The U.S. Food and Drug Administration (FDA) is largely keeping its critical operations running despite the ongoing government shutdown and previous staff reductions. However, the budget stalemate has an immediate and real impact on the biopharma industry, as new product applications are currently on hold.
Agency Staffing and Essential Services
The FDA has committed to retaining a substantial portion of its workforce during the shutdown, planning to keep 86% of its staff, which amounts to nearly 14,000 workers. This high retention rate is possible because a large number of employees are either funded through existing sources or classified as ‘excepted,’ meaning their duties are deemed too essential to stop.
Former HHS deputy assistant secretary Steven Grossman observed that the FDA will be ‘less affected than almost any other federal agency.’ Yet, he cautioned that this only spares the agency ‘in comparison to others,’ and there will still be consequences. FDA Commissioner Martin Makary, M.D., confirmed in a letter to staff that the budget impasse would ‘shut down certain operations’ but affirmed the agency’s commitment to ‘fully execute our public health mission.’
The Freeze on New Drug Submissions
The most immediate disruption for the biopharma sector is the halt on new applications for drugs, biologics, biosimilars, and medical devices that require a user fee. Companies that have not yet filed for a review of their products must now wait until Congress approves new funding.
This freeze occurs because while the FDA can use leftover user fees already collected from applicants to continue existing reviews, it legally cannot accept new fees assessed for the 2026 fiscal year until a new appropriation or Continuing Resolution is in place. Additionally, the regulator will need to cease most work related to unapproved drugs, limiting its ability to protect patients from ‘unsafe, ineffective, and poor-quality compounded drugs.’
Ongoing Work and Potential Delays
Using carryover user fees, the FDA will continue several vital activities: reviewing applications already submitted, managing recalls, working to mitigate drug shortages, issuing certain guidance documents, and carrying out certain surveillance inspections of regulated facilities.
Despite these efforts, some disruptions are anticipated. Former U.S. Senator Richard Burr noted that even before the shutdown, he had anecdotally seen a ‘slowdown’ in the FDA review process and predicted that the ‘noise from a shutdown may further delay reviews and approvals.’ He also suggested the shutdown could potentially last for a month or more, with the most severe impact on healthcare felt by academic institutions and companies reliant on NIH grants. This comes on the heels of the federal government cutting 3,500 full-time jobs at the FDA earlier in the year as part of a wider HHS downsizing.
Source: Fierce Pharma | October 1, 2025
