By publishing complete response letters as soon as they are issued to drug sponsors, the FDA is expanding transparency in a way that, while positioned as a public health measure, also grants investors greater visibility into regulatory decisions. Experts question whether this is the agency’s proper remit.
Drug development is a tricky business, with success rates remarkably low. Investments into the sector are therefore a gamble, and any additional information available to investors can be crucial to make the odds more favorable.
Helping investors has not typically fallen into the remit of drug regulators, but when the FDA decided earlier this month to publicize complete response letters (CRLs)—rejection letters for failed new drug or biologics license applications—in real-time, this was at least partly its objective.
In its announcement, the FDA said publishing CRLs would benefit public health by allowing drug developers to avoid “common missteps,” deliver insights to patients and healthcare providers and, finally, ensure sponsors provide “complete and contextualized information” to investors and shareholders.
Rachel Turow, head of Skadden’s FDA regulatory practice, explained that there is a gap between what applicants are required to disclose under SEC regulation and the information that is contained within CRLs, which leaves investors without a full picture.
“The FDA has decided that industry has not done a good enough job to fill that information gap and therefore the agency is going to do it proactively on their behalf,” Turow told BioSpace, adding that concerns for Wall Street seem “slightly outside” of the regulator’s public health mission. “But it’s very clear that is a motivation here, and I do think the biggest beneficiaries of this transparency are investors.”
In July, the FDA released 200 CRLs for drugs that eventually made it to market, with certain information, such as confidential commercial information. Then in September, the agency published another 89 rejection letters from 2024 and 2025, also heavily redacted, and this time promised that future CRLs would be made available “promptly after they are issued to sponsors.” So far, however, none have appeared for therapies rejected since that announcement.
Turow said that though the published CRLs are heavily redacted, they still contain important information related to clinical data and study design. This will allow investors to take a hard look at whether a drug remains viable and, for smaller companies, whether the businesses themselves have a long-term future, she said.
“The main consumers of FDA-related information are Wall Street analysts—I have never seen FDA conflate public health and Wall Street disclosure,” Turow said. “To me, it does not make a lot of sense.”
Further, it is not uncommon for shareholders to file lawsuits after a sudden drop in stock price based on the accuracy of information provided by a company, such as forward-looking statements. Turow noted details published in CRLs could be key to these lawsuits if they contradict publicly disclosed information.
A Shift in Disclosure
In a statement accompanying the Sept. 4 announcement, FDA Commissioner Marty Makary described the move to publish CRLs in real-time as the agency “embracing radical transparency,” which he said is one of the guiding principles of the current administration.
Makary has stated publicly that he considers information included in CRLs—with the exception of trade secrets, like manufacturing details—to belong to the public domain. “Although the company owns the proprietary information . . . they don’t own the thinking of the FDA reviewers—that’s public domain,” he said in an FDA Direct podcast in July.
Makary elaborated on his rationale for public disclosure of the CRLs in another July episode of FDA Direct. “It allows inventors and drug developers to understand exactly how a particular study group thinks, what to expect and what the statistics are on why applications get rejected. It helps developers with predictability—markets like predictability.”
Turow agreed that drug developers will be able to make use of the public CRLs to better understand the regulator’s thinking on certain aspects of drug development.
In her conversations with ex-FDA reviewers, Turow said many were very positive about the change because they had always felt they were “repeating themselves,” giving the same advice to different applicants, which would not have been the case if certain information were made public.
Steven Grossman, policy and regulatory consultant and author of the FDA Matters blog, told BioSpace in an email that companies that have their CRLs released mid-process may now be able to “crowd-source advice” that is useful in navigating any hurdles in the drug application process.
He added that the industry will likely quickly adapt to the new state of play—though he noted the FDA could find itself facing criticism over the reasoning behind the change.
Controlling the Narrative
Despite the potential advantages for stakeholders, the shift in CRL publication policy may not be entirely welcomed by industry. For Turow, the negative impact of the change is likely to be felt more by smaller-scale companies than by Big Pharma.
Small companies are often initially focused on the approval of just one product, which makes a CRL a major factor in determining whether the company is viable from an investment perspective moving forward, she said, whereas larger companies are generally better insulated financially from CRLs, except in the case of potential blockbuster products.
Turow outlined two primary challenges for biopharma companies: the release of information they consider confidential and the ability to control the narrative for investors. “Smaller companies want to be able to control messaging with investors, making their story front and center, and that is going to be pretty tough with CRLs being published in real-time,” she said. “The way to manage the messaging and the information flow is just not established yet.”
Expect Legal Challenges Ahead
Finally, in a kind of boomerang effect, the policy change around CRLs could pose a challenge for the FDA itself. As of the publication of this article, no lawsuits have yet been filed; however, as it is unclear how this change to disclosure is consistent with the agency’s remit, Turow said the FDA has “teed up a lawsuit very nicely here.”
Kristen Booze, strategic health communications leader at PhRMA, told BioSpace in an email that the industry group supports the push for increased transparency but emphasized the importance of ensuring that “the FDA works with biopharmaceutical companies to ensure that any CRLs released are appropriately redacted.”
The possibility that CRLs could be published in real time was previously raised during President Donald Trump’s first term, and there were suggestions that industry was blocking such a move. Former FDA commissioner Scott Gottlieb pushed back on this idea, writing on X in August 2019 that such action was not taken due to the resources and people power required to redact CRLs for release. He added that there would need to be a strong public health rationale, “not just investor thesis.”
In regard to the quality of the redactions in CRLs published so far, Turow noted that they appeared to be “somewhat inconsistent and haphazard,” suggesting they were carried out quickly and “not with the greatest attention to detail.”
Regardless of any potential legal or even logistical challenges to publishing the CRLs, Turow advised that any company in the process of submitting a new drug application should assume that a potential rejection letter will be published immediately upon receipt. In the longer term, she said she would expect legal challenges to the new policy to emerge.
“If there is an applicant who feels that they are harmed by the disclosures that the FDA is doing, especially those within the 89 applications that have not been approved and where the applicant did not know the FDA was going to publish the CRLs—if they feel they were harmed, we may see legal action as a result,” she concluded.
