The election of Donald Trump as President-Elect of the United States was, and continues to be, a watershed moment in the 200+ year American experiment. The public, the business community, and government are all currently adjusting to a new, unanticipated reality. A veritable frenzy of journalistic speculation is attempting to analyze the messaging of the past, and its potential relevance to the policies of the future. One thing is certain however; there is, most assuredly, a new Sheriff in town.
The week immediately before the election a panel discussion was held at the FDAnews Inspections Summit entitled: After the Election: A Look Ahead to What a New Administration Could Bring and the Impact on the FDA. The panel, comprised of well-respected Beltway insiders with long experience working with and on behalf of the FDA and affected FDA stakeholders, focused primarily on Agency personnel transitions, regulatory matters, and PDUFA and MDUFA funding concerns. Much of the discussion seemed to reflect that not much would change at FDA with the new administration. Given the generally consensus media predictions that the next administration would be a Clinton administration, there was not much substantive consideration given to the possibility of a Trump administration.
With our new, unexpected reality then, what will be the impact of a Trump administration on FDA Regulatory Enforcement? Given the generally accepted understanding that 25 cents of every dollar spent by Americans are on products regulated by the FDA, this question is critically important not only for US companies, but for any ex-US company that provides product for distribution within the US market.
Let’s examine some of the key factors that may shed some light on this question:
THE CHALLENGE OF MASSIVE CHANGE
It is incontrovertible that Donald Trump has outlined a bold agenda of massive change for our country. Implementation of his desired policy objectives will be complex, and difficult to manage. Because of this, the President-Elect will be focused on many topics, and although it is likely that FDA policy and regulation will be one of them, it is unlikely that FDA policy and regulation will be a major area of focus. The reason is simple: The President-Elect has outlined clear policy priorities on topics such as healthcare reform, immigration, defeating ISIS, infrastructure, and energy. It will be difficult for the new administration to achieve significant change in these areas, even with considerable focus. And although there are certainly business interests that would welcome reduced FDA regulatory enforcement rigor, there are equally compelling counter-balancing factors that make attention in this area less politically rewarding. As such, it is likely that a primary focus of the new President’s FDA policy and regulation attention will be on streamlining and removing barriers to regulatory approvals, and stabilizing (but not reducing) regulatory (but not enforcement) burden. I believe the objective will be to get FDA to focus on what matters, and to reduce or eliminate unreasonable requests for data and information. I would not be surprised to see Congressional hearings involving senior FDA leadership being subjected to questions relative to streamlining industry burden, but, likely, these will not lead to dramatic change – at least not in the immediate future.
HARMONIZATION WITH INTERNATIONAL REGULATORS
Fifteen or twenty years ago, FDA was the premiere global regulatory agency, developing what is now considered to be the gold standard of regulation of healthcare products. Due to ever-increasing globalization since the 1980s, a key industry-influenced FDA focus over the last 15+ years has been to participate in international harmonization efforts. And although the FDA doesn’t get much credit in this area, these activities, driven by industry demands, have been highly successful. In addition, the FDA has been the model for many other countries regulatory oversight agencies – and those agencies are now in most cases as sophisticated, as rigorous, and as aggressive as US FDA is in their oversight of life science / healthcare companies. Companies and the global regulators have engaged in an intimate waltz, whereby international regulators increase harmonization efforts, and companies globally align and rationalize their supply chains and quality systems to meet these much more consolidated set of requirements and expectations. A perfect example of such iterative alignment is in the area of data integrity: while the FDA is certainly laser-focused on this topic, China, India, MHRA and other regulators are moving in lockstep in their focus on the topic. Other examples of aligned global approaches include the Medical Device Single Audit Program (MDSAP) and the International Conference on Harmonization (ICH) which has yielded ICH Q7-12. These guidelines in particular have defined global – not just US – expectations for a significant swath of global healthcare supply chain operations.
In short, the globalization of life sciences regulation train has left the station. Corporations in large part drove these harmonization efforts, and this cannot be “untangled” in four, or even eight years, even if regulation and enforcement rigor was reduced in the US. International regulatory frameworks are simply too aligned now to make much of a difference if one of those regulators tries to “go backwards” and ease its approach.
THE PENDULUM ALWAYS SWINGS BACK
Undoing or reducing efforts of an in-place, effective quality and compliance infrastructure is complicated and will likely result in minimal value add to companies. Quality and compliance functions have been a perennial focus of corporate cost cutters. Much effort has already been made by most companies at improving the efficiency and effectiveness of quality and compliance operations. Many of these organizations already operate very lean – which is often a contributing cause of adverse enforcement outcomes. Given such lean operations, reducing scope and scale of these operations even more is complex and risky, as there can’t simply be a “cut” to headcount. Changes in functions impacting quality outcomes and compliance obligations have to be well thought out, processes need to be re-engineered, and new systems developed to ensure least impact. De-emphasizing focus on quality and compliance will likely not only provide little “value add” and could add risk and hazard to a company’s bottom line.
Also, FDA’s authority flows directly from the Federal Food Drug and Cosmetic Act (FDCA). Unless Congress initiates major changes to the FDCA to direct FDA to implement this Act differently, much will remain the same. Undoing regulatory burdens — i.e., deleting or eliminating rules found in the Code of Federal Regulations — requires notice and comment rulemaking. This process is not easy, and takes time to propose, review, receive comment on, and implement. The costs to implement such reduced regulatory burden would be substantial and accordingly, the benefits to industry would need to be even more substantial.
In short, the cost to untangle / scale down quality and compliance operations would be high and the risk of not doing it correctly is extremely high.
Further though, and perhaps most importantly, administrations change. The pendulum of enforcement always swings back. Four years (or even eight years) is not a very long time. There is always a chance that the political winds will change. Making abrupt, short-term decisions in a functional core contributor to company outcomes would be ill-advised without assurance of long-term, continued policy approaches. It is this author’s belief that undoing quality and compliance investments and rigor only makes sense if you are sure a state of reduced-regulatory-enforcement-risk will be sustained.
FOCUS ON LAW ENFORCEMENT
This consideration is relatively straightforward. The language from the Trump candidacy was clear that, if elected, Mr. Trump was going to enforce the existing laws of the United States with vigor. It is likely the President-Elect and his new administration will stick close by that pledge. So although the new administration will likely be “business friendly,” it also has a law enforcement mindset. It is likely that enforcement of all existing laws, including those administered by the US Food and Drug Administration, will be increased, and lawbreakers will be looked at aggressively.
[su_quote]”[T]he Feds will continue to keep the pressure on C-suite executives to adopt and maintain strong compliance programs for their companies. So the message for in-house counsel and corporate executives is not only to follow the law, but also to get serious about having an effective compliance program to prevent wrongdoing from occurring in the first place. ” Former U.S. Attorney John Wood Quoted in Corporate Counsel magazine, 1 December 2016 [/su_quote]
ETHICS, BRAND PROTECTION, LITIGATION RISK
A final set of factors to consider for FDA-regulated companies from any possible Trump administration change in approach concerns what can best be called a risk-aware business approach. A number of recent product and service failures from companies outside of FDA regulatory purview have resulted in devastating business impacts. Notable examples include Volkswagen, Wells Fargo, and Chipotle. In the healthcare industry space, companies are often insulated from this sort of enterprise-damaging failure, precisely due to their focus on quality and compliance requirements. A robust approach to quality and compliance, while also being the right thing to do for the American public, tends to protect a business from adverse marketplace outcomes. And although there are areas of FDA regulation that can be improved overall to help both the consumer and business, it is unlikely that massive changes to the current regulatory compliance enforcement approach will help anybody.
It’s also important to remember that public health is an important bi-partisan subject. Recent food and drug product quality disasters such as Peanut Company of America salmonella outbreak where nine people died (2009), and the New England Compounding Center meningitis outbreak (2012) where sixty-four people died are tragic examples. Even the most ardent proponents of the free market become a bit weak-kneed when considering true free-market forces applied, in the absence of regulatory oversight, to things like medical devices, pharmaceuticals, foods and biologics. The thing is, even Congress and the President consume these products, and their families certainly do. While pro-business advocates can argue about the value of an endangered species in a small river in Colorado, it is much more difficult for those same advocates to consider products they use every day, and think that it would be good if those products were “less safe.”
Overall, this author believes that the impact to regulatory compliance enforcement from a new Trump administration will be small, but generally positive, for FDA -regulated industry segments (pharmaceutical, medical device, biologics, foods, dietary supplement, etc.). There is always room for improvement in regulatory oversight, and this may be a good time to evaluate opportunities to tailor and streamline approaches to improve both business and Agency outcomes.
The smart companies – and the ones that will be successful in the long term – will be those that understand that regulation and enforcement flow from structures and approaches that measure in decades – not years. While there will be opportunities for companies over the next four or eight years under the new Trump administration, it will not flow from huge cost savings opportunities relating to massive decrease in regulatory compliance burden. Companies that follow such a path will lose in the end. Companies that understand the long-game dynamic of FDA regulation and enforcement, as well as the global regulatory environment, will be rewarded with stability and sustained positive business outcomes.
For more detailed recommendations on how to prepare for the upcoming Trump administration, and/or for further insights into FDA regulation and enforcement, please contact John C. (Jack) Garvey at john.garvey[at]compliancearchitects.com, or at 888-734-9778 (888-REG-XPRT).