The US Food and Drug Administration (FDA) is confronted with significant challenges in its inspection processes due to recent layoffs. Among other effects, the latest reduction in force of full-time FDA employees is raising concerns about the potential impact on drug and biologic manufacturing inspections.
On April 1, 2025, the US Department of Health and Human Services laid off roughly 3,500 full-time FDA employees (as described in our prior LawFlash). While some employees may be reinstated and while FDA inspectors were not impacted, inspection support staff, including staff that performed important inspection-related functions such as booking travel and securing translators, were affected.
FDA also paused its unannounced foreign inspection pilot program, and it is further expected that there may be a reduction in the number of FDA routine and other inspections. This inspection rollback will raise important considerations for the biologic and drug industries as well as challenges that will need to be navigated.
One of the key aspects of FDA’s approval of New Drug and Biologic License Applications is the pre-approval inspection (PAI). FDA regularly inspects all significant manufacturing facilities within a product’s manufacturing process, including facilities manufacturing active pharmaceutical ingredients and finished products as well as analytical testing facilities.
Because inspectors are now tasked with both administrative and investigative work, the increased workload may contribute to bottlenecks in the PAI and approval pipeline. Further, as during the COVID-19 pandemic, FDA may default to remote inspections based on paper reviews, which creates new issues and challenges with respect to communication and information sharing.
These delays may be exacerbated if a facility does not pass a PAI the first time, resulting in the issuance of a 483 inspection report, a Complete Response Letter, and the need for a second, likely delayed inspection. It is therefore critical for applicants and their contractors to confirm that facilities and laboratories are inspection-ready, including through conducting mock inspections and vigorous vendor selection and control processes.
Companies that heavily rely on contract manufacturing organizations (CMOs) for chemistry, manufacturing, control, and analytical activities should carefully select, partner with, and audit experienced contractors to ensure a comprehensive assessment of inspection readiness.
While FDA inspections may decrease or take longer to schedule, this does not mean that manufacturing facilities should also decrease their quality compliance efforts as there can be significant financial and legal consequences for noncompliance with current Good Manufacturing Practices (cGMPs), including costly product recalls, patient actions for injury or economic loss, commercial and contractual litigation between business partners or competitors, and additional remediation efforts to address newly formed compliance gaps.
cGMP noncompliance can also result in state enforcement actions, penalties, or loss of manufacturing or virtual manufacturing licenses as many states, like California, also have their own drug and biologic quality requirements or otherwise require compliance with FDA requirements.
Moreover, cGMP noncompliance resulting in sales of adulterated product to state and federal healthcare programs can result in actions under the False Claims Act (FCA). Despite the administration pulling back from or refocusing other fraud enforcement efforts (e.g., with respect to the Foreign Corrupt Practices Act and cryptocurrency-related crimes), there has not been any indication that the US Department of Justice plans to curtail enforcement activity under the FCA. To the contrary, DOJ representatives recently made public statements on continuing to aggressively pursue FCA cases to combat fraud, waste, and abuse in government programs.[1]
Drug manufacturers can take several proactive steps to bolster their quality systems, including dedication to a robust internal auditing system, inspection training on dealing with rushed and fast-moving inspections and demanding or inexperienced inspectors, and increasing and strengthening oversight of contract manufacturers.
Sponsors should carefully qualify and conduct continuous monitoring of prospective and current CMOs through a vigorous vendor management system, which includes routine and risk-based audits, contractually established clear lines of reporting and communication, and regular assessment of quality-based key performance indicators to detect early warning signs of quality, compliance issues, and lack of inspection readiness.
In certain circumstances, manufacturers with prior open FDA inspections or enforcement letters (e.g., Form 483 observations or Warning Letters) may need to have these cleared and closed, such as when contemplating corporate transactions. During due diligence, open compliance issues can raise questions regarding risk, which can impact company valuation. Accordingly, companies with a need for the closure of prior actions that have fully remediated any prior issues should proactively invite FDA to conduct an on-site reinspection or remote regulatory assessment.
Until FDA responds, however, firms should maintain internal systems and documentation in audit-ready form and be able to explain and provide clearly documented remediation steps to potential transactional partners to evidence a current state of compliance. Further, if FDA reinspections are not possible, companies needing documentation of current compliance may want to consider engaging outside legal and regulatory expertise to conduct an independent third-party audit.
Lastly, despite any company’s best efforts, quality issues may occur. Companies should be prepared to address any such quality issues through implementation of documented policies on investigations, root cause determinations, and corrective and preventative action plans (CAPAs), with adequate resources allocated to CAPA completion.
Companies should also have established policies on field actions, including recalls. Specifically, companies should be prepared to take quick and decisive action, should the need arise, as FDA recall staff may not be able to provide prompt or detailed feedback on recall plans within necessary timeframes. This will require clear processes regarding FDA reporting and communication as well as processes on internal recall decision-making, including determinations of recall scope and depth, in the absence of FDA input.
Should a company receive inspectional findings, it should be prepared to provide comprehensive responses to FDA. This will involve conducting root cause investigations, determining the impact of any finding on distributed product, and implementation of CAPAs with effectiveness checks.
With decreased FDA staffing, FDA may be more apt to issue enforcement letters rather than negotiating with a company to remediate any response deficiencies. Accordingly, it is important for a company to present the most comprehensive and detailed response possible (as opposed to a short or piecemeal response) in the first instance to an FDA Form 483. There is also benefit to having multiple inside and outside reviewers of the first response to ensure it is compelling and complete. Using outside legal and regulatory expertise to provide additional independent review is prudent.
With the new cuts exacerbating existing workforce strains, the pharmaceutical and biologic industries may soon experience reduced or different FDA inspections. This, however, does not decrease the importance of having a strong manufacturing quality program. The onus will be on companies to maintain cGMP compliance to ensure that only safe and efficacious products reach consumers.
Further, while FDA may temporarily return to alternative inspection methods, such as virtual inspections and record reviews as seen during the COVID-19 pandemic, drug manufacturers should maintain “inspection ready” facilities and quality control measures, e.g., good documentation practices, as FDA will likely eventually reengage in full in-person inspectional activities, just as the Agency did at the end of the pandemic.
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[1] It also is important to remember that most FCA cases are not initiated by the government but rather FCA whistleblowers, or “relators.” Once a relator files an FCA lawsuit, the government is statutorily required to conduct a diligent investigation. 31 USC § 3730(a).