“It’ll be death by a thousand cuts, and all you’ll see is the body moving,” Steven Grossman, deputy director of the Maryland-based group, told us.
The spending cuts – known as sequester – will reduce the FDA’s budget by about $209m between now and next September unless an agreement before then is reached in Congress. And although the agency has vowed not to lay off any of its employees because of the across-the-board cuts, the agency’s resources will be tied down so that only the most pertinent objectives will be dealt with.
The leading question on sequester, Grossman said, is whether OMB (Office of Management and Budget) or Congress will relent on the user fees, which the FDA collects to conduct its reviews of drugs, inspect company facilities and progress regulatory science.
Grossman said he’s only heard from one reliable source that said they might relent on the fees, but “the answer is no, as far as I can tell, as much as I would love the agency to get the sequestered user fees, it’s not going to happen. If you give the FDA back the sequestered user fees, what other fees are you going to give back at other agencies?”
And although the FDA has vowed not to lay off any of its employees, a significant shift in staff to the neediest of departments within the FDA will take place, while other departments that need more staff to complete their work will not see any help, Grossman said.
“A substantial number of vacancies – enough to save $209m - have not and will not be filled,” Grossman said.
However, Grossman predicted the FDA will approve as many new drugs as they would have without the sequester because “they’ll prioritize the ones closest to the finish line, and the ones closest to helping people.” But the “damage from sequestration will be enormous” because the FDA will have to shift its priorities away from pre-IND and Phase 2 submission meetings and provide less INDs (investigational new drug) and NDAs (new drug application) applicants with advice and feedback.
Last time there was a shortfall at the agency, Grossman said he had a conversation with a company developing an orphan drug for a rare disease with an unmet medical need that saw its pre-IND meeting pushed back from the usual 4 to 6 week waiting period to four months. “The company will never recover those lost months,” Grossman said.
The ramifications of lost user fees may also impact “the cycle of money that can flow back into the R&D” of drug companies since newly approved drugs can generate millions a day in revenue, John Lewis, a spokesman for ACRO (Association of Clinical Research Organizations), told in-Pharmatechnologist.com. Inspections of clinical trial sites could also be delayed, and as the uncertainty mounts, entire drug development programs could be put on hold, Lewis said.
The question of whether the widespread cuts from sequestration will be overhauled for a more intelligent entitlement cost-cutting mechanism is difficult to assess, he noted, especially as partisan wrangling continues.
Continuing Resolution vs. Sequester
Despite a lot of confusion related to the overlap on the impact of the sequester and the Continuing Resolution (CR) (H.R. 933) extension that Congress is looking at now to avoid a government shutdown, Grossman said the CR “issues are entirely different.”
The CR, which was passed by the House last week and could be taken up by the Senate this week, deals with the inclusion of recently passed legislation – FDASIA (Food and Drug Safety and Innovation Act) -- governing the user fees. The user fees are increased in five-year cycles so if the CR is passed and the government budget is funded at the same levels of 2012, some of FDASIA’s components might not be included.
The current version of the CR passed by the House does not include FDASIA. But Grossman believes that was just an oversight by the House and will be dealt with in Senate discussions.
“What makes it hard is the list from OMB on the anomalies [to be added to the CR] is not identical to what’s in the House bill or what people are talking about in the Senate,” Grossman said. “I believe it’s a technical dispute so FDA [will eventually be able to] take advantage of what FDASIA created.”
Among the components not included in the House CR bill are new user fees for biosimilars, which the FDA would need in order to begin developing the pathway for their approval and providing more guidance to industry.
“I don’t know if [the House’s failure to include biosimilars] was inadvertent or if there was a policy decision where the House no longer supports biosimilars. If it was inadvertent, then the Senate will fix it,” Grossman said.
But he added that he does not think biosimilars will be one of the initiatives that FDA will drop. “Biosimilars are too important for that,” he noted.