MDMA Speaks Out Against FDA User Fee Increases
Aug 4, 2004
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The Medical Device Manufacturers Association (MDMA) announced that it is continuing to call for legislative modifications to stabilize skyrocketing Food and Drug Administration (FDA) user fees.

According to the association, for the second straight year, the FDA has dramatically increased the user fees for reviewing medical technologies. The new rates, associated with the Medical Device User Fee and Modernization Act (MDUFMA), were published on Aug. 2, 2004 in the Federal Register and take effect Oct. 1, 2004. The fees for Pre-Market Approval Applications (PMAs) and PMA supplements skyrocketed 16 percent. Original PMA fees increased from U.S. $206,811 to $239,237, the association says, and fees for 180-day supplements rose to $51,436 and real time supplements rose to $17,225.

"Cleary these increases, coupled with the 35-percent fee increase last year, strengthen our case that the structure of the program is inherently flawed and legislative modifications are needed to stabilize the fees," commented Mark Leahey, executive director of MDMA.

While MDMA says it has been supportive of getting FDA the additional resources it needs to review medical technologies, it says FDA has been critical of MDUFMA's structure. The compensating and workload adjustments, which allow FDA to charge more money per submission when FDA has a decline in the number of fee generating applications, have always been a concern of the group, MDMA says.

"While the FY05 increases are steep, they only tell half the story," stated Mr. Leahey. "The increases do not include any adjustment in FY05 for the $5.2 million shortfall that FDA is projecting. While we appreciate FDA's efforts to delay the compensating adjustment for one year, this does not permanently address the structural problems of the program.

"Unless modifications are made to eliminate the compensating and workload adjustments, the industry is looking at a minimum of 20-percent increases for the next two years," Mr. Leahy continued "These fees increases cannot be sustained by the innovative, entrepreneurial companies we represent. By FY07 we will have PMA fees exceeding $350,000."

MDMA admits that escalation in fees is not without precedent. The pharmaceutical industry faced a similar increase during the first year of the Prescription Drug User Fee Act (PDUFA) in 1992. First-year fees were approximately $100,000 per application. The following year fees increased substantially. Fees have continued to increase such that fees for FY 2005 are set at $672,000, a 673-percent increase over 13 years. If MDUFMA fees follow, the application fee for a PMA will be $1,036,420 in 10 years, MDMA claims.

"MDMA is extremely concerned that MDUFMA will follow the same fate as PDUFA," stated Mr. Leahey. "If we continue to go down this road without legislative modifications, the one million dollar application is a reality. There is a stark difference between the device industry and the drug industry. Very few devices have the revenue potential of a blockbuster drug, and unlike drugs, the majority of device innovation comes from smaller companies. In fact, small companies (less than 500 employees) represent well over 90 percent of the device industry. That is a very different set of demographics when compared to the universe of drug companies."

Mr. Leahey concluded by saying, "Given the tremendous spike in fees, the lack of sufficient Congressional appropriations and the meek performance goals, the industry will not support extending this program without the necessary modifications."

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