When Agencies Lose Power: How 3 Seismic Shifts are Transforming Pharmaceutical Regulation

When the Supreme Court overturned Chevron v Natural Resources Defense Council last June in Loper Bright Enterprises v Raimondo, it ended 4 decades of judicial deference to agency interpretations of ambiguous statutes. The impact on pharmaceutical regulation was immediate and far-reaching.²

The ruling fundamentally alters the dynamics of regulatory authority. Agencies like the US Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (CMS) can no longer count on courts deferring to their expertise when interpreting ambiguous statutory language. This shift has already emboldened pharmaceutical companies to challenge regulations they previously might have accepted.³

The Medicare drug price negotiation program established under the Inflation Reduction Act (IRA) faces renewed legal scrutiny, with drugmakers questioning CMS's interpretation of which medications are eligible for negotiation and how maximum fair prices are determined. Without Chevron deference, courts will exercise independent judgment on these matters, potentially leading to inconsistent rulings across different jurisdictions.⁴

Similarly, the FDA's rule on Laboratory Developed Tests and its approach to regulating artificial intelligence (AI)-powered medical devices now stand on shakier ground. The process by which the FDA reaches decisions on new drugs and medical devices could face greater scrutiny, potentially leading to longer lead times as government lawyers work to strengthen their legal positions against inevitable challenges.⁵

At the end of March, the Supreme Court heard oral arguments in FCC v Consumers' Research, a case that could resurrect the long-dormant nondelegation doctrine. This principle, which hasn't been meaningfully applied since 1935, holds that Congress cannot delegate its legislative powers to executive agencies without providing an "intelligible principle" to guide agency discretion.⁶

At the time of writing, the Court has not yet ruled on this case. If the Court strengthens this doctrine, as many legal observers expect, the consequences for pharmaceutical regulation could be even more profound than the Chevron overturn. The nondelegation doctrine would fundamentally question whether agencies like the FDA have the constitutional authority to make certain types of decisions at all. It's not just about who interprets the law anymore—it's about who can make the rules in the first place.⁷

For pharmaceutical manufacturers, this could mean that many FDA regulations governing drug approval processes, clinical trial requirements, and manufacturing standards might be vulnerable to constitutional challenges. The FDA's ability to adapt quickly to emerging technologies like AI in drug development could be severely hampered if the Court requires more specific congressional authorization for agency actions.⁸

As if these judicial shifts weren't disruptive enough, HHS Secretary RFK Jr delivered another blow to the regulatory status quo on March 3rd by rescinding the Richardson Waiver—a 54-year-old policy that voluntarily subjected HHS rules about "public property, loans, grants, benefits, or contracts" to public notice and comment.⁹

The policy change, which took effect immediately, means that HHS will no longer accept public comments on rules falling under these exemptions unless specifically required by other laws. While Medicare and Medicaid programs will likely maintain their existing comment requirements due to separate statutory obligations, other HHS programs and initiatives could see significant changes in how they engage with stakeholders.¹⁰

This is particularly concerning for pharmaceutical innovation. Public comment periods have historically allowed researchers, patient advocates, and industry experts to identify potential unintended consequences of proposed regulations before they take effect. Eliminating this feedback loop could lead to less effective, less informed rulemaking.⁹

The timing of Kennedy Jr's decision is especially noteworthy given President Trump's recent executive order establishing the "Make America Health Again" Commission, which emphasized "radical transparency" in health agency operations. Eliminating public participation in rulemaking seems to run counter to this stated commitment to transparency.¹¹

For pharmaceutical manufacturers, these 3 developments create both challenges and opportunities. On one hand, the industry now has more avenues to challenge unfavorable regulations through litigation. On the other hand, the resulting regulatory uncertainty could slow drug development and approval processes.¹² Manufacturers are adopting a more cautious approach to compliance. With less certainty about how courts will interpret regulations, companies are building in additional time and resources for potential legal challenges.¹³

The FDA's regulation of emerging technologies like AI in drug discovery and development faces particular uncertainty. Justice Elena Kagan warned in her Loper dissent that limiting deference to agencies' interpretations hinders Congress's ability to appoint effective regulators for rapidly evolving fields like AI. Without clear regulatory guidance, pharmaceutical companies may hesitate to fully invest in these promising technologies.¹⁴

Perhaps the most overlooked aspect of this regulatory transformation is its impact on Congress. With courts and the administration pushing regulatory authority back to the legislative branch, Congress faces enormous pressure to craft detailed, technically complex legislation—a task for which it is most certainly ill-equipped.¹⁵ Congress simply doesn't have the staff or expertise to write the kind of detailed regulatory frameworks needed for modern pharmaceutical development. Lawmakers will need to shift away from broad delegations using "secretary shall" language and instead spell out specific requirements in statute.¹⁶

This challenge is compounded by the partisan atmosphere in Congress, which makes passing comprehensive legislation increasingly difficult. The result could be a regulatory vacuum where outdated rules remain in place because neither agencies nor Congress can effectively update them (or we continue to sneak in health care provisions in our annual budget resolutions...).¹⁷

As the pharmaceutical industry navigates this transformed regulatory landscape, stakeholders must adapt their strategies accordingly. Manufacturers should carefully assess the legal basis for all new regulations and be prepared to engage more directly with Congress on legislative solutions. Patient advocacy groups and industry associations will need to find new channels for input now that traditional comment periods may be unavailable for certain rules. And all stakeholders should prepare for a period of increased litigation as courts work to establish new interpretations of pharmaceutical regulations without agency deference.

The battle for regulatory authority between Congress, the courts, and executive agencies is far from over. But one thing is clear: the era of strong agency deference that characterized pharmaceutical regulation for decades has ended. What replaces it will shape drug development, pricing, and access for generations to come.

1. Loper Bright Enterprises v Raimondo, 143 S Ct. 2429 (2024).
2. Chevron U.S.A., Inc. v Natural Resources Defense Council, Inc., 467 US 837 (1984).
3. Department of Health and Human Services. Policy on adhering to the text of the Administrative Procedure Act. Federal Register. 2025;90(40):11029.
4. Centers for Medicare & Medicaid Services. Medicare Drug Price Negotiation Program. 42 CFR § 414.450 (2024).
5. Food and Drug Administration. Medical Devices; Laboratory Developed Tests. 21 CFR § 809 (2024).
6. FCC v Consumers' Research, No 24-582 (US cert. granted, Dec 13, 2024).
7. A.L.A. Schechter Poultry Corp. v United States, 295 US 495 (1935).
8. Food and Drug Administration. Artificial intelligence and machine learning in software as a medical device. Updated January 6, 2024. Accessed March 16, 2025. https://www.fda.gov/medical-devices/software-medical-device-samd/artificial-intelligence-and-machine-learning-software-medical-device 
9. Department of Health and Human Services. Public Participation in rule making. Federal Register. 1971;36:2532.
10. Administrative Procedure Act, 5 USC § 553(a)(2) (2018).
11. Making America Healthy Again by empowering patients with clear, accurate, and actionable healthcare pricing information. Executive Office of the President. Federal Register. 2025;90(39):11005.
12. Inflation Reduction Act of 2022. 117th Congress. HR 5376 (2022).
13. Perez v Mortgage Bankers Ass'n, 575 US 92 (2015).
14. Kagan E. Dissenting opinion. Loper Bright Enterprises v Raimondo, 143 S Ct 2429 (2024).
15. Congressional Research Service. Agency deference after Loper Bright and relentless: implications for Congress. Report No R47892. July 15, 2024.
16. Administrative Conference of the United States. Agency Guidance Through Policy Statements. Recommendation 2017-5. December 14, 2017. Accessed March 20, 2025. https://www.acus.gov/sites/default/files/documents/Recommendation%202017-5%20%28Agency%20Guidance%20Through%20Policy%20Statements%29_2.pdf
17. Gundy v United States, 139 S Ct 2116 (2019).