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FDA Drug Center Faces Layoff Notices If User Fee Deal Stalls (1)

Sept. 1, 2022, 9:25 AMUpdated: Sept. 1, 2022, 3:04 PM

FDA drug center staff will be the first to receive layoff warnings this month if the agency doesn’t quickly hear that congressional leaders are nearing an agreement to reauthorize the fees that help fund the agency, current and former officials warn.

Food and Drug Administration Commissioner Robert M. Califf has said the agency would need to start notifying “employees who are paid by user fees of impending personnel action” by the first week of September. The current user fee agreement expires Sept. 30, leaving Congress just weeks to muster a compromise that could win support from a key congressional negotiator who seemingly walked away from months of talks on the user fee package.

Employees whose salaries are covered by the Prescription Drug User Fee Act program, which makes up more than 60% of the Center for Drug Evaluation and Research’s budget, would be the first affected if Congress doesn’t reauthorize user fees in time, an FDA spokesperson told Bloomberg Law. FDA policy analysts and former agency officials say no user fees from industry past September means the FDA risks losing key staff who help with medical product reviews as it oversees responses to multiple ongoing health crises.

“Coming to the brink of shutdown so frequently is a distraction that takes time and resources away from FDA’s critical job of protecting and promoting public health,” said Stacy Cline Amin, former chief counsel at the FDA who also previously served in various staff roles for the Senate health panel.

“FDA’s mission is more important today than ever, whether it’s Covid vaccines or baby formula or monkeypox,” she added.

Manufacturers of prescription drugs, medical devices, generic drugs, and biosimilar products pay user fees to the FDA to help speed up product reviews. In exchange, the agency agrees to meet specific performance goals, including adding staff and releasing guidance to help companies develop more complete applications. The fees make up nearly half of the FDA’s budget, and legislation governing them must be reauthorized every five years.

For fiscal 2021, the total FDA budget was $6.1 billion, with 46%, or $2.8 billion, paid for by industry user fees. The budget covered more than 18,000 full-time equivalent employees.

Sen. Richard Burr (R-N.C.), ranking member of the Senate health committee, broke from his fellow negotiators in July when he introduced his own, stripped-down legislation that omits several additions from the version (S. 4348) that the Health, Education, Labor, and Pensions Committee advanced in June, particularly a proposed revamp to the accelerated approval pathway that gained renewed scrutiny after Biogen Inc.‘s Alzheimer’s drug approval.

The House and Senate are scheduled to return from their August recess in the coming weeks, leaving lawmakers just weeks to get a finalized package to the president’s desk.

An FDA spokesperson didn’t respond to questions on exactly how many employees would be affected by a lapse in user fee funding, but said the agency “would have to begin notifying PDUFA-funded staff of impending employment actions in September” without “assurance that we can collect fees beyond” then.

Califf said in a July 29 memo to staff that carryover funding from the previous PDUFA reauthorization would only cover about five weeks into the next fiscal year.

“We continue to convey to Congress the urgency of reauthorizing the user fee programs in a timely manner,” he wrote at the time. “I am confident that Congress will act responsibly and quickly.”

An aide to Senate HELP Chair Patty Murray (D-Wash.) said in an email Wednesday, “Senator Murray is continuing to push to avoid pink slips and get legislation to President Biden’s desk to reauthorize the FDA’s user fee programs, keep families safe, support innovation, bring down patients’ drug costs, and deliver on so many other bipartisan priorities the American people are counting on Congress to get done—and soon.”

A Democratic spokesperson for the House Energy and Commerce Committee assured that “Congress will not allow FDA user fees to expire,” and that “they are a top priority” for Chair Frank Pallone, Jr. (D-N.J.).

“He is determined to reach an agreement and see it passed and signed into law in the coming weeks,” the spokesperson said in an email Thursday.

A Strained FDA

Policy analysts and former FDA officials say the impact to agency staff will ultimately limit the number of new medical products that can reach consumers.

“If a deal cannot be reached before carryover funds expire, the risk is that FDA will not have the funds to perform medical product reviews, or will have to choose between activities that keep the public safe and reviewing new medical products,” said Amin, who now leads the FDA regulatory and compliance practice at Morrison & Foerster LLP.

“Either choice hurts consumers,” she added.

The loss in funding would mean the agency “would have to furlough hundreds of employees,” said Kalah Auchincloss, who served as deputy chief of staff during Califf’s first stint as commissioner in 2016 and under Scott Gottlieb.

“This would delay review of new drug and device applications, extend timelines for approval, compromise the agency’s ability to review supplemental applications for approved products, and generally impact much of the agency’s public health mission related to drugs and devices,” added Auchincloss, now executive vice president of regulatory compliance and general counsel for Greenleaf Health.

For existing staff, the current uncertainty “affects operational cohesion and morale,” said Steven Grossman, executive director at the Alliance for a Stronger FDA. He added the agency also risks losing out on individuals being recruited, “as many may take their skills elsewhere.”

Prior Years

Policy analysts are aligned in predicting that some version of a user fee bill will get passed by Sept. 30, despite the current congressional impasse.

Auchincloss noted that user fee reauthorization has only been delayed beyond Sept. 30 once in the past 25 years with the second iteration in 1997. This was enacted in November of that year.

Amin said this also isn’t the first time user fees weren’t passed before Congress left for its annual August recess. The 2017 reauthorization was signed into law by former President Donald Trump on Aug. 18 of that year. But she added that it “didn’t create as much turmoil” then “because the negotiations weren’t as far apart as they are now.”

“The user fees have traditionally been relatively clean reauthorizations of the agreements negotiated between industry and FDA,” Amin said. “But with each cycle, increasingly more policy issues are attached to the reauthorization.”

Auchincloss said lawmakers have floated the idea of a “clean” reauthorization without additional policy provisions granting the FDA additional authorities, but “it’s never gotten as far as Burr has taken it this time by actually introducing a clean bill.”

“The user fee package is viewed as ‘must pass’ legislation, and thus an opportunity to add policy provisions and modifications to the FDA governing statute,” Auchincloss said.

Grossman said despite the delay, there’s bipartisan agreement that no reauthorization by the end of September would be detrimental to the FDA and Americans who rely on the treatments the agency regulates.

“There will be a user fee deal—full stop,” Grossman said. He said while “details may be undecided,” there “will be a deal.”

(Updated with comment from Pallone spokesperson in 14th and 15th paragraphs.)

To contact the reporter on this story: Celine Castronuovo at ccastronuovo@bloombergindustry.com

To contact the editors responsible for this story: Karl Hardy at khardy@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com