FDA Drug Review Threatened by a Government Shutdown

The Food and Drug Administration (FDA) is not likely to continue to review and approve human drugs or medical devices if the federal government shuts down in March

The federal government is currently funded through March 14, 2025, and it remains a possibility that Congress will not complete a continuing resolution or omnibus appropriations bill by that date to fund the government for the remainder of the 2025 fiscal year (FY). If government funding lapses on March 14, will the FDA continue to review and approve drugs? The short answer: continued drug review during a government shutdown seems unlikely this year, unless agency practice is changed.

Historically, under the Prescription Drug User Fee Act (PDUFA) and congressional appropriations of drug user fee funds, FDA drug review and approval has continued early in a fiscal year even with the lack of an appropriation for that fiscal year because there have been carryover user fee funds (or operating reserves) from the previous fiscal year.[i] These excess, or carryover, user fees are available to be spent by FDA in the subsequent fiscal year even without an appropriation for the subsequent fiscal year because, beginning in the 2000s, Congress has appropriated drug user fees “until expended”—that is, they are available to be spent in any subsequent fiscal year (which is not normally the case for appropriated funds). In addition, FDA spends its appropriated money on a first in, first out basis, which means that operating reserves from the previous fiscal year are spent first, before current fiscal year user fees are spent.

As an example, consider the longest government shutdown (34 days) in U.S. history that occurred from Dec. 22, 2018, until Jan. 25, 2019. FDA review and approval of drugs continued during the entire shutdown with only minor disruptions (e.g., some drug review dates were missed by a day or two). But by mid-January, days before the shutdown ended, the agency publicly stated that drug review would soon cease as carryover funds would soon be depleted. FDA had estimated[ii] it would have an operating reserve from FY 2018 sufficient to fund only about 12.5 weeks of drug review work in FY 2019. This estimated operating reserve should have allowed FDA drug review to continue only through about the end of December 2018. In fact, it was able to continue drug reviews through most of January, suggesting either that FDA had underestimated the operating reserve balance, that the draw on drug user fee funds during the first few months of FY 2019 fell below the average weekly draw of FDA’s estimate, or a combination of both.

In setting drug user fee rates for FY 2025,[iii] FDA indicated that it expected to have carryover funds to support fewer than 10 weeks (i.e., 9.82 weeks) of drug review work in FY 2025. If FDA has continued to follow its first in, first out approach to accounting, these carryover user fee funds were depleted in December, during the last full month of the Biden administration. Recognizing the possibility that FDA underestimated operating reserves and/or that monthly drug review expenditures during the first quarter or half of the fiscal year may be lower than average weekly expenditures, it still seems very unlikely that there will be carryover user fees available come March 14, which is over 23 weeks after the start of the fiscal year.[iv]

That said, perhaps FDA has adopted a new approach to spending the operating reserve balance, such as saving it for a government shutdown and otherwise spending it after a full-year appropriation. However unlikely this possibility seems, the Office of Management and Budget (OMB) will need to permit their use during a shutdown. As the shutdown in 2019 shows, OMB in the first Trump administration permitted the use of carryover user fee funds during a shutdown. But there is no guarantee that the current OMB will do the same if a government shutdown is not averted by March 14, as the second Trump administration has already taken different approaches than the first Trump administration on several issues. The current administration may not prioritize continuing medical product reviews during a shutdown, and so OMB may not permit FDA to continue drug review work if carryover user fee funds are in fact available. For the same reason, it does not seem likely that the administration will go against historical practice to consider drug review at FDA to be “excepted work” (those who perform “excepted work” [e.g., emergency work involving the safety of human life] are excepted from furlough during a government shutdown).

So, what will happen if drug review work ceases during a government shutdown? In some sense, this is unchartered territory. However, when the FDA’s White Oak campus was closed because of heavy snow in the late 2000s, before FDA employees were able to work remotely (e.g., securely access application data over the internet), FDA missed user fee action dates that occurred during and shortly after the shutdown. The agency extended those user fee dates by the length of the shutdown. Over the course of several weeks, the agency caught up and began hitting user fee dates without delay. There may be longer delays for those drug applications for which FDA is planning an advisory committee review during the shutdown period, as it may take several weeks to reschedule an advisory committee meeting.

For the affected sponsors, product launches will be delayed, which reduces revenues in the short-term and may also do so in the long-term if a product in the same therapeutic space gains extra time to build market share. Patient access to potentially life-saving or life-enhancing products will be delayed.

We will continue to monitor the funding negotiations in Congress and potential impact to critical functions of the FDA.