Artificial Intelligence (“AI”) in the life sciences has moved from pilot to production, across discovery, trials, and post-market.  With the EU AI Act taking effect, evolving FDA expectations, and looming litigation and enforcement risk, getting it right has never mattered more.

Join the American Conference Institute (“ACI”) for two days of practical, case-based guidance on the legal and regulatory realities of AI in life sciences on February 24-25, 2026 at the New York City Bar Association, New York, NY.   Learn how to deploy AI in discovery and trials – and manage the risks – with clear playbooks for FDA/EU compliance, defensible documentation, contracting, data/privacy controls, and IP protection, delivered by agency leaders, in-house counsel, and top practitioners. Leave with tools you can use immediately to implement AI responsibly and at scale.

Conference highlights to be discussed at this year’s event include:

• Adapting risk and compliance frameworks for next-generation, agentic AI
• Navigating data, privacy, and transparency in drug development and clinical trials
• Contracting for AI-enabled systems and services
• Implementing IP strategies to protect innovation in AI-driven life sciences
• Understanding the impact of the EU AI Act and patchwork U.S. state laws
• Emerging litigation trends and governance structures shaping the AI landscape

Hyman, Phelps & McNamara, P.C.’s Jennifer D. Newberger will be speaking at a session titled “AI Use Cases in MedTech: Stress-Testing Legal and Compliance Challenges Through Case Studies.”

FDA Law Blog is a conference media partner. As such, we can offer our readers a special 10% discount. The discount code is: D10-999-FDA26.  You can access the conference brochure and sign up for the event here.  We look forward to seeing you at the conference.

Yesterday, FDA announced “Flexible Requirements for Cell and Gene Therapies to Advance Innovation.”  This regulatory flexibility, FDA hopes, will be “helpful in expediting product development and will help guide the FDA’s evaluation of development strategies in preparation for a Biologics License Application (BLA) submission.”

The announcement covers three broad areas: Clinical Development, Commercial Specifications, and Process Validation.  It is important to note that this announcement is not the signaling of a new program or regulatory paradigm. The very general potential regulatory flexibilities are not new and have been extended to companies on an individual basis for years.

It is encouraging that CBER is appearing to make these potential flexibilities public and therefore increase the uniformity in which they are available to companies in the Cell and Gene Therapy space.

Hopefully, CBER will take a page out of CDER’s playbook and issue a public facing SOPP akin to the MAPP CDER has issued for expedited products under their purview “MAPP 5015.13 Quality Assessment for Products in Expedited Programs” (this author’s favorite MAPP).

We must wait and see if CBER follows-up on this announcement with specific guidance or direction that can expedite clinical development programs for this product area.

DEA’s Former Chief Administrative Law Judge John J. Mulrooney, II (Partner, Belanger, Rae & Mulrooney, PLLC) and HPM’s Andrew Hull will be presenting at the American Conference Institute’s 7th Annual Summit on Controlled Substances taking place in New York City on January 26 & 27.  This fireside chat with Judge Mulrooney will cover numerous topics of interest to the DEA bar, including best practices for litigating before DEA, the current state of DEA’s Office of Administrative Law Judges, and the impact of recent Supreme Court administrative law decisions (e.g., Loper Bright, Jarkesy) on DEA precent and hearing procedures.

There’s still time to register for this exciting conference, which also offers CLE credits for attorneys.

FDA Law Blog readers: if you are planning on attending, please let Andrew know by sending him an email (ahull@hpm.com).  We hope to see you there!

On January 6, 2026, FDA issued two revised guidance documents related to clinical decision support (CDS) software and low-risk general wellness products. In a video announcing the revised guidance documents, Commissioner Makary states that they are intended to “cut unnecessary regulation and promote innovation” in the field of artificial intelligence (although neither guidance specifically mentions artificial intelligence). The guidance documents were issued without seeking public comment, which is unusual given the more than minor changes to policy and/or statutory interpretation embodied in the revisions.

CDS Guidance

The 2026 CDS Guidance, consistent with the tenor of Commission Makary’s announcement, reflects a more expansive reading of the statute’s CDS exemption and a greater willingness to exercise “enforcement discretion” with respect to software that may not technically qualify for exemption (more about that later). This updated guidance supersedes the 2022 CDS Guidance, about which we’ve previously blogged.

As a brief refresher, the Cures Act established four criteria for Non-Device CDS software.  Below we describe the key interpretive changes made by the new CDS Guidance with respect to each criterion; this in no way captures all the changes made in the update.

Criterion 1: Non-Device CDS software functions do not acquire, process, or analyze medical images, signals from an in vitro diagnostic (IVD) device, or patterns or signals from a signal acquisition system.

The 2026 CDS Guidance reinforces that CDS software can acquire, process or analyze more than one measured signal and still meet this non-device criterion, stating that “discrete, episodic, or intermittent point-in-time physiological measurements (e.g., routine vital signs obtained at discrete clinical encounters) generally do not, by themselves, constitute a pattern” and that signal acquisition systems measure parameters “through continuous, near-continuous, or otherwise streaming measurement.”

The 2022 version of the guidance already stated that “FDA recognizes there is a continuum between a single sample and a continuous sample,” so the new language is more a clarification than a real change.

Criterion 2: Non-Device CDS software functions display, analyze or print medical information about a patient or other medical information.

The 2022 CDS Guidance raised eyebrows when it interpreted “medical information about a patient” to mean “the type of information that normally is, and generally can be, communicated between HCPs in a clinical conversation or between HCPs and patients in the context of a clinical decision, meaning that the relevance of the information to the clinical decision being made is well-understood and accepted.” It was not at all clear what type of information is normally communicated between HCPs and/or patients.

The 2026 CDS Guidance modifies this somewhat with the caveat that “[w]hether particular information is commonly discussed in a clinical conversation is not, by itself, determinative of whether it is ‘medical information about a patient’ under Criterion 2, provided the information’s relevance to patient care is supported by well-understood and accepted sources and can be appropriately understood in context.” This language is helpful in that it removes the question of what constitutes information that is “normally communicated” between a patient and an HCP and instead reflects a broader interpretation that would likely cover most topics discussed between a patient and an HCP.

Criterion 3: Non-Device CDS software functions are intended for the purpose of supporting or providing recommendations about a patient’s care to a health care professional (HCP) user.

The changes to FDA’s interpretation of Criterion 3 are perhaps the most substantive and significant, but also a bit confusing. Both the 2022 and 2026 versions of the guidance state that a software function fails Criterion 3 if it “provides a specific preventive, diagnostic or treatment output or directive.” Seemingly in support of that position, the 2022 guidance was clear that a software function that provided “a user with a single, specific, selected output or solution rather than a list of options or complete information for the user to consider” was a device. That language no longer appears in the 2026 version. Instead, the guidance now states that “if only one option is clinically appropriate and the software function otherwise meets all criteria under section 520(o)(1)(E), FDA intends to exercise enforcement discretion” for such function and provides several examples of software functions that would and would not fall within this new enforcement policy. In other words, FDA is not saying that devices that provide a single output meet Criterion 3, but rather that even though they fail Criterion 3, FDA is choosing not to regulate them. It is not clear why FDA is enacting this enforcement discretion policy rather than merely expanding its view of the types of features that meet Criterion 3. The outcome is the same for developers, although this approach gives FDA the flexibility to withdraw that discretion should it deem necessary.

Similarly, the 2026 guidance deletes a controversial statement from the 2022 version that “FDA considers software that provides information that a specific patient ‘may exhibit signs’ of a disease or condition or identifies a risk probability or risk score for a specific disease or condition as providing a specific preventive, diagnostic, or treatment output. Therefore, such software would not satisfy Criterion 3.” Although the 2026 guidance stops short of saying such functions can satisfy Criterion 3, it includes several risk score functions as examples of products over which FDA would exercise enforcement discretion.

One such example is as follows:

A software function that predicts risk of future cardiovascular events for an HCP to consider based on a patient’s weight, current and historical smoking status, blood pressure, and brain natriuretic peptide (BNP) in vitro diagnostic (IVD) test results.

What is particularly interesting here is that FDA is attempting to carve out narrow circumstances in which this type of prediction would be acceptable without marketing authorization. While the above example would be permitted, if the same functionality relied on “variant genomic data as an input that does not have established relevance to the diagnostic recommendation” then the feature would be subject to FDA oversight. Additionally, if the feature “predicts risk of a cardiovascular event in the next 24 hours” then it would also require premarket review. It is not clear what predication time frame would be appropriate to benefit from enforcement discretion, and what would require review. It is also clear that manufacturers of CDS will need to carefully consider the inputs to the feature to determine whether they fit within the enforcement discretion carve-out.

Criterion 4: Non-Device CDS software functions provide sufficient information about the basis for the recommendations to the HCP user, so that the HCP user does not rely primarily on any of the recommendations to make a clinical decision about an individual patient.

This last Criterion has always been a difficult one for developers to implement. The 2022 CDS Guidance seemed to impose disclosure requirements that were virtually impossible to meet, and it was not clear how to strike a balance between providing sufficient information to allow an HCP to review and confirm the feature’s output without needing to disclose proprietary information. The 2026 version helps clarify these disclosure requirements. It largely maintains the list of “software and labeling recommendations” that the 2022 guidance set forth in order to satisfy Criterion 4, including a recommendation in both versions that the software or labeling provide a plain language description of the software inputs and underlying algorithm that form the basis of the CDS output. However, the 2026 guidance makes several new statements suggesting that FDA is looking for less detailed labeling disclosures than previously expected.  For example, it recommends that the software or labeling include a “summary of the general approach relied upon to provide the recommendations . . . at a level of detail appropriate for the intended user and use environment, which could include, for example, the logic or methods relied upon.” Similarly, the new guidance states that “Information that enables an HCP to independently review the basis of provided recommendations is presented in a manner that promotes usability and avoids information overload, including prioritizing the most-decision-relevant information and making additional detail available as appropriate.” For companies with complex algorithms or that want to protect proprietary technology, this update is a welcome change, as the disclosed information can be more general and include only the information most important to the intended users.

The 2026 guidance also moved the discussion of automation bias that previously appeared in the section interpreting Criterion 3 to the section interpreting Criterion 4, concluding that:

FDA considers the (a) level of software automation and (b) time-critical nature of the HCP’s decision making when determining whether a software function allows an HCP to independently review the basis for the recommendations presented by the software so that they do not rely primarily on such recommendations.

Interestingly, FDA removed all but one of the references to “time-critical” from Criterion 3, but revised examples of device and non-device CDS at the end of the guidance to state that time-critical software functions failed both Criterion 3 and 4. Practically speaking, if a software function would have failed Criterion 3 due to a high level of automation or the time-critical nature of its intended use, it would already have been considered a regulated device. Clarifying that such a software function would also fail Criterion 4 doesn’t change anything.

General Wellness Guidance

CDRH also issued an update to its guidance, General Wellness: Policy for Low Risk Devices, commonly known as the “General Wellness Guidance.” Although FDA did not change its definition of a general wellness product, it greatly expanded the scope of products that can fit within that definition. This is likely to result in many more products coming to market without FDA premarket review.  Perhaps most notably, language in this revised document guts the WHOOP Warning Letter, on which we posted here. As a quick refresher, in that Warning Letter FDA stated that WHOOP’s blood pressure wearable could not be a general wellness product even if tied to wellness uses because “the product is intended to provide a measurement or estimation of a user’s blood pressure, which is inherently associated with the diagnosis of hypo- and hypertension, and is therefore intended for use in the diagnosis of a disease or other condition, or in the cure, mitigation, treatment, or prevention of disease.”

Enter the revised General Wellness Guidance, which states:

FDA may consider certain products that use non-invasive sensing (e.g. optical sensing) to estimate, infer, or output physiologic parameters (e.g. blood pressure, oxygen saturation, blood glucose, heart rate variability) to be general wellness products when such outputs are intended solely for wellness uses, and provided they:

• are non-invasive and not-implanted;
• do not involve an intervention or technology that may pose a risk to the safety of users or other persons if specific regulatory controls are not applied;
• are not intended for the diagnosis, cure, mitigation, prevention, or treatment of a disease or condition;
• are not intended to substitute for an FDA-authorized, cleared, or approved device;
• do not include claims, functionality, or outputs that prompt or guide specific clinical action or medical management; and
• do not include values that mimic those used clinically unless validated (e.g. manufacturer testing, peer-reviewed clinical literature) to reflect those values.

Products that meet the aforementioned criteria may display values, ranges, trends, baselines, or longitudinal summaries, and may contextualize these outputs in relation to sleep, activity, stress, recovery, or similar wellness domains.

As we noted in our prior blog post, FDA seemed to be on thin ice in the Warning Letter, having crafted out of nowhere the concept of a claim being “inherently associated” with a disease or condition and therefore seemingly barred from being deemed a general wellness product. Now, the agency has done a pendulum swing in the opposite direction, essentially stating that any non-invasive sensing of physiologic parameters can fit within FDA’s view of general wellness, so long as they steer clear of any disease claims and avoid claims of clinical accuracy. The guidance also states that it expects general wellness products to have labeling consistent with, and not exceeding, the general wellness intended use.

On the whole, the updates to this general wellness guidance do provide much-needed clarity regarding FDA oversight of monitoring of physiological parameters for non-medical purposes. While many large companies, such as Apple, Garmin, and Google, have long had unregulated heart rate and other monitors on their fitness watches, the basis for concluding that those were not medical devices was always a little hazy, particularly when those features alert users to heart rates above or below established thresholds. It is now clear that, so long as labeling for these products follows the recommendations set forth in the guidance, measurement of a physiological parameter alone is not enough for the product to be deemed a medical device. These updates may also help level the playing field; in our experience, smaller, more risk-averse companies would seek FDA guidance on products that seemed similar to some of the large tech company offerings, only to be told that their products were devices due to the measurement of physiological parameters, even if not intended for use in a clinical environment. Such a position would now appear to be in contrast with the updates to the General Wellness Guidance.

While the guidance provides helpful instructions as to boundaries for general wellness products, one area of potential confusion pertains to the ranges that can be utilized in a general wellness product. The guidance appears internally inconsistent in this regard. On the one hand, the guidance states that a general wellness product may “not include values that mimic those used clinically unless validated (e.g., manufacturer testing, peer-reviewed clinical literature) to reflect those values.” (Emphasis added.) However, the guidance later states that a general wellness product may not include diagnostic thresholds at all, although it may include a notification “informing a user that evaluation by a healthcare professional may be helpful when outputs fall outside ranges appropriate for general wellness use, provided that such notifications . . . do not characterize the output as abnormal . . . [and] do not include clinical thresholds . . .”

The idea of a “range appropriate for general wellness use” that is somehow distinct from clinical thresholds is novel and seems to indicate that the manufacturer would need to establish its own independent range distinct from clinical utility. It is not clear how such ranges would be determined, and whether they would be consistent across similar general wellness products. It also cuts against other language indicating that clinical values may be included so long as they are validated.

While it is helpful that the guidance explicitly states that a general wellness product can tell a user to seek input from a healthcare professional, the guidance states that the feature cannot tell the person to seek such input because a result is abnormal. Telling a person to seek medical advice without telling them why will undoubtedly create confusion for consumers.

What Does It All Mean?

If you have read this far, thank you, and you may be past the point of wanting the TLDR, but we’ll give it to you anyway. These updates, made without any public input and by the Commissioner himself, may indicate that the administration, for better or worse, is beginning to pay more attention to medical devices, or at least to digital health products. They also appear to reflect an intent to align the interests of the administration with the approach taken by CDRH, which, as we have previously noted, have been seemingly inconsistent to date.

Overall, these updates strike us as reflecting this administration’s push towards deregulation and broader uptake of wearables, but there is a question as to whether the agency has, to some extent, prioritized innovation over patient safety. We agree that FDA’s oversight of low-risk software products has historically been overly conservative at times, but software products providing risk scores or likely diagnostic outcomes to HCPs may present certain risks to patients if those features have not been properly validated.

We encourage companies to reach out to us with any questions you have in interpreting FDA’s new guidance documents and how they may apply to your products.

We follow the civil settlements agreed to by the Drug Enforcement Administration (“DEA”) and registrants that are announced in press releases by U.S. Attorney’s Offices and DEA.  We were interested to observe what appeared to be a recurring theme running through four of the six settlements announced from November 24th through December 11th.  The recurrent theme was issuing or filling prescriptions for controlled substances, or ordering controlled substances, “outside the usual course of professional practice.”  We asked ourselves whether the theme was a trend, a coincidence or just a passing fancy.

Legal Points:

• For a controlled substance prescription to be effective, it must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of their professional practice. 21 C.F.R. § 1306.04(a).
• A prescription that is not issued in the usual course of professional practice or in legitimate and authorized research is not a prescription within the meaning of 21 U.S.C. § 829, and the person knowingly filling such a purported prescription, as well as the person issuing it, is subject to penalties. Id.
• Prescribing “[r]ed flags are circumstances surrounding a prescription that cause a pharmacist to take pause, including signs of diversion or the potential for patient harm.” Gulf Med Pharmacy; Decision and Order, 86 Fed. Reg. 72,694, 72,703 (Dec. 22, 2021).
• The presence of a red flag does not prohibit a pharmacist from filling a prescription, but “means the pharmacist must address and resolve, and … make a record of its resolution assuming it is resolvable. Id.
• The Department of Justice adjusted civil penalties under the Controlled Substances Act assessed after July 3, 2025, up to $19,246 (generally recordkeeping and reporting) and up to $82,950 (other prohibited activity). Civil Monetary Penalties Inflation Adjustments for 2025, 90 Fed. Reg. 29,445, 29,448 (July 3, 2025).

Three Physicians and a Hospital…

The first settlement, announced by U.S. Attorney’s Office, District of Colorado, press release on November 24th, involved three physicians at a hospital who wrote prescriptions “not issued for a legitimate medical purpose or were outside the usual course of professional practice.”  Doctors Sheryll Castro-Flores, Joseph Jimenez, and Douglas McFarland, and Mt. San Rafael Hospital and Rural Health Clinic, their employer in Trinidad, Colorado, agreed to pay a total of $650,000 under the Controlled Substances Act and damages under the False Claims Act for allegedly issuing invalid prescriptions between January 2016 and December 2023.  The physicians allegedly ignored red flags that indicated the prescriptions were “improper or unsafe” that included high daily opioid doses, dangerous drug combinations, signs of substance abuse, prolonged opioid use, cash payments despite insurance coverage, travelling long-distances to obtain prescriptions, and repeated early refills.

The government alleges that the hospital that employed the doctors “is also liable under the Controlled Substances Act for the illegal prescribing of its employees, and under the False Claims Act for causing claims for payment for these invalid prescriptions to be submitted to the government.”

The $650,000 aggregate penalty was allocated in the following manner:

• Drs. Castro-Flores and Jimenez-$112,500 each;
• Dr. MacFarland-$100,000; and
• •Mt. San Rafael Hospital-$325,000.

To prevent recurrence, the hospital issued new policies and implemented new protocols that disallowed prescribing opioids for chronic pain management and to ensure that opioid prescribing for acute and sub-acute pain is done safely and meets state guidelines.

Federal Court Permanently Prohibits a Pharmacist from Filling Prescriptions…

The Department of Justice announced via press release on December 10th that a federal court prohibited Nathaniel Esalomi from filling opioid and other controlled substance prescriptions.  In addition, the pharmacist had a civil penalty entered against him for $10,000 of a $500,000 suspended civil penalty.  Esalomi had owned and been the sole pharmacist at Apexx Pharmacy in Hudson, Florida, that was dissolved following a 2022 complaint and a temporary restraining order.  The government alleged that Esalomi unlawfully distributed “powerful” opioids when he filled prescriptions he knew were not valid.  He allegedly charged “dramatically inflated prices” to fill opioid prescriptions, accepted thousands of dollars in cash, instructed individuals to forge signatures and falsify addresses, and filled numerous prescriptions for deceased persons.  Esalomi agreed to a consent judgment to settle the allegations in the complaint.

Physician Alleged to Have Issued 1,400 Invalid Prescriptions Over Seven Years

According to the press release, also published on December 10th by the U.S. Attorney’s Office for the Eastern District of Washington, Dr. Duncan Lahtinen of Spokane, Washington, allegedly issued over 1,400 prescriptions to thirteen patients “that lacked legitimate medical purposes or were outside the usual course of his professional practice.”  Many of the prescriptions were issued in some combination of opioids, benzodiazepines, sedatives and carisoprodol.  What has been dubbed “the Holy Trinity,” is a combination of opioids, benzodiazepines and a muscle relaxant that DEA has alleged is never for legitimate medical purpose.  Lahtinen also allegedly failed to address numerous red flags of his patients’ substance abuse.  The press release noted that the Washington Department of Health sanctioned Lahtinen twice previously for improper controlled substance prescribing.  The matter was resolved with Lahtinen agreeing to pay $120,000, which equates to about $87.00.

Physician Ordered Controlled Substances “Outside the Course of Professional Practice”

Lastly, the U.S. Attorneys’ Office for the Eastern District of Oklahoma announced on December 11th that osteopath Jonathan Clark of Poteau, Oklahoma, agreed to pay $105,000 to resolve allegations that he ordered controlled substances “outside the usual course of professional practice.”  We are unclear precisely what “ordering outside the usual course of professional practice” meant.  Dr. Lahtinen also allegedly stored and dispensed controlled substances at an unregistered location and failed to maintain records documenting when they were received and dispensed.

“Outside the Usual Course of Professional Practice:” Trend, Coincidence or Passing Fancy?

We were struck that four of the last six DEA civil settlements involved prescribing, dispensing or ordering controlled substances “outside the usual course of professional practice.”  So we asked ourselves whether this theme was a becoming a trend?  Was it a coincidence?  Or was it a passing fancy soon to disappear?  To answer our questions we looked at reported civil settlements dating from the early 1990s to present.  We found that of the 432 reported settlements, 45 settlements involved allegations of issuing or filling prescriptions “outside the usual course of professional practice.”  One settlement involved a physician who allegedly dispensed “outside the course of professional practice,” and there was the recent settlement that alleged a doctor ordered controlled substances “outside the usual course of professional practice.”

We conclude that allegations that a physician issued prescriptions, or that a pharmacy filled prescriptions, “outside the usual course of professional practice” is neither a recent trend nor a passing fancy.  Rather, we believe that it is a coincidence that the most recent settlements involved allegations of prescribers and pharmacies acting “outside the course of professional practice.”

Yesterday, we posted Part I of our update on CMS’s proposed regulations to establish two most favored nation (MFN) demonstration models under Medicare Parts B and D, focusing on the Part D model, called Guarding U.S. Medicare Against Rising Drug Costs (GUARD).  In this post, we cover the main features of the Part B model, Global Benchmark for Efficient Drug Pricing (GLOBE).  Comments on both proposed models may be submitted here (for GLOBE) and here (for GUARD) until February 23, 2026.

Duration:  GLOBE would have a seven-year test period consisting of five performance years beginning on October 1, 2026 and ending on September 30, 2031, for which GLOBE rebates would be due, and during which beneficiary coinsurance and adjusted payments to providers and suppliers would apply, followed by two additional years beginning on October 1, 2031 and ending September 30, 2033, during which CMS would calculate, invoice and reconcile GLOBE rebates owed for previous performance years.

Drugs Covered:  Drugs covered under GLOBE would be a subset of Part B rebatable drugs which (1) are single source drugs and sole source biological products, (2) are classified as antigout agents, antineoplastics, blood products and modifiers, central nervous system agents, immunological agents, metabolic bone disease agents, or ophthalmic agents as specified in the USP Drug Classification (DC) criteria, and (3) have a HCPCS Level II code with Medicare Part B fee-for-service spending greater than $100 million over a 12-month period.  “Single source drugs” are defined as drugs approved under a new drug application (NDA), including authorized generics, that have no therapeutic equivalents listed in FDA’s Orange Book; CMS proposes to define “sole source biological” as biologics approved under a biologic license application (BLA), including unbranded biologics, and that are not a reference biologic for a biosimilar application.  GLOBE drugs that became multi-source during a performance year would no longer be subject to GLOBE after that point.

Regarding the drug classification criteria, once CMS has identified the USP DC category for a GLOBE drug or biological product, it would remain in that category for the duration of the GLOBE model.  Similarly, CMS proposes that Part B rebatable drugs that meet this criterion one time during the duration of the GLOBE Model will be considered to have met this criterion for all subsequent GLOBE Model ASP calendar quarters.

GLOBE would exclude (1) drugs or biological products without a calculable “specified amount” under the Part B inflation rebate program, (2) drugs for which a maximum fair price (MFP) under the Medicare Drug Price Negotiation Program is in effect, and (3) drugs or biological products that are no longer Part B rebatable drugs during the duration of the GLOBE Model.

Geographical area and Medicare population covered:  No later than 60 days before each performance year, CMS proposes to randomly select 25% of the Zip Code Tabulation Areas (ZCTAs) in the U.S.  ZCTAs are geographical areas roughly equivalent to zip codes.  Part B enrollees who reside in the selected ZCTAs (which would also represent approximately 25% of all Part B beneficiaries) would be added to CMS’s GLOBE Model Eligible Beneficiary List, and remain on this list until the model concludes or the beneficiary is no longer eligible for inclusion.  Part B enrollees who do not reside in the selected ZCTAs would be assigned as being eligible for inclusion in the comparison group.

Manufacturer participants:  Participation in GLOBE is mandatory for all manufacturers of GLOBE drugs that are furnished to a GLOBE beneficiary during the performance period.  No enrollment activities are necessary.

Basis for rebates – the International Pricing Benchmark:  Broadly, the proposed GLOBE Model modifies the existing Part B inflation rebate amount calculation by comparing a GLOBE Model drug’s “specified amount” for a quarter as determined for the standard Part B inflation rebate (i.e., the Part B payment limit) to an international benchmark.  If the specified amount is greater, the excess would be rebated to CMS, after subtracting any inflation rebate due.  The starting point for determining GLOBE rebates is therefore the international benchmark.

The international benchmark would look at prices in 19 reference countries: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Norway, South Korea, Spain, Sweden, Switzerland, and the United Kingdom.  These are the same reference countries listed in the proposed GUARD Model, which are members of the Organisation for Economic Co-operation and Development (OECD) that have a purchasing power parity-adjusted per-capita gross domestic product (GDP) of at least 60% that of the U.S., and that have an annual GDP of at least $400 billion.

CMS proposes to allow manufacturers to choose between relying on a CMS-calculated international pricing benchmark (the Method I GLOBE benchmark) or submitting their own international drug net pricing information (the Method II GLOBE benchmark).  CMS would determine the applicable GLOBE benchmark as the greater of the Method I and Method II benchmark, if available.

Under the default method, the Method I GLOBE benchmark would be the lowest country-level average price among the set of average prices for each reference country, adjusted by the country-specific gross domestic product (GDP) based on purchasing power parity (PPP).  To calculate the Method I GLOBE benchmark, CMS would rely on existing data sources with available drug pricing information in the reference countries, using data from two calendar quarters prior to the first applicable calendar quarter to which the total GLOBE rebate would apply (or, if unavailable, drug pricing information from the most recent ASP calendar quarter for which data are available).  The preamble identifies three such sources:  IQVIA’s MIDAS, Eversana’s NAVLIN, and GlobalData Pharmaceutical Prices (POLI).

Under the optional method (the Method II GLOBE benchmark), manufacturers may voluntarily submit their own international net drug pricing information to CMS that, if accepted, would serve as an alternative GLOBE benchmark.  The Method II GLOBE benchmark would reflect the volume-weighted average of the GDP (PPP) adjusted manufacturer’s international drug net pricing for sales among reference countries for the applicable ASP calendar quarter based on data calculated and voluntarily reported by the manufacturer to CMS on a quarterly basis.

Prior to the first submission of voluntary international drug net pricing data, the manufacturer would be required to execute a data agreement.  For each submission, CMS proposes that the required basic data elements would include, for example, the GLOBE Model drug brand name, nonproprietary name, HCPCS Level II code, dosage form and route of administration (if applicable), volume per item, package type, etc., and that the manufacturer must provide a list of every “applicable international analog,” defined as a non-U.S. analog whose nonproprietary name, dosage form, and route of administration (if applicable) align with a GLOBE Model drug and that are sold in one or more reference countries during the applicable ASP calendar quarter.

CMS also proposes that manufacturers would have two data submission options—streamlined and limited—for these submissions.  For both options, CMS proposes manufacturers would provide the required volume-weighted average GDP (PPP)-adjusted net pricing per HCPCS billing unit for the applicable international analogs for all reference countries for the applicable ASP calendar quarter (across country volume-weighted average GDP (PPP) adjusted net price per HCPCS billing unit).  The difference between the two options is the level of aggregation CMS would allow. Under the streamlined option, CMS proposes reporting prices for each applicable international analog in each reference country, while in the limited option, CMS proposes reporting prices aggregated at the reference country level.  CMS proposes that both streamlined or limited submissions must occur within 30 days after the end of the applicable ASP calendar quarter.  CMS would then conduct a verification review to determine if the submission is an “applicable submission” to identify a per-unit Method II GLOBE benchmark.

Under either Method I or Method II, CMS would apply an adjustment to the identified per-unit GLOBE benchmark to calculate the per-unit GLOBE Model benchmark amount, which includes an “applicable threshold percentage” and an “add-on percentage amount.”  CMS proposes to apply an applicable threshold percentage of 102 percent to the per-unit Method I GLOBE Model benchmark, and 105 percent to the per-unit Method II GLOBE Model benchmark.  For the add-on percentage amount, CMS proposes to increase the per-unit GLOBE Model benchmark by an add-on percentage amount that would, in general, equal the dollar amount of any add-on percentage included in the Part B payment limit (which generally would be the same as the “specified amount” as determined for the standard Part B inflation rebate under 42 CFR 427.302(b)).

The per-unit GLOBE rebate amount for a quarter would be equal to the greater of (1) the specified amount minus the per-unit GLOBE benchmark amount, or (2) the specified amount minus the inflation adjusted payment amount (i.e., the standard Part B inflation rebate).

Per-Unit and Total Incremental GLOBE Model Rebate:  CMS proposes to calculate a per-unit incremental GLOBE Model rebate amount, which would represent the amount of the GLOBE Model rebate that is in excess of any Part B inflation rebate due.  CMS would then calculate the total incremental GLOBE Model rebate amount as the per-unit incremental GLOBE Model rebate multiplied by the total number of GLOBE Model billing units.  Manufacturers would owe CMS the total incremental GLOBE Model rebate amount in addition to any amount invoiced under the Part B inflation rebate program.

The total incremental GLOBE Model rebate would be reduced for a drug currently in shortage, or when CMS determines that there is a severe supply chain disruption, using formulas similar to the corresponding reductions under the Part B inflation rebate program.

Invoicing and payment process:  CMS proposes two alternative approaches, a combined approach and an incremental approach, for how it would provide rebate reports and reconciliation rebate reports to GLOBE participants, and a process for suggestion of error when GLOBE rebates are owed.  CMS is seeking comment on these alternative approaches for reporting, invoicing, and reconciliation, and intends to adopt only one approach.

Under the combined approach, CMS would delay Part B inflation rebate invoicing for all manufacturers (not just GLOBE Model participants) by up to two months and would provide a combined report (invoice) that would include the total GLOBE rebate amount and incremental GLOBE rebate amount in both the Preliminary Rebate Report and Rebate Report provided to the manufacturer pursuant to the Part B inflation rebate program.  Under this approach, CMS would provide each manufacturer of a Part B rebatable drug a Rebate Report that is the invoice for the total rebate amount due under both the Part B inflation rebate program and the GLOBE Model (if applicable), if any, no later than eight months, instead of the current six months, after the end of each applicable calendar quarter, after sending a Preliminary Rebate Report one month earlier. Payment of rebates would be due no later than 30 calendar days after the date of receipt of the rebate reports/invoices.  In addition, because there would be a single combined report and rebate amount due under this approach, CMS proposes that the suggestion of error process described in the Part B inflation rebate program would be used for both the inflation rebate and the GLOBE rebate, if both are payable.

Under the incremental approach, CMS would use a separate invoicing process that would run approximately two months after issuing Part B inflation rebate reports.  Under this approach, CMS would provide a GLOBE Model Preliminary Rebate Report to each manufacturer of a GLOBE drug at least one month prior to the issuance of the GLOBE Model Rebate Report, which would be provided no later than eight months after the end of each applicable calendar quarter.  CMS would invoice manufacturers of GLOBE drugs for the total GLOBE rebate amount using the incremental GLOBE rebate amount and reconcile the portion of the total GLOBE rebate amount invoiced through the Part B inflation rebate program processes.  Under this incremental approach, CMS proposes a separate suggestion of error process such that a manufacturer would submit its suggestion of error within 10 calendar days from the date or receipt of a GLOBE Model Preliminary Rebate Report (or a report detailing the preliminary reconciliation of a GLOBE Model rebate amount) for the applicable calendar quarter.  CMS proposes that the manufacturer of GLOBE drug would be required to pay the incremental GLOBE rebate amount within 30 calendar days of receiving the GLOBE rebate report.

Enforcement:  Penalties for noncompliance would be the same as those under the Part B inflation rebate program.  Failure to pay an Incremental GLOBE Model rebate within the 30-day deadline would subject a manufacturer to a civil monetary penalty (CMP) of 125% of the rebate (or reconciled amount) that the manufacturer failed to pay.  The penalty would be in addition to the underlying rebate owed.  The CMP notice, hearing, and appeal procedures would be the same as under the Part B inflation rebate program.  CMS notes that it could also refer non-compliance cases to the HHS Office of the Inspector General, the Department of Justice, or the Treasury Department.

Coinsurance adjustment:  The ordinary Part B coinsurance obligation is 20% of the Medicare payment amount.  If a GLOBE rebate is applicable (i.e., if the payment amount exceeds the GLOBE Model benchmark amount), the beneficiary’s coinsurance would be adjusted to 20% of the per-unit GLOBE Model benchmark amount.  Where a beneficiary’s coinsurance is reduced, Medicare would increase the payment to the provider to extent of the reduction in the coinsurance.

Outside of Medicare Part B, CMS expects the proposed GLOBE Model to have only indirect impacts on other government price reporting programs.  For example, drugs selected for Medicare MFP negotiation would be excluded from GLOBE while the MFP is in effect.  In addition, GLOBE Model rebates themselves would not be included in a manufacturer’s determination of Medicaid rebate best price or average manufacturer price (AMP), , because CMS considers GLOBE rebates to be paid under the Part B inflation rebate program, and the latter are excluded by statute from AMP and best price.  Similarly, GLOBE rebates are excluded from ASP and from the calculation of 340B ceiling prices.  Nevertheless, CMS explains in the preamble that the GLOBE Model may indirectly impact these prices if the Model influences a manufacturer to reduce its prices to avoid GLOBE rebates.

In November, we posted that the New Year would be bringing us GENEROUS, a new Medicaid demonstration model initiated through CMS’s Center for Medicare and Medicaid Innovation (CMMI), which will permit drug manufacturers to enter into voluntary agreements with state Medicaid programs to provide most favored nation (MFN) pricing.  On December 23, CMS issued proposed regulations to establish, again under CMMI, two more MFN demonstration models under Medicare Parts B and D, respectively.  However, unlike GENEROUS, manufacturer participation in these models is mandatory.  The Part D model, called Guarding U.S. Medicare Against Rising Drug Costs (GUARD) is proposed to go into effect on January 1, 2027, while the Part B model, Global Benchmark for Efficient Drug Pricing (GLOBE), would become effective in the fourth quarter of 2026.  In this post, we outline the prominent features of the GUARD Model.  Tomorrow, we will post Part 2 of this article, which will focus on the GLOBE Model.  Comments on both the GUARD and the GLOBE proposals are due no later than February 23, 2026.

Duration:  GUARD would consist of five performance years beginning with 2027, for which manufacturers would be obligated to pay GUARD rebates, followed by a two-year period during which CMS would calculate, invoice and reconcile rebates owed for previous performance years.

Drugs Covered:  Drugs covered under GUARD would be sole source drugs and biologics that are subject to Medicare Part D inflation rebates and are within certain specified drug classes in the USP Medicare Model Formulary Guidelines.  “Sole source drugs” are defined as (1) single source drugs, meaning drugs approved under a new drug application (NDA), including authorized generics, that have no therapeutic equivalents listed in FDA’s Orange Book; and (2) biologics approved under a biologic license application (BLA), including unbranded biologics, that are not a reference biologic for a biosimilar application.  GUARD drugs that become multi-source during a performance year would no longer be subject to GUARD after that point.  There are 18 included USP drug classes, which are listed here.  They include the six Medicare protected classes and 12 additional classes.  Excluded would be generics approved under an ANDA, biosimilars licensed under section 351(k) of the Public Health Service Act, drugs selected for Medicare Maximum Fair Price (MFP) negotiation while the MFP is in effect, and drugs that do not meet a minimum Part D spend threshold, which is $69 million for 2027 and would be adjusted for inflation each performance year thereafter.

Geographical area and Medicare population covered:  No later than 60 days before each performance year, CMS would randomly select 25% of the Zip Code Tabulation Areas (ZCTAs) in the U.S.  ZCTAs are geographical areas roughly equivalent to zip codes.  Part D enrollees who reside in the selected ZCTAs (which would also represent approximately 25% of all Part D enrollees) would be covered under GUARD for that performance year.

Manufacturer participants:  Manufacturers subject to GUARD would be those that market GUARD drugs and are subject to the Medicare Part D inflation rebate program.  Participation is mandatory, and no enrollment procedure is necessary.

Basis for rebates – the International Pricing Benchmark:  In broad terms, the GUARD per-unit rebate for an NDC-9 in a performance year would be the excess (if any) of the Medicare Net Price over an International Pricing Benchmark, reduced by any Part D inflation rebate payable by the manufacturer for the same NDC-9.  Thus, the starting point for determining GUARD rebates is the International Pricing Benchmark.

The Benchmark would look at prices in the 19 foreign countries listed here.  These are members of the Organization for Economic Co-operation and Development (OECD) that have a purchasing power parity-adjusted per-capita gross domestic product (GDP) of at least 60% that of the U.S., and that have an annual GDP of at least $400 billion.

Benchmark prices would be developed for international analogs of a U.S. NDC-9, which would consist of foreign products with the same active pharmaceutical ingredient, dosage form, route of administration, and strength, excluding foreign generics and biosimilars.  Special procedures would be used to determine analogs where U.S. and foreign strengths are not aligned.

The International Pricing Benchmark for an NDC-9 would be the greater of two alternative benchmarks:  a “Default” Benchmark or an “Updated” Benchmark.  Under the Default Benchmark, CMS would use foreign pricing data obtained for the 12-months prior to a performance year (or, if unavailable, the most recent post-2024 12-month period available).  The data sources would be those that contain, in order of preference, sales plus volume (i.e., unit) data; price plus volume data; or prices only.  The preamble identifies three such sources:  IQVIA’s MIDAS, Eversana’s NAVLIN, and the Global Data Pharmaceutical Prices (POLI).

To determine the Default Benchmark for an NDC-9, CMS would calculate for each country, depending on the available data, either a volume weighted average price or a straight average price for the NDC-9 analog. To obtain the volume weighted average price, each different price for the analog in the country would be multiplied by its corresponding volume (in NCPDP units) to obtain a weighted price.  The weighted prices would then be added together and divided by the sum of the units for all prices.  For example, for an analog of an NDC-9 sold at three different prices in a country:

Volume weighted average price = [(price¹ x volume¹) + (price² x volume²) + (price³ x volume³)] ÷ [(volume¹ + volume² + volume³)]

If volume data were unavailable for a country, CMS would calculate a straight average price of the analog per NCPDP unit.  For example, for an analog sold in a country at three prices: (price¹ + price² + price³) ÷ 3.  The Default International Benchmark would be the lowest country average.

The second alternative method for determining the International Pricing Benchmark – the Updated Benchmark – would be derived from foreign pricing data voluntarily submitted to CMS by manufacturers, should they choose to do so.  A manufacturer that wanted to submit these data for any performance year would have to do so within 180 days after the end of the performance year.  The submission could cover one or more GUARD drugs, and would have to include data for all analogs (i.e., same API, dosage form, route of administration, and strength) of each GUARD drug sold in all 19 countries.  In addition to drug data (e.g., brand and nonproprietary name, approval status, API, route of administration, dosage form, strength, package sizes), the manufacturer would provide pricing data under either a “streamlined option” or a “limited option”.  The streamlined option would require, for each NDC-9 analog, all of the following:

• For each different net price in each country: gross sales, net sales, and sales volume in NCPDP units.
• For each country: (1) the volume weighted average net price; (2) the average net-to-gross ratio (total net sales ÷ total gross sales); (3) the exchange rate from the World Bank Atlas; and (4) a GDP adjuster (country per-capital GDP ÷ U.S. per-capita GDP).
• The volume weighted average net price across all countries.

The “limited option” would require, for each NDC-9 analog in each country, the weighted average net price; the total gross sales; the total net sales; the total sales units; the average net-to-gross ratio; the exchange rate; and the GDP adjuster.  Also required would be the volume weighted average net price across all countries.  One advantage of the limited option would be that it would not require sales and volume to be broken out by each price point in a country.

One glaring omission in the proposed rule and preamble is any direction on how manufacturers should calculate the various foreign net prices and weighted average net prices contained in their submissions.  This is in stark contrast to weighted average net prices required under Medicaid and Medicare – i.e., Medicaid average manufacturer price (AMP) and Medicare Part B average sales price (ASP) – for which CMS’s instructions consume scores of pages of regulations, preambles, and releases.  However, the preamble states that CMS will be issuing guidance on the various submission data elements and reasonable assumptions that may be necessary, among other things.  This guidance will hopefully provide direction on the calculation of foreign average net prices.  Even so, given the complexity and resources needed to calculate even one weighted average price (for example, AMP), the task of doing such calculations for a multitude of foreign prices will be daunting indeed.

Under the Default methodology, the International Benchmark would be the lowest country average price for the NDC-9 analog, and would not change for the entire GUARD Model period once it is set.  In contrast, under the Updated methodology, the International Benchmark would be the cross-country weighted average net price – not the lowest country price – and could change with manufacturer submissions in subsequent years.  As mentioned above, the greater of the Default Benchmark or the Updated Benchmark would become the International Benchmark.  CMS would then apply an adjuster of 102% if the Default method is used, or 104% if the Updated method is used (CMS explains that the greater adjustment could incentivize manufacturers to submit pricing data).

No conclusion can be drawn a priori on whether it will be advantageous for a manufacturer to submit international pricing data.  On one hand, relying on CMS to determine the International Benchmark under the Default method may be advantageous because CMS’s data sources will reflect list prices rather than the net prices submitted by manufacturers under the Updated method.  On the other hand, the limited option of the Updated method produces a cross-country weighted average net price for use as an International Benchmark, which will be greater than the lowest single country weighted average net price under the streamlined option, and may even be greater than the lowest country Default benchmark that CMS derives from published list price data.  The Updated method also has the advantage of the 104% adjuster.  A manufacturer’s decision whether to submit foreign pricing data will have to be guided by the international prices and discounting of the particular drug.

The GUARD Model rebate amount:  Once the International Benchmark for an NDC-9 unit is determined for a performance year, it would be compared with the performance year Medicare Net Price for the unit.  If the Medicare Net Price exceeded the International Benchmark, the excess would be the per-unit GUARD rebate.  The Medicare Net Price would be derived from the following operation:

• For each NDC-11 in the NDC-9 family, multiply WAC x units dispensed (from Prescription Drug Event (PDE) records), and add them together to obtain the NDC-9 total.
• Subtract aggregate manufacturer rebates paid to Part D plans for the NDC-9, taken from Direct and Indirect Remuneration (DIR) data in PDE records.
• Subtract aggregate Part D Manufacturer Discount Program rebates for the NDC-9.
• Divide by total quantity dispensed for all NDC-11s (from PDE records).

The Incremental GUARD Model rebate per unit:  A manufacturer who owed a GUARD Model rebate for a performance year might also owe a Part D inflation rebate for the same NDC9.  If so, and if the GUARD Model rebate were greater, the inflation rebate would be subtracted from the GUARD Model rebate.  Because an inflation rebate is owed for a fiscal year while a GUARD rebate would be for a calendar year, the inflation rebate would be converted to a calendar year using a time-weighting methodology.

Total Incremental GUARD Model Rebate for a performance year:  This would be the per-unit Incremental GUARD Model rebate multiplied by the number of units dispensed during the performance year, based on PDE data.  Units purchased under the 340B Drug Discount Program and units associated with compounded drugs would be excluded.  The Total Incremental GUARD Model Rebate would also be reduced for a drug currently in shortage, using a formula similar to the corresponding reduction under the Medicare Part D inflation rebate program.

Invoicing and payment process:  Manufacturers would be invoiced for the Total Incremental GUARD Model rebate separately from and at different intervals from the Part D inflation rebate invoices but using a similar process.  Final reports, which would also serve as invoices, would be sent 22 months after the end of a performance year, with two reconciliation reports at 12 months and 36 months, respectively, after the final report.  The reconciliations would adjust for updated claims and other reported data.  Payment of the initial rebate, and any additional amounts owed under the reconciliation reports, would be due within 30 calendar days after each report is received.  Thirty calendar days before each final report and reconciliation report, manufacturers would receive a preliminary report and have an opportunity to submit suggestions of error within 10 days following receipt.  Like suggestions of error under the inflation rebate program, GUARD suggestions of error would be limited to correction of mathematical errors, and the rule would preclude administrative and judicial review of CMS determinations of the Total Incremental GUARD Model Rebate, the dispensed units, or whether a drug is a GUARD Model Drug.  (Curiously, as authority for precluding review of the rebate amount or units, CMS cited the Part D inflation rebate statute, despite the obvious fact that this statute does not pertain to GUARD.)  In addition to the scheduled reconciliations, CMS could reconcile at any time after discovering its own error or learning of a manufacturer error, but could not do so later than five years after the date of receipt of the final report.

Enforcement:  Penalties for noncompliance would be the same as those under the Part D inflation rebate program.  Failure to pay an Incremental GUARD Model rebate within the 30-day deadline would subject a manufacturer to a civil monetary penalty (CMP) of 125% of the rebate (or reconciled amount) that the manufacturer failed to pay.  The penalty would be in addition to the underlying rebate owed.  The CMP notice, hearing, and appeal procedures would be the same as under the Part D inflation rebate program.  CMS notes that it could also refer non-compliance cases to the HHS Office of the Inspector General, the Department of Justice, or the Treasury Department.

Interaction with other government price reporting and discount programs:  With one exception noted below, GUARD Model rebates would not affect other reported government prices or government discounts in the U.S.  Drugs selected for Medicare MFP negotiation would be excluded from GUARD while the MFP is in effect.  Units purchased under the 340B program would be excluded.  Rebates paid under the Part D Manufacturer Discount Program would be excluded, as would voluntary rebates paid to Part D plans.  The exception is Medicaid rebate best price.  While Part D inflation rebates are excluded from best price by statute, the GUARD Model proposed rule does not explicitly exclude GUARD rebates from best price – nor could it do so, because CMS’s waiver authority under Social Security Act 1115A does not extend to waiver of Medicaid rebate best price provisions under CMMI demonstration models.

Effect on Part D enrollee out-of-pocket costs:  The GUARD Model is designed to reduce drug costs to Medicare, not necessarily to Medicare Part D enrollees.  CMS admits that the model will have only an indirect impact, if any, on enrollee cost sharing.  For example, it may reduce drug launch prices for GUARD drugs, which could have “cascading effects” of reducing co-insurance that is based on a percentage of list price, or causing Part D plans to change their benefit design to reduce enrollee cost-sharing.

Tomorrow’s post in FDA Law Blog will examine GLOBE, the Medicare Part B model for  MFN pricing.

On December 18, 2025, the U.S. Food and Drug Administration (FDA or the Agency) published clarification on its enforcement approach under the Modernization of Cosmetics Regulation Act of 2022 (MoCRA) with the release of a draft guidance titled “Questions and Answers Regarding Mandatory Cosmetics Recalls: Guidance for Industry.”  See also here (“FDA Recall Policy for Cosmetics”).  This draft guidance is now available for public review and comment and provides cosmetic companies, including distributors and packers, with insight into how FDA’s mandatory recall authority will work in real day-to-day practice.

Interestingly, MoCRA was passed in December  2022 and included many different requirements some of which were self-executing (e.g., mandatory recall authority).  Thus far, FDA has missed all or virtually all deadlines set by MoCRA including rulemaking for fragrance allergen disclosures, cosmetic good manufacturing practices, and talc asbestos testing.  In light of the Agency’s long to-do list, it took us by surprise that FDA issued a draft guidance regarding its mandatory recall authority—especially because MoCRA does not require that FDA issue guidance on this provision.

Why This Matters

Historically, FDA did not have the statutory authority to order cosmetic product recalls.While the Agency could request that companies voluntarily recall unsafe or violative products per 21 C.F.R. Part 7, it could not compel them to do so.  That changed with MoCRA, which granted the FDA formal mandatory recall authority for Class I recalls of cosmetics under FDCA Section 611.  See 21 U.S.C. § 364g.  FDA may order a recall when the Agency determines there is a reasonable probability that a product is adulterated or misbranded and could cause serious adverse health consequences or death (SAHCOD) (i.e., the standard for a Class 1 recall).

What Does the Draft Guidance Say?

The draft guidance is structured as a series of questions and answers—a common framework for clarifying guidances (see, e.g., here)—designed to explain FDA’s current thinking on several aspects of mandatory cosmetics recalls including:

• Criteria for Mandatory Recalls:  Outlines the circumstances under which FDA might determine a recall is necessary.  While the guidance doesn’t promulgate rules (because it isn’t legally binding as opposed to statutes/regulations), it emphasizes the Agency’s focus on potential serious adverse health consequences including, inter alia, chemical burns, infections, and patient safety signals.  Notably, adverse events for cosmetics are defined differently from those for drugs.  The industry would benefit from further clarification regarding this definition; however, unfortunately, the draft guidance does not address this expanded definition.
• Process:  Explains procedural steps, beginning with an opportunity for responsible parties (manufacturers, packers, distributors) to voluntarily cease distribution and conduct a recall.  If voluntary actions are inadequate, FDA can escalate its concerns and issue a formal recall order.
• Industry Expectations:  Clarifies what FDA expects from companies regarding compliance with recall orders including communication with both the Agency and the public.

Implications for Cosmetic Brands

For industry leaders and compliance teams, this draft guidance has several practical implications:

• Preparation Is Essential:  Because FDA is now able to mandate recalls, brands should revisit their recall readiness plans, ensuring they can rapidly identify and remove unsafe products from the market.  These efforts should include proceduralizing recall steps per standard operating procedures and training employees on the same as well as paying increased attention to potential safety signals.
• Risk Assessment and Documentation:  Prepare and maintain consistent internal safety assessments, thorough documentation, and transparent adverse event reporting.  As FDA inspectors love to quip, “if it isn’t documented, it didn’t happen.”
• Strategic Engagement:  Provide feedback on the draft guidance—we can’t emphasize this enough!

What’s Ahead

As mentioned earlier, FDA has been slow in implementing MoCRA.  It has missed all or virtually all deadlines set by the law.  Since the enactment of the law, FDA’s Office of Cosmetics and Colors has been moved from the Human Foods Program (formerly the Center for Food Safety and Applied Nutrition) to the Office of the Chief Scientist and we have seen little activity on MoCRA and related issues.  It remains to be seen if the issuance of the draft guidance is a sign of more activities and rulemaking to come.

FDA is actively seeking feedback from stakeholders, so GIVE IT!  Interested parties can review the draft guidance and submit comments through the regulations.gov portal or by written submission to the FDA Dockets Management Staff.  As is unique to FDA guidance documents (regardless of whether it’s the draft or final iteration), comments can be provided anytime.  21 C.F.R. § 10.115(g)(5); see also link.  However, FDA requested that comments be submitted by February 17, 2026 “to ensure that the Agency considers your comment . . . before it begins work on the final version of the guidance.”

This comment period presents a key opportunity for cosmetic companies, trade associations, and compliance professionals to raise any concerns and shape the final guidance document.

HPM will be monitoring further developments and is available to assist with drafting and submitting comments.

On December 16, CDRH issued 12 Warning Letters to manufacturers and retailers of breast binders.  The Warning Letters were posted on FDA’s website 2 days later. According to the Warning Letters, the products offered by these companies are intended to compress breast tissue and create a flatter chest appearance. Moreover, for FDA jurisdictional purposes, the Warning Letters claim that, because the targeted companies were marketing these products to alleviate gender dysphoria, they are medical devices.  Furthermore, the Warning Letters claim the devices were misbranded, in violation of the Federal Food, Drug, and Cosmetic (FD&C) Act, because the companies did not register their establishments or list their devices with FDA.

Are these products devices?

We’ll get the easy stuff out of the way first. To the extent that FDA could prove that a company marketed a breast binder to treat or mitigate a disease or condition or to affect a structure or function of the body, it could show that the product would meet the statutory definition of a medical device.  FDA classifies therapeutic medical binders, including breast binders, as Class I medical devices under 21 C.F.R. § 880.5160.  A therapeutic medical binder is “a device, usually made of cloth, that is intended for medical purposes and that can be secured by ties so that it supports the underlying part of the body or holds a dressing in place. This generic type of device includes the abdominal binder, breast binder, and perineal binder.”

Breast binders have been assigned product code HEF.  Like other therapeutic medical binders, they are exempt from 510(k) premarket notification requirements, as well as from most quality system regulation requirements (with the exception of complaint handling).  A breast binder intended for use in individuals with gender dysphoria, a psychiatric disorder as defined in the DSM-5 (Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition), would therefore meet the definition of a medical device.

Manufacturers of medical devices are required to register their establishments and list the products they manufacture with FDA.  The failure to register and list is a “misbranding” violation under the FD&C Act, 21 U.S.C. § 352(o).

Why would FDA issue these warning letters?

Here’s where things start to get a bit … odd.  It is rare for CDRH to issue a Warning Letter involving a low risk (i.e., Class I, 510(k) and QSR exempt) device.  Moreover, anyone who keeps up with Warning Letters would agree that it is highly unusual—indeed unprecedented— for the agency to issue a Warning Letter in response to a simple failure to register and list, a technical violation that can be remedied in a matter of minutes, involving only setting up an electronic account and paying a user fee.

For CDRH to issue a Warning Letter under these circumstances is inconsistent with FDA’s own policies. Chapter 4 of FDA’s Regulatory Procedures Manual (RPM) includes agency guidance and procedures for Warning Letters and Untitled Letters. Chapter 4-1-1 states:

The agency position is that Warning Letters are issued only for violations of regulatory significance. Significant violations are those violations that may lead to enforcement action if not promptly and adequately corrected. A Warning Letter is the agency’s principal means of achieving prompt voluntary compliance with the Federal Food, Drug, and Cosmetic Act (the Act).

In contrast, Chapter 4-2-1 describes Untitled Letters and when those may be appropriate:

An Untitled Letter cites violations that do not meet the threshold for significance of regulatory significance for a Warning Letter.

Separate from the RPM, FDA’s website also describes another type of CDRH communication, the “It Has Come to Our Attention” (IHCTOA) letter, which is used when CDRH has become aware that regulated industry may (emphasis in original) be promoting a device in a potentially violative manner.

The violations cited in the Warning Letters therefore do not support the agency’s response.  A failure to register an establishment and list a device—moreover a low-risk device—is unequivocally not a violation “of regulatory significance.” In fact, we are not aware of any other instance in which a Warning Letter was issued solely for the failure to register and list.  In part, this is because these violations can be corrected the same day that a manufacturer becomes aware of them.

If FDA were truly concerned solely about the failure to register or list, an IHCTOA or Untitled Letter would have been more appropriate, and consistent with established policy.  Importantly, IHCTOA and Untitled letters are, generally, non-public and allow companies to voluntarily come into compliance without shining a public light on them.  In our experience, FDA sends IHCTOA or Untitled Letters even for violations with far greater significance, such as marketing a device without 510(k) clearance.

Was FDA’s Concern Really About Registration and Listing?

A Warning Letter was clearly overkill in response to a failure to register and list, leading us to conclude that FDA’s concern was not really about registration and listing.  This conclusion is further supported by statements by FDA Commissioner Marty Makary made concomitantly with the issuance of the Warning Letters, alleging serious risks to children related to these products.  According to Dr. Makary, “Breast binders are a Class I medical device with legitimate medical uses such as being used by women after breast cancer surgery. These binders are not benign. Long-term usage has been associated with pain and compromised lung functions, and even difficulty breastfeeding later in life.”  Dr. Makary added that the Warning Letters will formally notify companies of these violations and will require prompt corrective actions. “Pushing transgender ideology in children is predatory, it’s wrong, and it needs to stop.”

The Commissioner made these statements during a press conference in which the Department of Health and Human Services (HHS) announced a series of proposed regulatory actions aimed at limiting access to gender-affirming care for minors, including a proposed rule from the Centers for Medicare & Medicaid Services (CMS) that would ban hospitals from performing sex change operations for children under 18.  A press release issued by HHS on the day of the press conference, titled, “HHS Acts to Bar Hospitals from Performing Sex-Rejecting Procedures on Children,” focused primarily on the CMS proposed rule, but mentioned the FDA Warning Letters, stating:

The U.S. Food and Drug Administration (FDA) is issuing warning letters to 12 manufacturers and retailers for illegal marketing of breast binders to children for the purposes of treating gender dysphoria. Breast binders are Class 1 medical devices used for purposes such as assistance in recovery from cancer-related mastectomy. The warning letters will formally notify the companies of their significant regulatory violations and how they should take prompt corrective action.

The press release uses the “significant regulatory violations” language presumably to support issuance of the Warning Letters, even though, as noted above, the only stated violations are the failure to register and list, which are not “significant regulatory violations.”

The press release included a quote by Commissioner Makary stating that “Illegal marketing of these products for children is alarming, and the FDA will take further enforcement action such as import alerts, seizures, and injunctions if it continues.”

The Warning Letters themselves, however, make no mention of any health risks associated with breast binders, calling into question the extent to which these statements by the Commissioner are supported by available facts and scientific evidence.  A review of MAUDE indicates there has not been a single reported adverse event associated with any breast binder in the last five years.  Furthermore, the scientific literature reflects a more nuanced view about the risks and benefits of breast binders (see, e.g., here). As with all products, there cannot be a focus on risk without also considering benefits, but Dr. Makary’s statements seem to dismiss altogether the benefits while exclusively emphasizing potential risks.

Additionally, the Warning Letters do not make any reference to “illegal marketing of breast binders to children,” as suggested by Dr. Makary.  We reviewed several of the websites for the companies that received Warning Letters, and did not see marketing specifically directed towards children. The statement in the press release about issuing the Warning Letters to protect children is therefore not supported by the language in the Warning Letters, or the marketing of the products themselves.

Furthermore, even if these companies were overtly marketing to children, they could easily discontinue such claims, if, in fact, such claims are violative; we note that the classification regulation encompassing breast binders does not restrict their use to adults.  If the marketing of the products is consistent with the regulatory definition of a therapeutic medical binder, which specifically includes breast binders, and the company complies with its other limited regulatory obligations, it is not clear on what basis FDA could claim that such marketing is “illegal” on its face.

Yet another oddity about these Warning Letters is that most of them also cc Shopify, which is presumably the platform through which the products are purchased and the transactions processed.  Although FDA has issued Warning Letters directly to Amazon for selling products that FDA deems adulterated and/or misbranded, copying the sales platform is, in our experience, unprecedented.  Whether FDA plans to take action against Shopify, and other platforms that facilitate sales of these products, remains unclear.

So what happens next?

Historically, FDA has taken the position that a “Warning Letter is informal and advisory. It communicates the agency’s position on a matter, but it does not commit FDA to taking enforcement action. For these reasons, FDA does not consider Warning Letters to be final agency action on which it can be sued.”  Courts have generally accepted that position, but past is not necessarily prologue.  The sellers of these products will need to decide how to determine whether they are in violation of the FDC Act and if so, how to come into compliance (in some form – either as devices or by making changes to not be devices). For a class I, 510(k) exempt product, this is relatively straightforward, although it would entail additional expenses, including an annual registration fee and costs associated with developing policies and procedures for complaint handling, MDR reporting, and corrections, removals, and recall handling.  Compliance with these requirements could, however, increase operating expenses for these companies which could, in turn, decrease accessibility for some who need them.

Alternatively, sellers of these products could change the claims to be esthetic in nature without mention of a specific medical disease or condition (e.g., gender dysphoria).  If that were the case, these binders would arguably not fall within the definition of a medical device at all.  However, given that therapeutic medical binders, including breast binders, have been classified as Class I, 510(k)-exempt devices for more than two decades, and that gender dysphoria is a recognized therapeutic use of breast binders, promoting the use of these products to alleviate gender dysphoria, which enables those who need  the products to more easily find them, would appear consistent with the classification regulation.

Given Dr. Makary’s statement in the press release that “FDA will take further enforcement action such as import alerts, seizures, and injunction if [marketing of these products for children] continues,” it is safe to assume that even if the companies come into compliance, this will not be the last we see of FDA enforcement related to these products.  FDA’s focus of the agency’s limited resources on a Class I device in the absence of serious safety signals, would be a strange prioritization, and inconsistent with the agency’s enunciated focus on reducing burdens on companies to speed availability and access to new products.  Moreover, any such effort would allow a targeted company another opportunity to challenge such an enforcement action as unlawful, under the FDC Act, the Administrative Procedure Act, and/or the U.S. Constitution.  In the face of such a challenge, FDA could be required to explain why it was not arbitrary and capricious or otherwise unlawful to target a company for allegedly marketing products to children when claiming that the violative conduct was the seemingly unrelated violation of failure to register.

In sum, these letters are yet another example of the seeming contradiction that is the current administration and FDA.  See our earlier post here.  On the one hand, Dr. Makary talks about patient access and lowering burdens to getting new products on the market, while on the other, these letters are clearly aimed at making access to these products more costly and difficult, which could mean that fewer patients in need will access them. More fundamentally, FDA may be called to explain why it is publicly targeting safe, low‑risk products that support those seeking treatment for gender dysphoria, and why the Warning Letters cite a technical, easily-corrected violation while the rhetoric in its press release alleges different concerns.

FDA wants to capitalize on the talent of venture capital (VC) firms that are developing innovative solutions that can be applied to FDA’s public health mission. On December 17, 2025, FDA issued a Request for Information (RFI) for its FIRE program, which stands for “Foundational Innovation and RAPID Engagement.”  The proposal is intended to solicit input from VC companies that have capabilities in “artificial intelligence, biotechnology, medical devices, and regulatory technology,” in an attempt to allow those companies to better compete for FDA contracts that “could significantly benefit FDA operations and the broader public health ecosystem.”  FDA Commissioner Marty Makary stated that FDA is exploring this new approach to harness the talent of America’s innovators, rather than relying on “middlemen and D.C. insiders” who are the typical recipients of federal contracts.

Specifically, FDA seeks to gather information to facilitate a potential contract vehicle that would:

• Establish direct contractual relationships with qualified VC firms.
• Enable any company within an approved firm’s portfolio to compete for and receive task orders under the vehicle. To adhere to federal contracting requirements, portfolio companies will be treated as subcontractors.
• Streamline the procurement process for innovative technologies and services.
• Provide a scalable mechanism for engaging with the startup ecosystem.
• Maintain appropriate oversight and compliance with federal acquisition regulations.

The RFI includes 19 questions to which interested parties must respond, and the entirety of the response can be no more than 20 pages, exclusive of appendices. FDA will understand a failure to respond to a single question to mean that the company “does not understand the question and does not demonstrate the capability to provide services required.” Responses also must “demonstrate capability, not merely affirm the respondent’s capability.” At the same time, the RFI states that responses can be broad and “specificity is not necessary at this time.” The questions fall under the following categories: interest and feasibility; structural requirements; venture capital firm qualifications; financial and administrative considerations; regulatory and compliance framework; and implementation timeline and process.

From our perspective, perhaps most interesting is the question about identifying and managing conflicts of interest. If FDA implements this contract vehicle, it is possible that companies with submissions before the agency could also be contracted with the agency to provide certain services; this may be particularly true in the area of AI. Secretary Kennedy has been very vocal about his perspective on the “corporate capture” of FDA by regulated industry. It is not clear how FDA could therefore contract with a VC firm, or a portfolio company of the firm, to provide services while reviewing submissions from the same entity without creating a conflict.

We would be happy to help any interested parties submit comments to this RFI.  Responses are due by 2 pm ET on January 18, 2026.

President Donald Trump signed an Executive Order on Thursday last week directing the Attorney General to expedite completion of marijuana rescheduling begun in October 2022 to facilitate medical research.  There was uncertainty whether President Trump, now in the White House, would support rescheduling.  Candidate Trump posted in September 2024, “As President, we will continue to focus on research to unlock the medical uses of marijuana to a Schedule 3 drug, and work with Congress to pass common sense laws, including safe banking for state authorized companies, and supporting states’ rights to pass marijuana laws, like in Florida.” Donald Trump (@realDonaldTrump), Truth Social (Sept. 8, 2024 at 23:18 ET).

In August 2023, the Department of Health and Human Services (“HHS”), after conducting the required Eight Factor Analysis under the Controlled Substances Act (“CSA”), recommended that the Drug Enforcement Administration (“DEA”) reschedule marijuana from schedule I to schedule III.  HHS found that 30,000 licensed healthcare practitioners were authorized to recommend marijuana for medical use to over six million patients to treat pain, anorexia related to certain medical condition, and nausea and vomiting from chemotherapy.  The Department of Justice conducted a separate Eight Factor Analysis and concurred with HHS’ rescheduling recommendation.  Then-Attorney General Merrick Garland signed a Notice of Proposed Rulemaking (“NPRM”) in May 2024 proposing to reschedule marijuana to schedule III that elicited over 43,500 public comments.  Last January, a public hearing on whether marijuana should be rescheduled was placed on hold pending an appeal by several parties.

The Executive Order’s stated purpose is to improve and facilitate medical research with marijuana and asserts that the “[f]ederal government’s long delay in recognizing the medical use of marijuana does not serve the Americans who report health benefits from the medical use of marijuana to ease chronic pain” and other ailments.  It opines that marijuana’s classification as a schedule I substance has actually “impeded research.”  The Executive Order also seeks to facilitate non-controlled cannabidiol (“CBD”) research for medical treatment.

The Executive Order directs Attorney General Pam Bondi to “take all necessary steps to complete the rulemaking process to reschedule marijuana to Schedule III of the CSA in the most expeditious manner” consistent with the Controlled Substances Act.  But how will the Attorney General bring rescheduling to a close?  Will DEA pick-up where the rescheduling hearing left off in January or will the agency simply issue a final order?

The Executive Order also mandates the Administration to work with Congress to update the statutory definition of hemp derived-CBD products for medical use of full spectrum CBD, while preserving congressional intent to restrict the sale of products posing serious health risks.  This would include developing guidance on upper THC limits.  The Executive Order further requires the responsible federal agencies to develop research methods and models utilizing “real-world evidence” to improve access to hemp-derived CBD products and inform standards of care.

The President’s action follows passage of the Medical Marijuana and Cannabidiol Research Expansion Act (Public Law 117-215) enacted in December 2022 to facilitate research of marijuana and its derivatives, including CBD, for development of approved medications.  The law requires DEA to ensure an adequate and uninterrupted supply for research.  It mandates that DEA streamline and accelerate registration application procedures for marijuana researchers and manufacturers of marijuana for research.  And it mandates HHS to assess, and with the National Institutes of Health report, on marijuana’s potential therapeutic and health effects.

The Executive Order directs finalizing rulemaking to reschedule marijuana from the most stringently regulated class of controlled substances, which includes heroin and LSD, to schedule III, the class with Tylenol with codeine, testosterone, buprenorphine, butalbital, and pentobarbital.  Reclassification to schedule III would acknowledge that marijuana, as with other drugs in that schedule, has a currently accepted medical use in the U.S., a potential for abuse less than drugs in schedule I and II, and a potential for abuse that may lead to moderate or low physical dependence or high psychological dependence.  21 U.S.C. § 812 (b)(3).  Rescheduling marijuana to schedule III would bring federal regulatory requirements into closer alignment with the forty states that authorize it for medical purposes.  It would not authorize marijuana for adult recreational use.

The May 2024 NPRM confirmed that if marijuana were rescheduled to schedule III, “regulatory controls applicable to schedule III controlled substances would apply, as appropriate, along with existing marijuana-specific requirements and any additional controls that might be implemented, including those that might be implemented to meet U.S. treaty obligations.”  Schedules of Controlled Substances: Rescheduling of Marijuana, 89 Fed. Reg. 44,597, 44,621 (May 21, 2024).

Rescheduling to schedule III would subject marijuana cultivators, producers, processors, distributors, importers, exporters, dispensers, and practitioners to specific regulatory requirements under the CSA and DEA regulations.  Requirements would vary depending on the registered business activity.

Rescheduling to the less restrictive schedule unless exemptions are established would still require marijuana businesses to obtain DEA registrations, take initial and biennial inventories of marijuana on-hand, maintain transaction records, file theft and significant loss reports, and label and secure products.  Dispensing marijuana to patients, as required for other schedule III substances, would require a prescription issued for legitimate medical purpose by a DEA-registered and state-licensed practitioner.  21 U.S.C. § 829(b).  Pharmacists have to exercise their corresponding responsibility to ensure that marijuana they dispense is prescribed for legitimate medical purpose.  21 C.F.R. § 1306.04(a).  Marijuana activities would be subject to CSA criminal prohibitions under 21 U.S.C. §§ 841-844.  89 Fed. Reg. at 44,621.  Marijuana would also remain subject to applicable provisions of the Federal Food, Drug, and Cosmetic Act. Id.

As we have advised during different steps in the marijuana rescheduling process, “buckle up.”

On December 3, 2025, the U.S. Food and Drug Administration held its public meeting on the upcoming reauthorization of the Biosimilar User Fee Act (BsUFA) for fiscal years 2028–2032, known as BsUFA IV. The meeting gave regulators, manufacturers, and other stakeholders an opportunity to outline priorities for a program that now provides approximately 61% of FDA’s funding for biosimilars review activities and has supported the approval of 81 biosimilars to date.

For stakeholders, several themes emerged that will shape how biosimilars are developed, reviewed, and approved in the United States over the coming decade.

FDA Session – Opening Remarks and Background

FDA leadership emphasized that the biosimilars program continues to be a major driver of patient access and healthcare savings. Biosimilars have generated $56 billion in savings since 2015, including almost $20 billion in 2024 alone. Biosimilars lower costs in two ways: they enter the market at lower prices, and their presence also leads brand biologics to reduce prices, lowering overall spending.

FDA summarized BsUFA background, program performance, financial background and fee structure, as well as the reauthorization process.  FDA also described several BsUFA III achievements:

• New supplement categories, timelines and performance goals
• Review procedures of use-related risk analysis and human factors protocols for biosimilar combination products
• Launch of a regulatory science pilot program focused on advancing interchangeable biosimilar development
• New meeting types and follow-up clarification opportunities

At the same time, FDA is aware of the need to address the challenges related to biosimilar development, manufacturing complexity, and the evolving landscape of biological products. As the reauthorization process for BsUFA IV kicks off, FDA welcomes the participation of patients, consumer advocacy groups, industry, healthcare professionals, and scientific experts.

Industry Perspective Session

The Biosimilars Forum commended FDA’s collaboration with industry and urged a big-picture reauthorization goal focusing on:

• Improving development and process efficiency to decrease costs of development
• Ensuring stable and adequate resources for FDA’s scientific workforce
• Evaluating whether current paradigms (e.g., suffix naming conventions) remain necessary

The Forum emphasized the importance of taking a step back and looking at what should change to make BsUFA IV more efficient; because, even though better access is needed, biosimilars remain key to competition and cost savings.

The Biosimilars Council (Association for Accessible Medicines) highlighted the program’s substantial progress – such as FDA reducing the need for comparative efficacy studies – and presented several areas for improvement:

• Shortened review timelines in light of decreasing reliance on comparative efficacy studies
• More efficient and transparent communication practices
• Greater efficiency and transparency in the inspection process
• Continue the increased reliance on analytical data to streamline development
• Enhanced approaches to device-related challenges (e.g., user interface differences and human factor studies, device bridging)
• Providing guidance for complex products such as antibody-drug-conjugates (ADCs) and bispecific monoclonal antibodies
• Exploring the use of a single global comparator
• Strengthening the reauthorization framework in a way that safeguards BsUFA-related resources and prevents disruptions

The Pharmaceutical Research and Manufacturers of America (PhRMA) emphasized the need to preserve and build on the successes of previous BsUFAs and for the biosimilars review process to continue to be consistent, predictable, transparent, as well as independent and science-based.  In their view, BsUFA IV should:

• Focus on core review functions, for example:
  • Improving review times

• • Ensuring that review process enhancements introduced in prior BsUFA cycles are utilized effectively and resources used optimally
  • Improve engagement and communication between FDA and biosimilar applicants
• Enhance the financial stability and sustainability of the program by:
  • Streamlining the program’s financial structure to match the FDA’s resource needs
  • Simplifying the user fee revenue process to improve predictability

Public Comment Session

Teva Pharmaceuticals appreciated FDA’s role in fostering a robust and competitive biosimilars market and acknowledged the progress made in BsUFA III. However, from Teva’s perspective, several review process issues warrant attention, for example:

• Supplement review times
• Information requests and deficiency response timelines
• Information requests and labeling comments late in the review process.

Teva expressed looking forward to discussing the possible changes that could address these challenges such as i) earlier identification of deficiencies and earlier inspection scheduling and ii) enhanced oversight of where BsUFA funds are dedicated.

Regarding final approval oversight, because the FDA is moving away from requiring Phase III-style confirmatory clinical trials for biosimilars, Teva recommended that the office most directly involved in reviewing biosimilar applications have final approval authority. That is, granting the Office of Therapeutic Biologics and Biosimilars (OTBB) signatory authority would simplify administrative complexity and reduce the involvement of the Office of New Drugs (OND) clinicians in the final sign off of biosimilar applications, allowing the clinicians to focus on reviewing innovative (i.e., non-biosimilar) drugs.

What Comes Next?

Formal negotiations for BsUFA IV begin in Spring 2026 and are expected to conclude by Summer 2026. FDA must:

• Obtain clearance for the recommendations from the various layers of federal government
• Conduct a final public meeting towards the end of 2026
• Submit final BsUFA IV recommendations to Congress by January 15, 2027

Notably, for the first time in the BsUFA program, FDA will conduct monthly periodic meetings with patient and consumer groups to obtain their input on BsUFA IV. These meetings will be conducted in parallel during the FDA-Industry negotiation meetings.

In addition, due to a new requirement, FDA will post public minutes of the FDA-Industry negotiation meetings within 30 days after each meeting.

For stakeholders interested in participating in the consultation process:

• The public comment docket for the Initial Public Meeting remains open until January 2, 2026.
• Patient and consumer groups can sign up by email BSUFAReauthorization@fda.hhs.gov by January 30th, 2026.

Conclusion

The December 2025 meeting demonstrated broad consensus on the need for a biosimilars program that is efficient, scientifically current, predictable, and sustainably funded. As biosimilars continue to play an increasingly significant role in the American health care system, BsUFA IV will be critical in shaping the regulatory environment that governs their development and approval.

For stakeholders, the upcoming negotiation cycle offers an opportunity to help define how FDA’s biosimilar review program evolves over the next five years.

Stay tuned for more updates!

On December 8, 2025, the Government Accountability Office (GAO) sent a report to Senators Richard Durbin and Richard Blumenthal in response to the Senators’ request for GAO to review FDA’s medical device recall process. At a high level, the findings are not surprising—FDA’s staffing is insufficient to conduct adequate oversight of medical devices recalls, and FDA’s legal authority limits what it can mandate of manufacturers who carry out voluntary recalls. GAO recommends:

HHS work with FDA: 1) to conduct workforce planning for device recalls, and 2) to assess and seek, if needed, additional authority for manufacturer-initiated recall strategies.

GAO stated that it made these recommendations to HHS, which concurred with the first, and is still considering the second.

1.  Workforce Planning

On the first point, it is notable that GAO’s report examines recalls overseen by FDA from FY2020 through FY2024—prior to the drastic agency reductions-in-force and departures that took place this year. It seems reasonable to assume that if FDA staff resources were previously constrained in their ability to conduct necessary recall activities, such constraints are almost certainly now further amplified by the action of the current administration with the significant voluntary and involuntary departures that have occurred in 2025.

The GAO report covers many different areas, from the process for conducting recalls to how FDA classifies recalls (Class I being highest risk, Class III lowest), interactions between FDA and industry during the conduct of a recall, and areas in which FDA has expressed an inability to oversee all aspects of a recall. While we do not intend to address all areas covered in the 49-page report, we will highlight a few notable takeaways.

a)  Device recalls are more voluminous and more multifaceted than drug or biologics recalls in many ways, adding to the complexity of FDA oversight.

The GAO report notes that “[i]n any given year, there are more device recalls than biologics and drug recalls combined.” This is not necessarily surprising, given how medical devices function as compared to drugs and biologics. For drugs and biologics, recalls are almost exclusively focused on safety issues associated with use of the product. For medical devices, recalls may be initiated for malfunctions even if those malfunctions have not caused harm, and even if the likelihood of harm is minimal. Furthermore, as noted in the report, medical devices undergo “rapid improvements and continuous enhancements” compared to biologics and drugs, making medical device oversight more challenging. The report notes that this results in FDA needing to process “a large volume of medical device recalls with limited time, insufficient staffing levels, and information technology database systems that require extensive manual data entry.”

b)  FDA staff acknowledge certain areas of lapsed recall oversight due to inadequate staffing.

The report calls out specific areas of recall oversight that are not currently undertaken due to staff shortages, including reviewing manufacturer Recall Status Reports and conducting in-person recall audit checks. According to the report, “Officials said they often forgo these activities because they must shift staff’s priorities to focus on the highest risk recalls (class I) and on the earlier stages of the recall process (initiation and classification).”  Consistent with this sentiment, as we have previously reported, and as is mentioned in the GAO report, CDRH recently implemented its Early Alert Communications program for potentially high-risk device recalls in an effort to inform the public in a more timely manner about potential risk associated with certain marketed devices.

c)  Termination of a recall by FDA is not a high priority and many months, if not years, can pass between a manufacturer’s request for recall termination and FDA’s issuance of a termination notice.

According to GAO, recall termination “is on the ‘back burner’ due to limited resources.” GAO’s investigation found that 74% of recalls across FY2020-2024 exceeded FDA’s policy of terminating a recall within three months of receiving a termination request from a manufacturer.

From a patient and provider perspective, these delays can sow confusion. As discussed in the report, if the recall has not been terminated, patients and providers may continue to believe that there is an ongoing problem with a particular product, or that FDA has not been satisfied with the recall activities, when the reality may simply be that FDA has not gotten around to it. This can also create problems during mergers and acquisitions, as a buyer may be concerned about a target’s open recall, even if the recall has been resolved adequately but FDA has not issued the termination notice.

d)  Communication between FDA and industry regarding execution of a recall is mutually inadequate.

Neither FDA nor industry is entirely happy with communications during the course of a recall. Interviews with industry trade groups indicate that FDA’s classification process is a “vacuum,” making it difficult for industry to ascertain the factors that FDA considers warrant a high-risk (Class I) classification. Additionally, FDA’s focus is primarily on the earlier recall discussions, leaving industry in the dark when it comes to closing out a recall.

From the FDA perspective, it cannot mandate that manufacturers take certain steps during a recall, which can lead to frustration on FDA’s part when a manufacturer fails to do what FDA is recommending. While it is true that FDA cannot mandate certain actions be taken, in our experience, in most instances the manufacturer will work with FDA to find a mutually agreeable solution to an FDA request. Additionally, FDA has the ability to issue its own press release about high-risk recalls, so while it may not be able to mandate specific activities, FDA does have leverage to influence what is or is not communicated to customers and the public.

e)  Though FDA has taken steps to improve transparency related to potential device risks, it is not clear how the agency will improve the areas that are currently lacking oversight given the reductions in force.

Despite its smaller workforce, CDRH has this year put additional focus on medical device recalls. While the Early Alert program has resulted in the public becoming aware of potential issues earlier, it is not clear the extent to which this program will ultimately affect other challenges identified in the GAO report, particularly with respect to communications toward the end of a recall. To the contrary, this pilot program emphasizes industry’s concern that FDA is far more engaged at the early stages of a recall than it is at the end.

2.  Legislative Authority

GAO also recommended that FDA assess whether it needs additional authority to require manufacturers to implement certain recall strategies.  In situations when FDA and the manufacturer disagree – e.g., about language in the customer letter, or whether to conduct a removal or whether a labeling change is adequate – GAO states that FDA “should have clear and sufficient authority” to conduct effective oversight over recalls.  FDA said it would consider this recommendation, noting that there are potentially more resources required to implement these new authorities, but acknowledging that having the ability to require manufacturers to use certain language could streamline review time for recall communications.  There is legislation proposed by the requestors of the GAO report, among others, to modernize FDA’s recall notification authority; as of the date of this blog post, the House and Senate bills are working their way through the committee review process.

*****

FDA and industry both can undoubtedly benefit from improved communications, increased transparency, and a collaborative approach across the entirety of the recall process. Given the staffing shortages at the agency, it remains to be seen whether or to what extent CDRH will be able to adopt GAO’s recommendation to conduct adequate and appropriate workforce planning for improved recall oversight.

We are proud to announce that Hyman, Phelps & McNamara, P.C. (HPM) has been named to the 2026 Best Law Firms® list, receiving top-tier recognition for our work in FDA Law. The firm earned:

• National Tier 1 – FDA Law
• Regional Tier 1, Washington, D.C. – FDA Law

This honor places HPM among the top 3.8% of law firms nationwide, underscoring our continued commitment to excellence, client service, and leadership in one of the most complex and highly regulated areas of law.

We are honored to be recognized and remain committed to delivering exceptional counsel, strategic solutions, and unmatched experience across the FDA regulatory landscape.

FDA recently published draft guidance explaining how medical gas manufacturers should comply with new regulations that become effective today, December 18, 2025. As an early gift for the holidays, the industry is getting its own set of Current Good Manufacturing Practices (cGMPs). These cGMPs were first unveiled when FDA published a final rule in June 2024, so the medical gas industry got to peek at its presents before they are formally unwrapped today. While the cGMPs are now in effect, comments on the draft guidance are open until January 30, 2026.

Medical gases include both designated medical gases (oxygen, nitrogen, nitrous oxide, carbon dioxide, helium, carbon monoxide, and medical air that meet USP standards) and other FDA-approved gases, gas mixtures, and combination products used for therapeutic purposes. The medical gas supply chain extends from original manufacturers who produce the gas to transfillers who transfer finished medical gas from one container to another. The guidance addresses challenges similar to some of those faced by the drug industry like filling errors and container integrity, but in a light that highlights the unique ways those problems affect the medical gas industry.

The new regs are needed because of these differences, and because over the years, FDA has received several reports of medical gas errors that resulted in patient deaths and serious injuries. As nursing homes and hospitals are not required to report adverse events associated with medical gas mix-ups to FDA, the agency believes that the real toll of these errors is higher.

Prior to the new regulations and draft guidance, medical gas makers followed 21 CFR §§ 210 and 211, as do manufacturers of finished drug products. The 2024 Federal Register notice explained that as of today, the newly minted 21 CFR § 213 replaces Parts 210 and 211 for these products. FDA designed Part 213 for the specific ways companies make, package, refill, and store medical gases and their containers. Companies produce these gases in closed pressurized systems. The gases themselves don’t chemically degrade under normal storage, though manufacturers may still apply expiration dates when required by specific drug applications or when they choose to guarantee container integrity for a defined period.

What distinguishes Part 213 from the drug CGMP container provisions under Part 211? As these provisions are entirely specific to medical gas makers, the new regulations release the industry from the burden of trying to fit the square-peg needs of their industry into the round-hole regulations that weren’t written for them. Part 213 addresses the unique and specific ways companies actually manufacture these products without necessarily sacrificing quality, patient safety, or efficacy. For example, you’d never hear this about traditional drugs, but the guidance clarifies that outdoor spaces and delivery truck beds can serve as appropriate areas for certain operations.

Additionally, manufacturers reuse containers many times. The guidance clarifies best practices for supplier qualification, container leak prevention, facility maintenance, labeling controls, and handling returned cylinders. The industry had previously struggled with these issues under regulations written for traditional drugs.

FDA also established Part 230 for certifying designated medical gases that meet USP standards. Congress created this category because these seven gases predate FDA’s drug approval system. Before Part 230, manufacturers faced a regulatory paradox: they had to comply with drug regulations but couldn’t submit traditional drug applications for these gases, which have been in widespread medical use since before the Second World War. Part 230 solves this by providing a streamlined certification path that acknowledges that the discovery of new kinds of adverse events is unlikely while also bringing them under oversight specific to the industry. FDA exempted these gases from periodic safety reporting since new safety issues rarely emerge, but companies must report serious adverse events within 15 calendar days when those events meet reporting criteria.

FDA defines “medical gas manufacturer” broadly, capturing the potentially long supply chain. The definition includes any entity that produces gas by chemical reaction, physical separation, air compression, purification, or combining gases. This covers original manufacturers through downstream entities that manufacture, process, pack, or hold medical gases.

The industry has advocated for these changes since the 1970s, and these new rules have been in the offing since Congress ordered FDA to write medical gas regulations in 2017. Some years, holiday presents are worth waiting for.