MDUFMA Renewal Plan Spreads Fee Burden More Evenly; Senate Panel OKs

From the April 23, 2007 issue of "The Gray Sheet"

Just two days after FDA released its behind-schedule proposal to reauthorize the medical device user fee program, a Senate committee approved the agency's recommendations to collect almost $300 million from manufacturers through 2012.

On April 18, the Senate Health, Education, Labor & Pensions Committee, chaired by Edward Kennedy, D-Mass., voted 15-5 to send the ¹FDA Revitalization Act (S 1082) - including the device user fee ²provisions delivered to Capitol Hill by FDA on the 16th - to the Senate floor. Republican Sens. Michael Enzi (Wyoming), Lamar Alexander (Tennessee), Pat Roberts (Kansas), and Orrin Hatch (Utah) joined the Democrats in the majority.

It could be several months before the full Senate votes on the bill, sources on the Hill say.

The device user fee program, begun in 2002 by the Medical Device User Fee & Modernization Act, needs to be reauthorized before its Sept. 30 expiration date. The new plan, the result of more than a year of negotiations with industry stakeholders, would authorize the collection of $287 million in device user fees in fiscal years 2008 through 2012 to supplement congressional appropriations. FDA will have collected about $165 million under MDUFMA during the five years ending this coming Sept. 30.

Fees collected under the reauthorization bill would account for almost 30% of FDA's $1.2 billion in medical device review resource requirements for the next five years, with the remainder to be provided through annual congressional appropriations.

Additional user fee revenue however, will not come from increases in individual application fees, but instead from several new fee categories that serve to spread the financial burden more broadly across industry. Meanwhile, annual costs to individual firms will actually decline in most cases, stakeholders say.

In return for the fees, FDA commits to meet a pared down set of premarket review performance goals that eliminates the interim "cycle" goals of the current program. Industry contends that the cycle goals have complicated and often stalled the review process. FDA also must issue several guidance documents, particularly on imaging and diagnostics, to help companies through the application and review process.

Industry stakeholders AdvaMed, the Medical Device Manufacturers Association (MDMA) and the National Electrical Manufacturers Association (NEMA), which participated in closed-door negotiations with FDA on the reauthorization, generally praised the proposal and said that, on balance, the provisions would not be overly costly to industry.

"This agreement is good policy and good sense," said Andrew Whitman, vice president of the Medical Imaging & Technology Alliance, a division of NEMA. AdvaMed President Steve Ubl called the plan "fair and reasonable." (See chart: "MDUFMA Reauthorization Proposal In A Nutshell" below)

MDUFMA Reauthorization Proposal In A Nutshell

Under the Medical Device User Fee & Modernization Act, FDA collects user fees from manufacturers seeking approval to market devices. In return for the user fees, which supplement Congressional appropriations, FDA is expected to meet certain performance goals to improve the timeliness of its premarket reviews. MDUFMA sunsets Sept. 30, requiring reauthorization of the program. FDA's proposal for reauthorization includes the following provisions, in summary:

Collectively, the device industry would pay 31% more in user fees in fiscal 2008 than in fiscal 2007 to meet increased FDA costs. The fees would increase 8.5% annually over the next five years. Individual application fees would decline significantly beginning in FY 2008 as the overall financial burden is spread more broadly through the introduction of two new annual fees - one for establishment registration ($1,700) and one for filing periodic reports ($6,500). The new fees are geared to account for 50% of all device user fees, and would create a more consistent revenue stream for the agency. Small businesses would get a bigger break as application fees are further reduced from current levels for firms with annual sales of $100 million or less. FDA's interim review "cycle" goals would be eliminated, enabling the agency to refocus on an interactive review process, while some of its final approval decision goals are made more rigorous. Proposal includes provisions for diagnostic imaging and IVD guidances, as well as for streamlining and expanding the "accredited person" third party inspection program. Current MDUFMA "triggers" tied to device-specific appropriations and agency spending would be extended intact.

A full description of the MDUFMA bill appears in this week's issue of "The Gray Sheet." Click here to sign up for free trial of "The Gray Sheet."