‘Two Out, One In’: Trump Signs Executive Order to Repeal Regulations

President Donald Trump on Monday signed an executive order (EO) that would require all government agencies to eliminate two regulations for every new regulation instituted.

The order, which White House officials characterized as a “one in, two out” plan to benefit small businesses, will likely impact the US Food and Drug Administration (FDA) as it applies to every agency but those related to military or national security-related branches of the federal government or other agencies exempted by the Office of Management and Budget (OMB).

But how such a “one in, two out” plan would work for an agency with a public health mission like FDA remains to be understood, particularly as most regulations are not necessarily intertwined. So if the agency needed to put in place a new regulation, it would then have to presumably cut out two other, unrelated regulations linked to public health.

According to the text of the EO, this plan will likely apply to FDA guidance documents too, which will be a problem for pharmaceutical and medical device companies that rely on such guidance to understand how FDA interprets the law.

“The term ‘regulation’ or ‘rule’ means an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency,” the text of the order reads.

So for instance, if FDA wanted to finalize guidance on say, biosimilar interchangeability or how companies can use multiple endpoints in clinical trials, the agency would then presumably have to identify two other regulations unrelated to biosimilar interchangeability or clinical trials that it would need to eliminate. And those decisions on what to cut and what to add would also be reviewed by the White House, according to officials, who added that the new EO sets a budget of $0 for new regulations in 2017.

On whether the EO applies to FDA guidance documents, a White House spokesman told Focus via email: "A guidance from OMB is forthcoming." 

Indeed, how this EO is implemented across the federal government is going to come largely from the OMB director, who will provide the heads of agencies with guidance addressing, among other things, “processes for standardizing the measurement and estimation of regulatory costs; standards for determining what qualifies as new and offsetting regulations; standards for determining the costs of existing regulations that are considered for elimination; processes for accounting for costs in different fiscal years; methods to oversee the issuance of rules with costs offset by savings at different times or different agencies; and emergencies and other circumstances that might justify individual waivers of the requirements.” 

Questions that remain to be answered: How will this new EO impact the re-authorization of the user fee programs (which need to be renewed by the end of September) and the implementation of the new 21st Century Cures law (at least 40 sections of which are linked to FDA)? And how will it impact the finalization of rulemakings or guidance that have been in the works for months or years and are needed by industry to understand FDA's current thinking on a topic?

Hiring Freeze and User Fee Hires

As these questions linger, debate is still brewing over whether the federal hiring freeze imposed last week impacts FDA officials hired from user fee funds.

A White House official told Focus via email on Monday: “The fact that FDA is funded by user fees does not in and of itself exempt the FDA from being subject to the Hiring Freeze Memorandum since the hiring freeze applies to all executive departments and agencies regardless of the sources of their operational and programmatic funding. That said, the FDA’s user fee supported work could be subject to public safety and national security exemptions provided for by the memorandum.”

When and how this memorandum will be interpreted for FDA is also beginning to draw questions from Congress.

Sen. Elizabeth Warren (D-MA) on Monday sent a letter to FDA Acting Commissioner Stephen Ostroff, noting that Trump’s executive order and a memorandum from OMB from 25 January “both lack clarity about how the freeze will impact the Food and Drug Administration,” which she said is concerning as they “will have a negative impact on the development programs and application reviews of new drugs and medical devices.

“Patients and their families can't freeze the progress of a disease while the FDA waits to fill critical positions. Drug and device manufacturers can't freeze their research and development while the new administration imposes its political ideology,” Warren wrote.

Among other questions, Warren is seeking more information from FDA on: whether the agency will exempt any positions from the hiring freeze because they are necessary "to meet national security or public safety responsibilities," and how a hiring freeze will affect FDA's ability to meet the commitments agreed to in the user fee agreements for generic and prescription drugs, medical devices and biosimilars?

In addition, several media outlets reported late last week that meetings between FDA and congressional staffers on the user fee agreements have had to be cancelled as the Trump Administration has called on agencies to halt all correspondence with Congress.