Following layoffs, the future of FDA’s user fee programs is in extreme jeopardy

The FDA on Tuesday began layoffs affecting approximately 3,500 of its staff. But the impact that just some of those staff could have on the future of the FDA’s operations could be considerable. FDA staff tell AgencyIQ that many of FDA’s user fee negotiation staff were among those fired, and that the agency is in danger of violating statutory triggers that could cause effective collapse of the agency’s user fee programs in the coming months.

Background on user fee programs

• User fee programs account for a little less than half of the FDA’s overall funding. The FDA pulls its funding from two primary sources each year: Congressional appropriations and industry. So-called user fees from industry amounted to $3.3 billion in 2025, accounting for a little less than half of FDA’s overall $6.9 billion budget.
• These fees come from several programs. The FDA has a Prescription Drug User Fee program focused on drugs and biologics, a Generic Drug User Fee program for generic drugs, a Medical Device User Fee program for medical devices and diagnostics, a Biosimilar User Fee program, an Over-the-Counter Monograph User Fee program, and several other programs covering veterinary drugs, tobacco products, food and other regulated products.
• Generally, these programs collect two types of fees: An annual program fee, and application-specific fees. For the FDA’s largest and first user fee program, PDUFA, about 80% of collected user fee revenue comes from annual program fees charged against currently marketed products, while 20% comes from application fees for new products. The smaller annual fees help cover FDA’s ongoing work, while the application fees help subsidize salaries of review staff. Fees are calculated based on a formula negotiated between the FDA and industry, and then approved by Congress.
• User fee programs set up a sort of quid pro quo agreement. Companies want their products to be reviewed quickly in order to shorten time to recoup investments or take advantage of periods of patent or marketing exclusivity. But the FDA needs to ensure that products are safe and effective, a process requiring competent and thorough review of applications. Limited Congressional appropriations mean that the FDA can only hire so many staff, and the agency has limited resources for training or other measures to boost efficiency. But if industry wants faster reviews, and FDA can only provide speedier review with more staff, then industry is willing to fund those positions under FDA’s user fee programs.
• While user fees go toward hiring staff, there are some important caveats. First, the FDA is in charge of hiring its own personnel, regardless of funding source; also, hires are not made to review specific applications, but rather to work on general topics. An individual staff member may be partially funded by user fees, and partially by appropriations. Importantly, user fee funding does not guarantee a favorable review of a drug. Rather, FDA is generally required to meet standard timelines and performance criteria for reviews, meetings and other regulatory activities. For example, a standard review of a new drug product takes 10 months from the time a product is accepted for review by the FDA, while a “priority” review takes just six months. FDA and industry agree on dozens of performance-based criteria, covering things like response times to information requests, delivery of specific information, timelines for meetings, application review timelines, and more.
• User fee programs are authorized for five-year periods. Since the 1992 passage of the Prescription Drug User Fee Act, Congress has reauthorized user fee programs on a five-year cycle (in 1997, 2002, 2007, 2012, 2017 and 2022). Except for OMUFA and animal veterinary products, all medical user fee programs are now reauthorized according to the same five-year cycle at the same time.

A quick overview of the reauthorization process and how it works

• The complicated process of reauthorizing a user fee program (each program is negotiated separately) involves the FDA and industry negotiating a mutually acceptable amount of total funding from industry in exchange for FDA making specified programmatic improvements, such as new meeting types or hiring more staff. Once it’s hammered out, the agreement is open for public comment before being sent to Congress for its review and approval – typically as part of a larger legislative package of FDA reforms.
• The reauthorization process involves several important phases. First, preparations start about a year before the start of the negotiation process, with FDA staff and industry separately meeting to develop their plans to negotiate. This process involves collecting data on current performance levels, building a wish list for resources and policies, and honing those policies into actionable “asks” for their counterpart.
• Second: the negotiations. This process officially begins for the next user fee programs in September 2025. At this stage, a team from the FDA will sit down with select members of industry trade groups to work on the text of a commitment letter, a document that spells out the FDA’s specific deliverables to industry under negotiated user fees. This negotiation process usually takes at least a few months, and occasionally longer.
• Finally, negotiations end, and the agreement is transmitted to Congress for its review after a final review by HHS. This transmittal happens most often in January of the final calendar year of the five-year reauthorization cycle, as required by statute.

An overview of the expected timeline for PDUFA VIII

But following this week’s mass FDA layoffs, the FDA’s user fee programs appear to be in jeopardy

• Many of the FDA’s top user fee program negotiators and implementers were targeted by the reduction in force. This week’s HHS actions targeted several job types within the FDA, including policy professionals – a role that’s especially critical for the user fee process. Recently terminated FDA officials we spoke who had participated in past user fee negotiations told us that between the termination of probationary staff, voluntary departures and the RIF, about half of the FDA negotiating team has left the agency. While some staff remain, they generally have less experience – or none at all – with the negotiating process.
• To learn more, AgencyIQ communicated with six current and former senior regulatory policy staff at the FDA across three major medical product centers, including three who played senior roles in prior user fee negotiations and were set to play major roles during the current reauthorization cycle.
• The speed and scope with which the RIF happened meant that many in-process actions couldn’t be transferred to other staff. Senior negotiators involved in one of the programs told us that they were deep in the process of planning and even preparing Federal Register notices to announce upcoming public meetings. However, the lack of transition planning – staff basically only had system-level access for a single day after being terminated – along with the sheer number of personnel let go meant that many in-process and future deliverables had no clear successor or owner once fired staff left.
• Many of the top leaders who had experience shepherding the user fee process have also recently left or been terminated. PATRIZIA CAVAZZONI, the director of CDER, left the agency in January. PETER MARKS, the longtime director of CBER, left the agency last week. PETER STEIN, the head of CDER’s Office of New Drugs, resigned his position this week as part of the RIF. Many of CBER’s top officials, including acting director JULIE TIERNEY, associate director for policy JAMES MYERS, and director of regulatory operations CHRIS JONECKIS were terminated. In CDER, we’re told that top leaders including PATRICK RAULERSON (head of regulatory policy) and CARTER BEACH (executive programs) were affected by the RIFs as well. In CDRH, AgencyIQ has learned that several leaders within OPEQ’s Office of Regulatory Programs, including BARBARA ZIMMERMAN, deputy office director of regulatory programs and a MDUFA negotiator, were subject to the RIF. Many of these leaders were deeply involved, either sitting in the negotiating rooms themselves or helping to make critical decisions about what was acceptable or advisable.
• Ongoing staff reductions, along with a change in FDA and HHS leadership, had already raised significant concerns among staff preparing for user fee negotiations, we’re told. Staff involved in at least two of the user fee programs said they were planning to propose to FDA leaders that they delay negotiations, to give leaders time to adjust and to allow the impact of ongoing FDA staff turnover to normalize. However, those people were themselves laid off.
• In the short term, user fee program staff expressed major concerns about the agency’s ability to meet prescribed deadlines under the existing user fee programs. The four programs all include explicit deadlines that FDA staff are supposed to meet when reviewing products, providing feedback, holding meetings, and answering questions. While reviewers were not affected by the latest RIF, many operations and administrative roles that help support reviews were affected. Policy staffers, while not directly involved in reviewing applications, were also instrumental in training reviewers on niche topics and ensuring consistency of reviews. And FDA staff told AgencyIQ that the agency is now unable to replace departing reviewers, and that staff who have elected to leave are typically taken off reviews that could represent a conflict of interest at their next employer, effectively reducing reviewer capacity.

User fee negotiators told AgencyIQ of some extraordinary emerging risks that could cause the user fee programs to implode

• The biggest of these risks is what is known as a “trigger” mechanism contained in the statute for the user fee programs. Under the statute for PDUFA, 21 U.S.C. 379h(f), user fees must “be refunded for a fiscal year beginning after fiscal year 1997 unless appropriations for salaries and expenses of the Food and Drug Administration for such fiscal year (excluding the amount of fees appropriated for such fiscal year) are equal to or greater than the amount of appropriations for the salaries and expenses of the Food and Drug Administration for the fiscal year 1997 (excluding the amount of fees appropriated for such fiscal year) multiplied by the adjustment factor applicable to the fiscal year involved.”
• Stripping away the legal jargon, the section means that if appropriated funding for salaries and expenses at the FDA fall below the levels set in 1997, multiplied by the “adjustment factor,” then the FDA must refund the fees. As explained in a Congressional Research Service report in 2018: “A key element of PDUFA, carried through all reauthorizations, is that user fees are to supplement congressional appropriations, not replace them. The law has included three limiting conditions, known as ‘triggers,’ to enforce that goal. FDA may collect and use fees only if (1) FDA’s overall Salaries and Expenses direct appropriation equals or exceeds the agency’s 1997 Salaries and Expenses appropriation, adjusted for inflation; (2) the fee amounts are provided in the appropriations acts; and (3) the agency spends at least as much from appropriated funds for the review of human drug applications as it spent in FY1997, adjusted for inflation. PDUFA VI does not change these conditions.”
• There are similar “triggers” for other user fee programs as well, including MDUFA, GDUFA, BsUFA and OMUFA.
• The most recent MDUFA financial report has a clear explanation of how the trigger works: “For FDA to obligate user fees collected under MDUFA, a certain amount of non-user fee appropriations must be spent on the process for the review of device applications plus certain other costs during that fiscal year. This amount is often referred to as a ‘non-user fee spending trigger.’”
• By dramatically slashing the FDA’s appropriated budget, the Trump administration risks falling below that statutory trigger, when the FDA would then be required to refund all user fees for all of its user fee programs. According to a review by AgencyIQ of the programs’ financial reports, some programs are especially at risk given how narrow the gap between appropriated funding and user funding is. The MDUFA program obligated just a hair over 16% more appropriated funding than the non-user fee spending trigger value, while GDUFA appropriations amounted to just over 17% of the trigger amount.

Fiscal year 2024 user fee funding triggers

• For some program areas, even a modest reduction in FDA-funded staff obligated to review functions could trigger this funding cutoff. And two recently departed senior FDA policy staffers told AgencyIQ that the trigger mechanism had been a significant concern for three user fee programs – MDUFA, GDUFA and BsUFA – even before the most recent RIF. Voluntary staff departures could further imperil FDA spending staying north of the statutory triggers.
• The loss of FDA’s user fee funding would be catastrophic for FDA and the life sciences industry. The evaporation of $3.3 billion in funding would likely halt all medical product reviews.
• And with so many policy and operational staff across the FDA now gone and being replaced by so many new and inexperienced leaders, FDA and industry might easily sleepwalk into a disaster situation. As one former FDA official told AgencyIQ, the user fee programs are “complex to run” and it’s “easy to make mistakes” even during routine periods of operation. And we are not in a routine period for FDA operations.
• Adding to the risk is FDA’s inability to hire new staff at present. There is a hiring freeze in place, as well as a rule from the Office of Personnel Management known as an Attrition Plan requiring that the agency hire no more than one staff for every four which leave. As a result, FDA’s ability to maintain staffing levels above the statutory trigger will be eroded over time with each staff member leaving the agency.

The political risks for the user fee programs are also quickly becoming apparent

• HHS Secretary ROBERT F. KENNEDY JR.’S plan to reorganize HHS is likely to place significantly more control over policy matters normally handled by the FDA in the hands of HHS officials. Persons familiar with user fee negotiations going back through 2012 told AgencyIQ that FDA has historically handled almost the entirety of the fee negotiating process, including drafting and finalizing the commitment letters. While HHS had an opportunity to review the letters before they were transmitted to Congress, they made only minor grammatical changes to the final letter, the persons told AgencyIQ.
• That could change significantly under Kennedy, especially now that many of FDA’s policy staff have been ousted. At a minimum, HHS staff under Kennedy seem more inclined to give close scrutiny to any user fee arrangements.
• But a worst-case scenario could involve HHS officials completely eliminating the program. This could happen through any of several avenues. As AgencyIQ explained in February 2025, the launch of the Make America Healthy Again Commission earlier this year could put a target on industry-favored programs like PDUFA. The executive order establishing it cites a need to “restore the integrity of the scientific process by protecting expert recommendations from inappropriate influence and increasing transparency regarding existing data.” Within 180 days of the order’s publication, the MAHA Commission is charged with delivering a strategy to “restructur[e] the Federal Government’s response to the childhood chronic disease crisis, including by ending Federal practices that exacerbate the health crisis or unsuccessfully attempt to address it, and by adding powerful new solutions that will end childhood chronic disease.”
• MAHA’s influence on UFAs: Given that MAHA movement leaders like CALLEY MEANS – now a senior advisor for Kennedy – have previously pointed to the FDA’s acceptance of industry-paid user fees as being evidence of industry corruption, the Commission’s ultimate recommendations could pose a concern to all user fee programs. Speaking at the POLITICO Health Summit on April 2, Means said he believed that HHS had been under the control of industry lobbyists, and said Kennedy and FDA’s new commissioner, MARTY MAKARY, would work to lessen that influence. Children’s Health Defense, the group founded by Kennedy, also states that “User fees introduce potential conflicts of interest into the FDA’s regulatory process.” And “Reform Pharma,” an initiative of the group, has developed a 10-point plan to “restore healthcare integrity.” The group means to “reform regulatory and oversight agencies,” including the FDA, which it says currently serves as an extended arm of the pharmaceutical industry by way of its user fee funding mechanisms.
• Other efforts could be coming soon as well. In February 2025, POLITICO reported that Kennedy’s team at HHS has “also discussed imposing sweeping new restrictions on so-called conflicts of interest.” One Kennedy advisor told POLITICO that there are “too many conflicts of interest right now,” and “something disruptive” needs to happen to drive change.
• Kennedy and his advisors could have a massive influence on the user fee negotiations – if he wants. He could prevent FDA staff from sitting down at the negotiating table. He could ask for major policy concessions. He could move to change the way that negotiations between FDA and industry take place, such as moving previously confidential negotiations into the public eye. He could order HHS leadership to prolong reviews of the final negotiating position. He could include more outsiders in the negotiations. He could reject the FDA and industry’s negotiated position and send them back to the negotiating table. Or, he could just refuse to participate at all in the negotiations.
• This, too, could potentially have massive consequences for the life sciences industry. The FDA is not permitted to collect user fees unless Congress reauthorizes or extends each user fee program by October 1, 2027. If the negotiating process is delayed, it could result in a lapse in funding for the agency that could imperil medical product reviews. Even without the disruptions, during the last reauthorization cycle, industry and FDA were at such an impasse over MDUFA that it was transmitted to Congress months late, nearly disrupting the reauthorization process. Any major disruption to the user fee process on the part of Kennedy and HHS could thus be cause for grave concern.

Analysis

• The pharmaceutical, generic, medical device and biosimilar industries will need to keep an incredibly close eye on federal fiscal data that could affect the user fee trigger mechanisms. Doing so will be all the more difficult, since many of the operational and policy staff who would routinely monitor this information and communicate with industry have been laid off. No real-time dashboards contain financial data on user fee-paid FTEs, and there is even less publicly available information regarding ongoing FDA expenditures. One major risk is therefore that FDA and industry both could sleepwalk into a catastrophic situation.
• Congress and its staff may have a role to play as well. While the trigger was meant to remove a temptation for legislators to simply shift the burden of the FDA budget entirely from taxpayers to industry, the risk of catastrophe in the current environment is such that emergency options may be necessary. For example, legislators could introduce a statutory delay when spending drops to the trigger level. This would allow the FDA time to come into compliance with the required funding levels, or for Congress or HHS to consider emergency action. Such legislation would likely be more palatable to industry than the trigger mechanism actually being pulled, which would effectively unravel the user fee structure.
• Congress also needs to be mindful about the unintentional impacts that budget cuts to the agency could have on user fee levels. Currently, the House and Senate are negotiating an appropriations package which is likely to cut significant funding from all federal agencies, including the FDA, based on publicly available baselines. If appropriations are cut too much, the user fee maintenance of effort triggers could go into effect, with ensuing catastrophic cuts to the agency.
• The brain drain from FDA’s most seasoned negotiators is likely to complicate the user fee reauthorization process. Over the last 15 years, we’ve spoken with dozens of FDA and industry staff who have been involved in negotiations. And to a person, each has said that the negotiating process requires deep understanding of how the FDA works – its problems, its resource constraints, how activities get adequately funded. That level of understanding takes many years, or decades, to accumulate. The end goal of the negotiations isn’t just to find a position that is mutually acceptable to FDA and industry, but rather to develop a long-term plan that will be sustainable and lead to the expected policy outcomes for both sides. For industry, a negotiated deal that both parties agree to, but is ultimately unworkable, represents a major risk.
• User fee deals require an expectation of stability in order to function, and lack of stability creates another major risk. FDA’s recent terminations upend that stability and the status quo, requiring industry and FDA to both recalibrate what is possible to achieve in future user fee programs. For example, recent user fee deals have placed a heavy emphasis on new guidance documents, new meeting types intended to help companies resolve early-stage development hurdles, new information technology systems to better track data, and hiring additional specialized staff. But in the last 3 months, the FDA and White House have terminated most staff who worked on guidance and placed limits on publishing new guidance and implemented work conditions that have led to huge capacity constraints and challenges hosting meetings. Further, FDA has terminated its chief information officer (VID DESAI) and many project managers, and required government staff to return to office while freezing hiring under the Title 21 authority that made it easier for FDA to hire scientific review staff. Without the expectation that things will generally remain the same, industry may be reluctant to place too much trust in the FDA’s ability to meet its negotiated commitments.
• Eliminating so many policy positions across the medical product review centers all but guarantees that remaining user fee commitments to release new guidance documents won’t take place. Not only are many of the staff who were experts in topics of specific interest no longer at the FDA, but a recent executive order requiring that 10 regulations be eliminated for every one released would make releasing such guidance logistically challenging, since it defines “regulation” to include guidance documents.
• An earlier suggestion by former FDA Commissioner SCOTT GOTTLIEB that industry simply extend the current user fee arrangement by two years to avoid some of the upcoming negotiating issues may no longer be feasible after this week, former FDA policy staff told AgencyIQ. The agency’s user fee performance is likely to degrade significantly after rounds of layoffs, the RIF, buyouts, retirements and attrition. FDA may be unable to deliver on its existing commitments, and therefore an extension of the program may not be helpful for either FDA or industry.
• What should industry be considering instead? One potential option could be a proposal centered around a “core essentials” user fee program, where industry and FDA identify the essential review-focused structures – review times, certain essential meetings, and a handful of other metrics – that would preserve the remaining FDA review staff’s ability to operate sustainably. The former FDA negotiators that AgencyIQ spoke to said that industry may need to recalibrate its expectations about what FDA is able to deliver given the ongoing cuts to the agency. FDA no longer has the staffing levels needed to act as a consultant to companies at early stages of product development, one former FDA official remarked to AgencyIQ.

To contact the author of this analysis, please email Alexander Gaffney ( agaffney@agencyiq.com)
To contact the editor of this analysis, please email Kari Oakes ( koakes@agencyiq.com)

correction:This piece has been updated to include information about enacted appropriations levels in 2024 and corrected information about FDA’s overall user fee funding levels. We had transposed the appropriated and user fee funding top-line numbers in the first paragraph.