Drugs

Pallone Asks GAO to Analyze RIF Impact on User Fees

David McFarland

— 2 min read
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Rep. Frank Pallone (D-NJ), the ranking member on the House Energy and Commerce Committee, has asked the Government Accountability Office (GAO) to analyze the impact of the FDA reduction-in-force (RIF) efforts through the so-called Department of Government Efficiency (DOGE) or other means on the agency’s user fee programs. In a 7/14 letter, Pallone says he wants to know if proper procedures were followed in the mass layoffs and dismissals and the impact of the staff cuts specifically on the medical product review programs.

He notes that the user fee statutes for each program and the commitment letters ratified by the industry and the agency clarify the intended purposes for the user fees that are collected. “Nowhere in the statute or commitment letter is there a stated or implied allowance for fees to pay for loss of staff that were spurred by actions of the federal government,” he writes.

Pallone says that despite the reductions-in-force, there are unexplained increases in payroll expenses between FY 2024 and FY 2025 for several of the medical product programs.

The question of payroll increases came up in a 2/19 PDUFA reauthorization negotiating session, Pallone says, and FDA reported that the funds were used to pay for lump sum payments, severance payments to eligible staff who performed PDUFA-covered work and were separated due to the reduction-in-force.

“I am concerned that upheaval to the user fee programs through staffing cuts or any mismanagement of user fee funds will further hasten the movement of investment in medical product development out of the United States,” Pallone says. “As the medical product user fee programs are set to expire on 9/30/2027, it is critical that Congress understand how FDA is acting as a steward of the funds that industry is paying as part of the user fee agreements.”

Pallone asks the GAO to focus its efforts on:

  • staff attrition at FDA with specific focus on staff that were funded, in part or whole, through user fee dollars;
  • the separation methods that were used for reduction in the staff, including involuntary termination or other voluntary separation methods that were offered in conjunction with DOGE’s RIF efforts;
  • the amount of severances or other separation dollars paid to employees affected by the RIF efforts or other separation efforts and the specific funding source used (appropriated funds under budget authority, user fee dollars, or operational overhead);
  • for each source of severance funding, the agency’s justification for use of the funds for the separations; and
  • whether the use of user fee dollars to pay for staff separation is a lawful use of the funds.

Pallone says the committee’s Democratic staff members requested the information in his questions from FDA and have not received a reply.

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