The Supreme Court Decisions Impacting Pharmacy Industry, Agency Interactions | ASPL 2024

Addressing recent Supreme Court decisions and developments within the pharmacy industry, a pharmacy law expert discussed how these decisions impact pharmacies’ ability to dispense medication and agency roles in enforcing regulatory standards. From Loper Bright overturning the Chevron deference decision to the subsequent cases that ironed out Loper Bright, they discussed macro-level developments in the Supreme Court and the implications these decisions have on pharmacies.

At the American Society of Pharmacy Law’s 50th Developments in Pharmacy Law Seminar, Selina Coleman, JD, Partner in Life Sciences Health Industry Group at Reed Smith LLP, hosted a session titled “Key Supreme Court Decisions Impacting Pharmacies.” She kicked the session off by discussing the gravity of the Loper Bright decision.

Selina Coleman, JD, Partner in Life Sciences Health Industry Group at Reed Smith LLP, hosted a session titled “Key Supreme Court Decisions Impacting Pharmacies.” | image credit: Manuel Milan / stock.adobe.com

“[Loper Bright] is a landmark case by the Supreme Court that ends 40 years of deference to agencies, known as Chevron deference. So, what this does is creates a seismic shift in how the industry will be engaging with courts, agencies, and with lawmakers,” she said.¹

Known as the “Chevron Doctrine,” the Chevron deference decision stems from the 1984 Chevron v. Natural Resources Defense Council Supreme Court ruling. The ruling stated that, when dealing with federal legislation that is considered by the courts as “ambiguous” or with any type of administrative gap, the courts have the ability to defer to the regulatory agency’s interpretation of the law. In other words, when there is vague interpretation of a law in court, the federal agency in charge of the law would then take over the interpretation, regardless of if it differed from the court’s interpretation.²

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With Loper Bright, however, the Chevron Doctrine was overturned, taking the power of ambiguous interpretation away from federal agencies and giving it back to the courts. According to Coleman, the Supreme Court’s decision was predicted to result in federal agencies becoming more conservative in the rules and regulations they establish.

“It's really courts who have the expertise, the experience, who are supposed to be interpreting things like ambiguous laws. That's something that courts do often,” continued Coleman.¹ She explained how the decision expressed the court’s superiority for determining the interpretation of an ambiguous law, more so than that of federal agencies.

As Coleman mentioned, the Loper Bright decision from earlier this year was a landmark case that reversed a Chevron deference decision that stood for nearly 40 years. And since the overturning of Chevron deference, subsequent decisions have further amended how businesses and agencies interact within the drug supply chain. Two of those decisions were Jarkesy v. the Securities and Exchange Commission (SEC), and the Corner Post decision.

First, the Jarkesy v. SEC decision adjusted how penalties are distributed for the violation of federal agency regulations. The Chevron deference stood for 40 years and allowed agencies to assess penalties on behalf of the federal government. However, with the Jarkesy decision, the Supreme Court decided that all penalties would be decided by a court consisting of the defendant’s peers. Since Loper Bright took agencies’ power of assessing penalties away, Jarkesy v. SEC had to determine how penalties are distributed.

Next, the Corner Post decision established a statute of limitations for the distribution of agency rules and regulations. “If you have a new company that enters the marketplace, they do something, and then they have an adverse ruling against them, or they feel they've been injured by an existing rule or regulation, they have 6 years to come to bring the [regulation to] challenge, even if there's been a regulation on the books for decades,” continued Coleman.¹

After describing the basis of recent Supreme Court decisions, she then explained how exactly these rulings would impact the pharmacy industry. First, these decisions would make it easier for businesses and parties within the marketplace to challenge agency rulemaking. Furthermore, they take the conflicts of interests away from agencies creating and enforcing rules, and successes from the Loper Bright case have already been recognized.

Indeed, when agencies applied the previously allowable Chevron deference, they won 93% of cases, but without any type of deference, agencies only won 38.5% of the time.

While these decisions do not solely focus on the pharmaceutical industry, they provide important implications for how agencies like the FDA, SEC, and so many more enforce rules and regulations towards pharmacies, manufacturers, and other parties with a significant role in the supply chain. Despite not directly impacting specific pharmacies and businesses within the industry, with the decisions being so fresh in the legislature, they are almost guaranteed to make an impact in the future.

“With respect to other government agencies that have the power to apply civil monetary penalties, the fact that now someone can challenge those as a mechanism that needs to go through a jury trial or something comparable, as opposed to being done by the agency itself, it could create a lot of opportunity to push back,” concluded Coleman.¹

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References

1. Coleman S. Key Supreme Court decisions impacting pharmacies. Presented at: 2024 Developments in Pharmacy Law Seminar; November 7-10, 2024; Phoenix, AZ.

2. Bardeen S, Gray B. Unpacking the Supreme Court’s recent ruling on the “Chevron Doctrine.” Public Policy Institute of California. July 17, 2024. Accessed November 8, 2024. https://www.ppic.org/blog/unpacking-the-supreme-courts-recent-ruling-on-the-chevron-doctrine/