Diagnostics & Imaging Week Washington Editor

WASHINGTON — Medical device companies soon may be able to breathe a little easier when faced with FDA user fees.

On July 20, a Senate committee took a big step forward in addressing the rising costs associated with the Medical Device User Fee and Modernization Act (MDUFMA), which have been a concern to device companies — especially of the early-stage variety — and industry organizations.

The Senate's Health, Education, Labor, and Pensions Committee, which oversees the FDA, held a markup session on proposed legislation called the Medical Device User Fee Stabilization Act of 2005 (S.1420). The committee voted unanimously to send the legislation to a full Senate vote.

The proposed fix is a big win for device companies, especially small to mid-sized firms. Fees have increased rapidly since the program's inception in 2002. A series of compensating adjustors in the original law allowed Congress and industry to defer budgeted fees from one year to the next. This has sent fees for new product submissions skyrocketing and average annual cost growth for the program to more than 20% per year, according to FDA figures.

The proposed stabilization would hold annual growth over the next year to roughly 6%.

Under the current law, $32 million would have been required to make up the shortfall in fees and government appropriation from 2003 and 2004. The new legislation would wipe the slate clean, requiring no added appropriations, but full Congressional funding would be mandated for 2006 and 2007.

The workload and inflation compensating adjustments in the current law also would be removed in the new law.

User fee increases for standard premarket applications (PMAs) for FY06 and FY07 would be capped at 8.5%. Right now, the increases, if left unchecked would be 21% and 20% respectively. This would make a PMA for 2006 $259,000, rather than $287,000, and $281,000 for 2007 vs. $344,501 without the fix.

In a boon for the Medical Device Manufacturers Association (MDMA; Washington), which has lobbied hard for changes to MDUFMA, the bill would increase the small business threshold from companies with $30 million in gross revenue to $100 million. It also would eliminate the FDA's ability to modify the small business threshold.

To receive a first-time PMA fee exemption, however, a company will still have to be below the $30 million threshold.

The new legislation also will attempt to clarify Section 301 of MDUFMA, which deals with labeling and branding of single-use devices (SUDs). The proposed language would limit the branding provision only to reprocessors of SUDs.

MDMA, the Advanced Medical Technology Associ-ation (also Washington), the FDA, and industry have had representatives on Capitol Hill over the past few months negotiating the finer points of the legislation with members of the committee.

"We worked as hard as we could to ensure that the fee increases were as small as possible and the small business threshold was a large as possible," Mark Leahey, MDMA's executive director told Diagnostics & Imaging Week following the meeting. "We have members who have been holding PMAs because they can't afford the fees. This is not just a political victory. Patients, ultimately, are the ones who benefit from allowing this new technology to get to market faster."

Despite pressure from larger companies on the change in the small business classification, Leahey said that the chairman and leadership of the health committee saw the importance of "smaller companies being given the opportunity to innovate."

"Looking back at the statements we made in 2002, we have always criticized the workload and compensating adjustors," Leahey added. "It makes no sense that the formula allowed the FDA to collect more money if they had fewer fee-generating submissions. However, there were concessions made by other in the industry that we have had to live with, and we're thankful that the Senate has limited those provisions and there is predictability."

Leahey went on to say that industry and his association will continue to work with the FDA to gauge the agency's performance needs.

In 2007, MDUFMA will be reevaluated and subject to a more comprehensive overhaul.

"Any of us who have followed this weren't sure we'd be able to get a legislative fix," said Edward Kennedy (D-Massachusetts), ranking member of the health committee.

Kennedy credited committee chairman Sen. Mike Enzi (R-Wyoming) for his "perseverance" on user fee stabilization.

"We worked very hard and think that this will allow medical devices to still be handled in a streamlined way," Enzi said.

Committee member Sen. Barbara Mikulski (D-Mary-land), who briefly was hospitalized a week earlier and diagnosed with atrial fibrillation, told Senate colleagues that she didn't have to look far to see the benefit of the medical technology industry, especially now that she is wearing a heart monitor.

"Medical device development in this country is really phenomenal, and I am not just talking about the really high-tech stuff," she said. "My heart monitor was invented in the United States of America and approved by the FDA. We ask where the jobs are going to come from in the future in this country. They will come from dynamic sectors like this."

The House Committee on Energy and Commerce has yet to tackle the user fee stabilization issue. According to Leahey, Rep. Joe Barton (R-Texas), committee chairman, has been "actively engaged" in the issue and has shown "tre-mendous leadership."

Industry groups hope the House and Senate will act before the upcoming August recess so the target sunset date of the MDUFMA program is not reached.

In the Senate, the legislation was sponsored by Sens. Enzi, Kennedy, Mikulski, Richard Burr (R-North Carolina), Mike DeWine (R-Ohio), Chris Dodd (D-Connecticut), and Patty Murray (D-Washington).

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