Losing the FDA’s senior negotiators would slow the renewal of the user fee programs “considerably,” according to policy and regulatory expert Steven Grossman.
Amid sweeping layoffs, the FDA has now lost most of its staff in charge of negotiating with the pharmaceutical industry for the drug user fee program, according to a Thursday report from Reuters.
“The loss of the user fee teams is just one of many important functions that have become unstaffed or understaffed,” Steven Grossman, policy and regulatory consultant, and author of the FDA Matters blog, told BioSpace in an email. “That’s not good for the American people, consumers, patients, and industry.”
Citing six sources, who requested anonymity, Reuters noted that among the terminated FDA staff include the head and deputy head negotiators for one of the user fee agreements. Employees who were let go were ordered to immediately stop their work and were not given the chance to hand over their duties to others who would remain at the agency.
The layoffs also affected FDA employees who were organizing public meetings as required by law before renewing the user fee agreements. These meetings were initially scheduled to take place in June and July though it is now unclear if the agency will still be able to push through with them. The current user fee arrangements will be in place until late 2027, but the renewal process is set to start in September.
Reuters reported that the loss of experienced negotiators could in turn compromise the FDA’s position at the bargaining table, giving pharmaceutical companies an advantage. Grossman, however, takes issue with this assertion, noting that “no one on either side has the power to accept terms unilaterally. Long before anything is agreed upon, the FDA position will be vetted multiple times by multiple people within the agency.”
He does concede, though, that the loss of seasoned staff at the FDA “will slow the [negotiation] process, probably considerably.”
The FDA runs several different user fee programs that vary depending on the type of product. The most common of these is the Prescription Drug User Fee program, which covers new drugs and biologics. Under these programs, the FDA can collect certain fees from pharma companies who file regulatory applications for review.
The FDA in turn uses this money to fund its operations—such as paying employee salaries—but with the important caveat that the fees don’t guarantee a favorable verdict for the companies. Overall, user fees make up just under half of the FDA’s annual budget: In 2024, the agency collected some $3.3 billion under this program, whereas its overall budget totaled $6.872 billion.
Policy expert Alexander Gaffney first raised the alarm over the potential “catastrophic collapse” of the FDA’s user fee program—and in turn its budget—due to the massive layoffs. Gaffney, citing interviews with FDA staffers, warned that the agency was “dangerously close” to triggering certain threshold mechanisms that would prevent it from collecting user fees.
If the FDA hits this trigger, according to Gaffney, “it would lose billions in funding and be forced to furlough thousands of additional staff.”