 05-1699 (N. D. Ca. Aug. 16, 2006) (dismissing failure-to-warn claim based in large part on deference to the FDA's view on pre-emption).

This article examines how the courts use agency decisions to make a pre-emption determination.

Deference to Agency Interpretation of Rules and Regulations

Regulatory pre-emption is not uncommon. For example, the Comp-troller of the Currency has issued a variety of rules that purport to pre-empt state consumer protection laws with respect to banking; the National Highway Traffic Safety Administration has issued pre-emption statements with proposed safety standards for cars; and the Consumer Product Safety Commission issued a mattress flammability standard that purports to pre-empt state tort law. See Banking Activities and Operations; Fuel Econ-omy Standards ' Credits and Fines ' Rights and Responsibilities of Manu-facturers in the Context of Changes in Corporate Relationships, 69 Fed. Reg. 77663 (Dec. 28, 2004); Real Estate Lending and Appraisals, 69 Fed. Reg. 1904 (Jan. 13, 2004); Standard for the Flammability (Open Flame) of Mat-tress Sets; Final Rule, 71 Fed. Reg. 13471 (March 15, 2006).

It is well-settled that where Congress has vested an agency with authority, it is not the courts' role to second-guess agency decisions on pre-emption. Courts hold this especially true where Congress granted authority based on the agency's expertise. Courts have held that an agency may communicate its intentions with regard to a particular regulatory scheme through statements in ”regulations, preambles, interpretive statements, and responses to comments,' as well as through the exercise of its explicitly designed power to exempt state requirements from pre-emption.' Medtronic, Inc. v. Lohr , 518 U.S. 470, 506 (1996) (Breyer, J. concurring in part and concurring in the judgment) (citing Hillsborough County v. Automated Med. Labs., Inc. , 471 U.S. 707, 718 (1985)); see also Geier v. Am. Honda Motor Co. , 529 U.S. 861, 881 (2000) (holding that the Department of Transportation's ('DOT') requirement that a certain percentage of cars have either airbags or some other type of passive restraint system pre-empts a state tort claim that a car without an airbag is defectively designed. The Court relied on the DOT's statement, set forth in a preamble accompanying the regulation in question, which made 'clear that the standard deliberately provided the manufacturer with a range of choices among different passive restraint devices').

This deference to agency interpretation is often called 'Chevron deference' based on the U.S. Supreme Court decision, Chevron, U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984). In Chevron, the Court held that since Congress had given the EPA broad discretion to implement policies of the Clean Air Act Amendments of 1977, and given the complexities of regulations regarding pollution-emitting devices, the Court would defer to the EPA's interpretation of its regulations. Id. at 866. The Court explained its decision to defer to the agency:

We have long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer, and the principle of deference to administration interpretations has been consistently followed by this Court whenever decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in a given situation has depended upon more than ordinary knowledge respecting the matters subjected to agency regulations. Id. at 844 (citations omitted).

Similarly, in Auer v. Robbins, 519 U.S. 452 (1997), the underlying regulations (overtime pay requirements) gave specificity to a statutory scheme the Secretary of Labor was charged with enforcing, and reflected the considerable experience and expertise the Department of Labor had acquired over time with respect to the complexities of the Fair Labor Standards Act ('FLSA'). The Supreme Court held that the Secretary's interpretation of the salary-based test as applied to public employees was a permissible reading of the FLSA and thus had to be sustained. Id. at 458.

The Court held in Auer that an administrative rule may receive substantial deference if it interprets the issuing agency's own ambiguous regulations. In so deciding, the Court did not find persuasive the petitioners' argument that an agency interpretation that comes in the form of a legal brief is entitled to no deference. 'The Secretary's position is in no sense a 'post hoc rationalization' advanced by an agency seeking to defend past agency action against attack.' Id. at 462. There was no reason, in the Court's opinion, to suspect that the interpretation was anything other than 'the agency's fair and considered judgment on the matter in question.' Id. Finally, there was no reason to construe the agency interpretation 'narrowly.' 'A rule requiring the Secretary to construe his own regulations narrowly would make little sense, since he is free to write the regulations as broadly as he wishes, subject only to the limits imposed by the statute.' Id. at 463.

Further, in Horn v. Thoratec Corp. , 376 F.3d 163, 169 (3d Cir. 2004), the Third Circuit held that requirements the FDA imposed on the ventricular device (a Class III medical device approved through the PMA process) were 'precisely 'the sort of concerns regarding a specific device' which the Supreme Court intimated would give rise to pre-emption under Section 360k(a).' In Horn, the defendant argued that the plaintiff's design defect and failure-to-warn claims were expressly pre-empted by '360k(a) of the MDA. The HeartMate', a heart pump providing circulatory support to the heart, underwent studies and clinical trials for 17 years. During that time, the manufacturer submitted more than 90 PMA supplements to the FDA and corresponded considerably with the FDA about its device. The FDA filed an amicus curiae letter brief in the Third Circuit, stating its strong interest in seeing its decisions regarding medical products implemented as promulgated. The Agency contended that the PMA process is detailed, covers every aspect of an approved product to assure reasonable safety and effectiveness, and creates specific federal requirements. The court concluded that there was 'no doubt' that the long PMA process undertaken by Thoratec 'imposed mandatory conditions ' pertaining to the HeartMate's manufacturing, packaging, storage, labeling, distribution and advertising [ ]' that triggered federal pre-emption. Horn, 376 F.3d at 170. The plaintiff's state tort claims were pre-empted because they sought to impose requirements that differed from the pervasive federal requirements.

Prior Inconsistent Statements

Opponents of pre-emption argue that deference should not be given to an agency position if it is contrary to prior agency policy. This argument typically does not carry the day. Indeed, the Supreme Court has recognized that an agency's view of the pre-emptive effect of its regulations may change over time as the agency gains more experience. In Chevron, the Court stressed it was of little note that the EPA had made prior inconsistent statements.

An initial agency interpretation is not instantly carved in stone. On the contrary, the agency, to engage in informed rulemaking, must consider varying interpretations and the wisdom of its policy on a continuing basis. Moreover, the fact that the agency has adopted different definitions in different contexts adds force to the argument that the definition itself is flexible, particularly since Congress has never indicated any disapproval of a flexible reading of the statute. 467 U.S. at 863-64 (emphasis added).

Based on the well-established law in this regard, Justice Charles R. Breyer in the Northern District of California, when confronted with the 'changed position' argument, concluded:

While the FDA's current view of the pre-emptive effect of its labeling regulations is a 180-degree reversal of its prior position, the Supreme Court has recognized that an agency's view of the pre-emptive effect of its regulations may change over time as the agency gains more experience with the interrelationship between its regulations and state law. In re: Bextra, at *11 (citing Hillsborough, 471 U.S. at 714-15; Chevron, 467 U.S. at 863-64).

Conclusion

The FDA's 2006 Labeling Rules have created substantial debate regarding the deference that should be afforded an agency with regard to its position on pre-emption. Should this issue reach the U.S. Supreme Court, the ultimate ruling will likely hinge on prior rulings by the Court on the degree of deference that is afforded to an agency's determination of its own rules.

In the final analysis, as Justice John Paul Stevens counsels in Chevron:

Judges are not experts in the field and are not part of either political branch of the Government. Courts must, in some cases, reconcile competing political interests, but not on the basis of a judges' personal policy preferences. In contrast, an agency to which Congress has delegated policymaking responsibilities may, within the limits of that delegation, properly rely upon the incumbent administration's views of wise policy to inform its judgments. While agencies are not directly accountable to the people, the Chief Executive is, and it is entirely appropriate for this political branch of the Government to make such policy choices ' resolving the competing interests which congress itself either inadvertently did not resolve, or intentionally left to be resolved by the agency charged with the administration of the statute in light of everyday realities. 467 U.S. at 865-66.

Vivian M. Quinn is a partner and Elizabeth A. Brophy an associate in the Product Liability Group of Nixon Peabody LLP, which has offices in New York City, Boston, San Francisco, Washington DC, and throughout New York state and New England. Their practices involve the health effects of food, chemical, and medical products, and they devote a significant amount of time to defending medical device and pharmaceutical companies as well as counseling clients regarding safety and regulatory compliance.