As the prospect of sector-specific tariffs under the second Trump administration continues to rattle drugmakers, a more fundamental threat to the U.S. biopharma industry is reportedly playing out in the offices of the nation’s drug regulator.
The recent mass layoffs of 3,500 staffers at the FDA have claimed “most” senior FDA negotiators who were responsible for working with the pharmaceutical industry to renew the agency’s user fee collection programs, Reuters wrote in a Thursday evening report, citing comments from six people close to the matter. Politico’s AgencyIQ had previously flagged the situation on April 1.
All told, 15 FDA staffers preparing for those talks were laid off under the sweeping downsizing initiative rolled out by HHS Secretary Robert F. Kennedy Jr. last month, the people told Reuters. Among those cuts were the head negotiator and deputy head negotiator for one of the FDA’s user fee agreements, Reuters noted.
Under the Prescription Drug User Fee Act (PDUFA) of 1992, the FDA can gather application fees from companies seeking reviews of their products. The fees—which Reuters noted currently comprise about 70% of the FDA’s drug review budget—provide the FDA with resources for its reviews to ensure a timely approval process for applicants.
Across the agency as a whole, user fees make up a little less than half of the FDA’s budget, along with funding from Congress.
One major issue is whether the FDA can effectively parley for a reauthorization of its user fee programs for branded and generic medicines later this year with such a reduced workforce. The programs, which must be reauthorized every five years, are set to expire in their current form in September 2027.
The move has also scuppered preparations already made by the FDA ahead of a formal negotiation period slated for this September, the news outlet added.
Since the middle of last year, FDA staff had been gearing up for meetings in April with the industry lobbying groups Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO) to set schedules and hash out logistics ahead of formal talks this fall. But that meeting has since been cancelled, several of Reuters’ sources said.
Without seasoned negotiators on the FDA’s side of the table, the pharma industry could gain the upper hand over its regulatory counterpart during reauthorization talks in the fall, Paul Kim, a health policy lawyer who worked at the FDA to help draft the first user fee agreement in 1992, warned.
"You can always find a warm body to get into a room with biotech and pharma, but they will get their lunch eaten," Kim told Reuters.
One main feature of the negotiations is setting terms for how the FDA will engage with drugmakers during the approval process, with those results informing the recommendations that ultimately guide Congress’ reauthorizations of the program, Reuters explained.
Complicating the matter further, the FDA staff cuts also appear to have impacted employees in charge of organizing legally mandated public meetings held before user fee negotiations begin, Reuters’ sources said.
A meeting to gather input on the generic drug program was scheduled for June, while the branded drug meeting was slated for July, Reuters said.
Even within the agency, the situation is far from transparent.
"There are no people at the FDA now doing overall tracking and reporting on whether the agency is meeting its required comments under PDUFA and GDUFA," Janet Woodcock, former principal deputy FDA commissioner, told Reuters, referring to the agency’s branded and generic drug user fee programs.
"These programs have been hobbled by losing all of their support staff,” she said. “They are what enable the system to bring safe and effective medicines to the American public."
As with many of the policy moves under Trump 2.0, the full consequences of the FDA staff cuts are hard to predict with any certainty right now.
Still, the threat to the agency’s user fee programs has become a growing concern among industry experts, with Politico’s AgencyIQ warning in its recent report that the framework could “effectively collapse” if the FDA falls below historic funding levels.
Given that Congressional funding for the FDA will be scaled back in the aftermath of RFK Jr.’s mass layoffs, the agency could potentially be forced to return user fees it’s already collected under a trigger framework meant to preserve the balance between federal and industry funding, AgencyIQ said earlier this month.
Others, like the Alliance for a Stronger FDA co-founder Steven Grossman, have adopted a similar point of view. Ultimately, it’s dangerous for biopharma companies and industry watchers to assume user fees will be renewed just because “the alternatives are unthinkable,” he said in a recent column on FDA Matters.
Grossman framed the issue as an existential one for the agency, noting that “we now have leaders who seem ready, perhaps eager, to let the user fee programs lapse.”
In turn, Grossman is calling for the industry to think “outside the box” to help “prevent a potential disaster.”
Funding aside, the FDA is in serious jeopardy of fumbling its drug review timelines in the next year or two following recent staff cuts, a former director of the agency’s Center for Biologics Evaluation and Research (CBER)—who resigned in March—told BMO Capital Markets in an interview earlier this week.
The BMO team never outright identified the expert it spoke to, though all signs point to it being Peter Marks, M.D., Ph.D., who announced his resignation as the head of CBER late last month after reportedly butting heads with RFK Jr. over vaccine policies.
BMO’s expert stressed that FDA staffers remain dedicated to their mission and have committed to continuing meeting current timelines of 10 months and six months for standard and priority drug reviews, respectively.
Nevertheless, the FDA is undoubtedly experiencing a rapid transformation, and the changes that have been disclosed publicly may just be the “tip of the iceberg,” the former director said.
While the situation may seem dire, the industry and lawmakers can still act before things take a turn for the worse, David Risinger, senior managing director for biopharma at Leerink Partners, told Fierce Pharma in a recent interview.
For one, Congress could roll out a statutory delay if appropriated funding drops below the trigger point baked into the user fee program, giving the FDA additional time to comply, he explained.
In the meantime, the industry and FDA must work together quickly to create a path for reauthorization of the program, Risinger said, adding that drugmakers should also bring the situation to the attention of their boards and push for lawmaker engagement on their concerns about the current state of the regulatory agency.