Reg czar accepts FDA's rule-based deregulatory approach, but slams regulating via guidance

January 30, 2018
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Editor's Note: This article was originally published on on Jan. 26, 2018.

White House regulatory czar Neomi Rao corroborated Friday (Jan. 26) FDA Commissioner Scott Gottlieb's claim that the agency can deregulate by regulating, but she also talked tough on agencies regulating via guidance -- a practice that stakeholders have slammed FDA for in the past.

The new remarks from the Office of Information and Regulatory Affairs chief came the same day HHS put out a 2017 achievement report that highlighted the department's deregulatory actions, including initiating reviews of more than 20 percent of FDA's regulations and taking 68 deregulatory actions department-wide.

Gottlieb asserted last year that the majority of FDA's regulatory actions would not get swept into President Donald Trump's executive order mandating two regulations be cut for every new regulation -- and that the agency could deregulate by regulating.

“A lot of our regulations are deregulatory actually in terms of how they get scored. A lot of times when we issue regulation, we're updating standards in a way that actually could potentially create efficiencies in the development process. We actually deregulate by regulating -- by issuing regulations -- it's something unique about FDA. And this isn't some magical construct we've adopted over the last six months, this is basically FDA's operating platform,” Gottlieb said during a National Press Club luncheon.

But Gottlieb maintained that where the agency promulgates regulations that impose net costs, the agency could find outdated regulations to cut.

When asked by Inside Health Policy for her take on whether FDA can deregulate by regulating, Rao corroborated Gottlieb's point.

“I think it's certainty the case that sometimes deregulation requires a new regulation because you're undoing something that previously existed and so you need to promulgate a new regulation, or sometimes certain forms of regulation can increase competition or innovation because they provide certain boundaries around a marketplace and I think that can also be a kind of deregulatory action,” Rao said at an event hosted by the Brookings Institution.

OIRA has lauded its progress in deregulating the administrative state, claiming that the administration in 2017 eliminated 22 regulations for every new regulation and has generated a total net savings of $8 billion -- a figure which Rao said was a conservative estimate. “We've tried to be exceptionally transparent in how we have calculated two-for-one and the cost savings,” Rao said.

While lauding her office's meticulousness, she also slammed past administrations for their cost-benefit calculations. “We are pushing hard to demand a very fair analysis of both the costs and benefits of regulation. Too often in the previous administration the benefits were exaggerated and the costs downplayed and we would like to have as fair of an accounting of those as possible,” Rao said.

HHS also took a deregulatory victory lap in its year-end report, released Friday. “HHS engaged with healthcare professionals and providers of all kinds to identify federal regulatory burdens that hurt patients, as well as ways to lower high prescription drug costs. This resulted in a net decrease in the burden imposed by HHS regulations as well as positive reforms in a range of Medicare payment rules, actions from the Food and Drug Administration, and ongoing reviews of further areas for action,” the report states.

HHS highlights a number of accomplishments including: imposing a net-negative regulatory burden in fiscal 2017, withdrawing 70 of the Obama administration's regulatory actions and reviewing FDA's existing regulations.

OIRA is also “systematically trying to crack down on bad regulatory practices and make sure that agencies are proceeding in a manner that is consistent with law,” Rao said. She named regulating via guidance as one such bad practice.

“We're striving to change the culture, so that when an agency issues guidance it's truly a guidance about existing requirements and not a back door to imposing new regulatory requirements without the process and accountability that's necessary for a legitimate administrative system,” Rao said.

While Rao did not name FDA specifically, the Washington Legal Foundation is one group among many that has taken issue with FDA's use of guidances. “WLF recognizes that very narrow technical or scientific issues may be difficult to address in the context of formal rulemaking. Advances in scientific knowledge can sometime move much more quickly than can rulemakers adhering to the APA. However, FDA has not limited its use of guidance documents to topics subject to rapid change,” WLF wrote in recent comments to the agency.

But when asked how OIRA can enforce the president's deregulatory orders, Rao pointed solely to peer pressure. “I think part of the consequences are that they're not meeting the president's priorities. The president has spoken frequently about deregulation and deregulatory effort at cabinet agencies and I think they're motivated by that. … At the end of the fiscal year when we release all our numbers, do you want your agency to be last? Rao said.

Rao also noted that in the coming year OIRA will “look closely at some of the statutory authorities that OIRA has to [use to] promote regulatory reform,” citing the Paperwork Reduction Act and the Congressional Review Act as two such authorities -- perhaps hinting that the office will more frequently utilize these tools in the coming years. -- Nicholas Florko (