Source: Indianapolis Business Journal

The Trump administration’s recent announcement that it plans to eliminate about 3,500 jobs at the U.S. Food and Drug Administration is creating uncertainty among Indianapolis-area companies that interact with the federal agency.

On March 27, the U.S. Department of Health and Human Services announced what it called a “dramatic restructuring” involving staff cuts, centralization and consolidation at the department’s divisions, which include the FDA, the Centers for Disease Control and Prevention, the National Institutes of Health and the Centers for Medicare and Medicaid Services.

The restructuring, which is part of the Department of Government Efficiency’s effort to slash the federal workforce and reshape government agencies, would take HHS’ current workforce of 82,000 down to 62,000.

The cuts at the FDA will focus on “streamlining operations and centralizing administrative functions” and will not affect FDA inspectors or drug, medical device or food reviewers, the HHS said.

But amid the backdrop of general uncertainty surrounding the federal government, local companies that interact with the FDA are worried about what the agency cuts might mean for business.

The FDA regulates a wide range of products, including human and veterinary medicines, medical devices, food and cosmetics.

According to the FDA’s website, the agency has more than 18,000 employees. Assuming that number is current, eliminating 3,500 jobs would be a 19% reduction in staff.

The co-founder and CEO of a central Indiana company developing a medical device said he’s hopeful the FDA cuts won’t affect his company.

The CEO, who did not want his name or his company’s name included in this story out of fear that it might affect the approval process, said his company submitted its device to the FDA several months ago. The company is seeking clearance under the agency’s 510(k) pathway, which is an expedited process for devices deemed to be “substantially equivalent” to a device that has already gained FDA approval.

The company received questions about its application from the FDA in mid-February, the CEO said, and a few days later the company learned the person who had been reviewing the application was no longer with the agency. (That person was rehired about 10 days later, the CEO said.)

“It certainly created a lot of anxiety and angst when this was going on,” the CEO said, adding that he believes his company’s application is back on track.

“We’re hopeful that we’ll have clearance soon,” the CEO said.

Indianapolis-based software company Greenlight Guru, which helps medical-device makers more easily navigate the FDA approval process, said it has heard from numerous concerned customers.

The process of securing FDA approval for a medical device is already a “tedious, laborious process,” and Greenlight Guru’s customers worry that it will now take even longer, said Etienne Nichols, the company’s head of industry insights and education.

Nichols said some of Greenlight Guru’s customers have already heard directly from the FDA that they should expect delays in the approvals process, which for medical devices averages 112 days.

“Approval timelines is a very, very big concern,” Nichols said.

And he said those delays could create other problems for medical-device startups that rely on venture funding.

Greenlight Guru was scheduled to host a webinar on Thursday that is intended to help medical-device makers navigate the FDA staff reduction.

Typically, Nichols said, companies want to secure FDA approvals before they seek their second major round of investment, known as Series B funding. If approval gets delayed, he said, venture investors might pause their investments in that company—which in turn could create a serious cash crunch.

“If they don’t have the [financial] runway to weather that storm, we are going to see a lot of companies fail,” Nichols predicted.

Audrey Beckman, partner and chief innovation officer at Indianapolis-based Boomerang Ventures, said most of Boomerang’s portfolio companies are at such an early stage that they aren’t yet thinking about FDA approval.

Boomerang, which launched in 2019, operates both a venture studio and an investment fund focused on technology-driven health care startups.

But Beckman said the FDA staff cuts are adding to other recent confusion at the agency.

In October 2023, the FDA announced it was forming a Digital Health Advisory Committee focused on the use of generative artificial intelligence in medical devices, among other topics. That same month, then-President Joe Biden issued an executive order directing federal government officials to establish guidelines and best practices for the safe use of AI systems.

After taking office in January, President Donald Trump rescinded Biden’s executive order. This week, he issued his own AI-focused executive order, which the White House described as “shifting to a forward-leaning, pro-innovation and pro-competition mindset rather than pursuing the risk-averse approach of the previous administration.”

In Beckman’s view, these changes create uncertainty for companies that plan to incorporate artificial intelligence technology into their medical devices and will be looking for FDA guidance on the issue—and the staff cuts make the uncertainty worse.

“These staffing cuts … are just going to be exacerbation for an already existing set of issues,” she said.

Paula Burge, president of Indianapolis-based Eagle Creek Consultants Inc., said some of her clients are also concerned about how the federal cuts will play out.

“Everyone is really focused on timing and, ‘How is this going to affect me?’” Burge said.

She said she has a few clients who are preparing for pre-submission meetings with the FDA—a standard part of the approval process.

One client is seeking National Institutes of Health funding, Burge said, and with the larger HHS shakeup, that funding is now in question. If the client must seek alternative funding sources, that will likely delay product development.

Burge said she’s optimistic that the staff cuts will not affect the FDA review process because it is supported by user fees that applicants pay to cover review costs.

Some level of disruption is to be expected with a presidential administration change, Burge said. During Trump’s first administration, the FDA actually saw few changes, she said, but his second term is shaping up quite differently.

The industry experts said it’s a bit early to know how things will shake out.

Burge said it could take a year or two to see the full impact of current changes. “We’re really in a wait-and-see approach.”

Source: Indianapolis Business Journal, Susan Orr, April 11, 2025