New SEC-FDA Agreement Signals Increased Scrutiny of FDA-Related Disclosures

The Securities and Exchange Commission (“SEC” or the “Commission”) and the Food and Drug Administration (“FDA”) recently announced a new agreement designed to expand the two agencies’ investigatory capabilities. The memorandum of understanding (“MOU”) establishes information-sharing protocols to facilitate the exchange of non-public information relevant to both market integrity and public health. According to the SEC, this agreement will be used to help administer and enforce federal securities laws regarding FDA-related disclosures by public companies, which can have a significant impact on the markets. While this is not the first information-sharing agreement between the FDA and the SEC, the MOU signals a heightened focus on interagency enforcement that life sciences companies should take seriously.

An Update on an Old Arrangement

The FDA and SEC have had an information-sharing agreement since 2004. The initial agreement established procedures for sharing non-public information and referring matters involving potentially misleading statements about FDA regulatory activities. The new MOU builds upon that framework by modernizing information sharing processes and identifying designated senior officials to serve as agency points of contact.

More importantly, the recent MOU signals the current administration’s priority to increase investigations and enforcement activity as to public companies in the life sciences. By publicly reaffirming their commitment to collaboration, both agencies are indicating a heightened interest in ensuring that public companies accurately characterize their interactions with the FDA. This includes representations about the status of FDA review, product approvals, and clinical trial results. For companies and executives in the pharmaceutical, life sciences, and healthcare industries, the practical takeaway is that disclosures about FDA-related activity will be under greater scrutiny and that information held by one agency will more readily inform investigations by the other.

The Agencies Remain Limited in What They Can Share

The MOU is authorized under existing legal authorities that permit both agencies to share certain non-public information while maintaining protections for trade secrets, confidential commercial information, and other privileged materials. As a result, neither agency has unrestricted authority to hand over proprietary information obtained from regulated companies.

On the FDA side, the MOU is authorized under 21 C.F.R. § 20.85, which allows FDA to disclose records that are otherwise exempt from public disclosure to other federal agencies, subject to a written agreement that the receiving agency will not further disclose the information without FDA’s permission. Critically, the regulation carves out trade secrets and confidential commercial information (“CCI”) protected under specific provisions of the Federal Food, Drug, and Cosmetic Act (“FD&C Act”). This means FDA cannot hand over proprietary manufacturing data, trade secrets, or most confidential business information that companies submit during the regulatory process.

On the SEC side, the MOU is authorized under Section 24 of the Securities Exchange Act of 1934, which imposes its own confidentiality obligations. It prohibits the Commission from disclosing information in violation of the SEC’s rules or where the Commission has determined to give confidential treatment to such information. However, the statute allows the SEC to share records with other federal agencies when there is a demonstrated need and adequate confidentiality assurances, without waiving any applicable privilege.

Even with those limitations, meaningful categories of non-public information may still be exchanged. For example, FDA may be able to provide general characterizations of its communications with a company without disclosing underlying confidential data. The FDA could potentially convey that it expressed concerns about a product, requested additional information, or viewed a submission favorably, even if it cannot share the proprietary information underlying those conclusions.

The implications become more significant when companies publicly discuss their interactions with FDA. Although FDA generally treats the existence of pending applications and many communications as confidential, a company waives this protection by publicly disclosing the information itself through press releases, investor presentations, or SEC filings. In those circumstances, FDA has greater flexibility to discuss with the SEC its own view of those interactions. This is where the MOU may have its greatest practical impact.

Enforcement Implications

The current administration has emphasized efforts to combat health care fraud, and the MOU appears to advance that interest. The SEC is likely to use the agreement to assess whether public companies are accurately describing their regulatory status and interactions with FDA.

For example, a company may announce that FDA has endorsed its plan to advance a product into Phase 2 clinical trials. Behind the scenes, however, FDA may have expressed significant skepticism about the company’s data, raised unresolved safety signals, or communicated that the application was not ready to move forward. FDA’s general characterization of those interactions, without disclosing the proprietary clinical data underlying it, is the type of non-public information that could flow to the SEC under this framework.

The same dynamic could arise in the context of a marketing application. A company might represent to investors that FDA approval is imminent, when in fact the agency has issued substantive deficiency letters or requested significant additional studies. The disconnect between a company’s public optimism and the agency’s actual posture is precisely what the SEC would want to evaluate.

Another concern arises on the enforcement side. Companies that receive a Form 483, a Warning Letter, or face litigation initiated by FDA sometimes characterize these as misunderstandings, routine matters, or the product of an overly meticulous regulator. If FDA has internally conveyed more serious concerns regarding product quality, manufacturing practices, or potential risks to public health, those communications could provide the SEC with additional context for evaluating whether investor disclosures were misleading. In short, the MOU could make it easier for the SEC to compare a company’s public narrative against the regulator’s actual assessment.

What Companies Should Do Now

Public companies should ensure that legal counsel with FDA experience is involved in reviewing investor-facing communications that touch on regulatory matters. Careful drafting has always been important, but the enhanced coordination reflected in this MOU increases the likelihood that optimistic characterizations, omissions, or inconsistencies will be closely scrutinized, potentially prompting enforcement activity from the SEC. For companies and executives in the pharmaceutical, life sciences, and healthcare industries, the MOU serves as a reminder that regulatory and securities risks are increasingly interconnected.

For FDA-regulated companies, the MOU reinforces the importance of precision in public disclosures. Statements regarding clinical trials, regulatory submissions, manufacturing compliance, inspections, and enforcement matters should accurately reflect the company’s interactions with FDA. Words matter, and regulators now have an additional mechanism for comparing public statements with underlying agency communications.

For more information or assistance, please contact Jennifer L. Achilles, Emily L. Hussey, Tom Sundlof, Alexandra Karr Amin or any member of Blank Rome’s Life Sciences or White Collar Defense & Investigations teams.