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.

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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.

Top takeaways from this episode

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.

Memorable quotes from this episode

"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."

Feedback Call-to-Action

We thrive on your input! If this discussion about government shutdowns and MedTech strategy sparked any thoughts, or if you have a topic you'd like us to cover, we want to hear from you. Email us directly at podcast@greenlight.guru. We personally read every email and are committed to providing you with the most relevant and actionable MedTech insights. 

Sponsors

This episode is brought to you by Greenlight Guru, the only MedTech-specific platform providing end-to-end solutions. Don't let a government shutdown pause your internal quality momentum. Leverage Greenlight Guru's eQMS and EDC solutions to keep your product development, design controls, and clinical data management moving forward, ensuring your systems are inspection-ready and helping you build a submission so flawless it cuts through the FDA's post-shutdown backlog. Visit www.greenlight.guru to learn more.

Transcript

Etienne Nichols: Hey, everyone. Welcome back to the Global Medical Device Podcast. My name is Etienne Nichols. I'll be the host for today's episode. Today we want to talk about the government shutdown.

Kind of when the government shuts down, what does it mean for MedTech? It's been 21 days at the time of recording since the government shut down. The FDA's contacts have may have gone dark.

Submissions may be frozen. We're going to find out a little bit more about that.

If a company's investors are asking questions you can't answer, what are you supposed to do? What happens to medical devices when Washington goes quiet? That's what we're going to be digging into today.

I'm not going to get into politics. We're not going to try to make anyone panic. We're just going to give the facts and what smart MedTech leaders can do right now to protect their runway.

To help us cut through the noise and kind of answer some of these questions is someone who's seen this from both sides of the fence.

His name is Michael Nilo. He's the president and principal consultant of Nilo Medical Consulting Group. He helps companies all around the world build regulatory strategies, prepare submissions, and keep their systems inspection ready. Before that, Michael was on the inside. He spent nearly six years as a biomedical engineer and scientific reviewer at the FDA, working across dental and cardiovascular devices, even serving in policy roles at the Center Director's office.

And since leaving the agency, he's advised teams from startups to Medtronic on IDEs, PMAs, breakthrough designations, you name it. He knows exactly what happens inside the industry when the lights go out.

And I'm sure I missed something. And also want to mention one caveat. I did not give him questions ahead of time. Michael has been gracious enough to take this interview anyway, so thank you so much for your patience.

If there's anything that you don't want to answer, feel free to punt. But how are you doing today?

Michael Nilo: I'm doing pretty good, you know, you know me. I'll do my best to answer everything, but we'll see where we go. And appreciate. Thank you so much for the introduction and having me on today and I'm hopefully I can provide some insights here.

Etienne Nichols: Yeah, well, I guess the first question I would ask is what really happens or what stops at the FDA during A shutdown.

Michael Nilo: So, I went through two shutdowns as a reviewer at the FDA and initially really nothing stops.

Except you know what does stop is new stuff. The FDA's ability to process new user fee supported submissions. And those are going to be your marketing applications, your PMAs, your De Novos, your 510(k)s, 513(g)s, those will stop.

You can't, there's no one there to process those. They don't take on new work. But you can kind of think it that the FDA running in a, with a big water reserve of money and so essential tasks which start with most things, and they start cutting as the, as the water runs out, that pool of money starts to run out which is, was supported by the, you know, nine months before of user fee generation.

Other things start to go. But honestly, you know, we're 21 days into this shutdown. There doesn't look to be a real end in sight. But that might, you know, that can change on a day-to-day basis.

Congress is talking about coming back to work to have those discussions this week. So maybe we might be done by next week. But 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 with those post market safety surveillance. So you're still required to do all your reporting.

Don't slouch on that just because you think the governments not there. The FDA is still working audits, especially audits that are part of PMA reviews, those preliminary article inspection ones, they're still ongoing.

We have clients right now that are in the middle of audits both on manufacturing facilities for Q sits and for preliminary pre-market audits for PMA level devices.

All of your emergency response type things. If there's a bad adverse event and signal, the FDA is still tasked with communicating and enforcing recalls through the shutdown.

And the last one that's actually a pretty key1 are IDE reviews. So, if you are trying to start your clinical trial, you can move forward with your submission to start your trial. And the FDA is still going to commit to reviewing that within 30 days.

But there are stuffs that slows and stops, which I'm assuming is.

Etienne Nichols: Yeah, well let's talk about the things that stop because I'm guessing that's probably the things people would be most concerned about as well.

Michael Nilo: Right.

So, the big Things that, and I think the things that the FDA promotes the most and talks the most about that do slow down and stop are all of those, the pre submissions and interactive reviews and stuff that's not tied to previously negotiated MDUFA goals and money.

So, it's free to submit a Q-Sub and a lot of the guidances, especially on the more accelerated pathways like TAP program or breakthrough or step, all state as resources allowed as the big caveat of if something like this happens, the resources have to be focused on essential tasks. Now we've had some success with exist. You know, our existing pre submission meetings are still on the calendar. We still plan to have them.

The FDA, the reviewers are being communicative. I think most of them are still there. But as this drags on again, that reserve goes down and the ability to have these types of interactions is less and less.

More people will get furloughed.

I remember when I was at the agency, I forget what year it was, but I think the shutdown lasted about 30 days or 28 days.

And I it stunk at first because all my other fed employees were like, you know, sweet day off tomorrow, we're not going to work. You know, it's expecting it to last a couple of days, and I had to go to work.

But then as it got longer, they were furloughed, so their paychecks weren't there, and they were getting increasingly scared and frustrated and I was still at work.

And then toward the end, the FDA people started getting furloughed. After day 21, day 22, we started losing a little bit more of the team, people who weren't working on those big-ticket IDEs or PMAs and things that had shorter deadlines.

So, you'll see some of those go down.

The FDA right before shutdown happened, put out a list of their priorities for guidances and new policies for fiscal year 2026.

All of that's on hold. That's not happening right now. You're not going to get new policy around this time.

Routine inspections are likely down, although we have seen them continue. I think that's one of the ones that if they were scheduled or already paid for, they're happening. But if this continues into November, I could see those routine ones evaporating pretty quickly.

And then like I mentioned before, new submissions that require user fees, user fee processing, that is currently nothing is being processed if it requires a payment.

And the last thing that I wanted to mention, sorry is, and this is kind of important because there is a time lag is we Aren't sure right now. We've had mixed communication from the agency on whether small business designations are being processed and that's a pretty big deal.

If you are a first, if you are a new medical device manufacturer who's submitting a small manufacturer that's submitting a 510 or PMA here in the first part of fiscal year 2026, if that can't get processed, then your user fee will be astronomically higher.

And often even when the government's open, those that processing takes, you know, six weeks.

So, if we have, if you have to wait till the government reopens, file your small business designation and then wait six more weeks till you actually submit. That's a, you know, time is money for startups and that's going to be a, could be a big lag there. So, you'll have to make some choices.

Etienne Nichols: Yeah, that's interesting. And I, we mentioned MDUFA a couple times. I wonder if it's worth mentioning and maybe explaining what that is and how it affects people.

Michael Nilo: Sorry, yeah, former government employee. So, you get stuck in the Alphabet soup sometimes. MDUFA stands for Medical Device User Free User Fee. I think it's authorization. Might be agreement. Forget what the A stands for, but.

Etienne Nichols: Might be amendment, but let me, I'll look it up while you talk about it.

Michael Nilo: Yeah, the A is not important.

What it does mean is that unlike a lot of federal agencies, the FDA gets a.

I think it's a majority of their funding now from user fees. So, companies pay to have their submissions reviewed. This helps fund all of the FDA's activities. So, while a portion of the money comes from taxpayers, a large portion of the money also comes from these user fees.

And therefore, when the government shuts down and that tax supported part goes away, there's still the industry supported part of the FDA's activities that can be maintained during this time.

And that's that pool of money that I was talking about.

Etienne Nichols: Yeah, and I think that's important to think about too because I see people in the industry sometimes saying, okay, you know, medical device companies are in the FDA's pocket. They're paying all this money to have their devices reviewed and so on.

But really that's not necessarily what it looks like to somebody on the outside. What they're, what they're doing is paying for an expedited review so that these things, these timelines don't just get astronomical.

Is that accurate or anything add there.

Michael Nilo: That's pretty, that's pretty accurate. Accurate. It's not even the expedited it's just the normal timeline there. You don't, you can't pay. I think it's important to know is you can't pay more to have something go faster.

That's not part of the model. There's no, it is just a standard fee. And actually, I think it's really important to note that, you know, advocacy groups on both industry and patient advocacy groups have really pushed hard in these negotiations for, with Congress to allow for reduced fees for the smaller medical device companies so that there isn't kind of a consolidation to just the bigger players.

And it's only. And then it would look, I think even more like it's a pay to pay, pay to play system, but there's an allowance to let kind of everyone have a seat at the table.

Etienne Nichols: Yeah, I think that's, that's good clarification for a company that's actually going through trying to get their submission. What are the actual effects on that company typically that you've seen.

Michael Nilo: As through the government shutdown? I think one, the big one is especially for smaller companies, you, they really need to take advantage of that Q-Submission process, that pre submission, those conversations and interactive review with the agency.

I think the medical device group in CDRH really utilizes interactive review during submissions to reach out to industry and ask questions interactively.

And it's a huge benefit to medical device companies to have that interaction. If you ever do work on the drug side, it's less like that. It's more of a black box and they have very firm decisions pretty in a different manner of interaction.

So, losing that I think is going to have an effect.

The other part is the obvious effect. If you were ready and you're like, hey, our corporate goal was to have our 510(k) submitted in October of 2025.

If this, if the government shut down, you're not getting that goal. And every day you're still required to kind of maintain your company and pay the daily fee of running the company.

But you're not any closer to generating revenue because your 510(k) is not in house or your PMA is not at the FDA and there might be some, you know, tough decisions that have to get made or it's maybe look toward other ways to generate revenue to bridge the gap and things like that. Some strategies.

Etienne Nichols: Yeah.

What's the, what's.

I'm sure you work with a lot of different companies. Are there any piece of advice that you're giving them or maybe started to think about what am I going to tell my customers you know, just watching this government shutdown thing.

Any piece of advice?

Michael Nilo: Yeah, right now, you know, for the, for the companies that we, we saw this on, like, looming. So, we did try to get as much of the user fees things into the FDA, even some that might have had something that we would have normally waited for, but we tried to get them in house.

Can't do anything about that now for, you know, current companies. I think if you're basically being forced to keep your submission on hold while you wait for this, I think better.

And take advantage of the time, the extra time, which all the time gets eaten up for regulatory people, you know, to hit deadlines. Take advantage of the extra time to make your submission more easily navigable.

Make a better executive summary, make better links to the attachments, kind of make it a better product because that will help when the lights go back on at the FDA.

And as I mentioned, they really haven't totally slowed down, but they will the longer this goes.

All these new submissions are in queue, just stacked. We're going to hit the FDA's desk all at once.

So, 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, once it's opened up.

The other thing we talk to our clients about is take the useful time and get your claim support, your quality system, your risk management stuff that you were going to potentially wait on, working on till after the submission went in because there's always that huge push, oh, now what time's better than now if the regulatory people are twiddling their thumbs some.

Etienne Nichols: Yeah, that's a good point. You know, start doing some things in parallel that maybe you were going to wait on. I, I think that's a really good way to look at that.

Do you have any suggestions on how firms can handle communication with investors, partners, any, any thoughts there?

Michael Nilo: You know, I think the, you know, when the, something as large as the FDA shuts down and the US Federal government shuts down, I think it's one of those things of, you know, uncontrollable natural disaster, essentially, you know, the hurricane, it's, what are you going to do? I think. But everyone's in the same boat and I think everyone's fairly aware.

We don't have. There's no magic solution to tell the investor, hey, I'm going to do some sneaky thing to get the FDA to review this. It's just, I think you tell them we're Working, you know, we're working on other aspects for commercial launch, your reimbursement plan, your market access plans, so that, you know, you can show them that there's going to be value right away at FDA clearance or FDA approval rather than, you know, what might have been in the plan is there might have been a gap, you know, FDA approval, then something we're working toward, shortening that gap on the back end is the best thing.

I think we can tell the boards.

Etienne Nichols: Yeah, I'm just thinking about a lot of the different things when I was getting close to the end of product development and we're really tightening up all of the submissions and verification and testing.

All of those things can be really refined slightly, I suppose.

Any other thoughts as far as those things that you can be doing right now? Maybe, you know, things are shut down, but there's things you can be doing right now.

I love the, I love all of the different processes you brought up.

Michael Nilo: No, I, I mean, I think you hit a great nail on the head too, of process validation. How do you make something more manufacturable? I mean, ultimately, things like a government shutdown have major effects on patient health.

And so, if you can kind of, you know, the goal for everyone in the industry is to get these new technologies out in the hands of patients and doctors to use it.

And I think it’s; it can be discouraging when you see these kinds of arguments affect that. But if you kind of spin it to, like you said, there's more time to work on other things that the business still needs.

And I think and could make it so that, hey, we were planning on being able to make a hundred of these and we were going to a hundred percent verify every single one by hand because that's the only thing we thought we'd have time to do.

Well, go validate some of your processes, get some better machining tools like use, use the time.

Just because regulatory is only one work stream in a product launch. So, there's plenty of other things that can be done. And I do think a lot of boards think of it as like, well, once we do that, once we get through the FDA, we're good to go. And that's.

It's only a step along the way. So, I think there's a lot of things you can kind of be working on that makes you more attractive for exit or better commercial launch or more access in the hospitals, all that kind of stuff.

Etienne Nichols: Yeah, I think that's a good way to put it. It's a good balanced approach.

I love the education you kind of provide through this, because a regulatory expert, let's say someone's working in a medical device company and someone's coming to them saying, hey, what, okay, so what's the plan?

What are we doing?

Maybe, maybe it's a little bit late as far as right now because it's happening right now. So, you've already had to answer those questions, I'm sure. But next year or, well, whenever the next time comes around, the preparation you can do. You mentioned we saw this looming.

If you just kind of look ahead and you say, okay, I know there's going to be the potential for a shutdown.

These are the things we're going to do to get ahead of this. I think that's smart way to approach things.

So that's good, if nothing else, just to raise awareness that there are activities you can do to help your outcome in the long run.

Michael Nilo: Yeah. And I think you can look, you know, look back on the history of some of these shutdowns and you know, historically they've lasted, you know, as short as a couple of days, but, you know, more, more often than not there, you know, two weeks to a month.

Right. And I think one in 2019. Right. When I started consulting pretty early in my consulting thing, it was like 35 days.

And, you know, if, you know, you know, what can you, if you plan for that, you know, okay, the last budget resolution, you know, wraps up March 1st. You know, put that. Probably you want to put those kinds of big things on your device calendar. So, you know, are we going to be able to submit something before that date or is our timeline more than 30 days after that date? And it doesn't. That shutdown shouldn't affect us that much.

You know, those are kind of things to look at.

Etienne Nichols: Yeah.

So, I'm curious if you zoomed out and just looked at this, are there any things that we could do that would. I mean, just as an industry, I mean, you've worked on both sides of the fence.

It's. It's bigger than just medical device. It's bigger than, than all of those things. Any pieces of advice, though, you have from a larger, maybe a broader standpoint and being able to tell, even if, you know, you mentioned looming. Is it. Is that. And I guess I keep going back to your looking how to, how to see around corners. I don't know.

Michael Nilo: Yeah. I mean, I, without getting too, like, I don't want to get stuck in a political thing, but I think, I think given the state of the US government and administrative. It is common for the last 20 years to resolve things by just shutting it down.

Etienne Nichols: Yeah.

Michael Nilo: And so, if. I think you can. We can almost anticipate there is a somewhat, you know, moving forward, we can anticipate that when the current agreement for budget expires, and sometimes that's three months, sometimes it's two years, we should expect some sort of political turmoil around that next decision.

Nobody seems to want to play nice in the sandbox anymore, so. And everyone takes their ball and goes home. So right now, they're not even.

Washington's not even in session. So, like, how so I think when we talk about this kind of stuff and say it's looming, it doesn't really.

Etienne Nichols: I know what you mean.

Michael Nilo: We don't need mirrors to peek around corners. It's kind of staring us in the face.

Etienne Nichols: So, it's funny. And I agree. I don't want to get too far in. I had a colleague tell me once, he said, you know, it's funny how they're not able to get in behind locked closed doors and talk very much anymore.

Everything's so out in the open. So, you almost have to take your hardline stances. It's really a shame, but any last piece of advice you give to medical device companies trying to make sure that they're doing the right things right now.

I know you've already given a lot of advice and education, but kind of as we shut this down, the pep.

Michael Nilo: Talk is just that, you know, remember what the mission is. You're making things for patients and you're making people's lives better. And, you know, while the government might not be helping support that effort right now, the FDA themselves, the people on the front lines of that regulatory, they are still working hard.

And so, I think you should be looking internally and not, you know, keep the goal in mind and keep working where you can. That's the best advice we can do.

Etienne Nichols: That's good.

Great. Thank you so much. I really appreciate it. Those who've been listening, thank you so much for listening to the Global Medical Device Podcast. We'll let you guys get back to it.

Take care.

Michael Nilo: Thanks, everyone.

Etienne Nichols: Thanks for tuning in to the Global Medical Device Podcast. If you found value in today's conversation, please take a moment to rate, review and subscribe on your favorite podcast platform. If you've got thoughts or questions, we'd love to hear from you.

Email us at podcast@greenlight.guru email.

Stay connected for more insights into the future of MedTech innovation. And if you're ready to take your product development to the next level. Visit us at www.greenlight.guru until next time, keep innovating and improving the quality of life.

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