While the full impact of the Supreme Court decision remains unknown, the new regulatory landscape could be a net positive for drug developers.
The Supreme Court’s ruling in June of this year that overturned Chevron deference has businesses across highly regulated industries questioning exactly what this means for them. With Chevron deference, agencies like the FDA were empowered to fill the gaps and interpret ambiguous regulatory laws with significant discretion and often in ways that impacted the speed and flexibility of product approvals.
This decision has major implications for highly regulated industries like biopharma, such that we won’t understand the full impact for years to come. As with any significant change at the macro level, we are likely to see a destabilization effect in the short term as companies, agencies and the courts work to navigate the unknown and establish a new standard. However, there’s good reason to believe that innovators may see greater flexibility, increased opportunities for legal recourse and a chance for developers to push for clearer regulatory frameworks. Favorable conditions for drug approvals, marketing and pricing could be on the horizon.
As president of Project Farma and an executive leader at Precision for Medicine, I work closely with biotech companies navigating the complex regulatory landscapes for novel therapies. Precision for Medicine is committed to advancing cutting-edge treatments, and regulatory clarity is crucial to bringing the safest and most effective products to market as quickly as possible. Our experience in bringing these novel treatments through commercialization provides a unique understanding of how the end of Chevron deference could reshape the regulatory landscape, presenting both challenges and new opportunities for the industry.
What Was Chevron Deference?
Chevron deference dates back to a 1984 dispute over how the Environmental Protection Agency (EPA) interpreted the Clean Air Act of 1977. The EPA argued for a “bubble” approach that would treat industrial plants as a single pollution source to allow for flexible emissions management. The Natural Resources Defense Council challenged this interpretation, advocating for each emission source within a plant to be regulated individually. The Supreme Court ruled in favor of the EPA in Chevron USA v Natural Resources Defense Council, creating a two-step test for courts to use when evaluating agency decisions: determining whether Congress clearly addressed the issue in the relevant statute, and if not, deferring to the agency’s interpretation as long as it was deemed reasonable.
Since this system was put in place, there has been an ongoing debate over the balance of power between federal agencies and the courts, with some people raising concerns about lack of accountability and excessive power on the part of agencies. Chevron deference allowed agencies to interpret ambiguous laws without significant judicial interference. Critics argued that this undermined legislative authority, as agencies could effectively make law through interpretation of laws that lack clear legislative direction. This belief that Chevron undermines legislative authority ultimately led to the 6-3 ruling to overturn the doctrine, shifting the responsibility of interpreting ambiguous laws from federal agencies to the courts, rebalancing power between the two.
Clearer Pathways to Market
The removal of Chevron deference could ultimately subject the FDA to increased scrutiny from the courts regarding its decisions, allowing innovators to legally challenge FDA rulings that are overly cautious or not aligned with the current pace of scientific advancements. If courts were to step in more frequently, this judicial oversight could create a compelling incentive for the FDA to draft guidelines that are definitive enough to hold up under this scrutiny.
As courts assume a greater role in reviewing agency decisions, the FDA may also face pressure from Congress to clarify statutory language and update regulations to reflect modern scientific practices. Even something as foundational as FDA’s guidance on the definition of a drug remains somewhat ambiguous to this day, particularly regarding products that blur the lines between dietary supplement and drug. This new level of accountability means decisions must be based on clear criteria defined in regulatory frameworks rather than vague interpretations that can be made after the fact.
More detailed guidance from the FDA will ensure compliance requirements are well understood, and ultimately enable biotech developers to navigate the regulatory process more effectively. Reduced compliance uncertainty may decrease time to market and potentially give innovative therapies new pathways to approval. This shift could be transformative for rapidly evolving sectors like radiopharmaceuticals, cell and gene therapies and other novel regenerative medicines, ensuring a regulatory framework that aligns with modern biotech innovations.
Accelerating Regulatory Reform and Driving Innovation in Emerging Tech
The ability to challenge FDA decisions in court can drive modernization and speed up advancements in regulatory processes. Companies’ ability to challenge FDA decisions will force agencies to adapt to new legal precedents faster than we’ve previously seen. The growth of emerging technologies has historically been at the mercy of agency capacity, leading to regulatory bottlenecks that slow product development.
For example, the FDA’s guidelines for clinical trials are always evolving and trial designs have been slow to adapt to the latest innovations, often leaving ambiguity. Similarly, AI-driven diagnostics experienced prolonged uncertainty due to unclear guidance, leaving developers unsure of regulatory expectations and how they can leverage this technology. Without Chevron deference, companies can now leverage legal recourse to push for faster adaptations from the FDA, encouraging proactive responses to emerging technologies. We could see court rulings play a role in defining and accelerating reform for novel tech like CRISPR gene editing, AI-driven drug discovery and radiopharma, where frameworks are not fully developed. Emerging fields may see an opportunity to bring innovations to market faster.
When regulatory decisions are made with the expectation of court challenges, the FDA may implement more streamlined processes to ensure compliance, resulting in faster approvals and more efficient regulatory pathways. Agencies might also be inclined to engage more actively with industry stakeholders to clarify regulations, creating a more collaborative regulatory environment that better aligns with scientific progress.
Balancing Innovation and Safety
While the loss of Chevron portends many potential positive outcomes for biotech companies, balancing the drive for innovation with ensuring patient safety must be the priority. FDA decisions are deeply grounded in a scientific foundation and peer-reviewed studies, where courts may lack the agency’s specialized subject matter expertise. Courts, agencies and industry must share the same agenda of achieving a more balanced system, creating a regulatory environment that is flexible while maintaining safety and efficacy.
As we enter the post-Chevron era, we could see exciting changes that lead to increased innovative momentum. With companies now empowered to seek clearer and modernized regulatory frameworks, the industry could be reshaped to foster an environment where innovation can thrive and reach patients faster, while steadfastly maintaining the same level of safety and efficacy standards of care.
