Originally Published MDDI
April 2003
FROM THE EDITORS
User Fees: Out the Window?Scarcely out of the starting gate, the controversial user fee program seems near collapse. Now that medical device makers are stuck with the program, they should do everything possible to make it work.
With the passage last fall of the Medical Device User Fee and Modernization Act of 2002, all signs seemed to point to a promising new era for the industry. By paying user fees, device makers would ensure faster approval of their products. In turn, society would benefit from more rapid introduction of life-saving technologies.
But as Jim Dickinson points out on page 32 of this issue, that promising vision seems to be fading. User fees are indeed being paid. But rather than enhancing current budget levels, they are simply masking a decrease in government’s share.
For a decade, the pharmaceutical industry had been paying user fees to underwrite FDA reviews of its products, evidently with great success. Indeed, drug makers had twice supported five-year extensions of the law. By 1999, CDRH was strongly encouraging user fees. The center, it said, had exhausted all the improvements possible through reengineering. Only the increased resources represented by user fees could produce further improvement.
Thus, after years of resistance, the device industry was persuaded to try user fees. The resulting law made the intent of such fees clear: to increase resources for product reviews. It specified that CDRH should receive about $206 million in government funds each year through fiscal year 2005. This would represent an annual increase over FY 2001 of about $15 million. In return, FDA was expected to meet performance goals reflecting improved review times. Industry, for its part, would throw in about $81 million in user fees.
As in all legislation worthy of the name, of course, there was a catch. Though user fees were mandated, increased appropriations were not. The law set the reasonable condition that if government funding did not increase by the specified amount, FDA would not be required to meet its goals. Unfortunately, it did not also set the just-as-reasonable condition that neither would industry have to pay its user fees. Regardless of how far short FDA falls of its performance goals, industry must pay at least through FY 2005.
So the following worst-case scenario was set up: Total appropriations fall short of the minimum. FDA fails to meet its performance goals. Industry pays three years of user fees.
Sadly, this worst case seems likely to be realized. CDRH funding in FY 2003 fell $11 million short of the threshold level. The administration’s proposed budget for 2004 is worse still—short by some $21 million. If Congress does not increase the proposed amount for FY 2004, it can make up the difference only by increasing the FY 2005 budget by close to 30%—an unlikely event.
Add to this the fact that Commissioner McClellan has said that FDA does not expect to meet its performance goals this year. Nor, he said in testimony before Congress, is he optimistic that the goals will be met by the end of the three-year period.
How did the device industry get into this fix? We believe the answer has much to do with its continuing low profile in the Congressional as well as the public eye. At the AdvaMed annual meeting last March, FDA’s deputy commissioner, Lester Crawford, made this point exactly. As he argued, both FDA and industry must do a much better job of raising the public awareness of the device industry as an entity separate from the drug industry but equally important.
It behooves the industry to hold nothing back in putting pressure on the administration and Congress to keep up their end of the bargain and make the user fee program a success. Otherwise, it will just be $81 million out the window.
The Editors
Copyright ©2003 Medical Device & Diagnostic Industry
