FDA's Redaction Practices Heightened by Evolving Trade Secret Law and Complex Court Rulings

Recent legal developments, including a landmark Supreme Court decision and a complex case involving Vanda Pharmaceuticals, are reinforcing the U.S. Food and Drug Administration's (FDA) inclination towards maximal redaction of abandoned or failed drug files. This trend reflects the agency's cautious approach to public disclosure in light of broadened trade secret protections and the unpredictable nature of related litigation.

Ruxandra Teslo, a prominent voice in the pharmaceutical regulatory space, articulated this concern in a recent tweet: > "Combine Argus Leader’s low secrecy bar, the Trade Secrets Act’s criminal penalties, and the unpredictability of cases like Vanda, and the safest path for FDA is maximal redaction, even on abandoned or failed drug files." This statement underscores the growing pressure on the FDA to protect proprietary information.

The Supreme Court's 2019 ruling in Food Marketing Institute v. Argus Leader Media significantly altered the landscape for Freedom of Information Act (FOIA) Exemption 4, which covers "trade secrets and commercial or financial information." The decision eliminated the long-standing requirement for agencies to prove "substantial competitive harm" to justify withholding such information. Instead, information can be withheld if it is customarily treated as private by its owner and provided to the government with an assurance of privacy. This ruling effectively lowered the "secrecy bar," making it easier for companies to claim confidentiality.

Further contributing to the FDA's cautious stance are the stringent provisions of the Defend Trade Secrets Act (DTSA) of 2016. This federal law provides a civil cause of action for trade secret misappropriation and, notably, includes criminal penalties under the Economic Espionage Act (EEA). The potential for severe legal repercussions, including fines and imprisonment, for unauthorized disclosure of trade secrets adds a significant layer of risk for government agencies handling sensitive corporate data.

The recent Vanda Pharmaceuticals, Inc. v. United States case, decided in early 2025 by the U.S. Court of Federal Claims, exemplifies the complexities involved in defining and protecting trade secrets within a regulatory context. Vanda sued the FDA, alleging that the agency improperly disclosed its trade secrets, such as dissolution specifications and impurity testing data, to generic drug manufacturers. While the court largely sided with the FDA, ruling that the information in question was either generated by the FDA or already publicly available through Vanda's patent applications, the case highlighted the intricate and often unpredictable nature of litigating what constitutes a protected trade secret when submitted to a regulatory body.

These combined factors—a lower threshold for claiming confidentiality under FOIA, the criminal penalties associated with trade secret theft, and the nuanced and sometimes unpredictable outcomes of trade secret litigation—create a strong incentive for the FDA to err on the side of caution. Consequently, the agency is likely to continue prioritizing maximal redaction of commercially sensitive information in drug applications, even for products that have been abandoned or failed, to mitigate legal risks and uphold perceived confidentiality obligations.