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Uncertainty Grows for Biotech as Government, FDA Shutdown Drags On

Xconomy National — 

The partial government shutdown could soon become the longest shutdown in history, and biotech firms that have submitted regulatory filings are facing greater uncertainty about their future plans. More than 40 percent of FDA workers and thousands at the SEC are furloughed, and FDA Commissioner Scott Gottlieb is resorting to Twitter to post updates about how his agency is using its fast-dwindling funds. Here’s a roundup of how the partial government shutdown is affecting the FDA. (Click here to read about the effects of the shutdown on government contractors from the tech industry.)

On Tuesday, Gottlieb wrote that the agency is shifting user fees away from pre-market drug reviews to post-market safety surveillance. These fees, paid by companies, fund the regulatory review of drugs and medical devices. But moving what’s left of those funds could mean “in the short term, there will be fewer resources and therefore delays in premarket product reviews,” says Steven Grossman, deputy executive director of the Alliance For a Stronger FDA, a pro-FDA advocacy group funded by drug companies, and patient and industry groups.

Those user fees are quickly running out. Since the shutdown started, the FDA has been unable to accept new user fees from life science companies or most new medical product applications. This means the agency is now relying on leftover fees from last year to review the applications it already has. Gottlieb tweeted on Jan. 5 that the program that reviews new drugs will likely run out of funding in about a month.

The user-fee funding for medical device reviews should last another two to three months, and for the review of generic drugs, only about a month of funding is left, Gottlieb said during a talk broadcast at the J.P. Morgan Healthcare Conference this week.

On Jan. 7, the Alliance for a Stronger FDA assessed the possible impact for companies in its “shutdown toolkit”. Here are some highlights:

“Those companies that have filed and paid the product user fee at the time of a regulatory filing and prior to the shutdown, can expect FDA to continue the agency’s review.”

We believe that while reviews will continue, there is a risk that agency timeframes may slip because review teams are smaller and some ancillary services may be missing.”

Our understanding from past shutdown threats is that user fee monies will be prioritized to later stage projects—closer to benefitting patients—and then on to earlier stage products”.

We do not know where the precise lines are being drawn in every instance and cannot provide assurance that any given user-fee funded activity will be fully continued (or partly continued or not continued) during a shutdown.”

Gottlieb said on Twitter he’ll tweet more updates in the coming days as his agency figures out how best to prioritize its shrinking funds.

Companies that got their new drug filings and user fees in to the FDA before the shutdown are hopeful their applications will get reviewed according to schedule. “For everyone, it’s a tenuous situation,” says Todd Bazemore, chief operating officer of Kala Pharmaceuticals (NASDAQ: KALA), whose application for a dry-eye drug was submitted in October and accepted by the FDA on Dec. 26. He adds he’s optimistic Kala’s review will happen on time, but “we will continue to watch closely. We are eager to see this resolved and everyone return to work.”

Others, like Aimmune Therapeutics (NASDAQ: AIMT), are feeling frustrated. Aimmune CEO Jayson Dallas told Stat this week that he doesn’t know whether the FDA will hit its Feb. 19 deadline to notify the company whether it has accepted the application. The company submitted its new drug application on Dec. 21, the day before the shutdown.

Companies that have recently filed for IPOs, many of them biotechs, are also having to put plans on hold. The Wall Street Journal wrote on Jan. 9 that companies will probably not be able to list shares until after January. Thousands of SEC workers are furloughed and the SEC isn’t reviewing or approving regulatory filings, including IPO registration statements. Gossamer Bio, Poseida, Alector  and others that filed for IPOs over the last few weeks will have to wait and see.