Another Appeals Court Accuses the FDA of Committing "Surprise Switcheroo"

The U.S. Court of Appeals for the D.C. Circuit takes issue with how the FDA evaluated Fontem's unflavored vaping products.

Today the U.S. Court of Appeals for the D.C. Circuit concluded the Food & Drug Administration failed to conduct the proper analyses before rejecting some vaping product applications. The court's unanimous decision in Fontem US v. FDA upheld the FDA's denial of Fontem's application to market flavored vaping products, in line with prior D.C. Circuit precedent, but rejected the FDA's denial of Fontem's applications for unflavored products, and became the second circuit court of appeals to accuse the FDA of a "surprise switcheroo" when reviewing vaping product applications. This is all further evidence that the FDA has a vaping problem.

The FDA regulates vaping products—also known as ENDS or "electronic nicotine delivery systems"—because it "deemed" them to be tobacco products in 2016, subjecting them to regulation under the federal Tobacco Act. As a consequence, all such products that were not on the market by 2007 must obtain the FDA's approval in order to be sold legally. Because of how narrowly the FDA defines individual products, this has meant the FDA has had to process applications for thousands and thousands of products, and in its rush to process these applications, the FDA appears to have cut some corners.

Fontem, which markets vaping products under the Blu and myBlu labels, sought to challenge the FDA's denial of several of its products. Among other things, Fontem accused the FDA of failing to perform the required analyses before issuing its denials, and at least with regard to Fontem's unflavored products, the D.C. Circuit agreed, finding the FDA failed "to engage  in the holistic public health analysis required by the statute."

From Judge Rao's opinion for the court (joined by Judge Walker and Senior Judge Ginsburg):

With respect to Fontem's unflavored products, the FDA also denied Fontem's applications on the public health ground. While the FDA identified multiple "deficiencies," it failed to analyze the tradeoffs necessary to make a public health finding. Nor did the agency explain how the specific deficiencies relate to its overall conclusion that Fontem failed to demonstrate its unflavored products were appropriate for the protection of public health. The agency's denial therefore failed to comport with the requirements of the Tobacco Control Act.

In denying Fontem's unflavored products, the FDA relies solely on the public health ground. The FDA could have promulgated regulations imposing consistent requirements on the composition and manufacturing of tobacco products. Had the agency done so, Fontem's failure to meet those standards would be an independent and sufficient ground for denying the applications, regardless of the overall public health consequences of Fontem's products. But the agency has not exercised its regulatory authority. Because the FDA has chosen to proceed application by application under the public health ground, it must undertake the holistic inquiry required by the statute. . . .

Instead of making an overall assessment that Fontem had not shown its products were beneficial to the public, the agency identified five highly technical deficiencies. But nothing in the denial order explains how the deficiencies relate to the overall public health consequences of Fontem's unflavored products. And despite the express statutory requirement that the agency consider the "risks and benefits to the population as a whole," including the "increased or decreased likelihood that existing users of tobacco products will stop using such products," 21 U.S.C. § 387j(c)(4), nowhere in the denial order did the FDA address the potential benefits of Fontem's products for the public at large. Nor did it consider the possibility that existing users of combustible tobacco products such as cigarettes would reap health benefits by transitioning to Fontem's vaping products. . . .

And, as noted above, the D.C. Circuit found that the FDA has had difficulty following its own guidance about what sorts of information and analyses companies must submit when seeking product approval.

The FDA's failure to correctly apply the public health inquiry to Fontem's unflavored products led it to make another serious error. In its initial deficiency letter, the FDA requested certain information from Fontem, thereby indicating such information would be sufficient for the agency to approve Fontem's products. Cf. 21 U.S.C. § 387j(c)(3) (providing an application denial "be accompanied by a statement informing the applicant of the measures required to remove such application from deniable form"). But in several instances, the FDA changed its tune in the denial order, reproaching Fontem for failing to provide information the agency had never explicitly sought. With respect to Deficiency 2, for instance, the FDA initially requested a "scientific justification for why consecutive puffing does not cause an increased risk of user injury" and "[t]he target value, upper and lower range limits, and test data" for the studies employed by Fontem. But after Fontem provided that information, the FDA faulted Fontem for failing to provide "scientific justifications" for its puff counts or the "maximum values" of "aerosol temperature measurements." Similarly, with respect to Deficiency 3, the FDA's letter requested information about the quality control processes at one facility. Yet the denial order faulted Fontem for failing to provide information about the processes at a different facility.

Shifting the regulatory goalposts without explanation is arbitrary and capricious. By indicating in its deficiency letter that Fontem could resolve issues with its applications by providing specific information, the FDA represented such information would be sufficient to secure approval. By later requiring different information, the agency "pull[ed] a surprise switcheroo." Env't Integrity Project v. EPA, 425 F.3d 992, 996 (D.C. Cir. 2005). The lack of consistency and notice to regulated entities is another unlawful consequence of the agency's departure from the holistic public health inquiry.

The D.C. Circuit upheld the FDA's denial of Fontem's applications for flavored products, likely (in part) because of prior D.C. Circuit precedent affirming the FDA's conclusion that "flavored products present greater risks than other tobacco products" in that they may be more attractive to non-tobacco users, and youth in particular. In Prohibition Juice v. FDA, a prior D.C. Circuit panel broadly embraced sweeping (although not particularly well substantiated) claims about the appeal of flavored vaping products to youth and paid little attention to the FDA's need to consider the negative health consequences of making non-combustible products less attractive to current and prospective smokers.  While this may have boxed in the current panel with regard to flavored vaping products, largely because (as the panel noted) the FDA's analysis of Fontem's flavored products was "consistent . . . with the balance" struck in that prior opinion, it did not prevent the court from carefully scrutinizing the FDA's treatment of unflavored products.

Despite the FDA's partial victory in Fontem, this decision is another potentially significant setback for the agency. The FDA is facing multiple lawsuits challenging its product application denials, and while it has prevailed in some cases, it has had significant losses in the Eleventh and Fifth Circuits, with another significant case pending before the Fifth Circuit sitting en banc. 

And while the FDA may not be eager for Supreme Court review of its vaping product handiwork, these cases have created a circuit split over how the FDA's application denials should be evaluated, making it more likely a vaping product application denial eventually makes its way to One First Street. And insofar as these cases shine a light on the FDA's inconsistent and arbitrary decisionmaking, one might wonder whether these cases could influence how courts evaluate other controversial policy decisions the FDA is currently trying to defend in court.