Diagnostics & Imaging Week Washington Editor

WASHINGTON — Has the FDA medical device user fee program put a damper on the number of product submissions?

Whatever the answer, in FY04 the number of device submissions received and reviewed by the agency has fallen off slightly since 2003.

According to the FY04 report released last week by the Center for Devices and Radiological Health (CDRH), the center received 9,064 submissions in 2004 compared to 9,879 in 2003.

Overall, the number of major submissions completed totaled 9,182 in 2004 compared to 9,570 in the previous fiscal year. The number of completed applications includes some rollovers from the previous year.

The submissions included in the center's tally are original premarket approval applications (PMAs), PMA supplements, original investigational device exemptions (IDEs), IDE amendments and supplements, 510(k)s, original humanitarian device exemptions (HDEs), and HDE supplements.

The number of PMAs received remained fairly consistent between 2003 and 2004 at 54 and 51, respectively. However, the number of 510(k)s have dropped off more substantially to 3,635 in FY04 compared to 4,247 in FY03. The figure for 2004 is the lowest number of 510(k) submissions since 1999.

These numbers, along with others released in the report, are scrutinized closely by industry and medical device organizations, as they look for increased value for the funding they are providing to the FDA via the Medical Device User Fee and Modernization Act, or MDUFMA. And that scrutiny does little to increase the confidence in the agency's use of user fee funding.

Critics have argued that fewer device submissions would seem to leave more resources for the center — and faster approvals — but FDA officials have countered that there is a long-term plan at work, so there is likely to be no short-term spike in productivity.

Budget cuts and fee collection shortfalls for FY03 and FY04 resulted in a $40 million deficit for the program. For FY05, the federal budget had requested that the program be fully funded this year. A change late in the budget cycle left another budget shortfall, though much smaller than the previous two years.

Because of fewer device submissions and a lack of congressional funding, user fees have risen sharply.

Certain levels of funding are required from industry and the government, and the compensating adjustor provision within the act allows shortfalls to be carried over into the next fiscal year.

The Advanced Medical Technology Association (Washington) — a prime industry mover behind the user fee plan — and the Medical Device Manufacturers Association (MDMA; also Washington) — an early critic — both support continuation of the program, but with changes, including a fix for the government's shortfall forgiveness and a cap on fee increases.

In his opening letter in the annual report, Daniel Schultz, MD, who recently completed his first full year as director of CDRH, emphasized that the second "M" in MDUFMA stands for "modernization" and CDRH has been taking "a serious look" at infrastructure improvements.

"User fees allowed us to begin doing that, giving us the opportunity to make a deposit — albeit a small one — into updating our IT systems," Schultz wrote.

He continued: "This is the kind of investment of resources that won't necessarily reap dividends in the current fiscal year, but will begin paying off in the future years."

With increased appropriations and user fees, CDRH will have the resources to hire additional staff, expand training, improve review processes, provide more interactive reviews, provide new and updated guidance documents, and begin the process of electronic review of applications, the report said.

Mark Leahey, executive director of MDMA, told Diagnostics & Imaging Week that rising user fees, at least in part, have had a chilling effect on device submissions, particularly among the smaller manufacturers his association represents.

"We are concerned that user fees would have an impact on submissions, and I think the data show that we've seen close to a 15% to 20% reduction, which is significant," he said. "I can't say that it is all the result of user fees, but it certainly is a concern, especially given the absurdity of the current structure of MDUFMA. Even though FDA's workload is decreasing and 510(k)s are decreasing 20%, they [CDRH] are still allowed to generate the same amount of total revenue dollars."

Leahey added that he thought it was "disappointing" that CDRH has not yet been willing to consider "doing more with less," despite ongoing talks with the agency.

"We have members who are currently withholding PMA submissions for certain indications because it is not in their regulatory budget to pay a quarter of a million dollars for it," he said. "And now that there is a fee associated with a 510(k), companies — unless the products are extremely profitable products — shy away from putting the submission forward."

Rather than provide the funding for additional staff, much of the MDUFMA funding, according to Leahey, has gone to make up the shortfalls in congressional appropriations and pay for the federally mandated salary increases of existing, pre-MDUFMA staff at the FDA.

According to FDA statistics, there have been 132 new hires for CDRH between FY03 and FY04 as a result of MDUFMA funding, mostly scientists and engineers.

"We've had some conversations with FDA that weren't the most productive," Leahey said. "And we all want to see the program continue, so long as it is done in a responsible fashion."

MDUFMA reaches a turning point when a decision must be made this fall on the compensating adjustor requirement in the legislation, or the program sunsets.

"Hopefully over the next few weeks or month we can get something in place that gives the FDA the resources it needs while at the same time making fees more reasonable or stabilizing the increases," Leahey added. "Something has to be done to address that, and we hope it can be done in the not-too-distant future."

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