Bloomberg Law - Shutdown Threat Clogs FDA Workload as Vaccine Push Continues

Jeannie Baumann and Ian Lopez | September 29, 2021

FDA review of Covid-19 vaccines for school-age children and other pandemic matters would likely weather a government shutdown without interruption, but other high stakes work could fall to the wayside.

The Department of Health and Human Services said it will use the full extent of existing authorities to keep the Covid-19 response going in the event of a shutdown. But the Food and Drug Administration must parse through all of its work and assess whether it can continue under an emergency exception—a time-consuming task for an agency that’s already working around the clock to review vaccines, diagnostics, and tests for Covid-19.

“A shutdown can create chaos in the agency, particularly at leadership levels, where some of the same people who would be working on the vaccines would also have to triage determining what other FDA work falls into the emergency exceptions categories,” Stacy Cline Amin, who was FDA’s chief counsel during the last shutdown that began in late 2018, said.

“FDA makes those determinations as to what work is legal for them to do or not,” she said.

Attorneys say they don’t expect the agency to slow down its Covid-19 vaccine-related work as it would likely consider almost any activity related to the pandemic an essential function. But they also say a shutdown would stop important policymaking, and that a prolonged closure will create a backlog of inspections and threaten the agency’s ability to review medical products.

Pfizer Inc. submitted data Tuesday to support its Covid-19 vaccine for children aged 5-11, which will likely be followed by an emergency use authorization application in the coming weeks. The agency is also leaning toward authorizing half-dose booster shots of the Moderna Inc. Covid-19 vaccine after having authorized boosters for Pfizer’s vaccine on Sept. 22.

Industry user fees that help fund the FDA aren’t associated with EUA’s, however, meaning that the agency will have to rely on supplemental funding.

Without legislation to keep the government open when the new fiscal year starts Oct. 1, the FDA would face its second shutdown in less than three years. The looming threat of closing down comes amid the worst health crisis in over a century with more than 693,000 deaths and 43 million confirmed cases in the U.S., according to Bloomberg data.

“The thought of even having to prioritize within a pandemic—even more than has already had to be done—is yet another curve ball being forced across the agency,” Jeff Allen, CEO of Friends of Cancer Research, said.

“This is not like a schoolyard tussle with one person having to fight with a hand behind their back,” he said. “This is sort of asking the frontlines to hold the line and defend public health in shackles, underwater, without a key.”

Emergency Exceptions

The House passed a spending bill earlier this month that most Republicans opposed because it included a provision extending the government’s debt limit. Republican leaders have said their members will support a government funding measure without the debt limit provision.

President Joe Biden would need to sign the measure into law by 11:59 p.m. Thursday night to avoid a lapse in appropriations and a government shutdown.

In the event of a shutdown, agencies with public safety functions, like the FDA, must evaluate each activity they conduct to determine if it has a source of funding or falls into an exception for emergency circumstances that would allow it to continue that work, said Amin, who now co-leads the FDA practice at Morrison & Foerster LLP.

Amin said the emergency circumstances exception under the federal Antideficiency Act would not apply to all FDA activities simply because a public health emergency has been declared. She noted there was also a PHE in effect for the opioid crisis during the 2018-2019 shutdown.

“Rather, FDA must evaluate for each non-funded activity, whether suspension of the activity would imminently threaten human life or the protection of property,” Amin said. To that end, the need to respond to the pandemic means FDA work related to Covid-19 will continue even if federal agencies close.

The threat of furlough is not as big a threat in relation to Covid-19 response efforts as one might perceive, James G. Hodge Jr., director of Arizona State University’s Center for Public Health Law and Policy, said.

The Antideficiency Act bars federal agencies from expending funds in excess of an appropriation. It allows for exceptions to furlough for people who are directly engaged in the health or safety of the American population.

“The public health emergency makes that exception all the more powerful and easy to justify,” Hodge said. “Furlough’s still a risk, and it’s definitely a problem. But it’s not the big problem that you might imagine in relation to Covid-19.”

Activities that would likely stop during a shutdown include policymaking functions and the vast majority of FDA surveillance inspections will not continue, Howard Sklamberg, an FDA regulatory and policy attorney with Arnold & Porter, said. “This has a particular effect on the food program, which is, by and large, not funded by user fees. Most food safety inspections would stop. Inspections in non-user fee medical product programs, such as pharmacy compounding, would also stop.”

Amin said most of the policy work that supports compliance and safety efforts and efficient product reviews would have to be suspended unless it’s related to Covid-19 or funded by user fees.

User Fees

Generally, the FDA can continue with activities that have been funded by user fees, including the regulation and review of drugs, biologics, and medical devices, Chad A. Landmon, chair of the FDA and intellectual property practice groups at Axinn Veltrop & Harkrider LLP, said.

The FDA’s budget relies on a mix of annual appropriations—which account for a little more than half of the agency’s total budget—and industry-paid user fees. User fees account for about 65% of funding in the FDA’s drug center and 41% of funding in the agency’s biologics center for fiscal 2021.

“FDA has managed shutdowns effectively in the past in that the agency continued its user fee work and its work on essential functions,” Sklamberg said. However, the agency can’t accept new user fees during a shutdown.

A prolonged shutdown will create a backlog of inspections, halt important policy work and runs the risk that the agency will run out of collected user fee funds.

“In the 2018/2019 shutdown, FDA almost had to stop drug reviews and was projected to run out of funding just days after the shutdown ended,” Amin said.

User fees will cover some activities, but the totality of maintaining those programs has to extend just beyond the core user fees, and may involve support staff whose salaries aren’t covered by user fees, Allen said.

And even though the FDA would be able to keep on a higher percentage of staff this time—69% in 2022 compared to 58% in 2018—that’s still 30% of the agency’s staff that will have to be furloughed, Landmon said. “Obviously, this will create disruption within FDA and delay some of the work that FDA does.”

To contact the reporters on this story: Jeannie Baumann in Washington at jbaumann@bloombergindustry.com; Ian Lopez in Washington at ilopez@bloomberglaw.com

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

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