On August 3, 2026, the Health Resources and Services Administration (HRSA) published a Federal Register notice announcing a revised 340B Rebate Model Pilot Program, stating that, for a defined set of drugs, “rebates will be used instead of upfront discounts.” It is HRSA’s second attempt at a rebate pilot in just over a year, and it arrives shortly after the D.C. Circuit’s decision in Novartis v. Kennedy, which held that rebate models are permissible under Section 340B but may not be implemented without approval from the Department of Health and Human Services (HHS). HRSA’s revised Pilot is the agency’s latest effort to exercise the authority the court recognized.

What the Revised Pilot Does

The revised Pilot would require participating manufacturers to provide 340B pricing through rebates rather than upfront discounts for a limited set of drugs selected for the Medicare Drug Price Negotiation Program’s 2026 and 2027 price applicability years. Eligible manufacturers must submit rebate plans to HRSA by August 24, 2026, for an effective date of January 1, 2027. Under the Pilot, covered entities would purchase those drugs at the ordinary purchase price and subsequently submit data to support a rebate request, and manufacturers would have a limited window to pay or deny that request. HRSA has also constrained how those denials may work: a manufacturer generally may not deny a rebate based on suspected patient ineligibility, diversion, or duplicate discounts, issues that remain subject to HRSA’s own audit and dispute-resolution processes rather than a unilateral manufacturer denial.

How We Got Here

The 340B statute requires manufacturers to ensure that eligible covered entities (such as certain safety-net hospitals, health centers, and federally supported clinics) may purchase covered outpatient drugs at no more than a statutory ceiling price, taking into account any rebate or discount “as provided by the Secretary.” Although HRSA historically has administered the program as an upfront discount-based system, manufacturers have long provided 340B pricing through a product-replenishment model, under which eligibility for 340B pricing is generally determined after a drug is dispensed and qualifying volume is replenished at the 340B price.

Beginning in the summer of 2024, Bristol Myers Squibb, Eli Lilly, Johnson & Johnson, Novartis, and Sanofi proposed moving some or all of their 340B business to rebate-based models. Under those proposals, covered entities would purchase drugs at full price and later seek reimbursement for the difference between that amount and the 340B ceiling price. Manufacturers argued that rebate models would provide greater visibility into claims-level data and help address duplicate-discount concerns. Those concerns became more acute following implementation of the Inflation Reduction Act’s Medicare Drug Price Negotiation Program, which created the possibility that the same drug transaction could receive both a 340B discount and a negotiated Maximum Fair Price. Because manufacturers bear responsibility for preventing that overlap, they argued that additional claims-level visibility was needed.

Litigation Derails the First Pilot

HRSA initially responded to the manufacturers’ proposals with a consistent position: the Secretary had not “provided” for a rebate model, and manufacturers therefore could not implement one on their own. Several manufacturers challenged that position in court, arguing that Section 340B permits rebate models and that HHS lacked authority to require preapproval before such models could be used.

While that litigation was moving forward, HRSA pursued a separate path. In July 2025, the agency launched a voluntary 340B Rebate Model Pilot Program for certain drugs subject to Medicare price negotiation. That effort proved short-lived. In a separate challenge brought by hospital groups in the District of Maine, a federal court vacated the Pilot on Administrative Procedure Act grounds, prompting HRSA to withdraw the notice in February 2026. Importantly, the Maine litigation did not resolve the underlying statutory questions raised by the manufacturers’ lawsuits. Those questions, whether Section 340B permits rebate models and who gets to decide when they may be used, remained unresolved in the D.C. Circuit.

The D.C. Circuit Weighs In

On July 21, 2026, the D.C. Circuit addressed the two questions at the center of the rebate debate: whether Section 340B permits rebate models and, if so, who gets to decide when they may be used. The court first considered whether Section 340B permits rebate models at all. Looking to the statutory text, legislative history, and HRSA’s longstanding recognition of a rebate option for State AIDS Drug Assistance Programs, the court concluded that it does. The statute directs that “the amount required to be paid” not exceed the ceiling price, “taking into account any rebate or discount, as provided by the Secretary.” Reading “rebate” according to its ordinary meaning, the court held that a manufacturer may satisfy the ceiling-price requirement either through an upfront discount or through a later rebate.

The more significant holding concerned who gets to decide when rebate models may be used. Although the court agreed that rebates are permissible, it rejected the manufacturers’ argument that they may implement rebate models unless and until HHS affirmatively disapproves them. Instead, the court concluded that the phrase “as provided by the Secretary” requires HHS to authorize a rebate mechanism before manufacturers may use it. As the court put it, the statute “places the Secretary, not the manufacturers, in the driver’s seat of this important program.”

The court also rejected the notion that HRSA had definitively denied the manufacturers’ proposals. Instead, it emphasized that the Secretary’s consideration of those proposals “remains ongoing” and expressly declined to “address whether the Secretary should ‘provide[]’ for the manufacturers’ proposed rebate models or with what limitations.” The court held only that manufacturers may not implement rebate models without the Secretary’s approval, leaving open whether, when, and on what terms that approval should come.

HRSA’s Rationale for Rebates

HRSA’s rationale for the revised Pilot is rooted largely in the Program’s growth. The agency points to the increasing size and complexity of the 340B Program, coupled with new nonduplication requirements under the Medicare Drug Price Negotiation Program, as justification for moving toward a claims-based rebate framework. The Congressional Research Service has reported that total 340B program sales reached approximately $44 billion in 2021, an increase of almost 15% over 2020, and that 340B hospital participation roughly tripled from before the Affordable Care Act’s 2010 expansion of covered entity categories, with registered 340B sites nearly doubling between 2014 and the CRS report’s issuance. HRSA’s own notice states that the Program has since grown further still, reaching more than $100 billion in purchases at discounted 340B pricing in 2025, with 15,249 covered entities and 49,214 associated sites as of April 2026. HRSA contends that this growth, combined with the nonduplication requirements introduced by the Medicare Drug Price Negotiation Program, has outpaced the upfront-discount model’s ability to prevent duplicate discounts, and that a claims-based rebate mechanism gives the agency and manufacturers better visibility into individual transactions before a discount is paid.

Reaction and What’s Next

Reaction to the revised Pilot has followed familiar lines. The American Hospital Association argues that the model will impose significant compliance, operational, and cash-flow burdens on covered entities. PhRMA had earlier called a rebate model “a commonsense, workable solution to longstanding program integrity failures that have worsened as the 340B program has grown,” urging HRSA to adopt one when it commented on the agency’s request for information in April 2026.

Congress, meanwhile, continues to consider competing approaches of its own. As discussed in our recent post on congressional 340B reform proposals, Senate HELP Committee Chairman Bill Cassidy’s discussion draft, released in June 2026, would permit manufacturers to provide 340B pricing through discounts, rebates, or a claims-repository model; it has not yet been formally introduced as a bill and remains open for stakeholder comment through August 28. Two other proposals have gone further and been formally referred to committee. The House’s bipartisan SECURE 340B Act, introduced July 6, 2026, would impose a multi-year pause on rebates and has been referred to committee, though it has not yet received a hearing. The Senate 340B Bipartisan Working Group’s SUSTAIN 340B Act, introduced August 5, 2026, has likewise been referred to committee and would take a still different approach, affirmatively declaring it the sense of Congress that the 340B program is meant to provide point-of-purchase discounts rather than rebates, and requiring HHS to wind down the Rebate Pilot (or any substantially similar program) within one year of enactment and transition to a data clearinghouse instead.

Whether the revised Pilot survives judicial review, how broadly it is implemented, and whether Congress ultimately supplants it with legislation remains to be seen. But after Novartis, one point is considerably clearer: manufacturers may not implement rebate models unless HHS first authorizes them. HRSA’s revised Pilot represents the agency’s latest effort to do so.

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The day after CBER’s Cellular, Tissue, and Gene Therapies Advisory Committee meeting on Capricor Inc.’s Deramiocel for the treatment of cardiomyopathy in DMD, the Advisory Committee met on July 30, 2026, to discuss Replimune’s BLA resubmission seeking accelerated approval of RP1 (vusolimogene oderparepvec) in combination with nivolumab for advanced melanoma after progression on anti-PD-1 therapy.

Replimune submitted a BLA on November 22, 2024, based on a single-arm Phase 2 IGNYTE study.  FDA issued a CRL on July 21, 2025, concluding that the application lacked substantial evidence of effectiveness.  Replimune resubmitted the BLA, but FDA issued a second CRL in April 2026, reiterating the same concerns. At issue in the advisory committee meeting was Replimune’s second BLA resubmission.

The FDA found that because all patients received RP1 plus nivolumab, without a nivolumab-alone control arm, it could not determine whether the observed responses were attributable to RP1, nivolumab, or the combination.  Where FDA’s review of Capricor’s application centered on data analysis issues, review of Replimune’s hinged on study design issues which the agency stated challenged interpretation, e.g.:

• Because all lesions were treated with RP1 instead of leaving a portion of lesions untreated, evaluating systemic effect in a single-arm trial may have been confounded.
• Using histopathology to reclassify disease progression, where lesions originally classified as having progressed were permitted to have been reclassified, may have inflated the objective response rate (ORR) or duration of response (DOR).
• Re-injecting lesions following disease progression and conducting additional procedures like excising lesions, may also have affected progression analysis and inflated the ORR or DOR.
• Using RECIST v1.1 response assessments to determine RP1’s contribution to systemic activity was questioned, given RP1’s intratumoral mechanism of action and the potential limitations of conventional tumor burden assessments like RECIST here.

Similar to Capricor’s situation, given the issues the agency identified, FDA conducted a more conservative sensitivity analysis and found a much lower ORR and DOR (15.7% and 14.1 months, respectively) than Replimune (who reported an ORR and DOR of 33.6% and 24.8 months, respectively).  The question for the advisory committee thus centered on whether this lower ORR and DOR were clinical meaningful.  By a vote of 10 to 3, the committee found in favor of the drug.  Their decision was largely swayed by the unmet need, the devastating nature of the disease (communicated heartbreakingly by the patients and caregivers during the open public portion of the meeting), and the fact that the confirmatory randomized controlled trial was well underway.

On August 6, 2026, four days after Replimune’s August 2, 2026 PDUFA date, FDA granted accelerated approval to RP1 (TUDRIQEV, vusolimogene oderparepvec-wtpg) in  combination with nivolumab for the treatment of adult patients with unresectable advanced cutaneous melanoma who experienced disease progression with a PD-1-blocking antibody-based regimen based on ORR and DOR of 24.2% and 14.1 months, respectively.

So what are key lessons to take away from this process?

• Proceed with caution when conducting single-arm arm studies. FDA maintains that a very large treatment effect is necessary to demonstrate efficacy when an outcome may be impacted by bias; however, how large that effect needs to be is subject to wide discretion.  FDA’s bar as expressed during the meeting was quite high, and certainly higher than the advisory committee’s.  While acknowledging the challenges identified by the agency, the advisory committee nevertheless found the bar to have been met when taking the unmet need, devastating nature of the disease, and patient perspective into account.  The patient voice proved to be particularly persuasive here.
• Remember that when FDA evaluates single-arm studies, they preserve the right to conduct sensitivity analyses taking a more conservative approach when study design issues are identified and can base their decision on such analyses. For this reason, when feasible, sponsors should consider erring on the side of making more conservative study conduct and design related decisions from the outset when conducting single-arm studies.  Alternatively, sponsors should seek more explicit alignment with the agency when planning these design features to ensure alignment with planned approaches.

Baseline-controlled studies remain an important tool in the arsenal of serious diseases with significant unmet medical need, often rare, however FDA’s review is a good reminder to design with intent to overcome FDA concerns of bias and interpretability challenges (see our previous coverage of successful single arm programs here and here).

Ultimately the advisory committee’s perspective, coupled with the patient voice, appeared to have swayed the agency to not only approve Replimune’s therapy, but to cite a higher ORR and DOR in the prescribing information than they presented at the meeting.

Overall, last week’s advisory committee meetings brought back much needed transparency into the agency’s thinking.  Limitations raised by the agency in reviewing both Capricor’s and Replimune’s BLA resubmissions have, by and large, been validated by the advisory committees, but the committee seemed more willing to exercise flexibility in the final analysis.  At least in Replimune’s case, the agency was persuaded to do the same.

After more than a year with nary an adcomm (just 2 drug approval-related meetings in the Makary era), CBER’s Cellular, Tissue, and Gene Therapies Advisory Committee meetings came back with a vengeance last week with back-to-back meetings to discuss two seemingly controversial cell and gene therapies that received complete response letters (CRLs) and are now under review following BLA resubmissions: Capricor’s Deramiocel for DMD and Replimune’s RP1 for advanced melanoma.

Covered in Part 1 of this FDA Law Blog series is the July 29, 2026 meeting on Capricor Inc.’s Deramiocel for the treatment of cardiomyopathy in patients in Duchenne muscular dystrophy (DMD).  Capricor previously submitted a BLA on December 31, 2024, based on results from a Phase 2 randomized trial (HOPE-2) and open label extension (HOPE-2-OLE).  FDA granted priority review but ultimately issued a CRL on July 9, 2025, finding a lack of substantial evidence of effectiveness.  At issue in the recent adcomm was Capricor’s BLA resubmission, and whether the data from its Phase 3 randomized, double-blind, placebo-controlled HOPE-3 study provided substantial evidence of effectiveness. A 9 to 3 vote by the advisory committee opined that it did not, at least for the cardiomyopathy indication (versus the broader impact on skeletal muscle which was not asked directly).  The PDUFA date for Capricor’s BLA resubmission is set for August 22, 2026.

The FDA’s review principally focused on data analysis and the statistical analysis plan (SAP).  They highlighted that decisions made on imputation, exclusion of certain patient data, and changing the primary endpoint from an absolute change to percent change, with key changes in primary endpoint and methodology made after the last subject visit.  FDA further noted the potential for functional unblinding from the AE profile and cross-over into the open-label extension.

Because of these concerns, in its briefing book and presentation, FDA relied on version 1.1 of the SAP, prior to when substantial data collection began (i.e., first subject, first visit), to analyze the data and found a lack of statistical significance.  While shifting to version 1.1 of the SAP seems to be a draconian and overly conservative analysis of the data, particularly in a rare and devastating disease like DMD where unmet needs are substantial and regulatory flexibility is warranted, the advisory committee members appeared concerned by these issues.  In their discussion, the committee members noted that whether statistical significance was reached appeared to hinge on the inclusion or exclusion of certain data or imputations from just a few patients – leading to what the committee members dubbed as data “fragility.”

Without opining on the merits of FDA’s assertions about Capricor’s program, the critiques the agency raised provide important insights for sponsors:

• Focus on the SAP from the get-go. Now this may seem obvious, but for many small companies with limited resources, most of the time and attention is spent on the clinical trial protocol – debating the sample size, single-arm vs. randomized, open-label vs. blinded, which controls to use, and what endpoints to measure.  The statistical analysis plan at this stage is mainly focused on ensuring the trial is adequately powered.  It’s often not until later, much (MUCH) later, when many of the important details for the SAP are hashed out.  Questions like how to handle missing data, what imputations (if any) should be made, and when it may be appropriate to exclude data, should all be considered carefully and pre-specified in the SAP, ideally before the start of the trial, but at least as early as is feasible.  Of course, not all issues can be forecasted but as issues arise during the conduct of the study, the SAP should be evaluated and updated in much the same way as the protocol.
• Avoid major changes to the SAP once the trial is underway, if at all possible. If major changes are unavoidable, ensure there is a very strong scientific justification for making the change and have that documented with the agency (in addition to the change itself).  Prior to submitting the BLA, sponsors should consider running the analysis prior to the SAP changes as an internal exercise to prepare for what the agency may do during a BLA review and prepare in advance for questions that may arise.
• Consider getting FDA alignment on the SAP – especially if major changes are made – or at least try to. While FDA does not need to approve the SAP, it may nevertheless be in a company’s best interest to actively seek alignment, particularly if there are aspects of the SAP the company predicts may raise questions.  As noted by Capricor, versions of the SAP were submitted to its IND and the agency did not provide comments objecting to the changes at the time, however this didn’t preclude the agency from later rejecting the changes. Seeking FDA feedback requires time, as FDA has taken 6+ months to return comments on a SAP submitted to an IND.

The reality is that we learn about rare diseases as we study them, and medical science advances at a rapid pace in parallel.  However, incorporating these learnings in analysis plans in real time needs to be weighed against the real risk that became apparent on July 29: that FDA may void those changes outright.

On July 20, 2026, FDA posted a funding opportunity for sponsors putting digital health technologies (DHTs) to work in clinical trials. RFA-FD-26-012 is a U01 cooperative agreement with a $1.1 million award ceiling, two expected awards, and no cost-sharing requirement (Assistance Listing 93.103). Applications close August 20, 2026.

The subject is DHTs, including actigraphy, photography, and contactless sensors, used for remote data acquisition in clinical investigations that support drug and biological product development. FDA lists four areas of interest (but notes the scope is non-exhaustive):

• Comparing digital measurements to traditional measurements in clinical trials evaluating drugs;
• Developing and evaluating novel endpoints using DHTs, such as contactless room sensors that capture apnea in pediatric patients;
• Comparing metrics to evaluate continuous measurements, such as maximum activity and stamina; and
• Capturing early manifestations of chronic disease, such as non-memory related signs of dementia detected through tests of balance or slowed reaction time.

The Clinical Trials Optional designation in the announcement title widens the applicant pool. Under NIH policy, that designation permits an applicant to propose a clinical trial without requiring one, so a sponsor running a measurement comparison or endpoint development project with no trial underway remains eligible.

FDA asked the public about this subject four months ago. Its March 2026 Request for Information sought comment on advancing DHT use in clinical investigations for drugs and biological products, with comments closing June 1. The Agency is now funding the work directly, consistent with CDER and CBER commitments under PDUFA VII to support DHT use in drug and biological product development.

Eligibility is broad: small businesses, other for-profit organizations, public and private institutions of higher education, nonprofits, and a range of state, local, and tribal government entities all qualify, which opens the door to sponsor-academic collaborations. The cooperative agreement structure carries an obligation a grant would not. A federal agency uses that instrument when substantial involvement is expected between the agency and the recipient in carrying out the funded activity. 31 U.S.C. § 6305(2). For a sponsor seeking early FDA alignment on measurement strategy, that involvement is the attraction. For a sponsor guarding a proprietary algorithm and a fixed development timeline, it is a cost. Two anticipated awards make the competition demanding either way.

Sponsors weighing an application before August 20 should do two things now. First, confirm federal registrations. Submission through Grants.gov requires an active SAM.gov entity registration, and HHS opportunities issued through the NIH Guide also require an eRA Commons account. NIH recommends starting that process six weeks before a deadline, which exceeds the time remaining for an organization beginning from zero. Second, determine whether the DHT meets the definition of a device, since the answer shapes the application and everything downstream of it.

The device answer changes what the application must contain. If the DHT is a device, its use in the proposed investigation becomes a regulated activity for which the protocol has to account: a significant risk determination sets which requirements attach, and a sponsor relying on another company’s DHT may need a right of reference to the manufacturer’s device master file to describe the technology. If the DHT is not a device, none of that applies, and the proposal advances on the drug or biologic pathway alone. Answering the question before drafting keeps a sponsor from building a budget and timeline around the wrong pathway.

FDA’s December 2023 final guidance, Digital Health Technologies for Remote Data Acquisition in Clinical Investigations, tells a sponsor what to do once its DHT is a device: when an investigational device exemption applies, and when information already in an IND suffices. It does not tell the sponsor whether the DHT is a device. The guidance puts that question, whether a DHT meets the definition in FDC Act § 201(h) (21 U.S.C. § 321(h)), expressly outside its scope. The FDA Law Blog covered the guidance when it issued.

The 21st Century Cures Act excluded five categories of software function from the device definition at FDC Act § 520(o)(1) (21 U.S.C. § 360j(o)(1)), and § 520(o)(2) governs products that combine device and non-device functions. FDA moved that line twice in January 2026, revising both the Clinical Decision Support Software guidance, which interprets § 520(o)(1)(E), and the General Wellness: Policy for Low Risk Devices guidance, which now extends enforcement discretion to noninvasive wearables that sense or estimate physiologic parameters where the claims stay within wellness. Because the exclusions depend on function rather than product, one DHT can split: a regulated sensor paired with an unregulated app, or an unregulated sensor feeding software that analyzes the signal and becomes a regulated device. A sponsor should classify each function separately. Under § 520(o)(2), FDA does not regulate an excluded software function as a device merely because it is packaged with a device function, though in reviewing the device function FDA may assess the non-device function’s impact on that function’s safety and effectiveness.

On August 27, 2026, FDA and the Duke-Margolis Institute for Health Policy will host a free virtual public workshop on statistical considerations for digitally derived endpoints in clinical trials for drug and biological products, including updates on FDA efforts under PDUFA VII. Registration is through Duke-Margolis.

Subject matter experts at Hyman, Phelps & McNamara, P.C. are available to evaluate whether a given DHT is a device and to position a DHT program for both the grant and the eventual submission.

Keeping with the 2026 pace of issuing at least two letters a month, the Office of Prescription Drug Promotion (OPDP) has issued letters 20 and 21 this July, and it’s pretty clear to these bloggers that these summer letters are the “filler” to keep up with whatever internal quotas FDA may have regarding prescription drug ad/promo enforcement letters.    This month’s letters take issue with medication convenience claims and an allegation of broadening the indication for a drug to healthcare professionals (HCPs).

With regard to convenience claims, OPDP issued a letter July 13 to Viatris over statements in a video advertisement about its cystic fibrosis drug, the TOBI® PODHALER® (tobramycin inhalation powder), for oral inhalation use.  There, a voice over suggests that the TOBI Podhaler can be used “in the car” or “anywhere,” which OPDP objects to given that the FDA-approved Instructions For Use for the TOBI Podhaler “includes several detailed steps requiring adequate lighting and stable conditions to properly complete the preparation and administration of the product.”  Though the video includes “some information pertaining to the use of the TOBI Podhaler,” OPDP determined that inclusion of this more detailed use information “does not mitigate the misleading impression.”

On July 15, 2026, OPDP issued an Untitled Letter to Sanofi Vaccines US about BEYFORTUS (nirsevimab-alip) injection, alleging that emails intended for HCPs are false and misleading because they create a misleading impression about the approved indication for the product.  Specifically, the emails referred to treating “RSV disease” with Beyfortus, which, according to FDA, suggests the use of Beyfortus for the general prevention of RSV, when Beyfortus is approved for prevention of RSV lower respiratory tract disease.  OPDP alleged, “the emails create a misleading impression about the drug’s FDA-approved indication” despite noting that the full FDA-approved indication is presented in the email in addition to the claims.

These two letters are striking examples (to these bloggers) of OPDP’s efforts to churn out letters whether or not the underlying communications are truly creating any confusion that may, in turn, create a public health risk.  In both cases, FDA acknowledged there was additional context in the communications, but the information was dismissed as “not mitigating the misleading impression.”  And in both cases, the communications at issue are unlikely to be relied upon solely for the administration or prescribing.  Further, in the case of the TOBI Podhaler video, the marketing identifier number referenced in the letter suggests the video has been in use since 2022 (TOBI-2022-0131) – also indicating that OPDP may be actively seeking out opportunities to issue letters.

OPDP is clearly interpreting claims very literally and narrowly, and additional context elsewhere in communications may not be sufficient to overcome any language imprecision.  As OPDP continues issuing Untitled Letters at a rapid pace, one has to wonder whether they are having the intended effect of changing pharma behavior regarding promotional materials or whether the deluge of letters has watered down their impact.  Given FDA’s announcement that it will be issuing a proposed rule that will effectively prohibit DTC TV ads, sponsors should continue to keep their guards up.

Well, don’t say we didn’t tell you what was coming.

Day 2 of the Pharmacy Compounding Advisory Committee (PCAC or the Panel) Meeting (mostly) followed in the footsteps and at the pace of Day 1 (see our prior coverage of Day 1).  Over the course of the day, the Panel worked through three more nominated peptides for possible inclusion on the Section 503A bulk drug substances list, ultimately recommending two—Epitalon and Semax—for inclusion, while declining to recommend Emideltide (the delta sleep-inducing peptide, aka “DSIP”). Was the DSIP “no-vote” the sacrificial lamb here?  As on Day 1, the real drama was less in the vote counts than in the recurring, and still-unresolved, question that FDA pressed from the outset: When a prescriber writes a prescription for one of these peptides, does anyone actually know what the patient is receiving?

FDA: “A Volvo with NASCAR Specs”

FDA opened by reprising its Day 1 themes and answering questions the Panel had raised the day before. The Agency reminded the Panel that none of these substances is an FDA-approved drug, that any clinical investigation would require an IND, and that 503A compounders are not required to submit adverse event reports, so the Agency simply does not receive that information.  FDA asked the Panel to weigh the absence of information as its own data point.

FDA’s Russ Wesdyk leaned into an analogy, likening the exercise to picking a car that is safe for your teenager: The manufacturer makes the nomination, but you may end up with “a Volvo with NASCAR racecar specs,” the same nameplate over a different amino acid count and molecular weight.  The name is fixed; the numbers under it are not.  Turning to “characterization,” FDA noted that “TB500,” a substance discussed on Day 1, typically refers to a 17-amino-acid fragment, but exact sequences and molecular weights vary between vendors, prompting the pointed question, “When you write a script for TB500, what form do you think your patients are receiving?  Does anyone know?”  The Agency stressed that it lacks the authority to define what TB500 is, drawing a comparison to the possibility that the most widely used form of a peptide might not even be the form its inventor discovered or patented (if even a patent were to exist).

“Process” v. “Substances” v. “Application” – What are we doing here?

Panel members quickly zeroed in on the “mechanics” of a peptide.  Panel member Kevin Zacharoff, a Clinical Assistant Professor and Course Director of Pain and Addiction at the Renaissance School of Medicine at Stony Brook University, asked whether the Panel was being asked to evaluate the process for making a peptide or specific compounds within it, noting uncertainty over whether a vote concerned one substance or many forms of a substance sharing a common name.  FDA acknowledged the difficulty: because these are “common name” substances with many possible forms, the open question from Dr. Zacharoff persists, “What form exactly do you want me to put on the list?”  When asked who regulates that question, Russ Wesdyk’scandid answer for the Agency was that one “would need to ask a lawyer.”  Well, being lawyers here, the answer is somewhat unclear; but we can take a good guess.

Panel members also underscored the limits of the record before them.  FDA explained that there is no drug “application” here; there’s only a public nomination, reviewed based on whatever information is submitted (often less than ideal), supplemented by what the Agency can find in the public domain.  As Panel member and patient representative Joshua Mailman, observed, because there is no common dosing schedule, route of administration, or tracking of drug interactions, none of the data generated in the 503A context could support a conventional FDA drug approval process.  FDA’s Office of New Drugs agreed that such information might be supportive of an IND or NDA but could not supplant the clinical evidence of safety and efficacy that approval requires.

Emideltide (DSIP): Not Today

The Panel’s discussion of Emideltide drew sharp opposition—but we note so did the Panel’s discussion of many of the nominated peptides.  Public Citizen’s Mary Ezren strongly supported FDA’s assessment against inclusion, flagging that the common name covers different active molecules, that there are immunogenicity concerns tied to incomplete impurity data, and that the efficacy data are flawed (i.e., small trials, with nothing more recent than 1992).  Dr. John Hertig, Chairman of the Board for the Collaborative for Evidence-Based Medicines, echoed that the sole supporting study is over 30 years old, and warned that once a substance is on the list, the Panel “loses control” over what is ultimately for them a binary choice.

Proponents offered a mix of history and anecdote—one speaker recounted the peptide’s 1977 discovery in the cerebral venous blood of rabbits and its role in regulating sleep architecture without inducing sleep, and others emphasized longevity and circadian applications.  Former Puerto Rico Governor Ricardo Rosselló cautioned that “waiting for perfect certainty” is itself a consequential policy choice.  Rosselló made this point for each substance discussed on Day 2.

The vote on Emideltide (free base and acetate) failed, 6 in favor to 7 against, with 1 abstention.  Dissenting members cited low-quality efficacy evidence, poor characterization, the existence of approved therapies, and the complexity/uncertainty of the dosing regimen.

Epitalon: A Relatively Narrower “Yes”

Epitalon fared better.  Opponents pressed on carcinogenicity—noting a proposed mechanism theoretically linked to cancer via telomere signaling, a concern amplified by chronic dosing—and on the regulatory patchwork that would result from leaving the substance to the states.  There was also a pointed exchange over whether Epitalon is registered in Russia as a dietary supplement, which FDA said it would look into.

The vote on Epitalon passed, 7 in favor to 4 against, with 1 abstention.  Several members in the majority stressed that they were applying 503A criteria—not Phase I or general NDA standards—and would defer to the physician and pharmacist to guide individualized care.

Semax: The (Relatively) Clearest Track Record

Semax drew perhaps the most developed proponent case, anchored by its purported three decades of international use, its mechanistic story (upregulation of neural growth factor BDNF and its receptor TrkB), and study data around neuroprotection and cerebral ischemia.  FDA countered that the available literature—much of it in Russian—often lacked the routes of administration, dosing, and study details needed to verify the study’s claims/outcomes.  In addition, Brian Serumaga, Acting PCAC Chairperson and USP representative, flagged a health literacy risk: the common name could easily be confused with Semaxanib, a distinct compound.

The vote on Semax passed, 8 in favor to 5 against, with 1 abstention.  Members in the majority framed their votes as recognizing a decision “patients are already making” and bringing it into a regulated framework of licensed pharmacies and testing.  Dissenters pointed to weak preclinical evidence, characterization concerns, and the risk of steering patients away from evidence-based therapies for serious conditions.

FDA: Creating—NOT Restoring—Access

Threaded through the day was a recurring correction from FDA.  As FDA’s Matthew Lash, Acting Director of the Office of Compounding Quality and Compliance, explained, Section 503A, enacted in 1997, permits compounding of a bulk substance only through one of three pathways—when a substance is a component of an approved drug, subject to a USP monograph, or included on the bulks list—and these peptides fall outside the first two.  FDA pushed back on the framing that adding them would “restore” post-2023 access, characterizing it instead as the “first time creating legal access,” with uncertain consequences for the scale of availability.  The Agency also emphasized that the withdrawal of the underlying nominations (specifically, all industry nominations had been withdrawn in the months prior to the PCAC meeting) was not a factor in its evaluation, and urged members not to weigh it in their votes.

Takeaways for Industry

Day 2 concluded leaving compounders, prescribers, and manufacturers with a predictable set of open questions.  Two more peptides advanced toward the 503A bulks list Category 1, bringing the total from this PCAC meeting to six; but the votes were relatively close and the Panel’s own members repeatedly acknowledged the tension between individualized patient access and the significant evidentiary and characterization gaps FDA identified.  With FDA confirming that this is a notice-and-comment rulemaking in which it will analyze the full record—including materials submitted after its June 2026 evaluations—the proposed rule, not the Panel’s recommendations, will be where these debates are ultimately resolved.  And with FDA signaling that additional peptides are already queued for a future PCAC meeting, this is just the beginning.

But What’s Next Here?

The compounding and peptide industry is chomping at the bit concerning who can make it across the finish line fastest.  We need FDA to determine—quickly—any needed next steps.  If not, the “gray/black market” production and distribution will continue.  And one of the reasons the PCAC meeting occurred—as addressed through multiple comments over two days—is to rein in the gray/black market and create some guardrails for use.  One option would be placing these “approved” peptides on FDA’s interim Category 1 list (along with all other API awaiting rulemaking) and, as a condition to FDA’s grant of enforcement discretion, put some clear procedures in place at least on a temporary basis.  Some thoughts include (for these peptides only) but are not limited to requiring adverse event reporting, and appropriate, sourcing, grading, identification, and release testing of the bulk substances.

See what we did there?

Well, readers, some big things have taken place.  “Big things” have happened: we previewed these for you in our two-part FDA’s Pep(tide) Rally! What Compounders and Industry Need to Know blog posts (Part I, Part II).

Yesterday, on Day 1 of FDA’s Pharmacy Compounding Advisory Committee (PCAC or Panel) Meeting, the assembled Panel voted to approve for inclusion on the list of bulk drug substances that may be used in compounding under section 503A of the FDC Act (the so-called Category 1 list) the first four of seven bulk drug substances to be considered during this two-day meeting.

With no exaggeration, this is a “sea change” and the “moment” for peptides; it’s just hard to imagine FDA would reverse course given the current administration’s MAHA agenda and HHS Secretary Robert F. Kennedy Jr.’s open support for wider access to peptides (see, for example, his noteworthy appearance on the Joe Rogan podcast, where important drug policy is now announced….).

The PCAC recommended inclusion of four of the most talked-about peptides on the market—BPC-157, KPV, TB500, and MOTS-c.  For BPC-157, KPV, and TB500, the Panel split 8 to 6, with one abstention, reaching that same 8-6-1 result separately for both the free base and the acetate forms.  MOTS-c cleared by a narrower 7-5-2 margin.  The votes are “advisory,” but they are notable because they run flatly against the recommendation of FDA’s own scientific review team.  You can access information about the PCAC, including FDA’s briefing documents, here.

By way of background, the nominations for all of the substances to be considered for inclusion had actually been withdrawn by their nominators at the eleventh hour, with no accompanying explanation; however, the Agency elected to evaluate each substance on its “own initiative,” prioritizing them for consideration given the level of public interest.  We believe that sponsors withdrew the nominations so that their use(s) would not be arguably or otherwise limited to the nominated “indications” should they be added to Category 1.  A multidisciplinary team drawn from the Office of Compounding Quality and Compliance (OCQC), Office of Pharmaceutical Quality (OPQ), and Office of New Drugs (OND)—including OND’s Office of Specialty Medicine (OSM) and Division of Rare Diseases, Pediatrics, Urologic, and Reproductive Medicine/Specialty Medicine (DPT-RPURM/SM)—assessed each substance against FDA’s review criteria and, balancing safety in the context of the proposed use, recommended against their inclusion on the 503A list.

Running through all of the FDA presentations was a foundational concern: identity and characterization of the substance.  As FDA put it, you cannot build meaningful quality standards until you can answer the deceptively simple question of “what is BPC-157?”  FDA repeatedly stated that these are substances described in the literature with a variable number of amino acids and no settled salt, ester, or free base form.  Because different salts and esters of the same active moiety can carry very different physicochemical, toxicological, and PK/PD properties, the Agency stressed that identity and characterization are not technicalities but prerequisites to any compounding standard(s).

The public hearing captured the broader fault line between FDA and non-Panel speakers/Panel members.  Clinicians, telehealth prescribers, and suppliers largely urged a “yes with guardrails” approach, including an FDA-evaluated “greenlist” of FDA-registered API suppliers (NOTE: API suppliers are not, and never can be, “FDA-approved” as many speakers repeatedly referred to them).  The pro-peptide participants also advocated a need for legitimate prescriber-patient relationships, mandatory MedWatch adverse event reporting (NOTE: FDA lacks this congressionally delegated statutory authority to require 503A ADE reporting), and enhanced disclosure that the preparation is compounded—effectively arguing that a blanket prohibition simply pushes patients to an international and research-use-only grey market.  On the other side, public health voices, including but not limited to CSPI’s Peter Lurie and Public Citizen’s Nina Zeldes, opposed inclusion, pointing to inconsistency with FDA’s own compounding standards, safety risks (six of the seven nominated peptides were nominated at least in part for injection, which raises a host of safety concerns), the availability of approved alternatives, and the risk that 503A “listing” would be misunderstood by patients as an FDA “approval.”  Public health speakers also warned that any Category 1-type listing would set a precedent for bypassing approval and strip the incentive to develop these substances under the IND framework.  Pressed on this, FDA invoked its integrity and cautioned that erosion of trust in the Agency’s safety and effectiveness determinations would, itself, endanger public health.

The two remaining substances taken up on Day 1 drew their own distinct debates.  The peptide TB500 was promoted largely for wound healing, tendon and ligament repair, and recovery.  Supporters, including clinicians who described it as part of the so-called “wolverine stack” taken alongside BPC-157, again urged a regulated 503A pathway over the grey market.  FDA and several panelists focused on a potential cancer signal, although FDA acknowledged there are no studies on TB500 itself (… Did we just write that?  No studies?).  Nonetheless, the Panel voted 8-6-1 to recommend inclusion of both the free base and acetate forms, with dissenters citing the paucity of efficacy data, concerns about overlap with tumor progression, and the substance’s proposed use as an injectable.

MOTS-c, a mitochondrial-derived peptide, closed out Day 1.  Opponents—including the Partnership for Safe Medicines, Public Citizen, and the Collaborative for Evidence-Based Medicine—argued that the substance lacks scientific backing, is not well characterized, and that listing would amount to a large, uncontrolled human trial without necessary adverse event reporting.  The Partnership for Safe Medicines’ Shabbir Imber Safdar framed the proponents’ case as a set of myths: that listing gives patients quality-made peptides, that patients will choose licensed dispensers when licensed options exist, and that FDA can permit measured access with guardrails.  On the last point, he said FDA lacks the resources to enforce the guardrails supporters proposed.  Georgetown University’s Adrienne Fugh-Berman was blunter still, calling MOTS-c not merely a harmless supplement but a poorly characterized experimental drug, and arguing that market interest is a reason to study a substance, not to legalize it.  In the closest vote of the day—which, in these authors’ opinions, didn’t feel all that close in the moment—the Panel recommended inclusion of the free base and acetate forms by a 7-5-2 margin, with two members abstaining.  As with all votes taken, victory cheers rang from the audience when PCAC read out the results.

A few points worth keeping in mind as this plays out.  First, the vote is advisory and one input among many; FDA has said it will continue reviewing the comments and data submitted through the docket and will announce any final decision through notice-and-comment rulemaking, not at the PCAC Meeting.  Second, while PCAC recommendations usually track FDA’s ultimate decision, the Agency has gone the other way at least once before, according to Matthew J. Lash, Acting Director, OCQC.  For now, the Committee has SPOKEN, and these four substances appear slated for inevitable inclusion on the 503A list—although timing is still a major question for industry stakeholders.  One question that likely merits a rather immediate answer is whether FDA will place these substances immediately on its interim Category 1 list—as it has with all of the other substances it has reviewed with much less fanfare.  And will it exercise enforcement discretion if compounders start compounding them immediately, like it has with all other substances the PCAC and FDA placed on the Category 1 list?  We bloggers hope FDA’s decision on these gating issues comes promptly as we are sure that the compounding pharmacies are fully primed to the opportunities these decisions present; and they welcome guardrails.

We believe Day 1’s results portend further good news for the peptide industry and consumer market today—stay tuned for our post covering Day 2!

Hyman, Phelps & McNamara, P.C. (HPM) is pleased to announce that Abdie Santiago has joined the firm as an Associate.

Mr. Santiago advises healthcare and life sciences clients on a broad range of healthcare regulatory and compliance matters, including fraud and abuse issues, federal drug pricing and  government healthcare programs, and healthcare transactions.

Prior to joining HPM, Mr. Santiago counseled life sciences and healthcare clients at two AmLaw 100 firms, where he advised on matters involving Medicaid, Medicare Parts B and D, and the 340B Drug Pricing Program. His experience includes counseling clients on drug pricing and reimbursement strategy, negotiating commercial agreements, supporting healthcare and life sciences transactions, and advising on government investigations, audits, enforcement matters, and federal healthcare compliance.

Jeffrey Wasserstein, co-head of the healthcare practice, said “We’re thrilled to have a lawyer of Abdie’s caliber and experience join HPM and expand and support our healthcare fraud and abuse and drug pricing practice.”

Mr. Santiago earned his J.D. from Stanford Law School and his Master of Public Policy from Stanford University. He received his A.B., cum laude, from Princeton University. He is admitted to practice in the District of Columbia and Tennessee.

Hyman, Phelps & McNamara, P.C. (HPM), the nation’s largest law firm dedicated exclusively to FDA and life sciences law, is pleased to announce that Gayatri Rao, M.D., J.D., M.B.E. has joined the firm as a Director.

Dr. Rao brings a rare combination of experience spanning, nearly a decade of leadership at the U.S. Food and Drug Administration, executive leadership within the biotechnology industry and private practice.  Her practice focuses on advising biotechnology and pharmaceutical companies on FDA regulatory strategy and medical product development, with particular experience guiding innovative therapies for rare diseases from early development through market approval.

Most recently, Dr. Rao served as Chief Regulatory Officer and Chief Development Officer at Rocket Pharmaceuticals, where she led regulatory and development strategy across multiple gene therapy programs. During her tenure, she played a key leadership role in the development and FDA approval of KRESLADI™ (marnetegragene autotemcel), gaining firsthand experience navigating the scientific, regulatory, and commercial challenges facing emerging biotechnology companies.

Prior to joining Rocket Pharmaceuticals, Dr. Rao spent nearly ten years at FDA, including seven years as Director of the Office of Orphan Products Development. In that role, she oversaw the Orphan Drug Designation Program, helped implement the Rare Pediatric Disease Priority Review Voucher Program, and worked to advance orphan drug policy and international regulatory collaboration. Earlier in her FDA career, she served as Associate Chief Counsel, advising the agency on medical devices, combination products, human subject protection, and other complex regulatory matters.

“Gayatri’s career reflects the kind of multidisciplinary experience that our clients need to shape and propose innovative development programs to FDA. Her leadership at OOPD and in biotechnology gives her an exceptional understanding of the scientific, regulatory, and strategic decisions at every stage of development, from Pre-IND through approval. We are thrilled to welcome her to HPM, where her experience will further elevate our work helping clients advance much-needed therapies for patients with rare diseases,” said James Valentine, J.D., M.H.S., Director at HPM.

Dr. Rao’s multidisciplinary background uniquely positions her to counsel clients on every stage of the product lifecycle.  Her experience as both a regulator and industry executive provides clients with practical, business-focused guidance informed by firsthand decision-making.

“I am thrilled to join Hyman, Phelps & McNamara,” said Dr. Rao. “Throughout my career, I have been passionate about helping bring innovative therapies to patients, particularly those with rare diseases and significant unmet medical needs. HPM’s unparalleled reputation in FDA law and regulatory strategy make it an ideal place to continue serving clients as they navigate today’s increasingly complex regulatory landscape.”

Dr. Rao earned her J.D. from the University of Pennsylvania Law School, M.D. from Rutgers New Jersey Medical School, and a Master of Bioethics from the University of Pennsylvania School of Medicine. She is admitted to practice in the District of Columbia and New York.

With Dr. Rao’s addition, HPM continues to expand its nationally recognized capabilities in FDA regulatory law, gene therapy, biologics, orphan drug development, and strategic counseling for life sciences companies.

Controlled substances are critical to patient care, but hospitals have always been vulnerable to their diversion by trusted employees.  In a number of recent cases, employees have been able to divert considerable quantities of controlled substances undetected over extended periods of time.  These incidents resulted in overdoses and deaths, patient undertreatment, multimillion-dollar civil monetary penalties, and comprehensive remedial settlements.  The Drug Enforcement Administration asserted that the hospitals’ noncompliance with mandatory recordkeeping, reporting, and security requirements enabled the diversion.

Larry Houck ‘s presentation, “Hospital/Healthcare Facility Controlled Substance Diversion: Recent Case Studies,” focuses on several of those high-profile cases and discusses how hospitals can prevent and detect employee diversion of controlled substances. The presentation on this timely topic, at the World Conference Forum’s 2026 Opioid & Fentanyl Abuse Management Summit in Chicago on July 20th-21st.

Mr. Houck will present on:

• How employees in several high-profile cases diverted significant controlled substance quantities;
• Red flags the hospitals missed;
• Safeguards for minimizing internal diversion risks; and
• Best practices for maximizing diversion detection.

Click here for information about WCF’s Opioid & Abuse Management Summit.

For years, debates over the 340B Drug Pricing Program have played out primarily through litigation, agency guidance, and stakeholder advocacy. Congress, by contrast, has largely remained on the sidelines. That may be changing. Within two weeks, lawmakers in both chambers released significant reform proposals that would address some of the program’s most disputed issues, including patient eligibility, contract pharmacies, transparency requirements, and pricing mechanisms.

On June 25, Senate HELP Committee Chairman Bill Cassidy released a discussion draft of the 340B Drug Pricing Integrity and Affordability for Patients Act (“340B for Patients Act”). Less than two weeks later, a bipartisan group of House Energy and Commerce Committee members introduced the Strengthening the Exercise of Controls and Upgrading Requirements for Efficiency in 340B Act (“SECURE 340B Act”). The proposals are notable not only for their timing, but also for their level of detail. At approximately 88 pages and 142 pages, respectively, they reflect extensive legislative development across many of the issues that have defined recent 340B policy discussions. Although the two proposals differ in important ways, both reflect growing bipartisan interest in codifying rules that have been the subject of years of regulatory uncertainty and litigation.

Where the Proposals Align

Both proposals would narrow and formalize the definition of a 340B patient, generally requiring a documented provider-patient relationship and an outpatient encounter within the previous 24 months. Both would also establish statutory frameworks for contract pharmacy arrangements (discussed below), expand transparency requirements, and impose new compliance obligations on covered entities.

The proposals similarly share a focus on demonstrating patient benefit. Each includes patient-affordability provisions aimed at ensuring that 340B savings translate more directly into reduced patient costs.

Where They Differ

The most significant differences for drug manufacturers involve discounting methodology and contract pharmacies. Those differences come against the backdrop of a broader debate over the role of rebates in the 340B Program. Beginning in 2024, several manufacturers sought to replace traditional upfront discounts with rebate-based models that would require covered entities to purchase drugs at a higher price and later receive a rebate equal to the difference between that price and the 340B ceiling price. Those efforts prompted litigation over HRSA’s authority to approve or reject rebate models, an issue that is still under review at the appellate level. The manufacturer rebate initiatives also led HRSA to establish a limited rebate model pilot program in 2025, although that pilot program was subsequently vacated on Administrative Procedure Act grounds and remanded to HHS by a federal district court. HRSA is still contemplating a possible rebate alternative, having issued a request for information on a rebate model earlier this year.

The Senate’s 340B for Patients Act would permit manufacturers to provide 340B pricing through upfront discounts, rebates, or an HHS-administered claims repository. The SECURE 340B Act instead would continue the current requirement of upfront discounts and impose a four-year moratorium on rebates while establishing an independent clearinghouse to validate claims and prevent duplicate discounts. The bill ties continuation of the moratorium to the clearinghouse’s performance, effectively making the future availability of rebates dependent on the success of that data infrastructure.

The proposals also differ sharply on contract pharmacies. The Senate draft would limit disproportionate share hospitals, free-standing cancer hospitals, and rural referral centers to five contract pharmacy arrangements and generally require those pharmacies to be located within the covered entity’s service area. The House bill imposes no such limits and would prohibit manufacturers from restricting access based on a covered entity’s use of contract pharmacies.

The House proposal also addresses a wider range of patient-facing issues, combining financial-assistance requirements with provisions related to medical-debt collection and reporting practices.

Neither proposal addresses another significant issue currently facing the 340B Program: Medicare reimbursement. On July 2, CMS proposed reducing Medicare Part B reimbursement for 340B-acquired drugs from ASP plus 6% to ASP minus 33.4% beginning in CY 2027. The proposal follows an acquisition-cost survey conducted by CMS and revisits a longstanding policy dispute that culminated in the Supreme Court’s 2022 decision, in American Hospital Association v. Becerra, 596 U.S. 724, invalidating the agency’s previous reimbursement cuts. While reimbursement policy is distinct from the reforms contemplated by the Senate and House proposals, the CMS rulemaking underscores that key questions regarding the scope and operation of the 340B Program remain under active consideration across multiple branches of government.

Why It Matters

Manufacturers, covered entities, contract pharmacies, and third-party administrators all face meaningful policy implications under either Congressional proposal. For manufacturers, the principal questions concern rebate models, claims verification, and contract pharmacy access. For covered entities, the proposals would create substantial new reporting, audit, and compliance obligations. Contract pharmacies and TPAs would also need to adapt to new statutory requirements governing participation, data reporting, and compliance oversight.

Perhaps most importantly, the emergence of detailed proposals from both the Senate and House suggests that congressional interest in 340B reform has moved beyond oversight and into active legislative development. The Senate discussion draft can be viewed as a natural outgrowth of Chairman Cassidy’s multi-year investigation of the program and the Senate HELP Committee’s 2025 report, which called for greater transparency, clearer patient-benefit standards, increased oversight of contract pharmacy and TPA arrangements, and more explicit statutory direction for program administration. Whether either proposal will advance in its current form remains uncertain. Taken together, however, they suggest that congressional attention is increasingly focused on establishing clearer statutory rules for a program that has long been shaped by agency guidance, administrative action, and litigation.

Looking Ahead

Chairman Cassidy has requested stakeholder feedback on the Senate discussion draft (with comments due August 28, 2026), while the SECURE 340B Act begins the normal legislative process in the House. As those discussions continue, attention will likely focus on whether Congress can reconcile the competing approaches to rebates, claims administration, and contract pharmacy oversight. For now, the proposals offer an early look at the policy issues that appear to be attracting the greatest congressional attention, including patient eligibility, contract pharmacies, transparency, and program administration.

Last week, FDA’s Civil Money Penalty (CMP) authority suffered its most severe blow to date: the U.S. Court of Appeals for the Fifth Circuit vacated FDA’s imposition of a CMP, against a retailer for selling unauthorized tobacco products, as unconstitutional under the Seventh Amendment and SEC v. Jarkesy, 603 U.S. 109 (2024).  Texas Tobacco Barn, LLC v. HHS (5th Cir. June 30, 2026).  If you’ve been following our multiple prior posts on this subject (here, here, and here), you know this is something we’ve been keeping keen eyes on.  Let’s recap where things stood before this decision, break down the (2-1) panel decision itself and its notable dissent, and consider what may come next.

First, to recap: two lower courts in Texas had found FDA’s tobacco CMP provisions unconstitutional, but the damage to FDA was limited because they only ordered party-specific relief, and were not more broadly binding.  But we observed that this case was pending before the 5^th Circuit, and if FDA lost it, “even if such a ruling only purports to offer party-specific relief . . . FDA would be much harder-pressed to continue business as usual given the broader precedent set by such a decision.”  Well, now it has.

The Decision – Majority and Dissent

Texas Tobacco Barn challenged a CMP imposed through an administrative proceeding for selling e-cigarette/vape products that had not first obtained FDA’s premarket authorization. The panel majority held that the CMP violated the petitioner’s 7^th Amendment right to a jury trial.

Central to that ruling was the finding that the “public rights exception” to the jury requirement, i.e., for rights that “historically could have been determined exclusively by the executive and legislative branches,” did not apply. Maj. Op. (quoting Jarkesy).  It found no broad “public health” category fitting into the public rights exception, and dismissed the prior Supreme Court “public rights” cases on which FDA relied.  It also considered the “substance” of the action, which it had discussed in an earlier part of the opinion.  Asking whether the type of claim FDA brought bore a “close relationship” to a historical “common law cause of action,” the court answered yes. It reasoned that FDA’s CMP action, which sought to enforce sales of tobacco products without FDA’s premarket authorization and thus rendered them “adulterated” and “misbranded” tobacco products under its statute (see 21 U.S.C. §§ 387b(6)(A), 387c(a)(6)), was “analogous” to historical private common law actions for the sales of “unwholesome” food and drink, and a “cheat action” for such products sold with false representations.  In short, “[w]hile these common law actions are not ‘identical’ to the FDCA, they confronted the ‘same basic conduct’ as the modern statute: selling adulterated or misbranded consumables.”  In sum, since the majority found no public rights exception, Jarkesy and the 7^th Amendment require a jury trial. Because this case came from a single petition from a CMP, the court simply ordered the vacatur of FDA’s imposition of that CMP (and nothing more).

Not so fast, said the dissent.  In its view, HHS had never advanced the broad “public health” exception the majority criticized, so that piece was largely a straw man; and it more favorably looked on the “public rights” cases FDA cited.  As for the “common law cause of action” piece, the dissent focused on a part of Jarkesy the majority did not: “the Seventh Amendment does apply to novel statutory regimes, so long as the claims are akin to common law claims.” Dissent Op. (quoting 603 U.S. at 139).  On that relationship, the dissent accused the majority of drawing too large a circle to find its fit.  The conduct for which FDA brought the action, the dissent pointed out, was the sale of tobacco products that did not go through FDA’s “novel premarket authorization process.”  That fundamentally distinguished it from the common law actions the majority had identified: “The problem with the majority’s analysis is that TTB was not accused of selling an unwholesome product or misrepresenting anything about the product.” Yes, the statute uses the terms “adulterated” and “misbranded” in categorizing such a violation, but that shouldn’t make a difference: regardless of the legal label, there was “nothing akin to a pre-sale authorization regime at common law, nor any authority for [the] leap from targeting unwholesome food products and deceit in food sales to targeting a failure to pre-authorize.”  In the dissent’s view, since that important nexus was not met, the public rights exception was satisfied, and there should be no constitutional problem with the jury-less CMP here.

Our Take

At bottom, the main difference between the majority and the dissent — and in the debate around the “public rights exception” more broadly — boils down to the “level of generality” (Dissent Op. at 22) with which common-law analogues should be viewed to determine whether they are closely enough related.  In the majority’s view, “adulterated and misbranded” is the right level, because FDA’s scheme here still ultimately is one that seeks to protect public health (from the dangers of selling unauthorized and therefore potentially harmful tobacco products). In the dissent’s, that’s not good enough: after all, “all statutes target harms in some sense, and ultimate harms of the kind the majority alludes to—harms to the public health from food, cheating—are perennial. At this level of generality, it is no surprise that the majority can identify ‘various’ common law actions that are ‘analogous’ to the one at issue here.”  Like many legal questions, how thinly the analytical salami is sliced can make all the difference; and in our prediction, the Supreme Court is still likely to be the ultimate salami-cutter here.

(That said, there may be still other arguments on either side that could ultimately carry the day: for example, if a court only focuses on specific categories of “public rights” with a “serious and unbroken historical pedigree” (Maj. Op., quoting Justice Gorsuch’s Jarkesy concurrence), then FDA may fare poorly; but if instead it focuses on the fact that premarket authorization operates more like a ‘licensing scheme’ for conduct Congress could outlaw entirely, then FDA may fare better (see Dissent Op. at 26-27 n.11.))

This discussion raises another interesting question.  While FDA has brought many tobacco CMP actions for sales of unauthorized (historically almost always e-cigarette/vape) products, FDA brings far more for underage buyer purchases, sometimes colloquially called a “sale and fail”: the sale of tobacco products to buyers under 21 years old, and the failure to verify their age with ID before doing so — violations which also render tobacco products “misbranded.” See 21 U.S.C. §§ 387f(d), 387c(a)(7)(B); 21 C.F.R. § 1140.14.  All the tobacco CMP litigation challenges we’re aware of have involved unauthorized products; it is interesting to consider how the analysis might shake out for the sale and fail. That is, would a common-law analogue for an action involving sales to a certain type of purchaser be more or less similar than those involving premarket authorizations?  Would it matter, under either the majority’s or the dissent’s method of analysis?  Or to keep the analogy going, if we’re talking about cutting salami here, what happens when you bring the cutter over to your pepperoni?

As we’ve written before, FDA has used tobacco CMPs as a powerful tool to obtain compliance, as it works both to combat the rash of unauthorized tobacco products in the U.S. market, and tries to keep tobacco products out of the hands of children and young adults. We’ll leave those questions for another day while we go grab a snack, but we’d be loathe to miss the hoagie for the fillings here.

What’s Next

After this first Circuit Court loss, FDA has two big decisions to make: whether to seek rehearing and/or certiorari to the U.S. Supreme Court from the decision, and whether and how to go forward with tobacco CMPs. If past is prologue, FDA will likely continue to zealously defend its CMP scheme in court, especially with a thoughtful dissenting opinion to bolster it.  Assuming FDA does not get this case reheard and overturned by the 5^th Circuit, and the mandate issues, that court could issue rulings in the currently-stayed Wulferic and Vaping Dragon cases further piling on the precedent now set.  The D.C. Circuit’s decision in D and A is still looming too, and the presence of a circuit split (or not) always affects the cert calculus.

In terms of FDA’s pursuit of CMPs going forward, we wrote back in early December that FDA’s pursuit of tobacco CMPs, even after one court loss, appeared to proceed apace. In our research for this blog, however, we observed a potential shift: while FDA continues to pursue new enforcement (in the form of Warning Letters and CMP Complaints) for underage buyer sales of various tobacco products including e-cigarettes, and existing CMP proceedings of all types appear to be moving apace, we could not find evidence on its website of any new CMPs for unauthorized e-cigarette sales since mid-December 2025.  (We note though that FDA has not updated its website since May 31, 2026). Whether this shift (assuming it is a real one) might derive from an assessment of litigation risk from these Jarkesy cases, or from a change in policy or enforcement priorities, we do not know.  But whatever the reason, that potential shift may blunt the immediate effects of this decision on FDA’s day-to-day workings in the realm of unapproved e-cigarettes, with its effects on FDA’s future tobacco CMP enforcement otherwise (for underage sales, and outside the 5^th Circuit’s jurisdiction, perhaps) remaining to be seen — though we already see some new underage sale CMP Complaints being filed even after the decision.

As always, we’re keepin.g our eyes peeled

Well, it’s here, it’s happening.  The Unified Agenda of Regulations has been updated to include a proposed rule, “Transparency in Direct-to-Consumer Advertising” to remove the (so-called) “adequate provision loophole” from the prescription drug advertising regulations in 21 C.F.R. §202.1(e)(1)(i)(B).  The proposal appears to be set for publication in December 2026 and is intended to force pharmaceutical companies to include a full brief summary within the drug’s broadcast ad (not through direction to a website, toll-free number, etc.,).  If finalized, this could effectively ban DTC broadcast ads by making them so lengthy as to be cost prohibitive.

This effort is hardly a surprise and is in response to the presidential memorandum, FDA  press release, and HHS Fact Sheet that we previously blogged on here and here in September, simultaneous with FDA’s “DTC Crackdown.”  As we noted back in September, FDA continues to mischaracterize adequate provision as a “loophole,” omitting the fact that broadcast ads already contain a “major statement” of key risks, and positioning this proposal as “improving consumer understanding” – when, in reality, it does the opposite.  Over a decade ago, FDA advised industry on the following as it pertained to consumer directed brief summary requirements:

To provide better and more actionable information for consumers, FDA believes that the brief summary should focus on the most important risk information rather than an exhaustive list of risks and that the information should be presented in a way most likely to be understood by consumers.  Thus, FDA strongly recommends against the use of the traditional approach to fulfill the brief summary requirement in consumer-directed advertisements, an approach in which risk related sections of the PI are presented verbatim, often in small font.

While this position was with regard to print advertisement (where consumers could take their time to read the print provided), one would expect the same policies regarding consumer comprehension to hold true for broadcast media.  So much for “improving consumer understanding.”  But hey, let’s not let the truth get in the way of a good story.

The FDA acknowledges that it anticipates this rule to be economically significant, with annual costs exceeding $100 million.  It is also likely to lead to litigation.  We’ll wait and see what ultimately gets published and how industry will respond.

The American Conference Institute’s (“ACI”) 13th Annual Summit for Women Leaders in Life Sciences Law returns July 29-30, 2026, at the Seaport Hotel Boston in Boston, Massachusetts.

ACI’s Summit for Women Leaders in Life Sciences Law is dedicated to providing the invaluable opportunities for networking and collaboration with the chance to meet, engage with, and learn from over 350 attorneys and executives from the biotech, pharmaceutical, and medical device industries and keep you up-to-date on the latest developments and challenges in the industry.

This year’s summit is bigger than ever, featuring:

• A Fireside Chat with FDA and EMA, focused on key agency initiatives and leadership in the public sector
• CEO Spotlight Interviews with Arivee Vargas (CEO & Found of Humble Rising, and Former Executive Coach at Vertex Pharmaceuticals) and Lara Sullivan (Board Member, President & CEO of Pyxis Oncology)
• Discussions on Navigating MFN Drug Pricing, TrumpRX, Direct-to-Patient Models, Commercial Disruption, Tariff Turbulence, AI-use in Product Development and Workflows, and more
• Intimate Roundtable Discussions on Multigenerational Workforces, Personal Branding, Self-Advocacy, and Leadership and Retention
• A Brand-new Interactive Workshop: the Boardroom Experience – A Live Board Meeting Simulation for Aspiring Board Members, facilitated by Diana Markaki-Bartholdi (Founder of the Boardroom)

Don’t miss the event that has been connecting women leaders in life sciences law for over a decade.

Hyman, Phelps & McNamara, P.C.’s Sara W. Koblitz will be speaking at a panel session, titled “Navigating the New Landscape of Direct-to-Consumer Advertising and Influencer Marketing in the Life Sciences Industry.”

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.