Genus Medical Technologies, LLC v. U.S. Food and Drug Administration
Anne K. Walsh* and Sara W. Koblitz**
Why This Case Made the List
For more than twenty years, the U.S. Food and Drug Administration’s (“FDA’s” or “the Agency’s”) position has been that it could regulate a product as either a drug or a medical device as long as the product meets both statutory definitions. The implications of this approach, however, lead to a significantly more onerous regulatory standard for products that, based on FDA’s self-granted whim, FDA deems to be a drug rather than a medical device. In Genus Medical Technologies v. FDA, the U.S. District Court for the District of Columbia rejected FDA’s long-held position and limited FDA’s discretion with respect to product classification.
The Court, relying on the plain language of the definitions for “drug” and “device” set forth in the Federal Food, Drug, and Cosmetic Act (“FDCA”), rejected the position that FDA “could classify any diagnostic device as a drug because no limiting principle would trammel its authority.” The Court mandated FDA to regulate as a device any product that meets the statutory definition in the FDCA. This case is a good example of a federal court limiting the deference it gives to FDA where the plain meaning of the FDCA places strict limits on FDA’s administrative decisions.
The FDCA, initially enacted in 1938, provides statutory authority for FDA to oversee the safety of food, drugs, medical devices, and cosmetics. Amended many times over the last eighty years, the FDCA eventually established separate regulatory schemes for products regulated by FDA. Under the FDCA, products are classified and regulated based on the statutory definitions governing each type of product that falls under FDA’s purview.
As it stands now, the FDCA sets forth two dramatically different regulatory schemes for drugs and devices based on their respective statutory definitions. Though both drugs and devices are “intended for use in the diagnosis of disease or other conditions,” in the “cure, mitigation, treatment, or prevention of disease,” or “to affect the structure or function of the body of man or other animals,” Congress provided a key statutory distinction based on how a particular product achieves its intended purpose. Specifically, a device “does not achieve its primary intended purposes through chemical action within or on the body of man or other animals” and “is not dependent upon being metabolized for the achievement of its primary intended purposes.”
Drugs and devices are subject to different regulatory schemes, with the drug pathway being significantly more onerous and expensive. User fees alone for a generic drug are approximately $200,000 or more compared to only around $7,600 for devices. Drugs are also subject to a more rigorous pre-market review process, as well as different post-market compliance requirements. Given these differences, the jurisdictional designation of a product is of great importance.
Genus manufactures a line of affordable barium sulfate oral solution contrast agents, Vanilla SilQ, which patients ingest prior to undergoing radiographic procedures. Barium sulfate has been used safely as a contrast agent for more than fifty years. The product coats the inside of the esophagus, stomach lining, or intestine, and absorbs x-rays, which provides contrast in the resulting images that permits radiologists to better visualize the gastrointestinal tract. Barium sulfate is neither absorbed nor metabolized when used as a contrast agent.
Initially classified as a device in the 1970s, FDA announced in July 1997 in response to several Citizen Petitions that all contrast agents—without specific reference to barium sulfate—would henceforth be regulated as drugs rather than devices, regardless of their physical properties and intended use, for purposes of administrative efficiency and regulatory consistency. For nearly twenty years, between 1997 and 2016, there was no further regulatory activity related to barium sulfate. And in 2016, FDA approved Bracco Diagnostics Inc.’s (“Bracco’s”) seven versions of barium sulfate as drug products.
In 2017, FDA sent Genus a Warning Letter asserting that because all contrast agents are drugs, its products were unapproved “new drugs” under the FDCA and therefore subject to the resource-intensive drug approval process and misbranded as currently marketed. Genus responded with its position that barium sulfate met the statutory definition of “device” and therefore must be regulated as such. While FDA agreed that the relevant products met the FDCA definition of “device,” FDA posited that it had discretion to regulate them as drugs because they also met the statutory “drug” definition, citing the overlap in the statutory definitions of “drug” and “device.” FDA argued that it must regulate contrast agents uniformly, and because all contrast agents meet the definition of “drugs” but not necessarily “devices,” FDA would regulate them all as devices in accordance with its response to the 1997 Citizen Petition.
Genus appealed internally within FDA by submitting a Request for Designation, but after receiving the same response, Genus sued FDA in the U.S. District Court for the District of Columbia. Genus alleged that FDA’s decision to regulate its Vanilla SilQ barium sulfate products as drugs rather than medical devices violated both the FDCA and Administrative Procedure Act (“APA”). Genus first argued that FDA failed to make a classification decision when it determined that Vanilla SilQ should be regulated as a drug. Genus also argued that FDA’s interpretation of the “overlap” in the statutory definitions of “drug” and “device” violates the plain language of the FDCA and therefore was arbitrary and capricious in violation of the APA.
In May 2019, Genus filed a motion for summary judgment seeking a declaration requiring FDA to regulate Genus’s Vanilla SilQ products as devices; in July 2019, FDA countered with a cross-motion for summary judgment requesting affirmation of its classification of barium sulfate as a drug. On December 6, 2019, the Honorable James E. Boasberg granted Genus’s motion for summary judgment, vacated FDA’s classification of Vanilla SilQ as a drug, and remanded the classification back to FDA for further administrative proceedings consistent with the Court’s decision.
FDA argued in its motion that the FDCA provides FDA discretion to regulate any product meeting the definition of “device” as a drug, notwithstanding the distinct statutory definitions and regulatory schemes that Congress adopted for each product. The FDCA, in relevant part, defines “drug” to include “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals.” It defines “device” to have the same intended purpose, but provides a key statutory distinction: a device does not achieve “its primary intended purposes through chemical action within or on the body of man” and “is not dependent upon being metabolized for the achievement of its primary intended purposes.” But because the two definitions both include articles “intended for use in the diagnosis” of disease, FDA asserted that all articles meeting the definition of a “device” also meet the definition of a “drug.” Under this interpretation, FDA boldly declared that it could choose—based on regulatory convenience or any other unenumerated consideration—whether to regulate any particular medical device as a drug.
In granting Genus’s motion for summary judgment, the court rejected FDA’s attempt to regulate Vanilla SilQ barium sulfate products as a drug, finding that the product plainly meets the definition of a device. Specifically, Judge Boasberg held that FDA’s theory of unfettered discretion to regulate devices as drugs contradicts the plain language of the FDCA. Relying on the canons of statutory interpretation, the Court held that FDA’s interpretation that the diagnostic product is a drug—even if it plainly falls under the device definition—would render superfluous the device definition in the statute. Indeed, Judge Boasberg explained that the drug-device distinction would be meaningless under FDA’s interpretation:
If a product that meets both definitions is nonetheless treated as a drug, then the device-drug distinction would be rendered meaningless. Put otherwise, the FDA could classify any diagnostic device as a drug because no limiting principle would trammel its authority. That would turn the statutory scheme on its head.
Employing Step 1 of the framework established by Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., the landmark Supreme Court decision on application of statutory terms by administrative agencies, Judge Boasberg determined that “[i]n the end, the plain text dictates the result here. Congress readily could have afforded the agency discretion to determine which of these pathways a product must take . . . . But it did not do so here.”
Judge Boasberg rejected FDA’s argument that any overlap in the definitions implicitly grants the Agency discretion to decide whether to regulate a product as a device or a drug. FDA based its argument on the evolution of the drug and device definitions; the FDCA once explicitly excluded devices from the definition of drug but was redrafted to remove that express exclusion. FDA argued that this revision awarded the Agency the discretion it sought, but Genus pointed out that this revision was made only to enable combination drug/device products to be regulated as drugs where appropriate. The Court, once again, agreed with Genus, stating “Congress’s intent was not—as the FDA would have the Court believe—to delegate unfettered discretion to the FDA to regulate all devices as drugs.” The Court also rejected FDA’s reliance on case law (predominantly Bracco Diagnostics, Inc. v. Shalala) that implicitly granted FDA the discretion it sought, as those cases arose in different contexts and under different permutations of the drug and device definitions. In the end, the Court held that such discretion is not implicitly in the statute nor is the statute ambiguous enough to support such an interpretation.
Thus, the court granted Genus’s motion for summary judgment and held that “a product that meets the device definition must be regulated as such.”
Impact of the Decision
This case expressly limits FDA’s regulatory discretion, which in and of itself is significant because courts generally defer to an agency when questions of technical or regulatory procedure arise.
But here, the Court stepped in to curb significant overreach by FDA. Indeed, FDA’s assertion was so breathtakingly broad that it would have left the medical device industry in a state of uncertainty, rendering the entire distinction between drugs and devices meaningless. But the distinction between a drug and a device is a critical one, and one with substantive financial and practical implications.
The U.S. Department of Justice filed its Notice of Appeal at the end of January 2020. As of the time this paper was submitted for publication, the United States Court of Appeals for the D.C. Circuit set a briefing schedule through August 6, 2020.
* Anne K. Walsh is a director at Hyman, Phelps & McNamara, P.C., where she investigates, negotiates, and litigates matters alleging violations of the Federal Food, Drug, and Cosmetic Act and the False Claims Act.
** Sara W. Koblitz is an associate at Hyman, Phelps & McNamara, P.C., where she advises drug and device manufacturers on applicable regulatory requirements under the Federal Food, Drug, and Cosmetic Act and Public Health Service Act, with a specific focus on the Hatch-Waxman Act and the Biologics Price Competition and Innovation Act.
 Memorandum Opinion, Genus Medical Tech., LLC v. U.S. Food and Drug Admin., No. 19-544, 2019 U.S. Dist. LEXIS 210397, at *13 (D.D.C. Dec. 6, 2019) [hereinafter Memorandum Opinion].
 See id. at *13–14.
 Federal Food, Drug, and Cosmetic Act, Pub. L. No. 75-717, 52 Stat. 1040 (1938).
 Compare, e.g., 21 U.S.C. subchapters IV to 21 U.S.C. subchapters V and VI.
 See, e.g., 21 U.S.C. § 321(f), (g)(1), (g)(2), (h), (i).
 See 21 U.S.C. § 321(g) (defining “drug”), (h) (defining “device”).
 21 U.S.C. § 321(h).
 Generic Drug User Fee Rates for Fiscal Year 2019, 83 Fed. Reg. 35649 (July 27, 2018).
 Medical Device User Fee Rates for Fiscal Year 2019, 83 Fed. Reg. 36598 (July 27, 2018).
 See, e.g., Barimex, 510(k) Premarket Notification, K760736 (Nov. 9, 1976).
 Ex. E to Decl. of Ed Powers, Genus Medical Technologies, LLC v. U.S. Food and Drug Administration, No. 19-544, at *4 (D.D.C. May 29, 2019).
 See FDA, Consolidated Response to Pending Citizen Petitions on the Regulation of Ultrasound Contrast Agents, Docket No. 96P-0511, at 53 (July 25, 1997).
 Memorandum Opinion, supra note 1, at *6–7.
 Complaint, Genus Medical Technologies, LLC v. U.S. Food and Drug Administration, No. 19-544 (D.D.C. Feb. 28, 2019).
 Motion for Summary Judgment, Genus Medical Technologies, LLC v. U.S. Food and Drug Administration, No. 19-544 (D.D.C. May 30, 2019).
 Memorandum Opinion, supra note 1, at *20.
 Cross-Motion for Summary Judgment, Genus Medical Technologies, LLC v. U.S. Food and Drug Administration, No. 19-544 (D.D.C. July 11, 2019) [hereinafter Cross-Motion for Summary Judgment].
 21 U.S.C. § 321(g)(1).
 Id. § 321(h)(3).
 Cross-Motion for Summary Judgment, supra note 20, at 9.
 Memorandum Order, supra note 1, at *14.
 Id. at *13.
 Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).
 Memorandum Order, supra note 1, at *14.
 Id. at *16; see also id. at *20 (“In sum, Bracco does not suggest that the FDA can ignore the plain language of the FDCA; it does not have discretion to regulate all contrast agents uniformly, irrespective of their defining features under the statute.”).
 963 F. Supp. 20 (D.D.C. 1997).
 Id. at *18–19.
 Id. at *14.
 Notice of Appeal, Genus Medical Tech., LLC v. U.S. Food and Drug Admin., No. 20-5026 (D.C. Cir. filed Jan. 31, 2020).