The legal definitions of a drug and a medical device set forth in the Food, Drug, and Cosmetic Act have some important overlapping provisions. Because of the overlapping provisions, theoretically the U.S. Food and Drug Administration (FDA) has some discretion in how it will regulate certain product categories. For the regulated industry, how the FDA asserts jurisdiction over a particular product will have a significant impact on a company and its investors.

First, if the FDA classifies a product as a drug, the product would be regulated by the Center for Drug Evaluation and Research (CDER), instead of the FDA's Center for Devices and Radiological Health. CDER, as its name suggests, has expertise and jurisdiction in regulating drugs, but has limited expertise in regulating devices.

Second, the time and effort for obtaining regulatory approval or clearance for medical devices and drugs are significantly different. Bringing a new drug to market requires conducting human clinical trials in multiple phases that can last several years; preparing and submitting a new drug application (NDA) containing substantial clinical evidence that the drug candidate is safe and effective; and gaining drug approval or licensing by the FDA.

In contrast, the majority of medical devices are brought to market through the premarket notification, or 510(k), process. Premarket notification generally does not require human clinical trials. 510(k) applications tend to be fairly straightforward to assemble and submit to the FDA. And the timeline for the FDA to review a 510(k) application is significantly shorter when compared to the substantive review of an NDA.

Finally, drugs are much more expensive to bring to market. For example, the costs to develop and bring to market a new drug total approximately $2 billion. This compares to approximately $31 million to bring a new medical device to market. So classifying a medical device as a drug can elevate development costs, increase regulatory burden, and extend the timeline to market. Such a classification will significantly impact whether a company can attract venture capital investment.

With these differences in mind, the U.S. District Court for the District of Columbia recently issued an important memorandum opinion. The opinion addresses the FDA's attempts to classify contrast agents, which are medical devices, as drugs. By way of background, in 2009 the FDA issued a guidance document, titled, "New Contrast Imaging Indication Considerations for Devices and Approved Drug and Biological Products," which sets forth the FDA's general policies for how it intends to regulate certain contrast agents.

Historically, the FDA has regulated barium sulfate containing contrast agents as drug products. The plaintiff in the present matter, Genus Medical Technologies, LLC (Genus), manufactures barium sulfate containing contrast agents. Contrast agents are used to image structures within the body. Barium sulfate is an "inert metal salt" which does not "chemically interact with human cells or tissue to serve its purpose." And ingesting barium sulfate "does not affect the chemical bonds or molecular structure of the gastrointestinal system or form new substances."

By law, a drug is defined, in part, to include "articles intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in man or other animals." The law defines a device, in part, as an "apparatus … intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals." Additionally, a device "does not achieve its primary intended purposes through chemical action …"

Because the definitions of drugs and devices overlap, the FDA noted that Genus' barium sulfate products "meet the definition of drug" and "also appear to meet the definition of a 'device.'" Nevertheless, the FDA concluded, in a binding determination, that Genus's barium sulfate containing contrast agents were drugs that would be regulated by CDER. Further, the FDA concluded that it "must regulate contrast agents … uniformly [as drugs]."

Genus disagreed. And through a pathway that included a request for designation, contentious discussions with the FDA, an FDA inspection, the FDA issuing Genus a warning letter, and Genus responding to the FDA's warning letter, Genus and the FDA ended up in litigation in the U.S. District Court for the District of Columbia. Genus brought its litigation to challenge the FDA's classification of Genus' contrast agents as drugs. The court issued its opinion as a response to separate motions for summary judgment filed by Genus and the FDA during the litigation.

The court vacated the FDA's decision to regulate Genus' contrast agents as drugs and remanded to the FDA for further administrative opinions. In arriving at its holding, court relied upon additional statutory language in the definition of a medical device, namely that a device:

Does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes.

Analyzing the validity of the FDA's determination under the Chevron framework, the court relied upon a cannon of statutory construction that "the specific governs the general." The court noted that there was no dispute that the medical device definition was more narrowly defined (i.e., the specific device definition governs the general drug definition).

Further, the court reasoned that adopting the FDA's conclusion would also "read out that exclusionary clauses altogether," that is, would read out the "Does not achieve its primary intended purposes through chemical action …" statutory clause entirely. The court also determined that the FDA's classification, if upheld, "would be at odds with the way courts ordinarily interpret statutes—namely, they attempt to give effect to all their provisions, 'so that no part will be inoperative or superfluous, void or insignificant.'" The opinion further dismissed as unpersuasive other arguments made by the FDA relating to legislative history and earlier case law.

Conclusion

The court's opinion is a win for Genus and for manufacturers of contrast agents. Furthermore, the opinion is important for the medical device industry as a whole, in that it substantiates that administrative decisions can be overturned by the courts when the FDA overreaches. That said, the FDA, however, may still lodge an appeal. Thus, medical device manufacturers should continue to monitor this case.