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issue: June 2005 APPLIANCE Magazine

The Open Door
What's Next for the Medical Device User Fee and Modernization Act?

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by Mark B. Leahey, executive director, Medical Device Manufacturers Association

When Congress passed the Medical Device User Fee and Modernization Act (MDUFMA) in the fall of 2002, the goal of the user fee program was to provide the U.S. Food and Drug Administration (FDA) with the resources it needed to review the safety and effectiveness of new medical devices in a timely manner. More than 2 years have passed since the inception of MDUFMA, and now many in the medical technology industry are evaluating whether the program is working as originally intended.

Mark B. Leahey, Esq. is the executive director for the Medical Device Manufacturers Association (MDMA). He is a graduate of Georgetown University and the Georgetown Law Center.

Dramatic fee increases, severe appropriations shortfalls, and unimpressive performance goals threaten to undermine the program’s effectiveness. Moving forward, the industry remains committed to ensuring that the FDA receives the funding it needs to regulate the industry. However, the skyrocketing fees, lack of Congressional appropriations, and modest performance goals have left some to question the benefit of the substantial industry investment.

MDUFMA was designed to provide an enhanced and expeditious review process for medical devices by imposing reasonable fees on pre-market approval applications, supplements, and 510(k) submissions reviewed by the Center for Devices and Radiological Health (CDRH) at the FDA. The law provides for shared responsibility between manufacturers and the government to fund the program. Over 5 years, the manufacturers’ fees and Congressional appropriations would provide CDRH with U.S. $225 million (plus inflationary adjustments) in additional resources in exchange for enhanced review performance from the agency averaging 25 percent.

Of the $225 million in new funding, the industry agreed to contribute $150 million in user fees with the remaining $75 million coming from additional Congressional appropriations. However, one of the structural problems within MDUFMA was the fact that the industry was responsible for paying the user fee from day one of the program, while Congress was given 3 years to appropriate the additional funds.

In addition, FDA was given 3 to 5 years before they were held accountable for many of their performance goals. However, Congress did include a “sunset” provision, which stated that if they did not appropriate $61 million in the first 3 years of the program, MDUFMA would terminate. The sunset provision allows legislators and interested parties to reconsider a program’s structure before allowing it to continue. Many believe that this is just the type of case in which a program’s intent has increasingly diverged with reality, and where some important modifications are needed.

In late November 2004, Congress passed the Fiscal Year (FY) 2005 FDA budget, which included approximately $26 million in additional funds for device reviews. Unfortunately, the results in FY 2003 and FY 2004 were not as positive. Only $3.1 million out of a committed $35 million was appropriated, resulting in a $31.9 million shortfall. As a result of this shortfall, the sunset provision within MDUFMA will be triggered unless the law is modified. Some in the industry have expressed a willingness to “forgive” Congress of the shortfall as long as other modifications are made that address the concerns of industry.

In addition, the device user fees have skyrocketed more than 60 percent during the first 3 years of the program. The original PMA fee of $154,000 is now $239,237. The initial 510(k) fee of $2,187 now stands at $3,502. The primary reason for the fee increases stems from the way in which fees are calculated. While some in the industry advocated for a set fee amount per submission, which would increase for inflation in subsequent years, the FDA was able to negotiate a system that provided them the flexibility to charge more per submission following a year in which they had fewer fee generating submissions. This “compensating adjustment” contributed significantly to the 34-percent fee increase for pre-market approvals (PMAs) and supplements and the 59.1-percent fee increase for 510(k) submissions in FY 2004.

Perhaps the most troubling part of MDUFMA is the lack of real performance goals from the FDA. During the MDUFMA negotiations, the FDA stated that with the user fees and additional Congressional appropriations, it would improve the review times for 510(k)s and PMAs by 25 percent. However, the goals established under MDFUMA do not reflect faster review in 99 percent of the submissions that are subject to the goals letter.

With the Oct. 1, 2005 sunset date quickly approaching, MDUFMA needs to be a top priority for the medical device industry, Congress, and the FDA. Addressing the skyrocketing fees, lack of appropriations, the need for enhanced performance, and dealing with other MDUFMA provisions will all need to be addressed in order to get the support of the entire industry. If attempts are made to modify MDUFMA without the agreement of the industry, the long-term viability of MDUFMA will be in jeopardy when it comes up for reauthorization in 2007.


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