Health Care Economic Information Under FDAMA 114 Guidance

The Food and Drug Administration Modernization Act of 1997 addressed a narrow information bottleneck: payors needed certain data manufacturers possessed, yet the law prevented its disclosure. Under FDAMA's predecessor rules, promoting such an economic analysis to a health plan required clearing the identical "substantial evidence" threshold used for prescriber-directed clinical assertions, effectively demanding two randomized controlled trials. That evidentiary bar fit claims about a drug's efficacy. Applied to economic comparisons, though, the bar was a poor fit, forcing formulary committees plus pharmacy benefit managers and managed care organizations to set coverage policy blind to the cost figures that would have sharpened those choices.

Through Section 114, Congress intentionally lowered the evidentiary bar by substituting "competent and reliable scientific evidence," known as CARSE, for the prior substantial evidence requirement. This relaxed standard came alongside a protective provision. Provided the statute's requirements are satisfied, "shall not be considered false or misleading," applies to health care economic information given to a payor, formulary committee, or comparable body performing coverage and reimbursement functions. HCEI received a fairly exact statutory definition: an evaluation that pinpoints, quantifies, or contrasts the financial impacts of taking one medication versus a different drug, another medical approach, or nothing at all, encompassing expenses tied to represented health outcomes.

The need for this information was clear, and the market for it existed. What Congress set up in 1997 was designed to give manufacturers a legal channel through which they could actually supply that information, freeing companies to share genuine economic analysis without fear of running afoul of the FD&C Act's prohibition on misleading statements. That commitment remains the standard by which all that came after must be judged.

The safe harbor's two decades of disuse

The safe harbor failed to serve its intended purpose. That failure was not about demand. It was about definition.

Two statutory terms carried much of the burden, though Congress defined neither. The other missing definition concerned who could receive the information. FDA made both uncertainties worse by leaving the statute without rules or formal advice from 1997 through 2016. For companies, the safe harbor existed on paper, but its boundaries were unclear.

A third point of friction sat inside the statute's own language: HCEI had to "directly relate to an approved indication." FDA never answered.

Employees lacked faith in the resource provided to them. A survey by Lin, Hughes, and Neumann at ISPOR revealed that most health outcomes directors at drug firms lacked confidence in drafting, authorizing, or applying Section 114 content, expressing unease with the rule itself alongside skepticism about whether meeting its requirements justified the effort. Regulatory actions only amplified this confusion. During 2010, an untitled FDA letter challenged Cumberland Pharmaceuticals for making superiority assertions based on economic data without adequate support, yet it omitted any reference to Section 114. Firms remained unsure if the agency expected CARSE compliance or was merely enforcing its broad ban on deceptive claims independent of the law. A protective provision that no one trusts enough to use offers no real protection.

How industry and formulary stakeholders pushed FDA toward guidance

The gap didn't close by itself, and FDA didn't act on its own to close it either. Industry associations, health plan pharmacy bodies, and academic researchers all presented formal recommendations to FDA spelling out what the guidance should cover.

PhRMA's white paper, "The Development and Dissemination of Health Care Economic Data to Payors, Formulary Committees, or Other Similar Entities," made three specific asks: define what CARSE means in operational terms, extend "similar entity" explicitly to pharmacy and therapeutic committees, technology assessment panels, managed health care plans, employers, and PBMs, and address how system-level economic claims that extend beyond labeled indications should be treated.

Payers arranged their own separate effort. During a March 2016 gathering of the AMCP Partnership Forum in Washington, diverse stakeholders met to craft joint recommendations and reached conclusions mirroring PhRMA's: unclear rules and missing FDA guidance left a statute underused as it neared its twentieth year. HCEI recipients should also expand to include those running integrated delivery networks and accountable care organizations, as well as groups constructing value frameworks, compiling compendia, or assessing pharmacoeconomic data.

Congress acted before FDA. In December 2016, the 21st Century Cures Act used Section 3037 to revise Section 114 and make clear that “clinical data, inputs, clinical or other assumptions, methods, results, and other components underlying or comprising the analysis” are included in HCEI. By filling that definitional hole, the amendment supplied FDA’s legal basis for formal guidance.

What the 2018 final guidance settled

In January 2017, the agency released a draft guidance addressing how drug and device makers share information with payors and formulary decision-makers, completing the final version in June 2018. Until then, FDA had never issued formal guidance on Section 114, leaving nearly two decades of silence after the statute took effect in 1997.

The 2018 guidance made the permitted audience more specific. FDA included pharmacy-benefit administrators, drug information centers, technology assessment panels, and similar multidisciplinary groups within the safe harbor, resolving one of the two main issues raised by PhRMA and AMCP. Still, the broadened category had firm limits: it excluded health care providers making prescribing choices for individual patients, as well as consumers. For CARSE evidence, FDA told manufacturers to use existing good-research-practice frameworks issued by AHRQ, ISPOR, ISPE, and PCORI across each analytical element, including its clinical inputs, not only the final cost number. Compliance teams therefore gained a concrete, citeable benchmark for the first time since 1997.

FDA also made clear that no specific format was required. The guidance went one step beyond the 1997 statute by initially addressing, in draft and ultimately final versions, off-label applications of already authorized items. However, items still undergoing regulatory review gained no such protection. At that point, Section 114 offered no shield whatsoever for messaging concerning items still awaiting authorization.

What stuck around after the 2018 guidance was the same lack of clarity concerning the phrase "directly relates to an approved indication", a phrase that had trailed the 1997 statute. PhRMA kept pressing FDA to clarify which statements qualify as directly related whenever they stray beyond the approved label. The fuzzy area that practitioners had been raising concerns about for close to two decades didn't disappear when the 2018 guidance was issued. It carried forward into the following years, planting the issues that the freshly proposed 2026 guidance would later be called on to resolve.

The three statutory changes the 2026 draft guidance incorporates

FDA issued a new draft guidance on June 2, 2026, with the Federal Register announcement following on June 3, 2026, and a public comment period running through August 3, 2026. The document is best understood as a translation exercise rather than a fresh policy initiative. Its most significant departures from 2018 come from Section 3630 of the 2023 Consolidated Appropriations Act, a statutory change Congress made, not a direction FDA chose on its own. If you are reading the 2026 draft, you should treat these three changes as fixed legal facts, not points open to negotiation with the agency.

The first change gives devices parity with drugs. Through Section 3630, the HCEI framework in Section 502 of the FD&C Act now covers medical devices, alongside an entirely fresh rule, Section 502(gg). That expansion appears in the 2026 draft guidance, which consistently says "medical products" instead of "drugs," meaning device makers now follow identical HCEI rules when talking to payors, just as drugmakers always have.

The second change gives investigational products their first statutory protection by establishing a safe harbor. When a product satisfies the four conditions of Section 502(gg), it "shall not be deemed to be misbranded." This creates new statutory ground rather than an expansion FDA created through guidance alone.

Under the third change, FDA's former best-practice recommendations now carry the force of binding law. The statute also creates a continuing duty: if previously provided payor data grows materially outdated, the company has to update it.

Approved products under Section 502(a) in the 2026 draft guidance

For previously cleared or approved medical products, the 2026 proposed guidance keeps the same trio of criteria FDA established in 2018. Such messaging escapes charges of deception provided it addresses an authorized use, draws on sound and trustworthy scientific data, and supplies any caveats required when findings diverge substantially from what FDA-approved labeling states. That framework is unchanged. Compliance teams must still confirm all three criteria before distributing any HCEI material.

CARSE is the benchmark that supplies the operational detail. FDA still directs teams to good-research-practice standards from ISPOR, ISPE, AHRQ, and PCORI, which govern the analysis from its component layers through the final conclusion. A team that records only the headline cost result while failing to substantiate the clinical assumptions beneath it falls short, since the required practice covers the entire analysis.

Format continues to be irrelevant. Because FDA never mandated a single delivery method for CARSE-grounded HCEI to permitted audiences, evidence dossiers alongside payor brochures and reprinted peer-reviewed articles remain perfectly acceptable. Those authorized back in 2018 still qualify today: payors, formulary committees, pharmacy benefit managers, drug information centers, panels that assess technology, plus any multidisciplinary bodies possessing real skill at evaluating health care economics who operate inside their coverage and reimbursement roles. Nobody revisited or narrowed the expansion from 2018 in 2026.

The requirement that still calls for careful judgment is the “directly relates to an approved indication” test. That phrasing appears unchanged in the 2026 draft guidance and in the statute, meaning manufacturers still have to tie HCEI to an approved or cleared use of the product, even when the analysis includes broader health-system expenses or comparison products outside the label’s exact wording.

The investigational products channel under Section 502(gg) and its limits

The 2023 Consolidated Appropriations Act is how Congress enacted Section 502(gg), meaning this pathway did not arise from FDA deciding to stretch its guidance into unfamiliar territory. Because of that distinction, makers must view the channel as a safe harbor fixed by statute rather than an agency policy subject to rollback through later guidance updates. Prior to 2023, manufacturers discussing unapproved or uncleared investigational items with payors lacked any legal safe harbor.

To qualify for safe harbor protection under Section 502(gg), a communication must meet four statutory conditions. Even if the figures are precise, a manufacturer that presents favorable trial results to a payor without explaining the development stage has failed to satisfy the statute. Nor does the duty stop after the initial disclosure is sent. When material changes occur in the data or development status following a payor's receipt of information, the manufacturer must provide an update. Assuming that one disclosure fulfills the obligation misunderstands the statutory mandate.

Investigational-product communications stay limited to the same set of readers the framework covers elsewhere: payors and other permitted entities handling coverage and reimbursement work.

For compliance planning, the biggest limit is the specific scope of Section 502(gg)'s protection. The protection applies only to misbranding claims brought under the FD&C Act's Section 502(f)(1). While this pathway lets drugmakers share information with payors regarding unapproved therapies, its reach remains restricted. It was never meant to make pre-approval exchanges a risk-free zone.

Where meaningful ambiguity persists after the 2026 draft guidance

In 2026, the draft guidance carries forward Congress’s 1997 framework, brings devices within its reach, and gives investigational products a genuine communications pathway. But Section 114’s original definitional divide still remains. The statute and its implementing guidance still do not spell out precisely what “Competent and reliable scientific evidence” or “directly relates to an approved indication” means.

Lin, Hughes, and Neumann’s ISPOR survey underscored the strength of the call for clearer boundaries among specialists in this area, with 88% of academic respondents saying FDA should issue guidance defining HCEI and CARSE. That survey preceded FDA’s 2018 guidance, and the record still indicates that its central uncertainty persists in both the 2018 document and the currently pending 2026 draft. A compliance program keyed to the 2026 framework may rely on its structural safeguards, yet whether a specific communication qualifies still turns on interpretive judgment that the statute leaves unsettled.