On December 5, FDA’s Digital Health Center of Excellence announced the “Technology-Enabled Meaningful Patient Outcomes (TEMPO) for Digital Health Devices Pilot,” in conjunction with the Center for Medicare and Medicaid Innovation (CMMI) Advancing Chronic Care with Effective, Scalable Solutions (ACCESS) model. FDA’s press release states that TEMPO is a “voluntary pilot designed to promote access to certain digital health devices while safeguarding patient safety.”

TEMPO will use a “risk-based enforcement approach that supports digital health devices intended for use to improve patient outcomes in cardio-kidney-metabolic, musculoskeletal, and behavioral health conditions.” The devices in the TEMPO pilot must be for uses “covered by the CMMI ACCESS model while collecting, monitoring, and reporting real-world performance data.” The ACCESS model intends to address a current challenge faced by developers of many digital health products, namely, that these products have not historically been covered by CMS, minimizing, if not entirely precluding, their uptake. ACCESS will allow CMS to offer coverage based on “outcomes over activities, enabling clinicians to offer innovative technology-supported care that improves patients’ health and complements traditional care.”

There are a few points of particular interest in this announcement. First, FDA states:

Under this approach, participating manufacturers may request that the FDA exercise enforcement discretion for certain requirements, such as premarket authorization and investigational device requirements, while manufacturers collect and share real-world data demonstrating the device’s performance. The FDA will work with participants in the TEMPO pilot to identify the circumstances when enforcement discretion may be appropriate for that manufacturer’s device.

It is not clear how a manufacturer would go about requesting enforcement discretion, the circumstances in which FDA would find it appropriate to exercise such discretion, or what happens after the manufacturer is done collecting and sharing “real-world data demonstrating the device’s performance.” Would the manufacturer, at that point, have to go back and obtain a premarket authorization? This would be an extraordinarily odd outcome, if the device is already being reimbursed by CMS, utilized for clinical decision-making, and essentially used commercially as if it were already authorized. This also does not address whether FDA would exercise enforcement discretion for other related requirements, for example, registration and listing and quality system requirements. It also is worth pointing out that it is not clear whether FDA has the statutory authority to permit differential treatment of certain devices, allowing some on the market without premarket authorization while requiring similar devices that are not part of the program to obtain premarket authorization before commercialization.

Relatedly, while not necessarily clear on FDA’s website, CMS’s website more explicitly calls out the types of conditions that devices in the pilot should be intended to treat, namely:

• Early cardio-kidney-metabolic conditions (eCKM): hypertension (high blood pressure), dyslipidemia (high or abnormal lipids, including cholesterol), obesity or overweight with marker of central obesity, and prediabetes
• Cardio-kidney-metabolic conditions (CKM): diabetes, chronic kidney disease (3a or 3b), and atherosclerotic cardiovascular disease, including heart disease
• Musculoskeletal conditions (MSK): chronic musculoskeletal pain
• Behavioral health conditions (BH): depression and anxiety

The first category above is particularly interesting, given FDA’s recent pushback on any blood pressure product that has not been cleared by FDA, stating that without such clearance there is no assurance of safety and effectiveness. See our posts on the WHOOP Warning Letter and FDA’s recent safety alerts regarding risks associated with use of unregulated blood pressure monitors. FDA now seems to be saying that products of this type may not need premarket authorization, at least not if they are part of this pilot program, which seems to call into question FDA’s prior statements about the necessity of such oversight to assure safety and effectiveness.

Given the historical challenges associated with coverage of digital health products, the TEMPO pilot is an overdue initiative and one with the potential to help provide access to critical digital health products for the Medicare population. In order to allow interested parties to proceed appropriately, however, additional clarification is needed. For example, it is not clear whether a party needs to submit both a “statement of interest” to the FDA, as indicated in the announcement, as well as an “ACCESS Model Interest Form” to CMS, or whether submission of one is adequate. It is also not clear whether CMS would need to first determine that the device is eligible for coverage under the ACCESS Model prior to the device being considered for the TEMPO pilot, or whether such a determination will be made collaboratively between CMS and FDA. Furthermore, it may be helpful for FDA to update its page to more specifically identify the conditions to be treated by a device in the pilot and mirror what is on CMS’s website, indicated above.

CMS’s website also states that the ACCESS Model Interest Forms must be submitted before April 1, 2026, and the program is intended to begin in July 2026. While FDA’s announcement indicates that interested parties can submit “statements of interest” beginning in January 2026, it does not include the April 1 deadline, nor does it indicate an intent to begin the program in July. Given that ACCESS and TEMPO are intertwined, it is reasonable to assume that these dates apply for both parties.

We are happy to help you keep up your “tempo” to be able to “access” both initiatives in a timely manner.

A few months ago, we blogged about a Texas U.S. District Court’s Wulferic ruling that FDA’s civil monetary penalty (CMP) provision for tobacco products contained at 21 U.S.C. § 333(f)(9) is unconstitutional under the Seventh Amendment and SEC v. Jarkesy, 603 U.S. 109 (2024). Wulferic, LLC v. FDA, 793 F. Supp. 3d 830 (N.D. Tex. 2025).  (As a recap, the court, applying Jarkesy, ruled that the Seventh Amendment right to a jury trial applies to civil monetary penalties like those applied by the FD&C Act, and that the enforcement of these penalties by administrative law judges is unconstitutional.)  We also considered the potential implications of that ruling, and its place in the broader landscape of Jarkesy challenges to FDA’s tobacco CMPs.  Nearly four months on, the picture is coming into focus: the main action is now shifting to the D.C. Circuit and the Fifth Circuit, and with FDA going full steam ahead on pursuing tobacco CMPs and defending its position, the stakes remain high.

In September, FDA appealed the Wulferic decision and filed a brief in the Fifth Circuit case we were watching, Texas Tobacco Barn, forcefully defending the constitutionality of its tobacco CMP provisions.  The Fifth Circuit then decided to stay the Wulferic appeal pending the outcome of Texas Tobacco Barn, although the Wulferic petitioner (likely wanting to get a word in while it matters most) filed an amicus brief there.  See Wulferic, LLC v. FDA, No. 25-11112, Dkt. No. 18 (5th Cir. Oct. 10, 2025); Texas Tobacco Barn, LLC v. HHS, No. 25-60200, Dkt. Nos. 43, 44 (5th Cir. Aug. 3, 2025).  Texas Tobacco Barn is fully briefed, but no argument has yet been scheduled.

We were also keeping an eye out for a ruling in The Vaping Dragon, which presented a different judge in the Northern District of Texas with the same issues as Wulferic.  That judge has still not issued any ruling — although that case has not been formally stayed, it is possible that the judge too is keeping his pen dry until the outcome of the Fifth Circuit’s decision(s).

Over in the D.C. Circuit, things are moving a bit more speedily in the case we were watching there.  Much the same as in Texas Tobacco Barn, in D and A, FDA filed a brief forcefully defending its tobacco CMP provisions.  The D.C. Circuit has set oral argument for December 8, 2025 (we’ll be tuning in), offering the first chance for the Circuit courts to weigh in on this precise issue.  See D and A Business Invs., LLC v. FDA, No. 25-1074 (D.C. Cir. Sept. 12, 2025, Oct. 16, 2025).  While Texas Tobacco and D and A each present other challenges to the proceedings such that they theoretically could be resolved without reaching the Jarkesy question, in all likelihood, both Circuits will reach its merits.

As before, the stakes are high: a ruling from either court that FDA’s tobacco Civil Money Penalty proceedings are unlawful could significantly dismantle FDA’s arsenal of actions to enforce compliance with the FD&C Act’s tobacco provisions.  And even if such a ruling only purports to offer party-specific relief (as the district court Wulferic decision did), FDA would be much harder-pressed to continue business as usual given the broader precedent set by such a decision.  If the challengers lose either case, they will be highly motivated to seek review in the Supreme Court; and especially if the outcome of the two decisions results in a Circuit split, the Supreme Court will likely weigh in to resolve it (as it recently did in a series of challenges to FDA decisions on flavored e-cigarette tobacco marketing applications, see FDA v. Wages & White Lion Invs., 604 U.S. 542 (2025) (see our post here)).

At least so far, however, FDA’s CMP proceedings show every sign of proceeding apace even after the (limited) Wulferic loss: FDA records show that it has continued to file hundreds of new administrative CMP complaints in recent months, just as it did before. See FDA, Tobacco Compliance Check Outcomes.

We will continue to monitor the developments in these cases and any other major challenges that may arise; but for now, what goes on in the federal appeals courtrooms in the District of Columbia and then New Orleans will matter most.

FDA has announced a public meeting and request for comment on proposed recommendations for the next reauthorization of the Biosimilar User Fee Act (BsUFA) for fiscal years 2028 through 2032. BsUFA allows FDA to collect user fees to support the review of biosimilar biological products. The current authority expires in September 2027, and new legislation will be needed for FDA to continue collecting these fees.

BsUFA was first enacted in 2012 and has been renewed twice since then. The program is designed to give FDA additional resources—such as staffing—to help ensure efficient and predictable biosimilar application reviews. Under each reauthorization, FDA and industry agree to specific performance goals and procedures, including timelines for reviewing applications and commitments related to meetings, communication practices, and regulatory science efforts. The current BsUFA (BsUFA III) includes enhancements such as new supplement categories, review timelines, expanded support for interchangeable biosimilars, improved inspection communication, and investments in IT and data modernization.

As part of the reauthorization process for BsUFA IV, FDA is seeking public input before it begins negotiations with industry. FDA is specifically interested in feedback on the performance of the current BsUFA program, which elements should be kept, changed or discontinued, whether any new components should be added, and whether the current fee structure should be updated to better support biosimilar development and timely patient access.

The public meeting will be held on December 3, 2025, from 9 a.m. to 12 p.m. EST, both in person at FDA’s White Oak Campus and virtually. After the meeting, FDA will continue to accept written comments until January 2, 2026. A transcript of the meeting and all submitted comments will be posted online once available.

Stay tuned for further updates.

Hyman, Phelps & McNamara, P.C. (HPM) is pleased to announce that Steven Gonzalez has been promoted to Counsel.

Steven joined the firm in 2022 and has quickly become a trusted advisor to clients navigating complex FDA regulatory and compliance matters. His practice focuses on advising pharmaceutical and medical device manufacturers on a wide range of issues, including product development strategy, marketing and promotion, lifecycle management, and enforcement risk. Steven’s full biography can be found here.

HPM Director Anne Walsh noted “Steven’s expertise and judgment on medical device topics make him a go-to resource for firm clients and an invaluable team member at HPM.  I am thrilled that he is being promoted in recognition of his substantive contributions and potential.”

Please join us in congratulating Steven on this well-deserved achievement.

On January 31, 2024, FDA issued the final rule revising 21 C.F.R. Part 820, which, upon taking effect, will be referred to as the Quality Management System Regulation (QMSR) (see our prior blog post here).  The QMSR incorporates the international standard ISO 13485: 2016 Medical devices — Quality management systems — Requirements for regulatory purposes by reference and came with a two-year transition period and effective date of February 2, 2026.  The Agency has said little about its transition during the past two years, but on October 27, 2025, just months from implementation of the QMSR, FDA has issued its first draft guidance, Quality Management System Information for Certain Premarket Submission Reviews (Draft Guidance).

The Draft Guidance provides recommendations for QMSR information included in Premarket Approval (PMA) and humanitarian Device Exemption (HDE) application.  While of obvious importance to those working on PMAs and HDEs, the recommendations in the Draft Guidance also shed light on how FDA may be interpreting ISO 13485 and how it may review quality system information in future inspections.

There is a lot of overlap between the requirements of ISO 13485 and the current Quality System Regulation (QSR), which is being replaced by the QMSR.  One of the key differences between the current Quality System Regulation and ISO 13485 is the requirement in ISO 13485 to “apply a risk based approach to the control of the appropriate processes needed for the quality management system” ISO 13485: 2016, Subclause 4.1.2(b).  The Draft Guidance recommends submitters provide “a summary of the risk-based approach(es) used to control the processes that make up the organization’s QMS.” Draft Guidance at 7.  Thus, when updating the quality system for the QMSR, it will be important to not only ensure each procedure covers the specific requirements of ISO 13485, but also to ensure that the overarching risk-based approach used in developing the system is documented.

The Draft Guidance, when finalized, will supersede the current guidance, Quality System Information for Certain Premarket Application Reviews, issued February, 2003 (Current Guidance).  Despite more than 20 years, the overall content expected is not changing drastically.  The Draft Guidance presents the recommended information for a PMA or HDE in the order it is described in ISO 13485 and uses the terminology used in ISO 13485, which is not always the same as was used in the QSR.  A marketing application should include a full description of the documentation described in ISO 13485 for:

• Management responsibility, including responsibilities of top management;
• Resource management, including infrastructure requirements and requirements for the work environment and contamination control;
• Product realization, including development processes, design and development requirements, purchasing requirements, purchasing process requirements, purchasing information requirements, requirements for verification of purchased product, implementation of production and service provisions, and control of monitoring and measuring equipment; and
• Measurement, analysis, and improvement, including the processes for monitoring and measurement, control of nonconforming product, analysis of data, and identifying and implementing necessary changes.

For requirements of the QMSR that are not directly from ISO 13485, the Draft Guidance also provides recommendations for content in the marketing application.  These include requirements for unique device identification (UDI), traceability and medical device tracking, medical device reporting, reports for corrections and removals, control of records, and device labeling and package controls.  One item of note is that the Draft Guidance recommends the marketing submission include a “sampling of UDIs and Global Unique Device Identification Database (GUDID) records” whenever possible. Id. at 20. As a FDA Premarket Submission Number is required for obtaining a GUDID account and submitting data on the device, this will unlikely be available for original submissions.

One final point of interest in the Draft Guidance is the inclusion of a Guidance History table on the last page.  It includes a note that the “table was implemented, beginning October 2025, and previous guidance history may not be captured in totality”.  For the description of the revisions, it says to “See Notice of Availability for more information” and includes a link to the FDA guidance document webpage.  The Notice of Availability provides high level statements regarding the reason for the Draft Guidance, but does not provide information on the specific differences as compared to the Current Guidance.  Given the lack of any useful information, it is not clear why the table is being included.

Those wishing to submit comments on the Draft Guidance, should do so by January 16, 2026.

As the February 2026 effective date for the QMSR approaches, FDA’s release of the Draft Guidance offers long-awaited insight into how the Agency may operationalize its alignment with ISO 13485. While the core expectations for PMA and HDE submissions remain largely consistent with prior guidance, the shift in structure, terminology, and emphasis on a documented risk-based approach signals a meaningful evolution in FDA’s regulatory posture. Given this, all medical device manufacturers, not just those with planned PMAs or HDEs, should consider the Draft Guidance as any quality system updates are being made for compliance with the QMSR.

Hyman, Phelps & McNamara, P.C. (HPM) is hosting a complimentary webinar, titled “Medical Device Update, 2025 Year in Review.” The webinar is scheduled for December 10, 2025 (11:00am to 12:00pm ET).

Don’t miss this essential briefing. Our experts will unpack the year’s top FDA regulatory changes, enforcement trends, and strategic insights to help medical device companies navigate what’s coming next.

The webinar will feature HPM attorneys Anne Walsh and Steven Gonzalez. You can register for the complimentary webinar here.  After registering, you will receive a confirmation email containing information about joining the webinar.

Hyman, Phelps & McNamara, P.C. (HPM) is excited to announce that Fabiola Cervantes-Gomez, Ph.D. has joined the firm as a CMC Regulatory Expert. Dr. Cervantes-Gomez brings over eight years of experience from the U.S. Food and Drug Administration’s Center for Drug Evaluation and Research (CDER), where she specialized in chemistry, manufacturing, and controls (CMC) review of biotechnology products including antibodies, antibody-drug conjugates, and biosimilars. At FDA, Fabiola served as primary CMC assessor for numerous biologics license applications (BLAs) and investigational new drug (IND) submissions across oncology, rare diseases, and other therapeutic areas. She conducted manufacturing facility inspections, contributed to FDA guidance development, and most recently led CDER’s Network of Experts Program, managing scientific engagement between FDA offices and external professional organizations.

Fabiola is recognized as a subject matter expert in biotechnology product quality assessment. She earned her Ph.D. in Biomedical Sciences from the University of Texas Health Science Center at MD Anderson Cancer Center and her B.S. in Chemistry from the University of Texas at El Paso.

HPM Director Mark Schwartz, who previously served over a dozen years at the FDA in various senior capacities, including as CBER’s Deputy Office Director in the Office of Compliance and Biologics Quality, noted, “Fabiola’s addition strengthens HPM’s team of lawyers and regulatory experts who can assist clients in navigating CMC, cGMP and other quality issues they face both pre and post-approval.  We are thrilled that she has joined our team.”

FDA is moving with notable speed.  Less than a month after announcing its inaugural class of Commissioner’s National Priority Voucher (CNPV) winners (see our previous post), the agency has already named its second cohort.

The CNPV program, designed to accelerate the review of products that advance key national priorities, from improving affordability to addressing unmet public health needs, has captured the attention of industry.  While we have yet to see a voucher’s effect on a review timeline, a voucher may materially change a product’s path to market.

Announced on November 6, the six new awardees reflect some of the most closely watched products in development today, spanning gene editing, oncology, metabolic disease, and global public health.  Five of the six products selected are already approved for at least one indication.  While the basis for some of the selections is clear, others are less clear.  For two of the products (Wegovy and orforglipron, both identified as “for obesity and related health conditions”), their selection was concurrent with pricing agreements, including Most-Favored-Nation (MFN) pricing agreements:

• Wegovy (semaglutide) – Since Wegovy’s initial approval in 2021 for chronic weight management, Wegovy’s labeling has expanded to include adolescents (2022), cardiovascular risk reduction (March 2024), and non-cirrhotic MASH (August 2025). Its selection likely reflects alignment with the CNPV program’s affordability and national health priority goals – potentially tied to the forthcoming 25 mg oral formulation and recently announced pricing commitments for GLP-1s.
• Orforglipron – As the only non-approved product on the list, orforglipron is a once-daily, oral, non-peptide GLP-1 receptor agonist, which would be positioned to offer a more accessible alternative to injectable GLP-1 therapies, if approved. Its inclusion signals FDA’s recognition of obesity as a national health priority, and the selection comes in the context of Eli Lilly’s recent drug-pricing announcement, aligning with the CNPV program’s goals of improving affordability and patient access.

The remaining four products selected for vouchers appear to be for potential expansions of existing indications or new indications:

• Casgevy (exagamglogene autotemcel) – Casgevy was approved by the FDA in December 2023 as the first FDA-approved CRISPR-based gene-editing therapy for patients ≥12 years with Sickle Cell Disease. Ongoing clinical development may further expand its use to younger patients (ages 5-11).
• Jemperli (dostarlimab-gxly) – Although Jemperli was already approved for certain endometrial cancer indications beginning in 2021, the product’s December 2024 Breakthrough Therapy Designation for locally advanced mismatch repair deficiency (dMMR)/microsatellite instability-high (MSI-H) rectal cancer was likely a key driver. Data to date showing a 100% clinical complete response rate suggest a potential shift in the treatment paradigm.
• Hernexeos (zongertinib) – Hernexeos was granted accelerated approval in August 2025 as a second-line, first-in-class oral HER2-directed tyrosine kinase inhibitor for HER2-mutated NSCLC. Hernexeos has provided a targeted option for a population with historically limited choices and poorer outcomes.  Ongoing Phase 3 development is evaluating Hernexeos as a first-line therapy in combination with Keytruda, with preliminary data expected late next year.
• Sirturo (bedaquiline) – Sirturo was initially granted accelerated approval in 2012 for the treatment of pulmonary multidrug-resistant tuberculosis (MDR-TB) in adults, followed by traditional approval in July 2024 with expanded use in pediatric patients > 2 years of age. The voucher is identified as being for “drug-resistant tuberculosis in young children.”  It is not clear what expansion to the labeling is anticipated.

This second CNPV cohort reinforces that FDA intends to deploy this program to reward products that are in line with the Commissioner’s priorities.  We will be watching to see how these vouchers play out.

On November 6, 2025, the Centers for Medicare & Medicaid Services (CMS), through its Center for Medicare and Medicaid Innovation, announced the upcoming launch of the voluntary GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) model, through which participating drug manufacturers can offer “most favored nation” (MFN) pricing on their covered outpatient drugs (CODs) to Medicaid through supplemental rebates to state Medicaid programs.  Set to launch on January 1, 2026 and continue for five years until December 31, 2030, the GENEROUS model will allow CMS to enter into negotiated agreements with manufacturers to set standard coverage criteria and effectuate MFN pricing for their CODs, which participating states may then adopt through a supplemental rebate agreement with the participating manufacturer.  This initiative marks the Trump administration’s latest action regarding MFN pricing, which follows several recent MFN agreement announcements (e.g., here, here, and here) and the May 12, 2025 Executive Order on MFN pricing (see our prior coverage on the Executive Order here and here).

Under the Medicaid Drug Rebate Program (MDRP), state Medicaid agencies obtain rebates from manufacturers in return for coverage of the manufacturer’s covered outpatient drugs (CODs).  The required rebate amount is set by statute, but most states also negotiate voluntary supplemental rebates with manufacturers, typically offering placement on the state’s preferred drug list in exchange for the rebates.  Recognizing the potential for substantial savings on some CODs if states’ net costs for single source or innovator multiple source CODs were set at MFN pricing, CMS stated that the GENEROUS model aims to facilitate a process whereby an interested manufacturer may voluntarily offer states MFN pricing by means of supplemental rebates.  In addition, CMS noted that any supplemental rebates provided by manufacturers under the model will not affect Medicaid Best Price and thus will not affect the ceiling prices required under the 340B drug discount program.

In terms of process, eligible manufacturers (i.e., those with an active Medicaid National Drug Rebate Agreement) that apply for and are accepted to participate in the model will enter into negotiations with CMS to set the key terms of supplemental rebate agreements that the manufacturer will offer to states to effectuate MFN pricing for their single source and innovator multiple source drugs.  These key terms include standard coverage criteria and utilization management policies, such as prior authorization criteria and Preferred Drug List placement.  The MFN price will be based on the average price for the drug’s NDC-9 in each of the selected countries (specifically, the United Kingdom, France, Germany, Italy, Canada, Japan, Denmark, and Switzerland) over the 12-month period reported to CMS by participating manufacturers, net of all rebates, discounts, and price concessions, and adjusted by the selected country’s gross domestic product (GDP), based on purchasing power parity.

After this negotiation phase, the manufacturer will enter into a participation agreement (PA) with CMS and formally become a participant in the GENEROUS model.  CMS will then communicate these agreed upon, standardized key terms to all states, who may choose to execute a state PA with CMS, thereby also becoming participants in the model.  Such participating states will adopt the Key Terms through a supplemental rebate agreement (SRA) with a participating manufacturer, although CMS stated that participating states may create their own criteria and policies as part of their SRAs as long as they are no more restrictive than the standardized access policy negotiated by CMS.  CMS also stated that participating states can determine which CODs they would like to obtain a price similar to what other countries pay with respect to that participating manufacturer.

CMS will share in the supplemental rebates with states via a reduction in the federal share of Medicaid payments, and will conduct monitoring activities to ensure states’ and manufacturers’ compliance with all aspects of the model, such as monitoring the accuracy of payments made under these SRAs.  In addition, CMS will engage an independent contractor to evaluate the model’s impact on drug spending, quality of care, access to medications, and healthcare costs.

Eligible manufacturers may submit applications until March 31, 2026.  CMS has released a Request for Applications (RFA) for drug manufacturers interested in participating in the GENEROUS Model, which outlines eligibility criteria and additional details on the model. CMS will negotiate and enter into PAs with manufacturers from December 2025 through June 30, 2026.  CMS is also seeking letters of intent from state Medicaid agencies interested in participating.  Interested states will have the ability to review pricing information and Key Terms before committing to join the GENEROUS model.  Next month CMS anticipates issuing an RFA for interested states, which will be able to apply for participation in the model on a rolling basis through August 31, 2026.

Donald Trump’s May 12, 2025, Executive Order on MFN pricing threatened that, If significant progress toward most-favored-nation pricing for American patients was not achieved through voluntary measures, “the Secretary [of HHS] shall propose a rulemaking plan to impose most-favored-nation pricing.”   We wonder if the GENEROUS program is a substitute for the rulemaking.  If so, it is a much milder outcome than the threatened rule, since it is not a regulation, does not impose any pricing, is temporary, and is limited to Medicaid.  Whether manufacturers choose to participate will likely depend on what coverage advantages and exceptions from utilization controls they can negotiate in exchange for MFN pricing.

We will continue to follow this and other MFN developments as they arise.

Hyman, Phelps & McNamara, P.C. (“HPM”) Director Larry Houck will moderate “New Rules, New Risks: Inside the Changing World of Federal Inspections” at the Food and Drug Law Institute’s Enforcement, Litigation, and Compliance Conference in Washington, D.C., December 4-5, 2025.  The session will explore the ever-evolving landscape of federal inspections, including the Food and Drug Administration’s use of unannounced foreign inspections, changes in domestic inspection priorities, and the effects of reduced staffing.  The session will explore how the Drug Enforcement Administration’s regulatory oversight and inspection activity impacts manufacturers, distributors, pharmacies, practitioners and other registrants amid growing scrutiny of controlled substances.  Panelists will also examine how federal agencies are rebalancing inspection strategies across borders, sectors, and products.  The session will occur Friday, December 5th.

Mr. Houck was a diversion investigator with DEA in the field and at agency headquarters for 15 years prior to joining HPM in 2001.

Some of the topics in other conference sessions will include:

• FDA’s Compliance Challenges and Enforcement Priorities
• Criminal Liability and Enforcement Trends
• AI in Industry and at FDA
• Dietary Supplements and Labeling
• Significant Class Action Trends Impacting Food, Dietary Supplements and Drug Manufacturers
• FDA Tobacco Enforcement
• Drug Shortages
• False Claims
• Medical Device Enforcement
• State-Level Challenges and Initiatives
• Compounding Litigation and Enforcement
• Recent Court Decisions Impacting FDA’s Authority

Further conference information, including registration, can be found here.

As we previously reported, nearly four years ago, the Natural Grocers, Citizens for GMO Labeling, Label GMOs, Rural Vermont, Good Earth Natural Foods, Puget Consumers Co-op, and the Center for Food Safety (Plaintiffs) filed a complaint against AMS challenging the final rule implementing the National Bioengineered Food Disclosure Standard (NBFDS), also known as the BE labeling rule.  Plaintiffs challenged the rule’s use of the term “bioengineered” (rather than “GMO” or “genetically engineered”), the rule’s limitation of the mandatory disclosure being required only if the food contains detectable modified genetic material, and the rule’s options of using a QR code disclosure or a text message for the disclosure statement.  In 2022, the U.S. District Court of the Northern District of California largely upheld the standard but remanded (without vacatur) the text and QR disclosure options.  Plaintiffs appealed.

On October 31, 2025, the Ninth Circuit reversed several aspects of the district court’s ruling, sending AMS back to the drawing board, i.e., it determined that the district court erred in the definition of bioengineered food, and it abused discretion in declining to vacate the two disclosure format provisions.  It did affirm the district court’s determination regarding the use of the term “bioengineered,” however.

First, the Ninth Circuit reversed the district court’s ruling that AMS could exempt highly refined foods from the definition of “bioengineered foods.”  The Ninth Circuit agreed with the plaintiffs that the current rule not requiring a disclosure statement, if the manufacturer concludes the BE ingredients are not detectable, is not the legal “equivalent to saying that the food does not  ‘contain’ such material.”  The court determined that a food contains modified genetic material “if it actually has modified genetic material within it.”  The crucial issue is that undetectable is not the same as non-presence; it may contain genetic material even if that is not detectable.  That said, the court acknowledged that AMS has the authority to adopt a detectability exception as the statute requires that AMS determine “the amount[] of a bioengineered substance that may be present in food, . . .  in order for the food to be a bioengineered food.”  In other words, AMS could, for example, adopt a limit of detection setting the amount of a BE substance that may be present.  If the bioengineered substance is not detectable within the limit, the food would be considered non-BE.  The food “would not count as a ‘bioengineered food’ under the regulatory standard only because it was excluded under a limit-of-detection-based standard” set by AMS.  The Ninth Circuit remanded the case to the district court, with instructions to remand the relevant regulations to the AMS and to determine whether any part of the regulation should be vacated in connection with that remand.

The Ninth Circuit also disagreed with the district court’s decision to not vacate the regulations allowing the disclosure statement via text or QR code, while AMS is going through the administrative process of reconsidering these options.  It reversed the district court’s decision to deny vacatur; the district court erred when it allowed the use of disclosure options that were found to be inadequate and unlawful, and remanded with instructions to grant an appropriate prospective vacatur, after receiving input from the parties on that specific point.

AMS did not lose on all fronts.  The Ninth Circuit affirmed the district court’s decision that AMS had not been arbitrary and capricious in requiring the term “bioengineered” rather than genetically engineered or GMO.

We will be monitoring future actions by AMS related to the threshold setting for detectable modified genetic material and possible actions regarding an electronic option for the disclosure statement.

Last Friday, October 31, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) Final Rule, which contained important changes in regulations governing the calculation of average sales price (ASP) for drugs covered under Medicare Part B.  The most significant of these are new policies regarding bundled sales arrangements and new documentation and submission requirements related to bona fide service fees (BFSFs).  Although some of these provisions impose new burdens, manufacturers were given a reprieve on some of the most intrusive requirements in the July 2025 proposed rule (see our prior blog post on the proposed rule here).

The rule will become effective on January 1, 2026, despite numerous comments raising concerns about the proposed rule’s compliance timeline.  Below we summarize the key provisions that CMS finalized (and point out those that CMS chose not to finalize).

I.  Average Sales Price

Currently, manufacturers are required to report ASP to CMS quarterly and calculate ASP for each NDC in accordance with the methodology specified by statute and CMS regulations.  Among other requirements, ASP must reflect sales to all U.S. purchasers, except sales exempt from Medicaid best price and sales that are merely nominal in amount.  In addition, price concessions must be deducted from the ASP calculation, while BFSFs are not considered price concessions and are not deducted from the ASP calculation.  In other words, excluding BFSFs increases the ASP and therefore the Part B payment limit, which is generally 106% of the ASP.

Bundled Arrangements

Manufacturers may offer certain price concessions as part of a “bundled arrangement,” in which the price concessions are conditioned upon the purchase of the same drug or biological or other drugs or biologicals or another product.  ASP calculations must account for such bundled price concessions.

In the proposed rule, CMS proposed to add a definition of “bundled arrangement” to the existing ASP regulations at 42 C.F.R. § 414.802, which the final rule adopted with slight modifications:

Bundled arrangement means an arrangement regardless of physical packaging under which the rebate, discount, or other price concession is conditioned upon the purchase of the same drug or biological or other drugs or biologicals or another product or some other performance requirement (for example, the achievement of market share, inclusion of tier placement on a formulary) or where the resulting discounts or other price concessions are greater than those which would have been available had the bundled drugs or biologicals been purchased separately or outside the bundled arrangement.”

This definition tracks the definition that has appeared in the Medicaid Drug Rebate Program (MDRP) regulations since 2007.  See 42 C.F.R. § 447.502.  However, unlike the Medicaid definition of “bundled arrangement,” which states that value-based purchasing arrangements may qualify as a bundled sale, CMS refrained from expressly including value-based purchasing arrangements in the ASP definition in order to “provide[] the agency the opportunity to monitor and assess how such a definition may affect ASP . . . .

In addition, CMS finalized regulations similar to the Medicaid counterpart regarding how to allocate discounts under bundled arrangements.  Specifically, under the final rule, discounts in a bundled sale, including those resulting from a contingent arrangement, are allocated proportionally to the total dollar value of the units of all drugs or products sold under the bundled arrangement.  However, CMS has apparently reversed its guidance regarding agreements that contain both contingent and non-contingent discounts.  Whereas prior CMS guidance under the MDRP appeared to indicate that only contingent discounts need be proportionally allocated, CMS stated in the final rule preamble that “the ‘unbundling’ of both contingent and non-contingent discounts is appropriate because ‘all the discounts’ in the bundled arrangement should be proportionally allocated.”

Bona Fide Service Fees

Bona fide service fees have historically been excluded from ASP because, as noted above, ASP excludes prices excluded from Medicaid best price, and BFSFs, as defined in the MDRP regulations, are excluded from best price.  CMS proposed to add a definition of BFSF to the ASP regulations, which would have tracked the MDRP definition:  fees paid by a manufacturer to an entity, that (1) represent FMV (2) for a bona fide, itemized service actually performed on behalf of the manufacturer (3) that the manufacturer would otherwise perform (or contract for) in the absence of the service arrangement, and (4) that are not passed on in whole or in part to a client or customer of an entity, whether or not the entity takes title to the drug.  CMS also proposed a number of significant changes to the policies regarding BFSFs, which would have imposed substantial new obligations on manufacturers.

Responding to commenters’ objections, CMS finalized only some of these policies.  CMS was persuaded not to finalize its proposed BFSF definition, which would have mandated a specific methodology for evaluating fair market value and would have required manufacturers to retain an independent firm to evaluate fair market value for every new or renewed percentage-based fee agreement.  CMS also decided not to finalize a proposed list of examples of fees that are not considered BFSFs (e.g., credit card fees, certain data fees, certain percentage-based distribution fees, and tissue procurement fees).

However, CMS did finalize several other proposed policies that have significant implications for BFSFs.  CMS finalized its proposed requirement that manufacturers must obtain letters from the recipient of a BFSF certifying that the fee is not passed on in whole or in part to a client or customer of the recipient of the fee, regardless of whether the entity takes title to the drug.  Letters must be obtained for all new agreements entered into prospectively on or after January 1, 2026, and must be submitted to CMS along with the ASP submission for the relevant quarter.  This is an unusual requirement given that CMS did not finalize an ASP definition of BFSF, so there is no prohibition on pass-through of fees in the first place.

Perhaps most notably, CMS finalized its proposal to require manufacturers to submit reasonable assumptions as part of manufacturers’ quarterly ASP data submissions to CMS.  Previously, submission of reasonable assumptions was optional.  These reasonable assumptions must include summary information on FMV assessments, including documentation of the methodology used to determine FMV for current, new, and renewed BFSF contracts, and periodic reviews of FMV.  CMS advised that summaries should be “well-detailed summaries of FMV methodologies that clearly describe the data sources, assumptions, and rationale supporting the determination.”   CMS noted that it will provide a template for manufacturers to use to document their FMV analysis summaries.  CMS expects manufacturers to document and submit the FMV summaries for all current BFSF arrangements by the April 30, 2026 deadline for ASP data submissions for the first quarter of 2026.  After that, FMV summaries must be submitted if there were new or renewed BFSF agreements during the quarter.

Units Sold at Maximum Fair Price

The Inflation Reduction Act of 2022 established the Medicare Drug Price Negotiation Program, which requires the Secretary of Health and Human Services (HHS) to negotiate a maximum fair price (MFP) with drug companies for certain high expenditure, single source drugs covered under Medicare Part D (starting in 2026) and Part B (starting in 2028).   Beginning in initial price applicability year 2028, for selected drugs payable under Part B, the Medicare Part B payment limit during the price applicability period is 106% of MFP.  In the final rule, CMS confirmed that it will publish only the actual MFP-based payment limit for selected drugs, and no ASP information will be displayed.  Although the payment limit for selected drugs will be based on the MFP rather than ASP, manufacturers of such drugs will still be required to calculate and submit ASP.

As described above, manufacturers of drugs payable under Part B are required by statute to include in ASP sales to all U.S. purchasers, with two exempted categories of sales: (1) sales exempt from best price; and (2) sales that are merely nominal in amount.  Units of drugs sold at MFP are included in the determination of best price.  Because the statutory language does not expressly or implicitly exempt units of drugs sold at MFP from the manufacturer’s ASP calculation, CMS clarified that units of selected drugs sold at MFP are included in the ASP calculation.  As a result, manufacturers’ ASP calculations will be required to include units of selected drugs sold at MFP on or after January 1, 2026, as applicable.

II.  Changes to Medicare Inflation Rebate Programs

In addition to the changes in ASP regulations, the CY 2026 PFS final rule revised the regulations implementing the Medicare inflation rebate program established under the Inflation Reduction Act.

Medicare Part B inflation rebates

The changes to the Medicare Part B inflation rebate program are relatively minor fixes, which include the following.

• Under pre-existing regulations, the benchmark quarter is defined as 3Q 2021 for a drug with a first marketed date on or before December 1, 2020, and for a drug with a first marketed date after that date, the benchmark quarter is the third full quarter after the first marketed date. Under the final rule, if data needed to calculate the payment amount in those quarters are not available, the benchmark quarter will become the third full quarter after the drug is assigned a billing and payment code.
• Under pre-existing regulations, if a published payment limit is not available for a benchmark quarter, CMS will use the lower of 106% of the manufacturer reported ASP or WAC (or, if those are not available, 106% of WAC reported in other sources). To avoid the use of a negative ASP reported by a manufacturer, CMS revised the rule to state that, in the absence of a published payment limit for the benchmark quarter, CMS will use positive ASP or WAC reported by manufacturers to CMS (and WAC from other sources if these are not available).

Medicare Part D inflation rebates

CMS’s revisions to the Medicare Part D inflation rebate regulations are more significant, and relate to the statutory exclusion of sales under the 340B drug discount program from Part D inflation rebates beginning with plan year 2026.  See 42 U.S.C. § 1395-114b(b)(1)(B).  The problem in implementing this exclusion is that a Part D drug’s status as having been purchased under the 340B program is generally not known at the time of dispensing, so that covered entities can only identify the drug’s Part D status retrospectively.  Accordingly, CMS has finalized a “claims-based methodology” to remove 340B units from its Part D inflation rebate calculations.  Under this methodology, CMS will start with the prescriber NPI number from the Prescription Drug Event (PDE) record (i.e., the Part D dispensing record); then find the provider’s Medicare Provider Number (MPN) by crosswalking the NPI number with Medicare Part A and B claims; then filter the NPI and MPN numbers using the 340B Office of Pharmacy Affairs Information System (OPAIS) database, which identifies the MPN numbers for 340B covered entities.  Another process will be used to link NPIs of 340B contract pharmacies in the PDE record to contract pharmacies listed in the OPAIS database.  These processes will result in a file of 340B-affiliated NPIs, which will be used to exclude unit dispensed by entities with these NPIs from the inflation rebates.

CMS estimates that approximately 10-35% of total units will be removed from the rebate calculation.  Under the statute, the exclusion of 340B units is not subject to administrative or judicial review, and CMS has decided not to permit disputes regarding excluded 340B units under the Suggestion of Error process, explaining that this process is limited to mathematical errors.

In the hope of improving the accuracy of 340B unit exclusions, CMS is establishing a voluntary 340B claims repository as of January 1, 2026, initially for usability testing.  The repository will receive voluntary submissions each quarter from 340B covered entities of several simple data elements (e.g., NPI, date of service, fill number) from all of their claims submitted to Medicare Part D plans.  CMS would match these data to PDE records for each drug during a period to identify which units to exclude from inflation rebate calculations.  The preamble explained that CMS is considering mandatory reporting in the near future, but declined to give a timeline for such requirement.  During the initial usability test period, the repository will not be used to actually exclude any units, and it will not be used for that purpose until a policy to do so is proposed and finalized.

III.  Autologous Cell-Based Immunotherapy and Gene Therapy

The rule finalized the continuation of the existing bundled payment policy for CAR T-cell therapies (which was initially finalized in the CY 2025 PFS final rule) and extended the policy to autologous cell-based immunotherapies and gene therapies.  As a result, under the final rule, preparatory procedures for patient-specific cell or tissue procurement and processing required for manufacturing are bundled into the product payment and are not paid separately.

Prior to the final rule, payment for procedures required for manufacturing other autologous cell-based immunotherapies and gene therapies (other than CAR T-cell therapies) had not been explicitly addressed by CMS.  In the final rule, CMS acknowledged that the tissue procurement step for all autologous cell-based therapies is “a pivotal part” of the manufacturing process and the overall cost of the product (i.e., COGS), and therefore should not be paid separately.

Consistent with this policy to include preparatory procedures for manufacturing an autologous cell-based immunotherapy or gene therapy in the payment of the product itself, CMS had initially proposed that such payments not be considered a BFSF for purposes of calculating the manufacturer’s ASP, and proposed to require their inclusion in ASP starting January 1, 2026.  However, CMS decided not to finalize either of these proposals based on public comments.  Instead, under the final rule, manufacturer-paid preparatory services may be treated as BFSFs—and thus be excluded from ASP—when they are itemized, represent fair market value, are performed on behalf of the manufacturer, and are not passed through to a purchaser.

IV. Conclusions

Although the final rule may be seen as a partial win for the pharmaceutical industry and other concerned stakeholders who objected to a number of proposals that CMS decided not to finalize, the final rule still contains major policy changes with substantial impacts on manufacturers and their government pricing activities and obligations, with a fast-approaching deadline of January 1, 2026 for manufacturers to come into compliance with the new data submission requirements.

Looking to the future, CMS will soon be issuing a template for use in submitting “detailed summaries” of fair market value methodologies to be submitted with the ASP submission for 1Q 2026 and subsequent quarters.  Beyond the immediate future, CMS has expressly stated that it will continue to consider a number of its non-finalized proposals in a future rulemaking, including proposals related to FMV determinations and extending the no pass-through requirement to “affiliates” of the service provider.  We expect CMS eventually to finalize a definition of bona fide service fees for ASP purposes.  Moreover, regulations under the MDRP will almost certainly be revised so that the two definitions are consistent.

We will continue to monitor developments on this rule, including any legal challenges, as they arise.

Biosimilars, costing about 50% of their reference products, have generated $56 billion in healthcare savings since 2015, with $20 billion saved in 2024 alone.  Compared to the small molecule market though, that’s pocket change.  It should come as no surprise therefore that FDA is actively working on plans to increase the uptake of biosimilars.

HHS detailed a biologics-specific “Patient Affordability Crisis” in a recent Fact Sheet, expressing concerns about “treatment abandonment, with patients rationing doses, skipping treatments, or going without medication entirely, resulting in disease progression, hospitalizations, and worse health outcomes” arising from high costs of biologics and provider hesitancy to adopt biosimilars.  Recognizing the need to address this issue, HHS, on October 29, 2025 announced its plan to:

• Eliminate unnecessary clinical trials in favor of improved analytical testing methods;
• Facilitate pharmacy-level substitution by removing barriers to interchangeability designation; and
• Reduce barriers to market entry by providing clearer guidance and more efficient processes to speed up approvals and reduce development uncertainty.

Along with this Fact Sheet, FDA published a guidance on October 29, 2025 essentially calling for the end of comparative clinical studies for a large swath of biosimilars.  Previous guidance advised that a comparative clinical study “will be necessary to support a demonstration of biosimilarity if there is residual uncertainty about whether there are clinically meaningful differences between the proposed product and the reference product based on comparative analytical studies, an assessment of toxicity, comparative human PK and PD studies (if there is a relevant PD measure(s)), and a clinical immunogenicity assessment.”  This new guidance, however, explains that due to evolving scientific approaches and additional experience in evaluating biosimilarity, comparative clinical studies may no longer be necessary to support a demonstration of bioequivalence.  This is because a comparative analytical assessment is “generally more sensitive” than a comparative clinical study now that “currently available analytical technologies can structurally characterize highly purified therapeutic proteins and model in vivo functional effects with a high degree of specificity and sensitivity using in vitro biological and biochemical assays.”  Generally, FDA now believes that the comparative analytical analysis may be sufficient if an appropriately designed human pharmacokinetic similarity study and an assessment of immunogenicity is performed.

Essentially, FDA is opening the door to more approvals without comparative clinical efficacy studies.  But the Guidance does not offer much in the way of knowing whether a comparative analytical analysis will be sufficient.  It only directs sponsors to “carefully consider what clinical study(ies) would be necessary” and “consider a streamlined approach where” a comparative efficacy study may not be necessary.  The recommendations state that a streamlined approach should be considered when:

• The reference product and proposed biosimilar product are manufactured from clonal cell lines, are highly purified, and can be well-characterized analytically;
• The relationship between quality attributes and clinical efficacy is generally understood for the reference product, and these attributes can be evaluated by assays included in the comparative analytical analysis; and
• A human pharmacokinetic similarity study is feasible and clinically relevant.

The Guidance does not offer much more in assessing whether comparative efficacy studies remain necessary, as it is a case-by-case analysis, but it’s definitely a good start.

The Agency believes this move will facilitate the development of new biosimilar products by eliminating costly and time-consuming studies.  Indeed, an FDA analysis found that comparative efficacy studies usually take 1-3 years and cost $24 million on average but add “little scientific value compared with advanced analytical testing.”

This guidance builds on FDA’s apparent move to increase flexibility in the biosimilar space.  In the last few years, the Agency has signaled its intent to eliminate the interchangeability distinction for biosimilars, and this intent was reiterated in the HHS Press Release announcing this Guidance.  There, HHS states “The agency through a separate initiative also plans to make it easier for biosimilars to be developed as interchangeable with brand-name biologics, helping patients and pharmacists choose lower-cost options more easily.”  This has been long-spoken of, but no action has been taken yet.  For now, we wait with bated breath to see if this Guidance and any accompanying policy changes will facilitate the kind of entry we’ve seen on the small molecule generic side on the biosimilar side.

On October 13, 2025, Governor Gavin Newsom signed into law SB 68, titled “Allergen Disclosure for Dining Experiences Act,” officially creating a statewide requirement for certain restaurants to disclose major food allergens on their menus.

What SB 68 Requires

SB 68:

• Requires disclosure of the nine major food allergens:  milk, eggs, fish, crustacean shellfish, tree nuts, wheat, peanuts, soybeans, and sesame.
• Effective July 1, 2026, requires that any food facility that is subject to the federal menu-nutrient disclosure requirements (i.e., chains with 20+ locations offering substantially the same menu items) must provide written notification of the major food allergens they know or reasonably should know are present in each menu item.
• Permits restaurants to display the allergen information directly on the menu (e.g., “contains:  soybeans, wheat”) or via a digital format (for example, a QR code linking to a detailed allergen chart).  If the digital option is chosen, the restaurant must also provide an alternative non-digital method (print booklet, chart, separate allergen-specific menu, etc.) for customers without digital access.
• Excludes pre-packaged foods already subject to federal labeling law as well as compact mobile food operations or non-permanent food facilities.
• Classifies a violation of these provisions as a misdemeanor.

Why This Matters

According to proponents of this law, this new law constitutes a monumental change for consumers with food allergies (estimated at approximately 2-4 million Californians) and their families.  See here and here.  According to the Asthma and Allergy Foundation of America (AAFA), nearly half of food-allergy related deaths in the United States are tied to restaurants or other food-service providers.

The Food Allergy Research & Education and California Restaurant Association opposed the law and raised concerns that the law could impose a burden on the business side and open the door to predatory lawsuits.  Proponents referenced ex-U.S. laws that require disclosure of allergens as evidence that such concerns are misplaced.

A Roadmap for Future State Legislation?

California is the first state in the United States to require (major) chain restaurants to disclose major food allergens on their menus.

But this law may just be a starting point:

• The law currently covers only large chains.  Over time, advocacy groups like the AAFA hope the law will expand to smaller restaurants and food-service establishments.
• It remains to be seen how the rule is enforced, how restaurants adapt, and whether the intended safety outcomes are achieved—especially in reducing allergen-related incidents in food-service settings.
• Other states may look to California’s experience and adopt similar laws, leading toward broader national standardization of allergen disclosure in restaurants.

On September 30, 2025, FDA held a public meeting titled “Onshoring Manufacturing of Drugs & Biological Products.”  Driven by Executive Order 14293, “Regulatory Relief To Promote Domestic Production of Critical Medicines,” the meeting focused on reducing U.S. dependence on foreign pharmaceutical sources and promoting investment in domestic manufacturing.

FDA highlighted its new PreCheck Initiative as the primary mechanism to achieve this goal – streamlining and accelerating the establishment of high-priority U.S. facilities through early engagement between FDA and industry to address facility design, quality, and compliance issues before operations begin.  By increasing regulatory predictability and reducing delays, PreCheck aims to spur U.S. investment.  As multiple speakers emphasized, the greatest challenge is not science, but procedural and predictable regulatory execution.

The PreCheck Initiative: FDA’s Three-P Strategy

FDA, through the Center for Drug Evaluation and Research (CDER) and the Center for Biologics Evaluation and Research (CBER), introduced PreCheck as the core mechanism to streamline regulatory pathways for domestic manufacturing.  The initiative is built on two phases and three guiding principles – Partnership, Predictability, and Preparedness – intended to provide earlier and clearer guidance to reduce uncertainty for U.S. investment.

1. Phase 1 – Facility Readiness (De-Risking): This phase involves pre-operational reviews during facility design and construction. A key tool is the Type V Drug Master File (DMF), a facility-specific dossier capturing site layout, Pharmaceutical Quality System (PQS) elements, and maturity practices that can be referenced across multiple product applications.
2. Phase 2 – Application Submission: Leveraging Phase 1 knowledge, this stage focuses on aligning Chemistry, Manufacturing, and Controls (CMC) expectations, streamlining quality assessments, and enable earlier, more targeted inspections.

Dr. George Tidmarsh (CDER) emphasized that the COVID-19 pandemic exposed serious supply-chain vulnerabilities: over 50% of U.S. drugs are manufactured abroad, and most of the 168 essential medicines rely solely on foreign manufactured Active Pharmaceutical Ingredients (APIs).

Industry’s Two Core Barriers: Logistical and Post-Approval Hurdles

While industry participants broadly supported PreCheck, they were candid about the most significant regulatory hurdles to establishing new U.S. API facilities.  Representatives from innovator, generic, biologic, and contract manufacturing organizations (CMOs) identified several key challenges that must be resolved to unlock domestic capacity:

• Inspection Predictability & Decoupling

Industry expressed frustration over the timing and variability of Pre-Approval Inspections (PAIs), which are often conducted just weeks before a PDUFA date, creating significant risk of Complete Response Letters (CRLs).  Smaller API developers asked who should initiate PreCheck (sponsor vs CDMO), when engagement should occur, and whether FDA can provide checklists or process diagrams to assist smaller regulatory teams.  Others recommended stage-gated engagement plans aligned with construction, commissioning, and validation milestones – shared across FDA review teams to prevent conflicting feedback.

Stakeholders also urged FDA to decouple facility inspections from product application reviews, adopting a more risk-based, earlier inspection model triggered by events like media fills and engineering runs, rather than waiting until post-submission.  This issue is particularly challenging for complex biologics, where short-run manufacturing campaigns make the “inspection-while-in-production” model impractical.

• Post-Approval Flexibility (Especially for Biologics)

For well-characterized modalities such as monoclonal antibodies, FDA’s “one-size-fits-all” approach often requires a Prior Approval Supplement (PAS) even where a Changes Being Effected in 30 Days (CBE-30) or annual report would be scientifically justified.  This rigidity delays routine changes, such as site transfers or scale-ups — that are critical to expanding domestic capacity.

Stakeholders called for a risk-based CMC framework that leverages prior knowledge and platform technologies to shorten the critical path.  Because onshoring often involves expanding existing sites or replicating established production lines, industry urged FDA to reduce redundant data requirements (for example, stability or comparability studies) when prior knowledge supports predictability.

Participants also encouraged FDA to more fully operationalize the tools under ICH Q12: Implementation Considerations for FDA-Regulated Products.  Doing so could allow many post-approval changes to be downgraded from PAS to CBE-30 or annual reports when scientifically appropriate.  Several speakers proposed an “innovation track” for emerging technologies such as continuous flow chemistry and single-use systems, which would accelerate the adoption of advanced manufacturing approaches.

Key PreCheck Elements Supported by Industry

• Making the Type V DMF Work in Practice

A central component of FDA’s PreCheck proposal that could significantly accelerate domestic manufacturing is the establishment of a Type V facility Drug Master File (DMF) as the backbone of regulatory review.  A Type V DMF — a mechanism for submitting information to FDA that does not fit within the traditional DMF categories — can serve as a facility-centric repository of detailed information on manufacturing capabilities, quality systems, and compliance history.  By allowing FDA to review and reference this information across multiple product applications, a facility DMF would enable earlier and more targeted PAIs and reduce redundant reviews of the same facility data for each submission.

However, participants emphasized the need for FDA to issue a clear operating framework for the DMF’s use, ownership, and maintenance.  They suggested that FDA:

• Define the boundaries between reusable DMF content and product-specific application content (Module 3).
• Clarify how a single facility review, and inspection outcome can be leveraged across multiple sponsors.
• Provide guidance on updating and maintaining the DMF throughout a facility’s lifecycle so that it remains a living document rather than an administrative burden.

Stakeholders further advised FDA to pair the DMF approach with targeted meetings and transparent expectations for updates, reuse, and confidentiality, particularly for CMO/CDMO-owned facilities.

• Early, Continuous — and Informal — Communication

Another recurring theme was the importance of early, continuous, and informal communication throughout the facility development process.  Industry participants stressed that real-time engagement — from initial design through Installation Qualification (IQ), Operational Qualification (OQ), and Performance Qualification (PQ) — is far more valuable than relying solely on formal meetings and information requests.

Companies requested a single FDA point of contact, consistent reviewer assignments approximately 30 days pre-filing, and a collaborative forum for technical discussions on topics such as airflow, microbial control, and aseptic operations.  They also called for a smarter inspection strategy that leverages the facility DMF to decouple PAIs from product review timelines and introduces early inspection triggers (e.g., media fills or engineering runs).

• Integration with Other FDA Programs

Stakeholders encouraged FDA to integrate PreCheck with existing regulatory programs, including CMC modernization efforts, advanced technology designations, and PDUFA review processes.  Industry also asked FDA to clarify how Phase 1 PreCheck engagement applies to non-CMO sponsors and whether the Type V DMF remains the preferred vehicle in all cases.

The API Focus: Predictability and Platform Recognition

The afternoon session, which centered on API manufacturing, confirmed that this sector faces similar, but often more acute challenges.  Participants highlighted three recurring priorities:

1. Predictability and Early Engagement: The lack of transparent timelines and early communication remains the greatest barrier to establishing new U.S. API facilities.
2. Modernized, Risk-Based Oversight: Sponsors reiterated the need to decouple facility assurance from product reviews, using earlier and risk-based inspection triggers to avoid production delays.
3. Platform Recognition and Data Reuse: Industry again called for clear rules governing data reuse between the facility DMF and Module 3, as well as an innovation track for advanced manufacturing platforms such as continuous flow chemistry.

Sponsor/CDMO Action Items: Mobilizing Now

Industry participants signaled strong readiness to engage early to share design, PQS, and validation data early, if FDA provides clear service levels, confidentiality protections, and a “Record of Decision” mechanism to make early feedback binding and portable across the facility lifecycle.

To prepare for participation in PreCheck, companies should consider the following steps:

1. Drafting a Facility DMF Architecture: Clearly separate stable facility/PQS content (for the Type V DMF) from product-specific, variable content (for individual applications).
2. Proposing an Engagement Plan: Map out timing for engineering run and media fills, and propose earlier or alternative inspection options (e.g., remote assessments).
3. Documenting Prior Knowledge: Compile evidence of “copy-paste” line similarity and established control strategies to support reduced data packages for stability or PPQ studies.
4. Nominating a Single-Point-of-Contact: Establish a continuous communication cadence and request FDA to mirror it with a dedicated liaison team.

Overall, the tone of the meeting was optimistic.  If FDA can rapidly implement a PreCheck program that formalizes early, durable engagement, modernizes post-approval change pathways, and alleviates late-cycle inspection bottleneck, the pharmaceutical industry appears poised to translate expertise into faster, more resilience domestic manufacturing capacity.