3 Ways The Government Shutdown Is Hurting Medtech Development

The U.S. government shutdown has entered its second week, and Democrats and Republicans appear no closer to breaking their stalemate today than they were a week ago. While the two sides continue to trade barbs and deflect blame, half a million federal workers remain furloughed, government facilities remain shuttered, and important services remain suspended. To make matters worse, the United States could default on its debt for the first time in history next week, should the combatants fail to declare a ceasefire and begin negotiating a government-funding plan.

Meanwhile, the gigantic political mess is beginning to cause some very real pain in the medical device industry. With the Department of Health and Human Services (HHS) losing more than half of its 78,000 employees — including some 6,600 at the FDA and 13,700 at the NIH — and restricting many of its activities, here are three ways in which the shutdown is impeding medtech development:

1. No New Regulatory Submissions
In a memo outlining its anticipated medical product activities during the federal government shutdown, the FDA communicated that, until an FY2014 appropriation or continuing resolution for the agency is passed, it cannot accept any user fees for FY2014. Consequently, it can’t accept any new regulatory submissions requiring FY2014 fee payments, either. So if you were planning to submit a new premarket approval (PMA), 510(k), product development protocol (PDP), premarket report (PMR), or other submission requiring fee payment, you’re out of luck. You’ll have to wait until the federal government — and the FDA — are back in business.

The good news is that the FDA will continue to accept and review new regulatory submissions that don’t require user fees. These include humanitarian device exemptions (HDEs), investigational device exemptions (IDEs), de novo submissions, pre-submissions, and others. However, the agency also warned that it may suspend work on certain submission types during the shutdown, due to “resource constraints.”

According to Stewart Eisenhart, senior regulatory analyst at the Emergo Group, all other effects of the government shutdown on device makers pale in comparison to being unable to obtain new market authorizations — or even renew current ones. “Manufacturers who expected to re-register a product that’s already on the market will have to ask themselves: What happens now? Do I have to suspend sales? What about product that’s already on the shelves or already being used in healthcare facilities? Basically, many cans of worms were opened last week,” he told me.

For a list of the types of new regulatory submissions that will/won’t be accepted by the FDA during the shutdown, visit http://www.fda.gov/ForIndustry/ucm370652.htm.

2. Delays In FDA Reviews
Regarding regulatory submissions submitted before the shutdown, the FDA memo said the agency will continue to review them, subsidized by carryover FY2013 user fee balances. However, there was again a caveat: that the agency “may suspend work on certain submission types during the lapse period due to resource constraints.” In other words, the FDA will try to keep prior submissions moving through the review pipeline, but there’s no guarantee that all submissions will progress at the typical rate (which, some would argue, was too slow to begin with).

The same goes for advisory committee meetings related to product approval or postmarket safety issues. The memo indicated that scheduled meetings will be conducted “subject to constraints on resources and travel”, and that certain meetings will be handled “on a case-by-case basis.” In a positive sign, this week’s Circulatory System Devices Panel  meetings — regarding PMA applications related to the Medtronic Cardiac Resynchronization Therapy Pacemaker (CRT-P) and Cardiac Resynchronization Therapy Defibrillator (CRT-D) devices, and to CardioMEMS’ Champion HF (Heart Failure) Monitoring System — are taking place as scheduled, the FDA’s Steven Immergut informed me.

Robert Littlefield, an analyst for market research firm GlobalData, suggests that, even if the FDA continues to hold key committee meetings, preparation and execution for these meetings could be affected, should the shutdown drag on. “These review meetings require significant preparation prior to taking place, from publication of pre-meeting materials online to organization of the presenting parties,” he wrote in an article on the GlobalData website. “It is expected that the government shutdown could hamper approval efforts or delay these meetings,” he added.

3. Funding Woes
If you rely on — or hoped to obtain — government funding for your device development, expect the shutdown to complicate matters for you (at best).

NIH says that work funded by currently active NIH grants may continue during the shutdown.  The HHS Payment Management System (PMS) will remain online, but staff members will not be available to help with or process any requests, so payments on grant accounts will be processed as long as staff action is not required. For grants due to expire during the funding lapse, no-cost extensions must be filed in hard-copy format, since the NIH’s eRA Commons system will be inaccessible. The NIH is dissuading applicants from submitting new grant applications, though the Grants.gov website is up and running, and it will not process any new awards until after federal funding is restored. For more information, review the NIH’s grant notice.

Similar restrictions are in place at the NSF. The entire NSF website was taken offline, replaced by single page of guidance addressing contract-related policy and systems issues that may arise during the shutdown. The highlights:

• Work can continue under NSF awards, but only so long as funds are available and the term of the grant or cooperative agreement has not expired. No payments will be made during the shutdown, and no-cost extensions cannot be submitted or processed.
• No new grants or cooperative agreements will be awarded, and no new funding opportunities will be issued.
• NSF’s FastLane website — for proposal preparation and submission — will be unavailable, and proposals submitted via Grants.gov will not be checked for compliance or processed.
• No review panels, including those previously scheduled, will be held during the shutdown; they will “likely” be rescheduled at a later date.

In addition to these three major setbacks, device makers must also contend with a myriad of minor inconveniences related to the government shutdown. For example, the FDA indicated that additional activities may have to be sacrificed due to lack of funding, including: routine establishment inspections (it’s already suspended its food safety inspections), some compliance and enforcement activities, monitoring of imports, notification programs, adverse event monitoring, and most laboratory research. How will these and other shutdown-related changes ultimately impact device makers’ ability to bring products to market? That remains to be seen.

One thing is for certain: A speedy resolution to these federal spending woes is in everyone’s best interest (though some might argue that a device tax repeal would be worth the wait — but I won’t get into that here). “Time is of the essence,” the Emergo Group’s Eisenhart said. “The longer this goes on, the bigger the hit U.S. market participants are going to have to take.”