FDA's 'Shaming Regulation' Sparks Industry Controversy: The Game Between Transparency and Trade Secrets

The U.S. Food and Drug Administration (FDA) is no longer shying away from making its disagreements with pharmaceutical companies public. As part of its push for "radical transparency," the agency has since last year begun publishing complete response letters (CRLs) that were previously confidential, revealing the rationale behind its decisions to reject drug applications.

This initiative, aimed at breaking the "FDA's culture of opaque decision-making," has won supporters on Wall Street—investors who previously often learned of negative news from the FDA only through one-sided accounts from companies. While it is not new for regulators to publicize violations, the practice itself is controversial, and the FDA has historically treated CRLs as internal communications between the agency and the affected company. Now, the publication of CRLs, along with other recent FDA actions that put regulatory enforcement targets in the spotlight, has raised concerns about privacy, legal, and financial risks.

"This is not the first policy change to make confidential drug development information public," said Michael Abrams, managing partner at Numerof & Associates, in an email. "Both the FDA Amendments Act of 2007 and the 21st Century Cures Act required the disclosure of information previously considered confidential."

In both instances of legislation, the decision to disclose new details of trial designs, results, and endpoints—including negative endpoints—met with industry resistance. Abrams noted that companies feared it would harm intellectual property or lead to misinterpretation of data. The FDA's current pressure on drugmakers has encountered similar caution. Large pharmaceutical companies generally support transparency but want the right to redact sensitive commercial details. For emerging biotech companies, the stakes are higher, as their future often hinges on a single key product.

"A CRL that exposes these companies to criticism could lead investors to withdraw support and valuations to plummet," Abrams said. "Without the ability to influence investor and media interpretation (except through after-the-fact remediation), having such information made public is of no value to them."

The ongoing push to publish CRLs

A key component of this new approach debuted in July, when the FDA released more than 200 CRLs previously sent to drugmakers for products that were later approved. These letters outlined safety, efficacy, or manufacturing issues that had led to delayed approvals. More controversially and worryingly for many, the agency decided in September to publish CRLs in real time for drugs not yet approved, without seeking public comment. FDA Commissioner Makary stated in a podcast that one reason for pushing information disclosure was that capital markets value predictability, raising questions about whether Wall Street influenced the decision.

"The strongest voices supporting the publication of CRLs come from investors and observers with a regulatory perspective," Abrams said. "In their view, greater transparency will support more efficient capital allocation and prevent investors and the public from being misled."

In the past, details of CRLs were typically disclosed by companies themselves, and framing the reasons for rejection could help avoid triggering stock declines. Although the FDA has not abandoned its real-time publication plan, officials have agreed to redact confidential and sensitive information. Even so, according to an analysis by the law firm Ropes & Gray, legal and policy issues remain, including whether the FDA can issue CRLs for pending or withdrawn applications and whether companies can review and comment on redactions.

One rejection letter sent to AstraZeneca is among the CRLs recently published by the FDA. The letter concerns the subcutaneous version of the company's lupus drug Saphnelo and points to "serious data quality issues affecting key analyses, including the primary endpoint." The company has since submitted additional information and stated it is "committed to working with the FDA to advance the application as quickly as possible."

"Ultimately, publishing CRLs will require the industry to adjust," Abrams said. "Most importantly, manufacturers will cede some control over the narrative of new products to the FDA. In a world where the FDA decides what information becomes public, the agency itself takes on a new role as arbiter of information."

Disclosure of details in warning letters

The FDA has also recently expanded the content of publicly disclosed Form 483 warning letters. Such letters are typically triggered by inspections of manufacturing facilities and involve violations ranging from poor sanitation to missing data protection measures. Historically, these letters did not include images—until recently. In an unusual move, the FDA attached photographs to a warning letter sent to an Indian drugmaker producing over-the-counter medications. The images provided more direct evidence of the unsanitary conditions described in the letter.

Although the FDA generally does not include images in public warning letters, the agency has long collected photographs during inspections to document findings. However, this has sparked controversy because it could reveal proprietary information or damage a company's image. Some have raised objections, leading to friction with the agency. In 2024, the FDA brought charges against a company for not allowing inspectors to take photographs. Even so, the FDA typically does not include photos in public warning letters, and it remains unclear whether the recent use of images will become a broader trend.

Cracking down on industry deception

The FDA has also been tough on industry leaders—especially when accusing them of false advertising. Recently, in a warning letter to ImmunityBio, the agency issued unusually harsh criticism over false and misleading claims about its bladder cancer therapy Anktiva made in podcasts and television ads. The letter noted that Dr. Patrick Soon-Shiong, the company's executive chairman and global chief scientific and medical officer, made a series of false and misleading statements in a podcast that could lead the public to believe the drug could "cure or even prevent all cancers." The promotions also omitted key information about the drug and its potential risks, and the company never submitted the podcast content to the FDA for review. ImmunityBio officials said they plan to conduct an internal regulatory review to address these issues.

In summary, the FDA's recent actions may increase reputational risks for companies, which may need to adjust their compliance efforts accordingly.

"Despite these concerns, the drug development industry has adapted. Data with potential competitive value has become a routine input for investors and analysts, and manufacturers design trials knowing this and seek to minimize such exposure," Abrams said. "The timing of sensitive disclosures is carefully managed to keep such data out of the public eye for as long as possible. This example shows that the drug development industry is more resilient than some might think."