Resumption of the US Government Shutdown Could Have Drastic Effects

The recent US government shutdown has been widely reported to have been the longest on record, and Standard & Poor’s Global Ratings estimates that it resulted in $6 billion in economic losses. On Jan. 25, 2019, the US President and Congress reached an agreement to fund US government offices for an additional three weeks. However, that will only take the government through February 15. Industry observers hope that the shutdown’s end will be permanent. 

While legislators consider moves that could make government shutdowns illegal in the future, industry groups are reaffirming FDA’s importance to the health and safety of US citizens, and the health of the global economy. “As the gold-standard for regulatory review, it’s critical the FDA continue to fulfill its public health mission. As an innovative industry, our companies depend on certainty and predictability to bring tomorrow’s treatments and cures to patients. We support FDA using its existing authority to deploy user fee funds to continue to review applications,” said Andrew Powaleny, spokesperson for thePharmaceutical Research and Manufacturers of America (PhRMA). 

Jim Nolan, CEO of the innovator company InClinica, believes that FDA should be added to the armed forces and other organizations on a list of agencies that would be exempted from the funding impact of government shutdowns. Nolan shared his views with Pharmaceutical Technology on the morning of Jan. 25, 2019, the afternoon of which news of the shutdown’s temporary end was announced.

PharmTech: What impact has the shutdown had so far, and what would be the most critical problems that a continued shutdown would have on the industry?

Nolan: The shutdown had and would have an impact that transcends our national borders. When FDA can no longer accept new drug applications and review them, that means delays, and not only [for] US-based innovators.  a lot of international companies in this space will be affected. This is a major short-term concern.

But another question is what impact the shutdown would have on FDA’s adverse events (AE) reporting system. If you have a drug that has been accepted and you’re performing a clinical test and you get an AE, you have to follow a very detailed and elaborate protocol, in which you report that AE to FDA and explain whether or not you want to continue with your trial and why.  FDA reviews the facts and makes a decision.

When a company’s drug gets an AE, the clinical trial for that drug stops until the firm receives a decision/explanation of what led to the adverse event. When you’re in the middle of a clinical trial, there’s a lot of momentum that builds up as you recruit patients and manage the trial.  A shutdown puts the entire process on hold. 

I consider Scott Gottlieb a hero for reminding people that the shutdown could have resulting impacts on AE reporting and that this could affect patient safety. Imagine a drug company that had a drug approved six months ago and suddenly is dealing with AE reports for that drug from all over the world. People have to be in place at FDA to call that emergency. 

And then, too, there are the technical difficulties presented by the science behind a drug. If you have been working with one FDA reviewer and the process shuts down for a few months, you will once again have to climb the learning curve and the process will slow down.

PharmTech:  What could the economic impact of a resumed shutdown on the pharma industry? 

Nolan: Most discoveries today are coming out of biotech companies, and they have very limited finances. They budget to the penny; it’s no exaggeration. When you have a two-to-three-month delay, that is an enormous cost because the company must still carry expenses, dictated by its burn rate, and the cost of people and operations. 

They must calculate how long the company can last based on its burn rate. Some small innovator biotech companies might have a burn rate of $20,000 a month, so a two-month delay would mean $40,000 that wasn’t in their budgets. That may be nothing for a company the size of Pfizer, but it’s enormous for a small innovator. In addition, they would lose the payments from investors that are tied to regulatory decisions (e.g., FDA green lighting a clinical trial).

PharmTech: Reduced inspections would also be a problem. What would the impacts be there?

Nolan: Chemistry manufacturing and controls (CMC) is becoming the most important part of development-answering how the drug is made and proving that its ingredients are safe. It’s also very expensive. If you delay the CMC inspection process, you delay bringing an approved product to market.  Even if you want to make changes to improve cost efficiencies, those efforts are slowed down, so a shutdown would have ramifications across the board. There would be major issues related to proving safety and efficacy. For example, a company might conservatively decide to halt a clinical trial after AEs, when those AEs aren’t tied to the drug.

PharmTech: What about the impact on a broader stage?

Nolan:  People at FDA use electricity, computer, and other services, and a shutdown has ripple effect on all these services companies, etc. If you require data and your computer goes down, you can’t recover it. In short, reverberations are enormous. You could also see an influx of counterfeit drugs because nobody would be available to follow up on inspection.

PharmTech: What impact do you see shutdowns having on staffers at FDA?

Nolan: FDA has recruited top-level scientists and physicians. If they’re not going to get a paycheck, they might at some point be inclined to change positions. And policy experts and regulatory affairs experts are critical to innovator companies. When they are furloughed you have lost that knowledge base.

PharmTech:  Should FDA be exempted from temporary spending cuts?

Nolan: I think that we should exempt FDA from the funding impacts of US government shortages. After all, the US armed forces are exempt. FDA has a huge impact on patient safety, and they should be exempt as well. 

PharmTech:  How do shutdowns affect compassionate use of an experimental drug for a dying patient?

Nolan: That whole process is then shut down, too. And also consider the synergies between FDA and the Centers for Disease Control. A shutdown takes all those connections down with it.