Category: Blog

Emerging SEC Disclosure Challenges in the Life Sciences Industry

Why is the life sciences sector an area of focus for the SEC? 

The United States Securities and Exchange Commission (“SEC”) is responsible for a pivotal aspect of regulatory oversight for publicly traded life sciences companies: monitoring public disclosures about interactions with the Federal Drug Administration (“FDA”). Pharmaceutical drugs, medical devices, and other life science products are often subject to the FDA regulatory approval process, where information about progress and development can greatly affect their market status and the price of a company’s stock. Thus, life sciences companies face substantial pressure to accurately disclose information about trial outcomes and approval status, as even unintentional misrepresentations and missteps can trigger SEC investigations. Therefore, the industry must balance communicating the clinical progress of their products with protecting confidential and proprietary information, as the SEC continuously monitors disclosures to prevent insider trading and fraud. 

What are life sciences companies required to disclose?

The primary regulation established by the SEC to enforce disclosures is known as the materiality standard, which requires the timely and complete disclosure of material information through annual (10-K), quarterly (10-Q), and current (8-K) reports. Typically, the SEC considers drugs, medical devices, and other product developments material to investors as they are prone to massive valuation swings based on clinical holds or failures for approval. Life sciences companies grapple with this uncertain standard while engaged in FDA dialogue because they must prudently determine what feedback from the agency should be conveyed to investors and the SEC. During the drug approval process, when there is consistent back and forth between a company and the FDA regarding a pending application, there is no duty to disclose ordinary course interactions if they do not involve significant material conclusions or risks. Thus, there is a fine line between choosing not to disclose immaterial issues in order to avoid investor panic and misrepresenting the product’s regulatory status to the federal government.

How is the reporting landscape shifting in the industry?

The life sciences industry can be unstable and unpredictable, and conflicts are often layered where co-investments, cross-fund participation, and compensation tied to portfolio milestones are involved. To ensure adequate disclosures, regulators tend to focus on valuation pressure points including assumptions around trial outcomes or FDA approval probabilities. Because life sciences companies are particularly susceptible to insider trading risk given the amount of material non-public information (MPNI) they possess, the SEC has recently intensified its focus on the transparency of these corporations. In order to manage the uptick in enforcement, life science companies are encouraged to adopt internal policies and include contract provisions to prevent trading on MPNI and remain objective in their disclosures about FDA feedback. More proactive and fulsome risk disclosures may help to insulate industry actors from SEC or shareholder scrutiny. False or misleading statements are prohibited by federal securities laws, so companies must be weary of their continuous oversight and keep pace with evolving disclosure requirements.

What are the emerging legal risks for corporations?

If the SEC concludes that a life sciences company submitted inaccurate or misleading disclosures, harsh consequences include substantial financial sanctions, the prohibition of individuals serving as company directors or officers, and, in extreme scenarios, criminal prosecution by the Department of Justice. The FDA itself is able to inform the SEC of securities violations and share nonpublic information with them regarding life science products, particularly if public health is at risk. Even though SEC enforcement trends have recently decreased overall, pharmaceutical, life sciences, and healthcare companies face increased enforcement activity, particularly due to the growing complexity of clinical data and industry share price movement. The Commission has expressed continued interest in cases indicative of overt fraud, false or misleading disclosures causing investor harm, and individual accountability for senior leaders of corporations. Overall, the higher selectivity of SEC actions heightens risk for public company executives, calling for robust internal and disclosure controls and transparent investor and SEC communications. 

Professional Responsibility Requirements in Psychotherapist-Patient Privilege Place Unbalanced Burdens on Psychotherapists

The psychotherapist-patient privilege plays an important role in federal and state rules of evidence, especially in disputes raised between the patients and their mental health practitioners. In  Jaffee v. Redmond, the Supreme Court established that the protection of confidential communications between the licensed mental health practitioners and the patients can be stronger and resist compelled disclosure even if there was a criminal case that involves serious issues in key evidence. The Court strengthened the privilege on the basis that if the psychotherapy applied by the practitioner relied on “confidence and trust,” then the patients are privileged to withhold critical information needed for the treatment.

Jaffee is certainly a landmark for cases related to health professionals’ privilege, however, this structure has raised another concern when it is compared to attorney-client privilege. For lawyers, if their clients sue them for malpractice, lawyers are allowed to disclose the privileged information for the purpose of their own defense. Mental health professionals face greater constraints when they need to defend themselves against patient complaints either, in front of regulatory boards or in the court. This has created an over-powerful status of rights to the patient while planting seeds of a potential structural imbalance for psychotherapists that may be ethically problematic and practically harmful.  

Compared with attorney-client privilege, psychotherapist-patient privilege does not offer the health professionals to equally defend themselves in most litigation and board administrative hearing processes. Although there are traditional exceptions that require the psychotherapists to report the privileged information to the related authorities, such as “being ordered by court” or “possible self-harm or dangerousness”, these scenarios are narrowly construed and are often relied on or subject to judicial supervision. 

As a public policy matter, it might be necessary to re-discuss the privileged communications among psychotherapists and their clients. In Tarasoff v. Regents of the University of California, the Court affirmed that the confidentiality is not absolute, and it can be bypassed when there is a necessity to prevent serious harm. However, various rules of law still limit the exceptions that can fairly protect the psychotherapists right as a health professional when there are disputes raised towards their malpractice or ethical issues. For cases where the psychotherapists are accused, the professional responsibility requirement does not only serve to be a shield for patients as the requirements are expected to be, but rather a barrier for finding the facts and upholding professional accountability.

There should be a balanced reform of psychotherapist-patient privilege to equally protect the patient and the provider. Legislators and courts should be favorable to embrace the limited self-defense exception in the fields of psychological practices, similar to that of the attorney-client privilege. Some suggest that the privilege shall be waived for psychotherapists when their patients make allegations and legal claims against them for malpractice or civil liability. It could be added that the disclosure shall be restricted to communications that are directly related to the allegations raised by their clients. Courts could be assigned with authority to regulate the disclosure and limit unnecessary exposure of the privileged information.

A new set of regulatory rules should be considered so that the legal system can be fairer in balancing the psychotherapists’ ethical concern with procedural justice due process and so that both patients and health professionals, especially psychotherapists, are treated equally under the law. 

Compounded GLP-1s: Filling a Medical Need But Posing What Dangers?

There are many drugs on the market created in a myriad of ways with some manufacturing processes less regulated, and therefore more dangerous, than others. One such method is called human drug compounding. Compounding occurs when a licensed physician or person under the supervision of a licensed pharmacist combines ingredients to form a medication designed for a specific patient. Compounded drugs can be incredibly important: they fill the gap for patients requiring specific strengths or dosages not available on the commercial market, they can remove allergens from drugs for patients with allergies, and they can change the form of the medication for patients that may have unique needs. It is also possible to create compound versions of the drugs on the FDA’s drug shortages list if the drug meets certain requirements. 

However, compounded drugs also come with a great risk: they are not FDA-approved. The Food and Drug Administration (FDA) is tasked with protecting the public health by approving drugs based on safety, efficacy, and security standards. The FDA has a robust drug approval process through which most drugs in the U.S. must pass, but compounded drugs are not subject to this process. This means that a compounded drug may not meet quality or safety standards as a traditional commercially marketed drug would.

One recent area where compounded drugs have become increasingly popular: GLP-1 drugs. A GLP-1, or glucagon-like peptide-1, is a hormone that is naturally produced in the body. Companies have figured out how to develop GLP-1s into drugs, initially to treat type 2 diabetes and more recently for weight management.

In a statement by the FDA released on February 6, 2026, the FDA announced it intended to take “decisive steps to restrict” the active ingredients of GLP-1s that are intended to be used in non-FDA approved compounded drugs in order to “safeguard consumers from drugs for which the FDA cannot verify quality, safety, or efficacy,” as the selling of non-FDA approved drugs is a violation of the Federal Food, Drug, and Cosmetic Act. The statement also addressed misleading advertising and marketing of companies claiming that their non-FDA approved compounded drugs were simply generic versions of FDA-approved drugs.

Hims & Hers, referenced in the letter, has been in the headlines recently. Novo Nordisk, maker of the Wegovy pill and injections, has filed a lawsuit against Hims & Hers, a telehealth provider, for marketing compounded versions of its drugs, claiming patent infringement. Recent statements by Novo Nordisk’s general counsel for global legal, IP, and security called into question the safety and risks associated with Hims & Hers products, referring to the lack of FDA regulation for compounded drugs. This is not the first legal and regulatory issue faced by a GLP-1 manufacturer. In 2024, Eli Lilly’s weight loss drugs Zepbound and Mounjaro had their active ingredient tirzepatide regularly compounded before the FDA took it off the drug shortages list. The problems are likely just beginning. Between 2019 and 2024, Medicare Part D claims increased from 4.8 million to 21.8 million for GLP-1s. In addition to Novo Nordisk’s patent suit, there is also ongoing multidistrict litigation against Novo Nordisk and Eli Lilly by patients alleging loss of eyesight from their weight loss drugs. With the explosion of GLP-1s, it is likely that more issues will arise.

The Unfinished Cleanup: PFAS in the Anacostia 

Rivers running around Washington, D.C. are no stranger to contamination. Aging combined sewer systems routinely dump wastewater into local waterways through discharges known as combined sewage overflows, while legacy pollution from past military activities pollute the water as well, particularly in the Anacostia. D.C.’s agencies have evolved to address the environmental stressors of sewage and industrial pollutants like polychlorinated biphenyls (PCBs), but certain industrial pollutants remain unaddressed. 

The Anacostia River Park, which borders the Anacostia River, is a Superfund site (a contaminated site listed under CERCLA’s National Priority List for cleanup) due to chemical dumping associated with former U.S. military activities. The river itself contains remnants of this cheap dumping practice that has harmed generations of primarily communities of color living by and off the river, from playing in its river banks to consuming its fish. After over 150 years of dumping toxic waste into the river, the Office of the Attorney General of the District of Columbia sued the U.S. government in early 2025 under CERCLA and the Brownfield Act. OAG alleged that the dumping was an intentional act of noncompliance with environmental laws, seeking “costs, damages, and a declaration of future liability” against the government. 

D.C.’s Department of Energy and the Environment (DOEE) initiated the Anacostia River Sediment Project to clean up the river’s contamination in 2013, culminating in the release of the 100% Design Report in the summer of 2025. The report outlines the remedial design with considerations such as the feasibility, cost, and benefits of certain remediation design options, factoring in stakeholder input. While the report is a milestone in clean up efforts and is partially funded by entities like Pepco who contributed to its pollution, it is largely aimed at PCB contamination, leaving out other contaminants like PFAS which have been documented to reside in the Anacostia watershed. In line with the report, D.C.’s OAG alleged that the river contained PCBs and other industrial contaminants such as heavy metals, notably leaving out any mention of PFAS – which in some regards, may be the most insidious pollutant in the river due to their persistent, bioaccumulative nature. However, the District’s 2023 suit against major chemical corporations like 3M acknowledges that corporations and the DOD used and released products containing PFAS into the river; establishing an understanding of PFAS contamination.

Per- and polyfluoroalkyl substances, or PFAS, are a class of highly persistent, stable, and health-harming chemicals that have evaded substantive national and global regulation for decades. This regulatory ‘hole’ has been permitted via a lack of governmental oversight, systemic failures to hold corporations accountable for dumping, and improper corporate disclosures as to the toxicity of the chemicals. PFAS have been shown to cause a myriad of health conditions, from increased cholesterol to developmental effects to cancer. The exposure pathways of PFAS are well documented, where the chemicals can impact humans via dermal exposure, ingestion, and inhalation and often travel through industrial discharges into bodies of water as exceptionally mobile, stable compounds. The chemicals then bioaccumulate in various ecosystems, meaning that seafood in water bodies contaminated by PFAS are unsafe to consume. DOEE’s fishing advisory issued in 2024 highlights this fact and advises the public not to eat eel, carp, striped bass, or largemouth bass caught in the Anacostia due to high PFAS levels and to instead opt for smaller fish containing less PFAS in their tissues. Maryland’s Department of the Environment similarly issued a fishing advisory for the watershed for PFAS contamination.

The chemicals as both a class and individually are not yet adequately addressed in our drinking water, let alone our water bodies. With the U.S. EPA setting back its PFAS drinking water regulations at the dawn of the second Trump Administration, it is no surprise that water bodies and water quality are not a focus in the PFAS space. There is no government attempt to remediate PFAS in the Anacostia River as there is for PCB and other harsh contaminants, but the chemicals are present. OAG’s 2023 natural resource damages complaint against chemical manufacturers, seeking monetary damages, states that “PFOA and/or PFOS were detected at all locations tested” in D.C.’s waterways. 

The Anacostia Riverkeeper found 8-10 different PFAS chemicals in the six samples collected from the river. The measurable PFOA (a common, “long chain” PFAS compound) concentrations in the samples ranged from 3.5-8 ppt, despite the EPA’s advisory limit of 0.004 ppt, and PFOS (another long chain PFAS compound) concentrations similarly ranged from 4.7-7.7 ppt, exceeding the EPA’s PFOS advisory limit of 0.002 ppt. Furthermore, the Environmental Working Group took water samples at certain locations across the U.S. and found significant levels of PFAS in samples from the Joint Base Anacostia–Bolling military installation situation along the Anacostia. For instance, one sample taken from the base was discovered to have a combined value of 10.6 ppt of the two “short-chain” PFAS (PFHxA and PFPeA) measured in the study. 

Demonstrating the urgency of the public health issue and the recognized presence of PFAS in the river, the Anacostia Riverkeeper submitted public comments to DOEE to its “Early Action Area Remedial Design Report” at the 90% design phase, urging the agency to incorporate remediation plans for PFAS in its 100% Design Report. The Riverkeeper noted that it was “irresponsible for [DOEE] to know there is PFAS contamination in the Anacostia River but to not consider it in [the] [remediation], potentially yielding a final product that is already outdated before it’s even constructed.” The agency responded that it was infeasible at that point in the project because PFAS samples were not incorporated into the plan and “revisions would delay the project by years.”

Given budgetary limitations, the decision to exclude PFAS from river remediation efforts is a multi-pronged determination based on cost, time, resources, and practicality. PFAS are notoriously difficult and costly to filter from water (although there are emerging more cost-effective techniques) and now local governments and utility companies are made to grapple with federal and corporate failures. The argument that the addition of PFAS into the plan would significantly alter a nearly decades-long remediation planning process has merits, but at the same time, PFAS remediation should become a priority for federal and local governments to protect human and ecological health. This is especially pertinent following the allegations in the District’s natural resource damages complaint. 

Although drinking water regulations are likely the first step, addressing the Anacostia’s PFAS contamination in some capacity should be made part of D.C.’s plan to remediate the river. This effort is necessary to safeguard the health of the communities that rely on and live by the river. It would also be a showing to other governments that water quality remediation includes PFAS – contaminants that have been ignored for far too long to the detriment of our health.

Deregulating the EPA: How the Elimination of the Endangerment Finding Ignores Health Consequences for Infants and Children

This month, the Environmental Protection Agency (EPA) under the Trump administration rescinded the Obama-era Greenhouse Gas (GHG) Endangerment Finding and the subsequent emission regulation standards that have accompanied it. Published by the EPA on December 15, 2009, the Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act found that six greenhouse gases—carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride—contribute to air pollution and endanger public health and welfare of current and future generations. In the sixteen years since the endangerment finding was published, scientific evidence supporting each impact noted in the finding has become virtually indisputable; every ton of emissions increases the severity of expected climate impact, and every exposure to compound climate events “can increase morbidity and mortality.” Notably absent from the Agency’s news release is any discussion of or consideration for the health impacts that the finding sought to protect against.

Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks has directed government agencies to identify and assess environmental health risks that may “disproportionately affect children” since 1997. In its full report, the EPA uses careful language to skirt this obligation, stating that children “are not expected to experience greater ambient concentrations of air pollutants than the general population.” The statement points out the obvious–children are breathing air with the same chemical composition as everyone else–while ignoring the reality that the health consequences of air pollution have a far greater impact on growing and developing bodies than it does on fully developed adults. 

Increased concentrations of greenhouse gases have caused overall warming and more extreme weather patterns and heat events. In looking at the health impacts on children, the American Academy of Pediatrics 2024 Policy Statement outlined the specific effects of increased emissions against real health consequences. One study analyzed infant mortality data on an individual level against outdoor air temperature data for over 60,000 sudden infant death syndrome (SIDS) cases between 1972 and 2006, finding that a ten degree Fahrenheit temperature increase during the summer was associated with an 8.6% increase in the risk of SIDS. For black infants, the increased risk was 18.5%. In addition to the risk of rising temperatures, an analysis of six years of pediatric respiratory health data in San Diego County found particulate pollution from wildfires to be approximately ten times more harmful to children’s health than particulate matter from other sources. While climate change alone is not the sole cause of wildfires, the scientific consensus is that human-caused global warming contributes significantly to the trend of larger, more severe wildfires across California and the Southwest. 

Air pollution and heat exposure from climate change are also associated with adverse pregnancy outcomes. Exposure to ultrafine particulate matter is associated with increased risk of preterm birth and low birth weight, with higher risk found among black mothers, and mothers with asthma. Continued exposure to air pollution after birth can also affect lung development, leading to a greater risk of lung disease.

While the announcement from the EPA this month focused its priorities on the American consumer’s freedom to buy whatever car they want, it ignores its own origins as an agency founded on principles of achieving national air quality standards and reducing automobile pollution. The science of the last sixteen years makes it abundantly clear that not only does climate change increase the risk of negative health outcomes, but those risks are substantially higher for children and other high risk groups. The battle over this deregulation, however, has only just begun. The American Public Health Association, jointly with numerous other health and environmental groups, has already filed suit challenging the EPA and California is expected to follow soon.

Recent Bipartisan Report Raises Concerns About Incarceration of Juveniles with Mental Health Needs

The offices of Democratic Senator Jon Ossoff of Georgia and Republican Representative Jen Kiggans of Virginia have released a seminal report after conducting a more than year-long investigation into the prolonged incarceration of children with mental health conditions. They found that more than half of the surveyed juvenile detention centers reported incarcerating children who could be eligible for release to mental health care, due to a lack of available resources. Twenty facilities even reported incarcerating children without charges or with charges that would not ordinarily lead to placement in a juvenile detention center. The report indicates that these scenarios of incarceration are especially prevalent among youth with neurodevelopmental disorders, such as autism spectrum disorder. Similarly, some facilities noted that there were children being incarcerated whose charges had been dropped or who had already served their full sentence. Many of the centers reported being forced to wait weeks to months until children can access more appropriate care through in-home services or long-term psychiatric residential treatment. 

Incarceration can be incredibly damaging to a child’s physical, mental, and developmental health. Incarcerated children face limited access to evidence-based medical care, inadequate educational opportunities, and face lifelong medical and mental health outcomes, including increased risk of depression and suicide. Mental Health America (MHA) reports that placing children with behavioral health conditions in the juvenile system can be especially challenging due to their vulnerability to difficult conditions. Additionally, the Sentencing Project notes that incarcerating youth impedes both success in education and employment later in life. MHA’s call to action specifically notes that the juvenile justice system should never be used as an alternative to treatment, services, and support for children with mental health concerns.

From a legal perspective, this report raises many concerns. First, under the Violent Crime Control and Law Enforcement Act of 1994 (34 U.S.C. § 12601(a)) it is unlawful for any government agent or law enforcement officer who is responsible for juvenile justice to deprive a juvenile of their rights, privileges, or immunities secured by the Constitution. Next, the Americans with Disabilities Act (42 U.S.C. § 12132) specifically prohibits denial of services, programs, or activities of a public entity by reason of qualified disability. In addition to these, the Department of Justice utilizes the Civil Rights of Institutionalized Persons Act (42 U.S.C. § 1997(a)), the Individuals with Disabilities Education Act (20 U.S.C. § 1400), and28 U.S.C. § 517 to review and investigate systemic violations of federal law as relates to juvenile justice. 

Placing youth in juvenile detention centers as opposed to providing mental health treatment is a clear violation of juvenile due process rights (see In re Gault). There is also a clear Eighth Amendment, cruel and unusual punishment argument against the act of incarcerating youth with mental health disorders (see Graham v. Florida), as well as a Fourteenth Amendment Equal Protection argument. The Report is deeply concerning for the youth being affected by this practice, and in the words of Senator Ossoff: “no child in America should be locked up instead of getting the mental health care they need and deserve.”