January 25, 2019

The Government Shutdown and Its Effects on the FDA

Holland & Knight Healthcare Blog
Ethan Jorgensen-Earp | Sara M. Klock | Michael J. Werner

Note

On January 25, President Trump announced that the White House and congressional leaders in the House and Senate have reached an agreement to fund the government on a short-term continuing resolution (CR) through Feb. 15 to end the 35-day government shutdown. The CR would fund all currently unfunded departments, including the operations of the Food and Drug Administration (FDA), at slightly less than FY 2018 levels, and would provide a vehicle to move to conference on the Homeland Security appropriations bill. The measure would also include a provision to provide backpay for furloughed government employees. If a CR is signed, the FDA would be able to access new user fees and process medical product applications until its expiration. A full update on the effects of this CR on FDA activities will be reported on January 28.


 

As the federal government shutdown enters its fifth week, U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb released new estimates on Jan. 18, suggesting that 31 percent of the FDA's total staff is in furlough status. Gottlieb also said an additional 32 percent of the staff is in some form of alternate pay status, such as partially paid and excepted (non-paid but working) status. The shutdown, which began on Dec. 22, 2018, has prevented further funding of nine executive departments of the U.S. federal government, including the FDA. It has adversely impacted virtually all FDA activities. FDA is currently using existing user fees (discussed below) to pay for product review while many other activities have been suspended. Commissioner Gottlieb stated recently that he estimates user fee funding to last until approximately February 8, but has said he can take steps to briefly extend the date.

The timeliness of product reviews whose application and user fees were submitted prior to the shutdown is unclear. The agency is not authorized to accept any new user fee payments. Reports indicate that those submitted 9-10 months ago may not see a significant additional delay – and a product was recently approved – while those submitted more recently are likely to be delayed.

Review for products not associated with user fees have ceased completely. Should carry-over user fee funding not extend beyond the current projection of mid-February, the review of new product applications would likely cease until the shutdown ends and discretionary funding is restored to the Agency. This timeline will vary as FDA continues to shift funding among various priorities.

Funding – User Fees and Federal Appropriations for the Food and Drug Administration

As a result of a historical anomaly, the FDA is funded through the appropriations account of the U.S. Department of Agriculture, rather than the account of the Department of Health and Human Services (HHS). This is critical because a Fiscal Year (FY) 2019 Agriculture-FDA appropriations bill has yet to be enacted and as of this writing there is no indication this will happen soon. In contrast, legislation providing funding for the Department of Health and Human Services has been enacted.

Reviews for most FDA regulated products, such as prescription drugs, virtually all biologics, and medical devices, are funded in large part by user fees. FDA continues to use these fees to support product review activities. However, by law, FDA cannot collect additional user fees if it does not receive appropriated funding. Thus, the lack of appropriated funding means the Agency does not have money for non-review activities and also will not get new user fees. The result is that eventually the Agency will have insufficient funds to perform most of its duties. Whether the Agency actually reaches that point, and what it will do if it does, remains unclear.

Funding for Product Reviews

The review for the vast majority of human medical products is supplemented by user fees that are paid at the time of submission of a new drug application (NDA) for a prescription drug product, a biologics license application (BLA) for a biologic product, or an abbreviated new drug application (ANDA) for a generic product. User fee agreements, the first of which was originally signed in 1992 to assist the FDA in its review of prescription drug products, for these and other FDA-regulated products provide a large percentage of the funding used by the Agency to conduct product review.

User fee agreements apply to products that fall within the definition of a particular product. For instance, the Prescription Drug User Fee Amendments apply to a "prescription drug product" under the Federal Food, Drug, and Cosmetic Act (FDCA). This definition does not apply to certain human medical products, including:

  • Whole blood or a blood component for transfusion;
  • An allergenic extract product; or
  • Certain human cell, gene and tissue-based products.

These products are not covered by user fee amounts and their review is subject to FDA's appropriated and non-user fee budget.

The Shutdown and Its Effects on the FDA's Review of Medical Products

During the shutdown, FDA has allocated resources to prioritize public health and patient safety activities. FDA recently said it will continue "vital activities critical to ensuring public health and safety…including maintaining core functions to handle and respond to emergencies – such as monitoring for and quickly responding to outbreaks related to foodborne illness and the flu, supporting high-risk food and medical product recalls when products endanger consumers and patients, pursuing civil investigations when we believe public health is imminently at risk and pursuing criminal investigations, screening the food and medical products that are imported to the U.S. to protect consumers and patients from harmful products, and addressing other critical public health issues that involve imminent threats to the safety of human life." The Agency has also said that new investigational new drug applications (INDs), which represent the first major step towards carrying out clinical trials of unapproved medicines in humans, new emergency INDs, and human safety-related IND amendments are all being accepted during the shutdown. INDs not associated with user fee products, however, are not being accepted or processed.

Senior FDA officials have said the Agency is using existing (already paid) user fees to perform product reviews but most other activities have been halted. That means NDAs and BLAs requiring new user fees and other products not governed by user fees are not being reviewed.

It is unclear how long the existing user fees will last. As the shutdown has continued, FDA has shifted its staff or furloughed additional staff to help extend the funds. The Agency also recently said it has had to shift some of its carry-over funding from pre-market review activities to carry out post-market safety surveillance.

Healthcare organizations have begun to express public concern about the impact of the shutdown on FDA's ability to carry out its mission. A recent letter from more than 40 public health organizations to President Trump and congressional leaders on January 22 urged swift resolution to the shutdown.

Congress has also been monitoring the effects of the shutdown on the FDA's activities. On January 11, 34 Senate Democrats sent a letter to FDA Commissioner Gottlieb requesting additional information related to the function of the FDA's medical product and food safety programs, the potential for a backlog of new medical product reviews, and the status of FDA's workforce during the shutdown.

On January 24, Rep. Frank Pallone (D-N.J.), Chairman of the House Energy & Commerce Committee, announced a hearing to take place on January 31, to examine the effects of the government shutdown on agencies within the committee's jurisdiction, including the FDA. Legislation is also currently being considered that would allow the FDA to accept user fees specifically for new device applications during the shutdown.

The situation remains fluid. Organizations should continue to monitor new developments.

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