#429: MedTech Regulatory Risk: Navigating the FDA During a Government Shutdown

This episode, hosted by Etienne Nichols, delves into the critical impact of a U.S. government shutdown on the medical device industry, specifically focusing on the Food and Drug Administration (FDA). Guest Michael Nilo, President and Principal Consultant of Nilo Medical Consulting Group and a former FDA Scientific Reviewer, offers an insider's perspective on which FDA functions halt and which remain active during a funding lapse. He clarifies that while the processing of new, user-fee-supported marketing applications like PMAs and 510(k)s typically stops, essential activities like active review of already-filed submissions, post-market safety surveillance, enforcement of recalls, and Investigational Device Exemption (IDE) reviews continue, drawing on existing user fee reserves.

The discussion pivots to the significant slowdowns that occur, notably the suspension of non-MDUFA-goal-tied interactions, such as Q-submissions (Pre-Submissions) and most interactive reviews. For startups and small manufacturers, the halting of the crucial small business designation processing can be particularly detrimental, leading to astronomically higher user fees once the government reopens. Michael emphasizes that the industry should anticipate this political risk and plan submission timelines strategically, positioning a government shutdown as an "uncontrollable natural disaster" that requires proactive risk mitigation.

Michael provides actionable advice for MedTech leaders to pivot during a shutdown. He recommends using the enforced delay to significantly improve the quality of submissions—making them easier to navigate and review once the FDA is fully operational—to gain a crucial advantage over the backlog of queued submissions. Furthermore, companies should utilize the time to focus on parallel activities such as process validation, refining quality systems, and strengthening commercial and reimbursement strategies. Michael stresses the importance of remembering the core mission: getting life-improving technologies to patients, and using any delay as an opportunity to emerge stronger and more prepared for commercial launch.

Key Timestamps

• 1:45 - The initial effects of a shutdown: What truly stops at the FDA (new submissions) versus what keeps running (existing reviews, IDEs, post-market surveillance).
• 3:50 - Why active review of filed submissions continues—the role of the user fee "reserve."
• 5:58 - Critical functions that stop or slow down: Pre-submissions (Q-subs), interactive reviews, new policy guidance, and routine inspections.
• 7:25 - The major impact of halting the small business designation process on user fees for new manufacturers.
• 8:36 - MDUFA (Medical Device User Fee Amendments) explained: How user fees fund the FDA and maintain operations during a lapse.
• 11:51 - Direct effects on a MedTech company's runway and the loss of interactive review.
• 13:17 - Actionable advice: Improving submission quality for easier review to mitigate the post-shutdown backlog.
• 15:00 - Strategic pivot: Focusing on parallel work like process validation and quality system refinement.
• 16:03 - Communicating with investors and partners: Positioning the shutdown as an uncontrollable event and shortening the commercial launch gap.
• 18:50 - Looking ahead: Planning submissions around budget resolution deadlines to anticipate shutdown risk.
• 20:53 - Final advice: Keeping the patient-focused mission in mind and maximizing internal efforts.

Quotes

"Active review of device submissions, if you already had something in or you were smart enough, you saw the writing on the wall, you got it in on September 30, you’re good to go. Those will still keep going on schedule with and the FDA is going to try to meet their MDUFA goals..." - Michael Nilo

"If yours stands out as being something that is easier to handle, makes it easier to process, they can navigate through it better, you have a better chance of getting a quicker, faster, better review process once it’s opened up."

Takeaways

1. Regulatory Strategy & Submission Quality: Use any government shutdown delay to drastically improve the navigability and clarity of your marketing submission (PMA, 510(k)). A well-organized, hyperlinked, and clear application will likely be processed faster by reviewers facing a post-shutdown submission backlog.
2. Financial Risk & Small Business Designation: Small medical device manufacturers should anticipate potential government shutdowns and file their small business designation application well in advance. Failure to process this designation during a lapse can result in paying the full, significantly higher user fee, which dramatically impacts startup runway.
3. Operations & Quality Focus: While regulatory submissions are stalled, pivot R&D and Quality teams to focus on parallel work streams. This includes advancing process validation, completing outstanding quality system activities (e.g., risk management file updates), and solidifying commercialization and reimbursement strategies.
4. IDE Reviews Continue: Companies initiating clinical trials should note that Investigational Device Exemption (IDE) submissions are generally considered essential and will still be reviewed within the MDUFA 30-day timeline. This is one of the few submission types that allows for continued progress during a shutdown.
5. Leverage User Fee Systems: Understand that the FDA's user fee structure (MDUFA) ensures that key pre- and post-market safety functions, as well as active review of existing applications, can be maintained for a period, acting as a crucial shock absorber for the industry.

References

• Michael Nilo's LinkedIn
• Etienne Nichols' LinkedIn: Connect with Etienne
• MDUFA (Medical Device User Fee Amendments): The legislation that authorizes the FDA to collect fees from companies that submit certain marketing applications for medical devices, which funds a significant portion of the agency's device-related activities and performance goals.
• IDE (Investigational Device Exemption): An FDA process that allows a device that is not yet legally marketed to be used in a clinical study to collect safety and effectiveness data. IDE reviews are generally protected during a shutdown.

MedTech 101 Section: User Fees and the MDUFA Buffer

When the U.S. government shuts down, it means Congress hasn't passed a budget, and non-essential federal agencies must pause most operations because their taxpayer funding stops. However, the FDA has a financial safety net for its medical device work: User Fees, authorized by the Medical Device User Fee Amendments (MDUFA).

Think of MDUFA as a dedicated savings account funded by MedTech companies. When a company submits a major application like a 510(k) or PMA, they pay a fee. This money goes into a separate reserve. When a government shutdown happens, the FDA can tap into this reserve to keep essential, MDUFA-related work going. This includes the salaries of reviewers who are already working on your application, ongoing post-market surveillance, and crucial safety functions. The money acts as a buffer, allowing the FDA to continue its core mission for a limited time, which is why existing reviews aren't immediately halted. New submissions, however, often can't be processed because that intake and processing function is deemed non-essential and is not typically covered by the emergency user fee funding.

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Sponsors

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