Ivy Sports Medicine, LLC v. Sylvia Mathews Burwell

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 8, 2014 Decided September 26, 2014
No. 13-5139
IVY SPORTS MEDICINE, LLC,
APPELLANT
v.
SYLVIA MATHEWS BURWELL, SECRETARY OF HEALTH AND
HUMAN SERVICES (IN HER OFFICIAL CAPACITY), ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:11-cv-01006)
Matthew M. Hoffman argued the cause for appellant.
With him on the briefs was Mark A. Heller.
Adam C. Jed, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were
Stuart F. Delery, Assistant Attorney General, Ronald C.
Machen, Jr., U.S. Attorney, and Scott R. McIntosh, Attorney.
Before: GRIFFITH, KAVANAUGH, and PILLARD, Circuit
Judges.
Opinion for the Court filed by Circuit Judge
KAVANAUGH, with whom Circuit Judge GRIFFITH joins.
2
Dissenting opinion filed by Circuit Judge PILLARD.
KAVANAUGH, Circuit Judge: This case concerns the
Food and Drug Administration’s regulation – and subsequent
re-regulation – of a medical device called the Collagen
Scaffold, an absorbable surgical mesh that is designed for use
in knee-replacement surgeries. In December 2008, the
manufacturer of the scaffold, ReGen Biologics, obtained FDA
clearance to market the device. FDA’s clearance of the
scaffold soon came under fire in the press and from some
Members of Congress amid allegations that the process had
been tainted by improper political pressure from other
Members of Congress. An internal FDA investigation
concluded that some procedural irregularities had occurred
during the agency’s review of the device.
Following the internal investigation, FDA did not
exercise its clear statutory authority to reclassify the device.
Reclassification would force the device off the market and
require the device to undergo the extensive pre-market
approval process before it could again be marketed. That
statutory reclassification process generally requires FDA to
provide notice and an opportunity for comment before the
agency reclassifies a device. FDA here did not give notice
and opportunity for comment. Rather, FDA short-circuited
the statutory reclassification process by relying on what it
called its inherent reconsideration authority. Asserting that
inherent authority, FDA reevaluated the scaffold and
concluded that the agency had erred in allowing the device to
be sold. FDA issued an order rescinding its clearance
decision, forcing ReGen to immediately pull the scaffold from
the market. ReGen subsequently filed for bankruptcy.
ReGen and its successor in interest, Ivy Sports Medicine,
challenged FDA’s decision to rescind the clearance
3
determination as procedurally flawed. The District Court
granted summary judgment to FDA, and Ivy now appeals.
Because we conclude that FDA did not follow the proper
statutory procedure for reclassifying a device, we reverse the
judgment of the District Court. We direct the District Court
to vacate FDA’s decision and to remand to the agency for
further proceedings.
I
A
In 1976, Congress amended the Food, Drug, and
Cosmetic Act, 21 U.S.C. § 301 et seq., to grant FDA authority
to regulate medical devices intended for human use. Devices
fall into one of three categories – Class I, Class II, or Class
III. A device’s classification is determined based on “the
degree of regulation thought necessary to provide reasonable
assurance of each device’s ‘safety and effectiveness.’”
Contact Lens Manufacturers Association v. FDA, 766 F.2d
592, 594 (D.C. Cir. 1985).
The classification of a device matters because the three
classes trigger different approval processes. In order to enter
the market, manufacturers of Class III devices first must go
through the “premarket approval” process. “That process
generally requires extensive clinical research on a new device
to ensure the device’s safety, and it often takes significant
time.” Cytori Therapeutics, Inc. v. FDA, 715 F.3d 922, 923
(D.C. Cir. 2013). Class I and II devices are considered to
pose fewer risks and are therefore able to enter the market
more easily. Rather than requiring pre-market approval, Class
I and II devices are subject either to “general controls” such
as labeling restrictions (for Class I devices), or a combination
of general controls and “special controls,” such as
4
performance standards (for Class II devices). See 21 U.S.C.
§ 360c(a)(1)(A)(i), (a)(1)(B).
How does a device initially get classified into Class I, II,
or III? The Act makes Class III the default category for new
(that is, post-1976) medical devices, unless and until FDA
finds that one of two conditions has been met. See id.
§ 360c(f)(1). First, FDA may determine that a device is
“substantially equivalent” to a pre-existing Class I or II
device. Id. § 360c(f)(1)(A)(ii). To be substantially equivalent
to a pre-existing Class I or II device, the new device must
have “the same intended use as the predicate device,” and
either (i) have “the same technological characteristics as the
predicate device” or (ii) be shown to be as safe and effective
as the predicate device. Id. § 360c(i)(1)(A). Second,
regardless of whether a device is substantially equivalent to
an existing device, FDA may make a de novo determination
that a device meets the statutory definitions of Class I or II.
See id. § 360c(f)(1)(B), (f)(2)-(3). That determination may be
made on FDA’s own initiative or in response to the device
manufacturer’s petition for de novo classification.
Here is how it works in practice: Classification of a new
medical device into Class I or II is usually obtained by
submitting to FDA a “premarket notification,” which in turn
triggers the FDA’s substantial equivalence review. See id.
§ 360(k). In the pre-market notification, the manufacturer
states the new device’s intended use, identifies the predicate
devices to which the new device is substantially equivalent,
and offers a proposed classification. See id.; 21 C.F.R.
§ 807.87. If FDA agrees that the new device is substantially
equivalent to an existing Class I or Class II device, it issues a
classification order allowing the device to be marketed subject
to appropriate restrictions. See 21 C.F.R. § 807.100. But if
FDA disagrees with the proposed classification, the device
5
remains in Class III and must go through the pre-market
approval process, unless FDA subsequently approves a
petition for de novo classification. See 21 U.S.C.
§ 360c(f)(3)(A).
After a device has been initially classified, there is also a
process for FDA reclassification. The Act includes a
provision, Section 360c(e), allowing FDA to change the
classification given to a device. See 21 U.S.C. § 360c(e).
During the time period relevant to this litigation, that
provision stated: “Based on new information respecting a
device, the Secretary may, upon his own initiative or upon
petition of an interested person, by regulation (A) change such
device’s classification, and (B) revoke, because of the change
in classification, any regulation or requirement in
effect . . . with respect to such device.” Id. § 360c(e)(1)
(2011). Because reclassification must be done “by
regulation,” it must be done in accord with certain procedural
requirements, including notice and comment. See FDA Br.
36; 21 U.S.C. § 360c(e); 21 C.F.R. § 860.130(c).
B
ReGen Biologics, Inc. was a New Jersey-based medical
device manufacturer. In 1993, ReGen began research on a
new device for use in certain knee-repair surgeries. The fruit
of that labor, called the Collagen Scaffold, is a crescent-
shaped surgical mesh made of bovine collagen. According to
ReGen, the Collagen Scaffold was intended to reinforce and
repair the knee cartilage remaining after knee surgery and to
provide a scaffold on which new tissue could grow.
In 2004, ReGen submitted a Class III premarket approval
application but subsequently withdrew it and sought to
proceed through the quicker premarket notification process
for Class I or Class II devices. In 2005, ReGen submitted to
6
FDA its first pre-market notification for the Collagen
Scaffold. Shortly thereafter, FDA issued a letter finding that
the scaffold was not substantially equivalent to its claimed
predicates. FDA eventually agreed to convert that finding
into a request for additional information. After receiving the
requested information, FDA again determined that the
scaffold was not substantially equivalent.
In late 2006, ReGen submitted a second pre-market
notification with revised labeling. Following more back-and-
forth between ReGen and FDA, the agency issued another
finding that the Collagen Scaffold was not substantially
equivalent to existing devices. A few months after this
second decision, four members of New Jersey’s congressional
delegation wrote to the FDA Commissioner expressing
concern about FDA’s process for reviewing the scaffold.
Representatives from ReGen later met with the Commissioner
and with Dr. Daniel Schultz, the director of FDA’s Center for
Devices and Radiological Health, the office that oversees
device approval decisions. Although the FDA officials
declined to take further action on the denied application, Dr.
Schultz advised ReGen that it could submit a new pre-market
notification with additional revisions.
ReGen took Dr. Schultz up on his suggestion and
submitted a third pre-market notification in July 2008. As
they had before, FDA’s staff reviewers recommended that the
scaffold be found not substantially equivalent to the claimed
predicates. Rather than issue a final decision, however, Dr.
Schultz decided to convene and seek input from an expert
advisory panel. That panel ultimately concluded that the
scaffold “was as safe and effective as the predicate devices.”
FOOD & DRUG ADMINISTRATION, ORTHOPAEDIC AND
REHABILITATION DEVICES PANEL MEETING – NOVEMBER 14,
2008 (SUMMARY). Based on the panel’s conclusions and
7
other information in the administrative record, Dr. Schultz
issued a letter finding that ReGen had demonstrated
substantial equivalence and classifying the Collagen Scaffold
into Class II.
ReGen’s victory would prove short-lived. A few months
after ReGen received clearance to market the Collagen
Scaffold, the Wall Street Journal published an article alleging
that political pressure had skewed FDA’s review process. See
Alicia Mundy, Political Lobbying Drove FDA Process, WALL
ST. J., Mar. 6, 2009, at A1. The same day that the Wall Street
Journal article appeared, a United States Senator contacted
FDA to raise concerns that ReGen had been allowed to play
an outsized and inappropriate role in the process. Other
Members of Congress later raised similar concerns. And in
April 2009, at the same time ReGen was preparing for its first
commercial distributions of the scaffold in the United States,
a group of FDA employees wrote a letter to President Obama
accusing Dr. Schultz and the FDA Commissioner of
improperly influencing the results of the agency’s review.
Faced with those and other allegations of impropriety,
FDA’s newly appointed Acting Commissioner ordered an
internal investigation of the Collagen Scaffold’s review
process. The investigation culminated in a report issued in
September 2009. See FOOD & DRUG ADMINISTRATION,
REVIEW OF THE REGEN MENAFLEX: DEPARTURES FROM
PROCESSES, PROCEDURES, AND PRACTICES LEAVE THE BASIS
FOR A REVIEW DECISION IN QUESTION, PRELIMINARY REPORT
(2009). The report identified “multiple departures from
processes, procedures, and practices” that raised “serious
questions about whether the integrity (as well as the quality)
of the review process was compromised.” Id. at 1, 22.
Among other things, the report criticized ReGen’s access to
high-level FDA officials, and those officials’ involvement in
8
the decisionmaking process; communications between
Members of Congress and the FDA Commissioner; and
ReGen’s level of involvement in the expert panel
proceedings. Although the report stopped short of concluding
that the review process had been compromised, it
recommended reevaluation of Dr. Schultz’s decision to clear
the Collagen Scaffold. Id. at 23.
Following the report’s publication, FDA appointed a new
team to review the Collagen Scaffold. That team concluded
that the device was not substantially equivalent to its claimed
predicates. Dr. Jeffrey Shuren, who had succeeded Dr.
Schultz as head of FDA’s Center for Devices and
Radiological Health, then convened a second expert panel.
The second panel’s findings were mixed; although the
scaffold was “generally considered safe,” the panel members
raised “some concerns about efficacy.” J.A. 1020. In
October 2010, Dr. Shuren notified ReGen that the clearance
of the scaffold “was in error,” and that to “rectify this error”
FDA would rescind its substantial equivalence determination.
Letter from Dr. Jeffrey Shuren, Director, Center for Devices
and Radiological Health, to Dr. Gerald E. Bisbee, Jr.,
Chairman and Chief Executive Officer, ReGen Biologics, Inc.
(Oct. 14, 2010). That decision, in turn, meant that the
Collagen Scaffold would be in Class III and have to go
through the extensive pre-market approval process to be
marketed again. An official rescission order followed in
March 2011, forcing ReGen to withdraw the Collagen
Scaffold from the market.
ReGen then filed this suit in the District Court seeking
review of FDA’s decision pursuant to the Administrative
Procedure Act. See 5 U.S.C. § 702. During the pendency of
the case, ReGen went bankrupt and Ivy Sports Medicine, LLC
9
became the successor in interest to ReGen and was substituted
as plaintiff.
Before the District Court, Ivy argued that FDA’s
rescission order was unlawful. Of relevance here, Ivy
asserted that FDA did not have inherent authority to rescind
its substantial equivalence determination; rather, according to
Ivy, FDA should have exercised its statutory reclassification
authority if it wanted to change the original classification
decision. The District Court disagreed and granted summary
judgment to FDA. Our review of the District Court’s decision
is de novo. See Virginia Department of Medical Assistance
Services v. HHS, 678 F.3d 918, 921 (D.C. Cir. 2012).
II
FDA asserts that it had “inherent authority” to rescind its
determination that the Collagen Scaffold was substantially
equivalent to devices already in the market. Rescinding that
determination had the effect of putting the device into Class
III, and thus required completion of the extensive pre-market
approval process before the scaffold could be marketed again.
FDA used its inherent authority to rescind rather than its
statutory reclassification authority. As a result, FDA did not
go through the procedures – including notice and comment –
that are required for reclassification.
The Act does not contain an express provision granting
FDA authority to reconsider its substantial equivalence
determinations. But as FDA notes, administrative agencies
are assumed to possess at least some inherent authority to
revisit their prior decisions, at least if done in a timely
fashion. See, e.g., American Methyl Corp. v. EPA, 749 F.2d
826, 835 (D.C. Cir. 1984) (“We have held that agencies have
an inherent power to correct their mistakes by reconsidering
their decisions within the period available for taking an
10
appeal.”); Mazaleski v. Treusdell, 562 F.2d 701, 720 (D.C.
Cir. 1977) (“We have many times held that an agency has the
inherent power to reconsider and change a decision if it does
so within a reasonable period of time.”) (quoting Gratehouse
v. United States, 512 F.2d 1104, 1109 (Ct. Cl. 1975));
Albertson v. FCC, 182 F.2d 397, 399 (D.C. Cir. 1950) (“in the
absence of any specific limitation,” reconsideration available
“within the period for taking an appeal”); see generally
Daniel Bress, Note, Administrative Reconsideration, 91 VA.
L. REV. 1737 (2005). As this Court explained in an oft-
repeated framing of the principle, inherent authority for
timely administrative reconsideration is premised on the
notion that the “power to reconsider is inherent in the power
to decide.” Albertson, 182 F.2d at 399.
But we have also recognized that any inherent
reconsideration authority does not apply in cases where
Congress has spoken. In American Methyl Corp. v. EPA, 749
F.2d 826 (D.C. Cir. 1984), we held that an agency may not
rely on inherent reconsideration authority “when Congress
has provided a mechanism capable of rectifying mistaken
actions.” 749 F.2d at 835. In such circumstances, we
concluded, “it is not reasonable to infer authority to
reconsider agency action.” Id.; see also New Jersey v. EPA,
517 F.3d 574, 583 (D.C. Cir. 2008) (“Congress . . .
undoubtedly can limit an agency’s discretion to reverse
itself”). Put more simply, our cases assume that Congress
intends to displace an administrative agency’s inherent
reconsideration authority when it provides statutory authority
to rectify the agency’s mistakes.
Ivy argues that this case falls squarely within the ambit of
cases like American Methyl. In particular, Ivy contends that
Congress precluded FDA from exercising inherent authority
to rescind substantial equivalence determinations by creating
11
in 21 U.S.C. § 360c(e) a specific statutory mechanism to
correct alleged device classification errors. As relevant here,
that provision states: “Based on new information respecting a
device, the Secretary may, upon his own initiative or upon
petition of an interested person, by regulation (A) change such
device’s classification, and (B) revoke, because of the change
in classification, any regulation or requirement in effect under
section 360d or 360e of this title with respect to such device.”
21 U.S.C. § 360c(e)(1) (2011). To do so, the agency must
first give notice and opportunity for comment. See FDA Br.
36; 21 U.S.C. § 360c(e); 21 C.F.R. § 860.130(c).
For its part, FDA acknowledges that it could have used
the statutory reclassification procedure in Section 360c(e) to
reclassify the Collagen Scaffold into Class III and thereby
remove it from the market. See FDA Br. 39. But FDA argues
that nothing in the Act or the American Methyl line of cases
bars the agency from relying on its inherent reconsideration
authority for the underlying substantial equivalence
determination. In FDA’s view, Ivy is conflating the
underlying substantial equivalence determination with the
potential consequence of that decision – classification into
Class I, II, or III.
Although counsel for FDA has advanced a forceful case
for the agency’s position, we ultimately think that Ivy has the
better of the argument. It may well be correct, as FDA
contends, that the statutory procedures outlined in Sections
360c(f) (for determining substantial equivalence) and 360c(e)
(for reclassification) are not mirror images of one another.
But the fundamental question both provisions address – what
is the appropriate classification of a new device? – is the
same. And as a practical matter, the decision to revoke a
substantial equivalence determination in circumstances like
those present here is a de facto reclassification of the device
12
into Class III, at least absent other FDA action. If FDA finds
that a device is no longer substantially equivalent to any
existing Class I or Class II devices, that device is
automatically reclassified as a Class III device. In other
words, to revoke a substantial equivalence determination is to
“change the classification,” 21 U.S.C. § 360c(e)(2), of that
device.
FDA’s statutory reclassification authority covers the
same concerns, and achieves the same result, as revocation of
a substantial equivalence determination. Therefore, as in
American Methyl, “Congress has provided a mechanism
capable of rectifying mistaken actions,” and it would be
unreasonable under this statutory scheme to infer that FDA
retains inherent authority to short-circuit or end-run the
carefully prescribed statutory reclassification process in order
to correct the same mistake. Indeed, accepting FDA’s
assertion of inherent authority would render Section 360c(e) a
dead letter in many cases because FDA could often reclassify
a device without complying with the procedural requirements
of that provision, in particular notice and comment.
In short, because FDA concededly could have used
Section 360c(e) to reclassify the Collagen Scaffold into Class
III, it could not rely on a claimed inherent reconsideration
authority to short-circuit that statutory process and revoke its
prior substantial equivalence determination to achieve that
same result.
The practical significance of our holding on this point is
limited but important. To reclassify under the statute, FDA
must go through certain procedural hoops, including notice
and comment. See FDA Br. 36. FDA obviously thinks notice
and comment is unnecessary here, a not-uncommon sentiment
among agencies that want to take action more promptly. But
13
notice and comment helps to prevent mistakes, because
agencies receive more input and information before they
make a final decision. And notice and comment also helps
ensure that regulated parties receive fair treatment, a value
basic to American administrative law. So notice and
comment, while somewhat burdensome, serves important
purposes both generally and in this statute.1
III
FDA responds that even if Section 360c(e) is the kind of
statutory provision that can displace inherent reconsideration
authority, the American Methyl principle still would not apply
on the particular facts of this case. American Methyl held that
EPA had erred by failing to use the statutory procedure for
revoking fuel-marketing waivers. But in a footnote, the Court
also stated that it was not expressing any view “as to EPA’s
power to revoke a waiver obtained through fraud, ex parte
contacts, or other misconduct tainting the original record and
thereby affecting the integrity of an agency’s proceedings.”
749 F.2d at 834 n.51. The Court went on to note that in the
case before it there was no evidence of such fraud or
misconduct in the administrative record. Id.1
As both a legal and a practical matter, the difference between
our approach and the dissent’s approach is exceedingly narrow. As
a legal matter, we simply read this particular statutory notice and
comment scheme as one that, under our American Methyl
precedent, negates FDA’s resort to its inherent authority in these
circumstances. As a practical matter, FDA can still quickly and
readily reclassify a device even with notice and comment.
Moreover, in certain situations where it becomes necessary, an
agency may rely on exceptions to the notice and comment
requirement. See, e.g., 5 U.S.C. § 553(b)(3)(B).
14
Here, FDA argues that the findings of its internal
investigation – political pressure, agency acquiescence to that
pressure, and departures from standard agency procedures –
are the kinds of concerns that American Methyl contemplated
could warrant reconsideration on the basis of inherent
authority even if a statutory reconsideration provision exists.
FDA overreads American Methyl. To begin with, it is not
clear that American Methyl’s statements regarding the
implications of misconduct are anything more than dicta. As
FDA itself points out, the record in American Methyl
contained no evidence of misconduct. The Court therefore
had no occasion to consider whether a finding of misconduct
would allow an agency to use inherent authority – rather than
statutory authority – to reconsider a decision. Indeed, the
Court explicitly stated that it “of course intimate[d] no view”
on the subject. Id.; see also id. at 835 n.55 (fraud allegations
“an issue not before us today and on which we venture no
opinion”). Given its ambiguous precedential value, we are
hesitant to bind ourselves to American Methyl’s supposed
misconduct exception. Cf. Empresa Cubana Exportadora de
Alimentos y Productos Varios v. Department of Treasury, 638
F.3d 794, 802 (D.C. Cir. 2011) (where footnote was arguably
dicta, Court would “decline to elevate it now to a holding”).
In any event, it is unnecessary to decide today whether to
recognize that American Methyl exception. Even accepting
that American Methyl’s footnote 51 created an exception for
misconduct, that exception poses a high bar and would not
apply in this case. To state the obvious, not every wrong
decision or ill-considered decision is tainted by misconduct.
The term “misconduct” as used in American Methyl connotes
some clear legal or ethical violation. Here, the record
indicates that the review process for the Collagen Scaffold
was perhaps imperfect, but the supposed mistakes do not rise
15
to the level of misconduct contemplated by American Methyl.
For example, FDA’s report on the scaffold’s review process
acknowledged that communications between members of the
New Jersey congressional delegation and FDA officials were
“not inappropriate.” J.A. 850. And in fact, representing the
interests of constituents is a key and proper part of the job of
Representatives and Senators. Indeed, FDA received pressure
from other Members of Congress to change the original
reclassification decision. Not surprisingly, therefore,
Members of Congress were on both sides of the question.
The Members’ expression of their views – on both sides –
was not misconduct for purposes of the American Methyl
exception.
Similarly, while the report identified mistakes in the
expert panel proceedings, the report found no evidence that
those supposed defects affected FDA’s decision. See FDA
PRELIMINARY REPORT 20-21 (consequences of excluding
review team members were “speculative” and panel transcript
“does not provide adequate support for a conclusion that the
integrity of the process was compromised”).2
2
The District Court expressed concern about purported ex
parte contacts between FDA officials and ReGen’s executives
following the denial of ReGen’s second premarket notification. See
Ivy Sports Medicine, LLC v. Sebelius, 938 F. Supp. 2d 47, 57
(D.D.C. 2013). As Ivy points out, however, the statutes and FDA
regulation barring companies from meeting with FDA officials
apply only to formal, on-the-record hearings in a rulemaking or
adjudication, not to informal agency proceedings, such as
proceedings to determine substantial equivalence. See 5 U.S.C.
§ 557(a), (d); 21 C.F.R. § 10.55(a). And generally speaking, it is a
good thing for agency officials to meet with regulated entities and
other affected parties.
16
It is also notable that no senior leaders of FDA,
executives of ReGen, or Members of Congress were
disciplined for their involvement in the scaffold’s review
process. Yet if FDA actually rendered a decision tainted by
misconduct – as opposed to simply reaching a mistaken
decision or a decision it no longer agrees with – that
misconduct must have been due to the legally or ethically
wrongful actions of some person or persons. FDA’s inability
or unwillingness to identify those wrongdoers is an indication
that, in fact, no American Methyl-level misconduct occurred,
at least on the record before us.
***
Because Congress created a procedure for FDA to
reclassify medical devices, FDA may not short-circuit that
process through what it calls its inherent authority to reverse
its substantial equivalence determinations for those devices.
FDA’s order rescinding the Collagen Scaffold’s substantial
equivalence determination on the basis of inherent authority
was therefore invalid. We reverse the judgment of the
District Court. We direct the District Court to vacate FDA’s
decision and to remand to the agency for further proceedings.
So ordered.
PILLARD, Circuit Judge, dissenting: This case requires us
to consider the source and scope of the FDA’s authority to
rescind its clearance of an ineffective medical device when
the agency concludes that its decision was flawed and that it
should not have cleared the device in the first place. Ivy
Sports Medicine’s predecessor, ReGen Biologics,1 developed
a surgical mesh, referred to as the Collagen Scaffold, which it
described as a resorbable, crescent-shaped mesh designed to
be implanted inside the knee joint in treatment of injuries of
the meniscus. The FDA cleared the device for marketing as a
Class II device under the Federal Food, Drug, and Cosmetic
Act, as amended by the Medical Device Amendments of 1976
(MDA) (collectively, FDCA or the Act). It did so without
making any substantive determination that the device met the
statutory Class II criteria, but by an alternative route that the
statute authorizes: deeming the device substantially
equivalent to other Class II surgical meshes already in use. In
effect, the FDA’s clearance of the Collagen Scaffold
piggybacked on its prior approval of other, ostensibly
equivalent “predicate” devices. But the FDA soon recognized
that the apparent equivalence was specious and rescinded the
Class II clearance because none of the predicate surgical
meshes was used in a weight-bearing joint like the knee, nor
was any used in place of diseased tissue. There was,
moreover, no evidence that the Collagen Scaffold had any
beneficial effect for its intended use.
Neither the erroneous clearance nor its reversal was
accompanied by notice and comment rulemaking. Ivy
acknowledges that the statute provides for substantial
equivalence determinations to be made without notice and
comment, but challenges the reversal because, in its view, the
FDA lacks authority to revisit any erroneous equivalence
decision except through the Act’s notice-and-comment
1
For the sake of simplicity, this opinion refers interchangeably to
both ReGen Biologics and Ivy Sports Medicine simply as “Ivy.”
2
process for making “Classification Changes.” Where a statute
specifies an exclusive process for revoking erroneous
decisions, agencies cannot circumvent that process by
adverting to their inherent or implied power of error
correction. Ivy contends that 21 U.S.C. § 360c(e)
(“subsection (e)”) is the exclusive process for revoking an
erroneous substantial equivalence determination, and so ousts
the FDA’s implicit reconsideration authority.
The FDA argues to the contrary. The regulatory
“Classification Changes” procedure, codified in subsection
(e), is a means to adjust a device’s statutory classification
“based on new information respecting [the] device.” It is
narrower than Ivy supposes, and clearly does not set forth the
exclusive process—and perhaps not even a permissible
route—for revocation of the FDA’s substantial equivalence
determination.
The statute’s text, structure, history, and purpose, in
addition to past administrative practice, all show that the FDA
permissibly read the statute not to displace its otherwise-
undisputed implicit authority to correct erroneous substantial
equivalence decisions. Subsection (e) speaks neither to
correction of decisions that were wrong when made, nor to
substantial equivalence determinations. It is keyed instead to
changes in light of new information of classifications that
were themselves made through a notice-and-comment process
under subsections (b)-(d). See 21 U.S.C. § 360c(b)-(d). It
does not relate to the type of de facto reclassification to Class
III that occurs upon revocation of an erroneous clearance into
a lower class under the substantial equivalence determination,
and, indeed, does not speak to any decision, such as an
equivalence revocation, that would move a device from Class
II or I into Class III. It does, however, specifically
3
contemplate shifts in the opposite direction, e.g., out of Class
III into Class II or I.
Congress did not intend subsection (e) to be the exclusive
method to reconsider assessments of substantial equivalence,
so it does not displace the FDA’s implicit authority to correct
its own errors. I believe the majority errs in reading the Act
to require that the agency’s erroneous approval of a medical
device via the abbreviated substantial equivalence process
remain frozen in place unless the agency takes the long way
around, through notice and comment rulemaking required for
“Classification Changes,” to undo it, and so I respectfully
dissent.
I. Background
As the majority explains, a medical device defaults to the
restrictive “Class III” under the Act unless the FDA
determines that it belongs in the less restrictive Class II or
Class I (or affirmatively classifies it as required to remain in
Class III). Ivy initially faced a choice of two routes by which
it might have its device moved into a less restrictive class.
One route was to petition the Secretary for classification of
the device directly under the statutory criteria. The other way
was to employ a shortcut “substantial equivalence” process.
After an initial stab at developing the clinical evidence for a
premarket approval application, Ivy chose to bypass the more
onerous regulatory route and seek FDA clearance into Class II
via the piggyback substantial equivalence process. Ivy thus
filed a premarket notification contending that its device was
substantially equivalent to a set of already-classified predicate
devices. If that abbreviated process did not succeed, Ivy
retained the option to seek clearance by petitioning the
Secretary for application of the statutory criteria under the de
novo classification process.
4
As it happened, the piggyback worked for Ivy, at least
temporarily. The FDA approved the Collagen Scaffold as
substantially equivalent to Class II surgical meshes that were
already being marketed to reinforce injured soft tissue, such
as a sutured rotator cuff or fistula. But the substantial
equivalence determination was fraught and close. The FDA
found equivalence reluctantly, and soon suspected that it had
erred. The agency did not immediately reverse itself,
however, but ordered an independent review of its process to
determine whether it had improperly bowed to outside
pressures. In addition, the agency organized a new FDA team
to review the device’s substantial equivalence, subject to
further review by a panel of outside experts. The preliminary
report of the internal investigation, titled “Review of the
ReGen Menaflex®: Departures from Processes, Procedures
and Practices Leave the Basis for A Review Decision in
Question,” identified significant process irregularities and
concerns about outside pressures. The scientific review found
no substantial equivalence due to the different technological
characteristics and intended use from the predicate meshes
and concluded that the Collagen Scaffold was not as safe and
effective as the predicates. With the results of those
investigations in hand, the FDA decided that the substantial
equivalence determination was indeed wrong and reversed it,
inviting Ivy to submit the device for a risk-based
classification of the device through the de novo process.
Instead of submitting the Collagen Scaffold for classification
under the statutory criteria, however, Ivy filed suit under the
Administrative Procedure Act challenging the FDA’s
authority to reconsider and revoke its own erroneous
substantial equivalence determination.
Ivy argues that the FDA’s reversal is invalid because, in
its view, Congress required any correction of error in a
substantial equivalence determination go through notice and
5
comment rulemaking, and the FDA’s reversal here, however
informed and procedurally careful, did not proceed by
regulation. Ivy points to subsection (e), the Act’s provision
entitled “Classification Changes” that authorizes such changes
by notice and comment rulemaking, and contends that the
statute makes that provision the exclusive authority for
reversal of erroneous substantial equivalence determinations
because the effect of such a reversal is to return the device by
default to Class III, and thus, effectively, to change its
classification.
Subsection (e)(1) begins:
Based on new information respecting a device, the
Secretary may, upon his own initiative or upon
petition of an interested person, by regulation (A)
change such device’s classification, and (B) revoke,
because of the change in classification, any regulation
or requirement in effect under section 360d or 360e of
this title with respect to such device.
21 U.S.C. § 360c(e)(1).2 The subsection goes on to provide
that, in promulgating such a classification-change regulation,
“the Secretary may secure from the panel to which the device
was last referred pursuant to subsection (c) of this section
[authorizing initial classification by regulation] a
recommendation respecting the proposed change in the
device’s classification.” Id. It then spells out conditions
required for changing device classifications, referring only to
changes from Class III to Class II or I, which the parties refer
to as “down classification.” It nowhere mentions substantial
2
As discussed further below, subsection (e) was amended in July
2012. Unless otherwise noted, all citations to the Act refer to the
provisions in effect when the FDA rescinded its substantial
equivalence determination.
6
equivalence or the statutory provision authorizing equivalence
determinations, nor does it mention changes in classification
in the other direction (as occurred here), from Class I or II to
Class III, referred to as “up classification.”
II. Analysis
The sole issue here is whether the FDCA requires the
agency to go through the rulemaking process authorized by
subsection (e) for “Classification Changes” in order to undo
an erroneous substantial equivalence determination, which it
was not in the first instance required to make by rule, and
which did not involve application of the Act’s classification
criteria. The nub of the dispute is a contest between dueling
statutory implications. The FDA relies on the established
principle that agencies’ power to make decisions implies their
power to reconsider and revoke erroneous decisions. Ivy
acknowledges such implicit power of error correction, but
contends that the FDCA eliminates it here by operation of the
settled canon, expressio unius est exclusio alterius, i.e., the
express mention of one thing excludes all others. Ivy says the
statutory provision authorizing “Classification Changes” by
regulation, 28 U.S.C. § 360c(e)(1), is the explicit and
exclusive avenue for changing any agency decision that yields
even a default, provisional reclassification of a medical
device. Thus, according to Ivy, the FDA must conduct
rulemaking under the “Classification Changes” provision, not
only to change a classification initially determined by
rulemaking under subsections (b)-(d), see 21 U.S.C.
§ 360c(b)-(d), but also to reverse a piggyback decision to
clear a device under subsection (f) as substantially equivalent
to a predicate device the FDA has already cleared, see id. §
360c(f)(1). As Ivy understands it, subsection (e) ousts by
negative implication the authority the agency would otherwise
have to reconsider and revoke, without conducting notice and
7
comment rulemaking, a non-regulatory substantial
equivalence decision that it made in error.
The FDA counters that it need not conduct notice and
comment rulemaking under subsection (e) to rethink and
retract a substantial equivalence decision that it decides, on
the original record, was wrong from the start. The FDA’s
inherent authority is preserved, it argues, because “neither the
text nor the legislative history of [subsection (e)] speak to
reconsideration or even to substantial equivalence at all.” Br.
for Appellees 30. And even if it can be read to bar
reconsiderations triggered by “new information,” such
information being the threshold requirement of subsection (e),
the FDA contends that it need not be used for revocation of
decisions “that were flawed at their inception.” Id.
The parties start from the shared premise that the FDA has
implicit statutory authority to correct its own errors, including
erroneous substantial equivalence decisions, unless subsection
(e) displaces it. See Slip Op. 9-10. It is well settled that, even
where Congress has provided no explicit mechanism for
agency reconsideration, statutes that authorize agencies to act
are also presumed to empower those agencies to reconsider
their actions to correct their mistakes. See, e.g., Boesche v.
Udall, 373 U.S. 472, 476 (1963); Civil Aeronautics Bd. v.
Delta Air Lines, Inc., 367 U.S. 316, 325 (1961); Am. Trucking
Ass’ns v. Frisco Transp. Co., 358 U.S. 133, 145 (1958); Nat’l
Ass’n of Trailer Owners, Inc. v. Day, 299 F.2d 137, 139 (D.C.
Cir. 1962). “[I]n the absence of any specific [statutory]
limitation,” an agency retains authority to reconsider and
correct an earlier decision. Albertson v. FCC, 182 F.2d 397,
399 (D.C. Cir. 1950). The description of such authority as
“inherent,” though widely used in our precedents, is
somewhat of a misnomer, because the FDA, like other
executive agencies, is “entirely a creature of Congress.” Civil
8
Aeronautics Bd., 367 U.S. at 322. Assuming no “inherent”
power in the constitutional sense, cf. Owens v. Republic of
Sudan, 531 F.3d 884, 893 (D.C. Cir. 2008), agencies are
typically understood to have statutorily implicit corrective
powers in the absence of statutory provisions explicitly
removing them. See Civil Aeronautics Bd., 367 U.S. at 321-
22. The touchstone, then, is congressional intent.
American Methyl Corp. v. EPA, 749 F.2d 826 (D.C. Cir.
1984), is a straightforward statutory interpretation decision,
and Ivy’s application of it here rests on a misreading of the
FDCA. In American Methyl, the EPA asserted that it retained
inherent authority to revoke a waiver granted under
Section 211(f)(4) of the Clean Air Act that allowed the
introduction of a fuel additive onto the market. See id. at 828-
29. The court rejected the agency’s assertion of inherent
authority to revoke the waiver, concluding that Section 211(c)
of the statute expressly “empowered [the agency] to take
action against an offending fuel or fuel additive” that was
“already in commerce,” and that, because the statute explicitly
set forth that process for taking a fuel additive off the market,
the agency could not avoid it by resorting to its “inherent
authority” to revoke the waiver. Id. at 835-366. Specifically,
the court looked at the “interrelationship” of subsections (c)
and (f) and concluded that Section 211(c) “provid[ed] a
mechanism for correcting” the error in that case. Id. at 834-
35; see also id. at 836-37 (analyzing “statutory design”). The
court also examined the legislative history, emphasizing that
it supported the view that Congress intended Section 211(c)
“as the exclusive means by which [the agency] was to correct
waivers mistakenly granted by default.” Id. at 836 (emphasis
added). Because “Congress contemplated regulation of fuels
and fuel additives . . . waived into commerce only through
proceedings under section 211(c),” the court reasoned that
“the legislative understanding thus rejects the implied
9
revocation authority claimed by the EPA.” Id. at 834(emphasis added)). Explicit authority must be used where it
represents an exclusive and specific limitation on whatever
inherent authority the agency might otherwise have had.
Albertson, 182 F.2d at 399-400; Am. Methyl, 749 F.2d at 835.
As American Methyl recognizes, the touchstone in
determining whether an explicit provision must be read to
limit an agency’s implied authority to reconsider a prior
decision is whether “Congress had an intention on the precise
question at issue.” Am. Methyl, 749 F.2d at 833 (quoting
Chevron, U.S.A., Inc. v. Nat’l Resources Defense Council,
Inc., 467 U.S. 837, 843 n.9 (1984)). The “precise question” in
this case is whether Congress intended subsection (e), which
allows the FDA to make a “classification change” by
regulation, to be the exclusive means for the agency to
reconsider a substantial equivalence determination.
Answering that question requires examination of the statutory
scheme, see id. at 834-37, guided by “the customary statutory
interpretation tools,” Cal. Metro Mobile Commc’ns, Inc. v.
FCC, 365 F.3d 38, 44 (D.C. Cir. 2004) (“traditional tools”
include text, structure, purpose, and legislative history); see
also Am. Methyl, 749 F.2d at 834-837 (reviewing legislative
history, text, structure, and agency practice). Read with the
help of those customary tools of statutory interpretation, the
FDCA makes clear that Congress never intended to require
the FDA to use subsection (e) to rescind an erroneous
substantial equivalence determination.
A. Statutory Overview
Some statutory context is helpful to explicate the textual,
structural, and functional relationship between the full
regulatory classification process detailed in subsections (b)-
(d) and the shortcut subsection (f) substantial equivalence
10
determination. Compare 21 U.S.C. § 360c(b)-(d), with id.
§ 360c(f). Congress enacted the MDA in 1976 to bring
medical devices, not previously subject to federal regulation,
under the ambit of the FDCA. The new regulatory scheme
was designed to give consumers prompt access to medical
devices beneficial to human health while keeping off the
market devices that are not safe and effective. See Contact
Lens Mfrs. Ass’n v. FDA, 766 F.2d 592, 593-94 (D.C. Cir.
1985). The Act grants authority to the agency to classify
medical devices into three classes “based on the risk that they
pose to the public.” Medtronic Inc. v. Lohr, 518 U.S. 470,
476 (1996); see Contact Lens Mfrs. Ass’n, 766 F.2d at 594.
As the majority explains, a device’s classification determines
both the relative ease with which the device can enter the
market and the types of marketing restrictions to which it will
be subject, with devices in Class III requiring the FDA’s
affirmative premarket approval, subject to the most extensive
conditions, and those in Classes II and I subject only to
specific or general controls. See 21 U.S.C. § 360c(a)(1); Slip
Op. at 3. No medical device introduced after the enactment
date of the MDA may be marketed until the FDA has at least
acted to clear it. The FDA treats such a device as Class III by
default unless and until it moves it into a lower category, such
as by application of the statutory criteria, see id. § 360c(f)(2)-
(3), or a substantial equivalence determination under
subsection (f)(1).3
3
Class III devices may not be marketed without premarket
approval, whereas devices in Class II and Class I need no such
additional scrutiny. A premarket approval application initiates a
detailed process of scientific review requiring the manufacturer to
submit research findings showing the device is safe and effective
for its intended use, together with proposed labeling that is not false
or misleading. See 21 U.S.C. § 360e. The FDA’s premarket
approval process involves referral of the device to expert panels,
11
The majority is correct that, in practice, placement of a
new device in Class I or II usually is obtained through a
determination that the device is “substantially equivalent” to a
predicate device, i.e., one already in Class I or II. But the
majority misunderstands subsection (e) in part because it
leaves out of its description a number of related provisions of
Section 360c (“Classification Of Devices Intended For
Human Use”) that describe the Act’s foundational method of
device classification by regulation, informed by
recommendations from panels of scientific experts and
subject to public notice and comment. See 21 U.S.C.
§ 360c(b)-(d). Reading Section 360c as a whole makes clear
that the subsection (e) process is required not for revocations
of piggyback substantial equivalence determinations, but for
changes in classifications initially made by the foundational
regulatory classification route.
When Congress enacted the MDA to bring medical
devices under the ambit of the FDCA, it faced the project of
classifying an enormous number of then-existing medical
devices (now commonly referred to as “pre-amendments
devices”). Subsections (b)-(d) require that to be done through
a process of notice and comment rulemaking, supported by
input from expert advisory panels, to determine with respect
to each type of device its effectiveness and the risks it poses,
and what kinds of controls might be needed for it be used as
and inspection of the manufacturing site and assurances about the
manufacturing process. Throughout the premarket approval
process, the burden of proof is on the manufacturer. Approval,
when given, is typically accompanied by marketing conditions to
provide reasonable assurance of safety and effectiveness. See id. §
360e(c)-(d). The time and cost associated with the premarket
approval process tends to motivate manufacturers to seek
classification of their devices into Class I or II where it is feasible
to do so. See Medtronic, 518 U.S. at 479.
12
intended in a safe and beneficial manner. See 21 U.S.C.
§ 360c(b)-(d). The Act provides—in subsection (e), on which
Ivy relies—that, where new information respecting a device
comes to the FDA’s attention, the agency must again deploy
notice and comment rulemaking if it wants to change the
device’s classification. Id. § 360c(e). Pre-amendments
devices are grandfathered and thus left unclassified unless and
until the FDA classifies them pursuant to subsection (a)-(d).
See Medtronic, 518 U.S. at 477-78.
Congress further created, in subsection (f), a dual-track
process to be followed to clear new, or “post-amendments”
devices. Whereas the default for pre-amendments devices is
that they are left unclassified until classified, subsection (f)
starts all post-amendments devices in Class III by default, and
then sets forth two tracks for their clearance for marketing.
One track involves FDA application of the statutory criteria to
post-amendments devices through a rulemaking process
analogous to that used for pre-amendments devices. Thus, if
a new device has no apparent equivalent among cleared
predicate devices, for example, it can be cleared like a pre-
amendments device, through a process that may include
expert panels and is subject to notice and comment. See 21
U.S.C. § 360c(f)(3).
The other track piggybacks on the foundation of devices
classified by regulation, by simply matching new devices to
those already-reviewed predicates as a way to assign them to
their appropriate classes. See id. § 360c(f)(1). That second,
expedited clearance process applies to post-amendments
devices that are “substantially equivalent” to already cleared
devices to avoid shielding devices already in use from
competition from new and potentially improved versions. See
id.; Medtronic, 518 U.S. at 478. The substantial equivalence
inquiry does not require the FDA to apply the statute’s
13
classificatory criteria to the new device, but asks whether the
new device is substantially equivalent to a predicate device
and thus can be assigned the same classification. See id.§ 360c(i) (defining substantial equivalence). The substantial
equivalence decisional process is a procedural as well as
substantive shortcut, as it does not require notice and
comment rulemaking. See id. § 360c(f)(1).
Finally, subsection (f) provides that proponents of post-
amendments devices can have it both ways: When a
manufacturer or importer tries the substantial equivalence
shortcut and fails, the device defaults back to Class III, see id.
§ 360c(f)(1), but that need not be the end of the road. If, for
example, the FDA rules adversely on a petition for substantial
equivalence because the device has a different intended use
from the predicate, the unsuccessful petitioner can within 30
days request that the Secretary classify the device as safe and
effective in its own right under a de novo process applying the
statutory criteria. See id. § 360c(f)(2).
B. Statutory Text
In discerning Congress’s meaning, the text is primary.
Subsection (e) authorizes the FDA, on its “own initiative or
upon petition of an interested person, by regulation,” to
change a device’s classification. 21 U.S.C. § 360c(e)(1). The
parties agree that “by regulation” means notice and comment
rulemaking. The question is whether Congress intended
subsection (e) to be the exclusive process for reconsidering
erroneous substantial equivalence determinations. The
statute’s text shows that it did not and, indeed, raises doubts
about whether it would have even been permissible for the
agency to use it for that purpose.
14
1. Subsection (e) explicitly addresses subsection (c)
classification, not subsection (f) substantial
equivalence.
The first hint that subsection (e) does not restrict the
agency’s reconsideration of erroneous substantial equivalence
determinations is that subsection (e) makes no reference to the
piggyback substantial equivalence process or the provisions
codifying it, whereas it explicitly cross-references the full
regulatory process for classifying devices by application of
the statute’s classification criteria, with input from expert
advisory panels and notice and comment. As Ivy’s counsel
acknowledged during oral argument, Congress developed
subsection (e) as a procedural mechanism for reclassifying
pre-amendments devices. See Oral Arg. Rec. at 4:45-4:55
(counsel for Ivy) (describing rulemaking procedures for pre-
amendments devices and explaining that “Congress initially
provided for reclassification of pre-amendments devices by
notice and comment rulemaking [i.e. via subsection (e)] to
parallel that original classification decision”). Subsection (e)
specifically cross-references the classification procedures for
ab initio regulatory device classification: It empowers the
FDA to “secure from the panel to which the device was last
referred pursuant to [the rulemaking procedures for pre-
amendments devices] a recommendation respecting the
proposed change in the device’s classification.” Id.
§ 360c(e)(1) (citing § 360c(c)). Mirroring the requirements of
the regulatory classification procedures (set forth in
subsections (b)-(d)), subsection (e) requires that any panel
recommendation for a classification change must likewise be
published in the Federal Register. Compare id. § 360c(d)(1),
with id. § 360c(e)(1). The explicit statutory cross-reference
and the parallel procedures reflect Congress’s assumption that
the device classifications subject to change under subsection
15
(e) are those that were made in the first instance, with expert
panel input, pursuant to subsections (b)-(d).
The text of subsection (e) makes no mention whatsoever
of subsection (f) or substantial equivalence determinations.
Because classifications that result from substantial
equivalence determinations, unlike those made under
subsections (b)-(d), do not proceed by panel recommendation
and notice and comment rulemaking, subsection (e)’s textual
reference to subsection (c) and “the panel to which the device
was last referred” make no sense in the context of revocation
of a substantial equivalence determination, such as is at issue
in this case. Subsection (e)’s explicit references to the panel
process, and its lack of any mention of either error correction
or substantial equivalence, belies Ivy’s efforts to cast it as the
only way the FDA can correct an equivalence decision it
recognizes was wrong.
2. Subsection (e) speaks to classification changes based
on new evidence, not correction of errors in an initial
substantial equivalence determination.
Two additional textual features reinforce the conclusion
that subsection (e) is not the FDA’s exclusive means to
revoke an invalid substantial equivalence determination:
Subsection (e) is titled “Classification Changes,” and provides
for changes in response to “new information respecting a
device.” Neither of those terms is apposite to revocation of
equivalence decisions that were invalid at their inception.
The FDA asserts here the authority to reconsider a
decision on its initial record, not to change it based on new
information. The agency’s reversal of its determination that
the Collagen Scaffold was equivalent to predicate devices—
like any determination that the agency made the wrong
equivalence decision from the start—was not triggered by any
16
“new information,” and yet such information is the threshold
condition for application of subsection (e).4
It is also not at all clear that, even if it were triggered by
new information, reversal of a substantial equivalence
determination is a “classification change” within the meaning
of subsection (e). Revoking the decision that the Collagen
Scaffold was substantially equivalent to devices in Class II
caused a de facto “change” in its “classification” back to
Class III, but that change resulted from the statutory default
that places all post-amendments devices in Class III until the
FDA takes appropriate action on them. 21 U.S.C.
§ 360c(f)(1). The Collagen Scaffold moved back to Class III
only provisionally and by default, and not as the result of any
affirmative classification decision based on new information,
such as subsection (e) contemplates.
3. Subsection (e) refers only to changes from more to less
restrictive classifications, but invalidating an
erroneous equivalence determination has the opposite
effect.
Subsection (e) provides further textual indication that it
does not apply to the kind of de facto classification change
here, resulting from operation of the statute’s default
4
The FDA has read “new information” to also encompass the
reevaluation of existing information. J.A. 1675; see, e.g., Medical
Devices; Reclassification of the Cutaneous Carbon Dioxide and the
Cutaneous Oxygen Monitor, 67 Fed. Reg. 76,678, 76,679 (2002)
(citing, inter alia, Holland Rantos v. U.S. Dep’t of Health, Educ., &
Welfare, 587 F.2d 1173, 1174 n.1 (D.C. Cir. 1978)). That is not
contrary to the point that Congress tied subsection (e) to evidence-
based classifications based on the statutory criteria, not to
rescissions of substantial equivalence determinations that were void
on the record information from the start.
17
placement of post-amendments devices in Class III: It refers
only to what the parties call “down classifications” (e.g., from
Class III to Class II or I) and not to “up classifications” (e.g.,
from a lower class back up to Class III). Subsection (e) thus
is not the requisite process for all reclassifications, as Ivy
implies, but specifically governs moving Class III devices to
lower classifications under certain circumstances. See id.§ 360c(e)(2)(A) (referring to classification change from Class
III to Class II); id. § 360c(e)(2)(B) (referring to classification
change from Class III to Class I). Under subsection (e), the
FDA may change a device’s classification from Class III to
Class I or Class II if the agency determines that the controls
provided by the lower classification “would provide
reasonable assurance of the safety and effectiveness of the
device.” 21 U.S.C. § 360c(e)(2)(A) & (B). By contrast, in
this case as in any case of substantial equivalence, the FDA
did not have to consider the ability of classification controls to
assure safety and effectiveness; rather, the agency simply
determined—based on an evaluation of the device’s intended
use and technological characteristics—that the Collagen
Scaffold was not substantially equivalent to the predicate
devices that the manufacturer had identified. See Oral Arg.
Rec. at 28:53-31:21.
Based on its explicit reference to down classifications
only, it is far from obvious why the plain text of subsection
(e) even permits, much less mandates, that the agency use it to
upclassify the Collagen Scaffold. See Oral Arg. Rec. at
25:55-26:15 (counsel for FDA) (asserting the agency’s up-
classification authority but acknowledging that the question
has not been adjudicated by any court).5 Neither of the types
5
After the events at issue here, Congress prospectively amended
subsection (e) to provide that it may be used to “up classify”
devices from Class II to III. Food and Drug Administration Safety
& Innovation Act, Pub. L. No. 112-144, § 608, 126 Stat. 993, 1055-
18
of reclassifications specifically enumerated in subsection (e)
(from Class III to II, or from Class III to I) describes the effect
of the FDA’s rescission of the substantial equivalence
determination, which restored the Collagen Scaffold from
Class II to the default, more closely restricted, Class III.
C. Statutory Structure and Purpose
The structure of the statute reinforces the textual evidence
that Congress intended subsection (e) to play a different and
more limited role than Ivy contends. A key structural feature
of the Act is subsection (e)’s placement in the statute, which
reinforces the distinction between the foundational
classification of devices via a regulatory process of
determining their safety and effectiveness, and the dependent
process of classification based on matching new devices with
predicates already on the market. The second, procedurally
abbreviated, process piggybacks on the first process, which
relies on expert panels and notice-and-comment rulemaking.
Subsection (e) appears immediately after those subsections
that set forth the regulatory classification process, but before
subsection (f), which sets forth the piggyback classification
method. Thus, the procedure that Ivy says must control
rescission of an erroneous substantial equivalence
determination appears in the statute before the FDCA defines
or even mentions “substantial equivalence.” See 28 U.S.C.
§ 360c(f)(A)(ii). It seems unlikely that Congress codified a
56 (2012) (amending 21 U.S.C. § 360c(e)(1) to permit
reclassification from Class II to III when Class I and II controls
“together are not sufficient to provide a reasonable assurance of
safety and effectiveness for such device”). As the majority
emphasizes, the FDA has taken the position that, even prior to its
amendment, the agency could have used subsection (e) to reclassify
the Collagen Scaffold into Class III. That contention is addressed
below.
19
mechanism for correcting a type of determination before it
codified the authority for making such determination in the
first place. Subsection (e) more logically relates not to
substantial equivalence determinations, but to the full-dress
device-classification provisions set forth in subsections (b)-
(d)—to which it expressly refers and which immediately
precede it in the statute. Structurally, it makes sense that
subsection (e) explains how to change the type of ab initio
classification described in the immediately preceding
subsections of the statute; it is much less logical to conclude
that it governs undoing a different kind of decision that the
statute does not even set forth until later.
That conclusion is further reinforced by the equal rigor of
the processes required to classify a device under subsections
(b)-(d) and to change its classification under subsection (e),
both of which require notice and comment rulemaking. For
example, just as pre-amendments classifications must be
announced “by regulation,” so too a classification change
under full-dress reclassification must be effectuated “by
regulation.” Compare 21 U.S.C. § 360c(d)(1) (initial
classification), with id. § 360c(e)(1) (classification changes).
That symmetry contrasts with the very different, shortcut
process contemplated for substantial equivalence decisions
under subsection (f)(1). Id. § 360c(f)(1). The latter type of
decisions bypass the statutory classification criteria and
instead focus on matching a new device with a cleared
predicate, and do not require notice and comment rulemaking.
It makes practical sense that decisions made through the
time consuming and expensive rulemaking process cannot be
lightly changed—hence the notice and comment requirement
in subsection (e) for classifications changes, which mirrors
the process in subsection (d) for the classifications thereby
being changed. In contrast, classifications made by deciding
20
into which of several boxes to place a new device (where the
boxes are the prior device classifications) typically are—and
are intended to be—quicker and more informal. Cf.
Medtronic, 518 U.S. at 478-79 (contrasting the roughly 20
hours needed to complete the “limited form of review”
required for substantial equivalence with the 1,200 hours
needed to complete a premarket approval).
Reading the statute so as not to require the subsection (e)
process be used to correct erroneous substantial equivalence
determinations best serves the statute’s purpose. Congress
enacted the FDA classification system to make sure that
consumers benefit from safe and effective medical devices
and are protected from those that are useless or unsafe. See
id. at 475-77. The substantial equivalence process helps to
preserve market competition in medical devices by removing
unnecessary barriers that the classification process could pose
to devices that are substantially equivalent to, and may be
cheaper or better than, those that are already on the market.
See id. at 478.
The court has it backwards in citing the accuracy benefits
of notice and comment in support of Ivy’s view, see Slip Op.
at 12-13: Substantial equivalence decisions are prone to error
in part because they are made without notice and comment, so
Ivy’s contention that notice and comment, admittedly not
required for the initial equivalence decision, is necessary to
fix such a decision if it was wrong creates an obstacle against
correction of mistakes in a body of presumptively error-prone
decisions. I read the Act to allow equivalence decisions to be
reversed as readily as they are made (leaving open to a device
manufacturer or importer to seek a more fully informed and
thus accurate consideration of the device through the de novo
process), which I believe better serves the Act’s purpose of
assuring the safety and effectiveness of medical devices than
21
does the one-way ratchet that Ivy advocates. The harms
likely to flow from reading the Act so that mistaken
equivalence determinations are easier to make than to fix are
likely to be multiplied, because devices cleared as
substantially equivalent thereby qualify as predicate devices
for future equivalence decisions. An uncorrected error in
deeming a device substantially equivalent invites a daisy
chain of further errors. The court’s holding that FDA must
undertake the relatively formal, slow, and costly process
contemplated by subsection (e) in order to correct errors in
relatively quick and informal substantial equivalence
determinations creates an unwarranted asymmetry, making
erroneous approvals easy to make and cumbersome and slow
to correct—a result that is at odds with the core aims of the
Act.
D. Agency Practice
The text and structure of the Act are sufficient, standing
alone, to demonstrate that Congress did not intend full-dress
reclassification to be the exclusive statutory mechanism for
the agency’s reconsideration of an erroneous substantial
equivalence determination. Nevertheless, because this court
in American Methyl considered prior administrative practice
relevant to the strength of the agency’s statutory reading, see
749 F.2d at 838-39, it is worth briefly mentioning the FDA’s
prior practice. In American Methyl, the agency’s own prior
practice belied its proffered statutory analysis, see id. at 838,
but here the FDA’s practice is consistent with its position that
a classification change by regulation is not the exclusive
method for reconsidering a substantial equivalence
determination. Indeed, as discussed below, it may not be an
appropriate method at all.
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Two aspects of the FDA’s practice are especially
pertinent. First, with respect to the rescission of prior
substantial equivalence determinations, the FDA represented
that there have been approximately 50 agency rescissions of
substantial equivalence determinations in the history of the
program, and that none of those has been accomplished using
the regulatory classification change process of subsection (e).
See Oral Arg. Rec. at 31:25-33:38. That further distinguishes
this case from American Methyl, where “the agency’s
prelitigation administrative practice belie[d] its professed
belief in an implied revocation authority.” 749 F.2d at 838.
We noted there that, “[i]n seven years of administering
section 211(f), American Methyl [was] the first manufacturer
subjected to a revocation proceeding” based on the EPA’s
asserted inherent authority; in every prior case the EPA had
used the statute’s express “control or prohibition” authority,
id., and we concluded that course of conduct “exemplified the
understanding” of the statute we adopted there to oust any
residual reconsideration power and restrict the agency to the
“control or prohibition” provision, id. at 838-39.
Second, the FDA emphasizes—and Ivy does not
dispute—that the agency rarely uses the regulatory
reclassification authority to reclassify a single device, but
rather uses it to change the classification of groups of devices.
See Oral Arg. Rec. at 5:40-6:44, 31:25-33:38. The pending
reclassification proceeding relating to transvaginal meshes (on
which Ivy relied in its opening brief and again brought to the
court’s attention after oral argument) underscores that point.
As the government explains, the FDA is currently using the
subsection (e) reclassification procedure, including soliciting
recommendations from an expert panel, to change the
classification of two types of surgical meshes that encompass
more than 100 different devices cleared over the course of 20
years. See 79 Fed. Reg. 24,634, 24,636 (May 1, 2014). The
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consistent practices of not using subsection (e) to correct
errors in substantial equivalence determinations, and using it
to accurately build the foundational classification architecture
of types of devices on which substantial equivalence decisions
piggyback, lend support to the agency’s position that it was
not required to use the subsection (e) regulatory process to
correct the mistaken equivalence decision about a single
device in this case.
E. FDA’s Assertion That It Could Have Used
Subsection (e)
Ivy places substantial weight on the FDA’s
acknowledgement that, although the agency chose not to do
so, it could have used the subsection (e) regulatory route to
move the Collagen Scaffold from Class II to Class III. In
Ivy’s view, that concession all but clinches the case, on the
logic that, if subsection (e) is available to move the device
from Class II to Class III, under American Methyl, subsection
(e) ousts implicit authority to correct an error by any other
route. The court accepts that argument as decisive. It
concludes that, because the FDA “concededly could have
used [full-dress reclassification] to reclassify the Collagen
Scaffold into Class III, it could not rely on a claimed inherent
reconsideration authority to short-circuit that statutory process
and revoke its prior substantial equivalence determination.”
Slip Op. at 12 (citing American Methyl).
That conclusion is in error for two related reasons. First,
for the reasons discussed above, subsection (e) does not
appear to apply at all to the kind of error-correction at issue in
this case. And, second, even if the agency could have acted
under subsection (e) to change the classification of the
Collagen Scaffold, as the FDA contends, American Methyl’s
negative implication would only apply here to displace the
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FDA’s implicit authority if the only permissible reading of the
Act is that subsection (e) is the exclusive means for rescinding
an erroneous substantial equivalence determination. The
agency vigorously contests that point, and it has the better of
the argument.
There is some question whether the FDA is correct that it
could have used the subsection (e) process had it so chosen.
As noted above, the revocation of the substantial equivalence
determination was not “[b]ased on new information
respecting [the] device,” as subsection (e) expressly requires;
it effected a “classification change” only by default, and it
was an up classification whereas subsection (e) only addresses
down classifications; and it addressed a decision not
previously made with input from a panel convened under
subsection (c), and thus was not the kind of decision
subsection (e) describes.
Assuming it were available to the FDA to change the
device’s classification under subsection (e), that route would
have effected an affirmative, regulatory “classification”
decision. The route the FDA took, in contrast, merely
reversed the agency’s erroneous substantial equivalence
determination, leaving to Ivy, if it so chose, to petition to
classify the Collagen Scaffold under the statutory criteria for
Class II. See 21 U.S.C. §§ 360c(f)(1)(B) & (C), (f)(2), (f)(3);
J.A. 1317-18 (notifying Ivy of FDA’s reversal of its
substantial equivalence determination and inviting it to
petition for Class II). In effect, what the FDA did left to Ivy
whether to use the statutory-criteria regulatory classification
process; all the agency did was to undo its error in having
equated the device to an existing, already classified predicate
device. It is consonant with the statute’s structure and
purposes for the FDA to conclude that it would have been
authorized, had it so chosen, to take an alternative course of
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not only undoing its error, but going on to apply the statute’s
criteria affirmatively to make a classification decision.
In any event, the FDA chose not to invoke the subsection
(e) process here. My view of the statute does not rely on
whether the agency was correct that it could have done so. It
is at least clear that, even if the subsection (e) process were
available to the FDA to initiate a full regulatory
reclassification process to assess the propriety of the Collagen
Scaffold remaining in Class II, that process is not required
where the agency chooses simply to rescind a substantial
equivalence decision it made in error without initiating any
affirmative regulatory classification process such as
subsection (e) provides.
III. Conclusion
The text and structure of the Act, along with the agency’s
administrative practice, amply support the FDA’s
interpretation as not confining the agency to the notice and
comment process set forth in subsection (e) when it acts to
rescind a substantial equivalence decision it made in error.
The preceding analysis of subsection (e) shows that the
expressio unius canon that the American Methyl court invoked
in rejecting the agency’s claim of implicit authority in that
case does not apply to correction of a substantial equivalence
determination that was erroneous from the start. See 749 F.2d
at 835-36; cf. Adirondack Med. Ctr. v. Sebelius, 740 F.3d 692,
697 (D.C. Cir. 2014) (emphasizing that “the canon’s
relevance and applicability must be assessed within the
context of the entire statutory framework”). That is especially
true where, as here, a more plausible understanding is that
Congress intentionally created two classification tracks—ab
initio regulatory classifications, and the substantial
equivalence shortcut—with separate procedural and
26
substantive requirements, and that subsection (e) addresses
only the first track. See Nat’l Shooting Sports Found., Inc. v.
Jones, 716 F.3d 200, 211 (D.C. Cir. 2013) (no application of
expressio unius where its invocation “disregards other
plausible explanations for an omission” (brackets and internal
quotation marks omitted)).
A conclusion that the full-dress reclassification procedure
did not preclude the FDA from exercising its implicit
statutory authority to rescind the Collagen Scaffold’s
substantial equivalence determination would not mean that
the FDA’s exercise of that authority was reasonable in this
case. See Mazaleski v. Treusdell, 562 F.2d 701, 720 (D.C.
Cir. 1977). The parties disagreed on that point in the district
court, but because Ivy did not renew those arguments until its
reply brief, I would affirm the district court’s conclusion on
that point. See New York Rehab. Care Mgmt., LLC v. NLRB,
506 F.3d 1070, 1076 (D.C. Cir. 2007) (“[W]e have generally
held that issues not raised until the reply brief are waived.”
(internal quotation marks omitted)).
Because all these reasons lead me to conclude that the
FDA permissibly read section (e) not to displace its authority
to revoke its mistaken clearance of the Collagen Scaffold
without undertaking full notice and comment rulemaking, I
respectfully dissent.