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Pink Sheet – A Burning FDA Hiring Freeze Question: What About User Fee-Supported Staff?

Pink Sheet – A Burning FDA Hiring Freeze Question: What About User Fee-Supported Staff?

Executive Summary

Industry worries about user fee programs as US FDA could wait weeks before finding out how President Trump’s hiring freeze affects it.

President Donald Trump’s mandated hiring freeze for the US government, while simple on its face, could prove much more complicated in its application to FDA, meaning more confusion and uncertainty for agency officials.


Trump issued an executive order telling all federal executive agency heads to stop hiring new workers or filing existing positions vacant as of noon Jan. 22, excepted in limited circumstances. No new positions may be created until further notice, while the administration assesses whether it is hiring smartly and efficiently.


The order states that the freeze does not apply to military personnel, and department and agency heads have discretionary authority to continue hiring if it is for national security and public safety reasons. It also gives the Office of Personnel Management (OPM) authority to allow new hires where “otherwise necessary.”


However, it is unclear how it will affect FDA. OPM and the Office of Management and Budget (OMB) likely will have to issue an interpretation for some specific cases, such as positions supported by industry user fees.


It could be days or weeks before the decision is rendered and stakeholders already are nervous.


The Biotechnology Innovation Organization said in a statement that it hopes “there will be recognition that the source of funds to pay for the FDA personnel who review and approve new drug applications, and those who support such review activities, is user fees paid for by drug and biologics developers.”


“We will work with the administration and Congress to ensure that hiring commitments under PDUFA, critical to FDA’s ability to carry out its public health mission on behalf of patients, is not hindered,” BIO said.


The prescription drug, generic drug and biosimilar user fee renewal commitments were completed in 2016. They recently were sent to Congress for passage. But there have been questions about whether the Trump administration could decide to reopen the agreements. (Also see “PDUFA VI: Industry Ready For ‘Hard Sell’ To Keep Agreement Intact” – Pink Sheet, 19 Dec, 2016.)


Nancy Myers, president of Catalyst Healthcare Consulting, said in an interview that there is no precedent for user fee positions as they relate to a hiring freeze. She said there will be a lot of questions about the effect on the current full-time equivalents.


Myers also has said that FDA has a strong argument for an exemption from the hiring freeze because of its public health role as well as user fee investments. (Also see “Will US FDA Wind Up With More Political Positions Under Trump?” – Pink Sheet, 4 Dec, 2016.)


John DiLoreto, executive director of the Society of Chemical Manufacturers and Affiliates’ Bulk Pharmaceuticals Task Force, who helped negotiate the generic drug user fee reauthorization, said in an email that industry could end up in a situation similar to the last government shutdown, where it must pay to help support FDA operations, but that money cannot be used.


“The only difference here is that instead of being able to spend user fee funds for reviews and inspection, FDA may not be able to spend the money on new hires, which are badly needed and could force FDA to miss its goals,” he said.


Since industry payments funded them and not Treasury dollars, user fee-supported employees continued to work during the government shutdown. (Also see “FDA’s Shutdown Plan: Some User Fee Services Would Continue; Routine Inspections Would Not” – Pink Sheet, 27 Sep, 2013.)


FDA added more than 1,200 new employees during GDUFA I, and continued adding people last year in part to help reduce the number of ANDAs under review. (Also see “FDA Hiring Campaign Continues; Goal Is Addressing Pending ANDAs” – Pink Sheet, 27 Sep, 2016.)


How Does Existing Law Affect Freeze?

Jeff Allen, President and CEO of the Friends of Cancer Research, said the freeze also “could potentially affect the hiring of new scientists” under the upcoming user fee bill and 21st Century Cures legislation passed last year during a Jan. 24 speech at the California Separation Science Society’s annual symposium on regulatory and analytical sciences for biotechnology health products in Washington D.C.

Cures included provisions intended to help FDA hire the necessary expertise it needs. Not only was the hiring process streamlined in some cases, but FDA also was authorized to pay higher salaries, if necessary. (Also see “Woodcock, Califf Give Thumbs Up To Certain 21st Century Cures Provisions” – Pink Sheet, 14 Dec, 2016.)


There is one provision in the order that could allow FDA to continue hiring in some instances. The order states that “it does not limit the hiring of personnel where such a limit would conflict with applicable law.” Since the user fee programs and Cures are enacted law, FDA may be able to argue that hiring specific to them could continue.


FDA also would not be allowed to use contractors to pick up the slack. The order states that attempts to circumvent its intent by contracting outside the government will not be allowed.


How Long Will Freeze Last?

The length of the freeze also remains subject to interpretation, at least somewhat.


The order does not appear to be open-ended. It states that the director of OMB in consultation with the director of OPM will recommend a long-term plan to reduce the federal government’s workforce through attrition within 90 days. Once the plan is put into effect the order will expire.


Steven Grossman, deputy executive director of the Alliance for a Stronger FDA, said he is unsure how the order will play out because it hasn’t been interpreted by OPM and OBM yet.


“We don’t know if this thing is going to last 30 days, 60 days, is it permanent?” Grossman said. “There are really just a dozen different ways this could be sliced and until we have some clarification … it’s hard to know whether there’s a problem or not.”


Grossman also notes that even if it is interpreted in the strictest sense, there still may be opportunities to evolve that interpretation in the future.


FDA referred questions about hiring, the current number of openings at FDA and the number of positions that could be affected by the order to the White House. A White House statement on the order said it is intended “to counter the dramatic expansion of the federal workforce in recent years and the costs attendant to that expansion.”


FDA’s troubles hiring staff are well-documented. The agency has hundreds of openings that it cannot fill, in part because salaries are not competitive. (Also see “Show Me The Money: Salaries, Red Tape Challenge FDA Recruiting” – Pink Sheet, 19 Jan, 2015.)


Among the provisions of PDUFA VI is one for the Center for Drug Evaluation and Research are recruiting improvements. (Also see “PDUFA First: Fees To Support Device Center Staff” – Pink Sheet, 24 Aug, 2016.)


Service Cuts On The Horizon?

The Pharmaceutical Research and Manufacturers of America said in an email that “a stable and sustainable workforce is crucial to [FDA’s] ability to keep pace with scientific advances in biopharmaceutical drug development while ensuring safe and effective medicines reach patients in a timely manner.”


The National Treasury Employees Union, which represents FDA staff, said in a statement that the freeze is harmful and counterproductive. Union President Tony Reardon said backlogs will increase and service quality will decrease.


“Arbitrary cuts will leave agencies scrambling to serve the public,” he said in the statement. “A hiring freeze takes away the agencies’ ability to make strategic decisions about their workforce.”


“Attrition is already taking a heavy toll at many federal agencies as employees depart and there is no replacement to take on the work,” Reardon added. “Freezing federal hiring could lead to disastrous short-term and long-term impacts and the American people will suffer. Many of our agencies are already experiencing severe staffing shortages as a result of budget cuts and sequestration.”…