Medical Device Link.

Originally Published MX September/October 2005

BUSINESS NEWS

Just days before their August break, the House and Senate passed legislation to ensure the continuation of the Medical Device User Fee and Modernization Act of 2002, which was initially signed into law to provide FDA with greater resources for the timely review of devices submitted for approval. Without Congressional action to modify provisions of the original user-fee act, the law would have likely expired on September 30 of this year.

The new bill, known as the Medical Device User Fee Stabilization Act of 2005, was signed into law by President Bush on August 1.

The original user-fee legislation authorized a two-prong funding structure for facilitating the device approval process: user fees from manufacturers and appropriations from Congress. Under the so-called "workload and compensating adjustments," FDA was permitted to increase the rate for fees paid by industry when the revenues gained from device submissions fell below projections. Under this arrangement, fees have increased by more than 50% since the inception of the program and were seen to be on a steep upward trajectory without congressional review and adjustment.

Key provisions of the new legislation include the following.

• Limits user fee increases to 8.5% for the next two years. Premarket approval (PMA) submissions will be charged $259,600 in 2006 and $281,600 in 2007.
• Eliminates concept of workload adjustments, which means that FDA cannot unilaterally increase user fees. The agency will be authorized to allocate up to two-thirds of fees carried over from previous years to keep the program going, but it must notify Congress if it intends to take such action.
• Forgives all outstanding industry and congressional shortfalls from previous years.
• Requires Congress to fully appropriate program funds in 2006 and 2007.
• Moves small manufacturer threshold from the current $30 million in annual revenues to $100 million. Small manufacturers are eligible for reduced user fees. The fee waiver for first-time PMAs submitted by small manufacturers remains at $30 million. The small business threshold cannot be reset without congressional approval.
• Calls for more-detailed reporting systems from FDA regarding the numbers and types of device submissions received and reviewed each year.
• Defines requirements and responsibilities for labeling reprocessed manufacturer-designated single-use devices for more- effective tracking.

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