As the U.S. continues to face the government shutdown in 2019, the longest in history, the lack of funding for government agencies has impacts to a variety of business operations. The partial shutdown of the FDA has major implications for the pharmaceutical, medical device, and generics industries. Many of the routine regulatory activities that life sciences companies depend on to keep operations running, such as inspections or new drug applications, are currently on hold.
What’s on Hold with Government Shutdown 2019
With 41 percent of the agency’s 17,800 employees on furlough, the FDA lacks the manpower to complete many of its usual functions. It cannot accept new applications for medicines, devices, generics, or clinical trials without a fiscal year 2019 budget, even those funded by industry user fees. Almost all INDs (Investigation New Drug) programs – except for emergency drugs – have stopped, along with all BLAs (Biologics License Applications).
Potential treatments for depression, migraines, multiple sclerosis, cystic fibrosis, and other conditions are on hold, and companies might be forced to push back release dates until 2020. Work on policymaking and new guidances has also slowed. Moreover, the CDER (Center for Drug Evaluation) and CBER (Center for Biologics Evaluation) branches of the FDA stopped regulatory activities related to blood components for transfusions, allergenic extracts, and cellular tissue-based products.
As progress on new applications halts, experts predict that investors will want to wait until the government reopens before sinking large amounts of new capital into the industry, creating even more challenges for early stage biotechs seeking funding. Although the biotech industry started 2019 strong with a double-digit rise in stock, the rating is excepted to drop soon as the FDA reaches the end of its holdover funding. Aimmune Therapeutics, for example, has already noted a drop in stock price, possibly due to a delay on their drug application for a peanut allergy treatment.
About 69 percent of the agency’s pharmaceutical regulatory budget comes from user-fee funds, but only 35 percent of the budget for medical devices comes from this type of private funding. Therefore, the medical devices industry might feel a greater impact.
What’s Still Running
Although the shutdown affects many FDA programs, some of its functions remain intact. The agency is still pursuing criminal and high-risk civil investigations, maintaining emergency responses to the flu and food recalls, and inspecting foreign imports. “Mission-critical” surveillance of some medical devices will also continue. The National Institute of Health, as part of the Department of Health and Human Services, is able to move forward with its medical research. Holdover funding from last fiscal year allows the FDA to make progress on user fee-funded submissions and pre-marketing reviews from 2018. However, this funding is excepted to run out by February should the shutdown continue.
The impact of the government shutdown in 2019 on the FDA means that many businesses in the life sciences industry are facing unexcepted setbacks. As businesses navigate murky regulatory waters, it’s critical to continue forward with the end in mind. Companies should use this time to continue strengthening the prepatory work for audits, inspections, and new applications while also preparing for post-audit activities. Recovering the lost time from the government shutdown will require quick action once budgets have been approved.
Subscribe to Clarkston's Insights
Coauthor and contributions by Sabrina Zirkle