Although the final bill approved by the House and Senate and sent to President George Bush for his signature omitted such fees, the Advanced Medical Technology Association (AdvaMed; Washington) last month reversed its longstanding opposition to user fees paid to the FDA. In discussing its about-face, the association said such fees would support improved performance by the agency and ultimately help the industry. In a unanimous vote, AdvaMed's board in mid-May approved a plan supporting fees paid to the agency by companies seeking regulatory clearance of a new product. The vote came, the organization said, after an agreement hammered out with FDA officials. The proposed yearly fees paid to the agency by device manufacturers would bring in an estimated $25 million in the first year. Specific first-year fees would be as follows: $125,000 for a premarket approval (PMA) filing; $25,000 for a PMA supplement; and $2,500 for a 510(k).
AdvaMed – along with the Medical Device Manufacturers Association (MDMA; also Washington) – has traditionally launched aggressive lobbying efforts against user fees, arguing that the additional monies required from companies would be a disincentive to development of new products, especially by smaller firms. But in announcing the new position, Pamela Bailey, AdvaMed president, said the user fees should not create an undue burden on small companies and would speed up product clearances. "We worked with a group of our small member companies to ensure the proposal provided a strong protection for small firms that do not have the up-front resources to pay a premarket application fee," Bailey said. More than 80% of AdvaMed's member companies have fewer than 50 employees, she noted.
Bailey stated the association's new position in terms of the value to patients rather than as a burden on manufacturers: "It's an exciting new day for patients, because this will give them more timely access to technologies and establishes strong review performance goals for the FDA." She said approval of new technologies such as tissue engineering and microelectronics requires added resources because of the challenges they pose to the FDA's premarket review program.
Stephen Ubl, AdvaMed's executive vice president for federal government relations, said that the fees would increase over a five year period, and produce a total of about $225 million. "There is a ramp-up schedule, and the FDA will establish the fees for subsequent years based on several factors, including inflation and workload, but tentatively it looks like it will increase from $25 million to $29 million, then to $32 million and finally to $35 million, with additional appropriations from Congress," he said. Ubl noted there are two types of goals included in the agreement: First, cycle goals, where the FDA agrees to perform PMA and 510(k) reviews in a quicker time period; and secondly, the agency will establish its own decision goals on how to meet industry demand.
"There is a deferral for small companies, which is defined as a company with revenues of $5 million or less from the last federal tax filing, and the company would have one year following the FDA decision to pay the fee," he said.
The agreement is based on the FDA receiving 78 PMAs in the coming year. Within five years, AdvaMed hopes to see a 25% performance increase from the FDA, based on the additional funds. There are some exceptions to the mandatory fees, Ubl noted. "If a company chose to get a third-party review, they would not have to pay the fee for a 510(k) as well."
AdvaMed doesn't necessarily see the fees as resulting in additional FDA staff, but rather providing the flexibility to contract with experts in specific areas of science to help improve the agency's market approval process, said Jim Benson, executive vice president, technology and regulatory affairs. "There may very well be additional employees [hired], but we see it as a way of gaining consultations from experts in new technologies and gaining additional infrastructure improvements, such as new computers and networks." The staffing levels at the Center for Devices and Radiological Health have fallen 10% since 1995, and in 2001 the average review time for PMAs rose to 411 days – twice the statutory review time of 180 days, according to data from AdvaMed.
The MDMA, by contrast, has not endorsed user fees but instead has proposed that additional FDA funding be developed through the mechanism of a joint task force supporting agency efforts. MDMA was not approached about the user fee agreement, Bailey said, but she expressed hope that it would offer its support. "We are hopeful they will have an open mind about this because it serves the interest of small companies," she said.
The final bill passed by the two houses in late May failed to include device user fees, but the subject is likely to be revisited.
Spectranetics board removes execs
Out of step with two of the company's top executives about the future direction of the firm, Spectranetics' (Colorado Springs, Colorado) board of directors last month voted to remove them. The company, which specializes in lasers used for minimally invasive surgery, said that CEO Joseph Largey and CFO Paul Samek had been removed from their posts. The company said that the officers were removed for their disagreement with the board's policy of pursuing sustainable growth in profitability as a key driver of the value of the company's stock. The board said it was convinced that Largey and Samek were "not committed to controlling selling, general and administrative expenses and were under-investing in the company's product development efforts at a critical point." The board said it effected the terminations only after it made considerable efforts to persuade Largey and Samek to endorse and implement those strategies.
Emile Geisenheimer, the company's chairman of the board, was appointed acting CEO to replace Largey. Geisenheimer became a director of Spectranetics in 1990 and chairman of the board in 1996. He led the final series of venture capital financing of the company, chaired the board committee that led to the company's initial public offering and chaired the board committee that negotiated the merger of Spectranetics and Advanced Interventional Systems in 1994. Spectranetics' CVX-300 excimer laser is the only system currently approved by the FDA for multiple cardiovascular procedures, including coronary atherectomy and the removal of problematic pacemaker and defibrillator leads.
Matricaria retiring from St. Jude board
St. Jude Medical (St. Paul, Minnesota) chairman Ronald Matricaria will retire from the board at the end of this year, and was succeeded as chairman by CEO Terry Shepherd, effective at last month's annual shareholders meeting.
Matricaria, 59, joined St. Jude Medical as president and CEO in April 1993 and was elected chairman in 1995. Shepherd, 49, joined the company in October 1994 as president of its heart valve division. He was named president and CEO and was elected to the board of directors in May 1999. A company statement said the election of Shepherd as chairman "completes a succession planning process initiated several years ago by the board of directors."
Matricaria reflected on St. Jude's growth, noting that when he joined the company nine years ago, it "was successful and profitable, but focused on one segment of the heart valve market." Now, he said, the company "is a leader in several significant global medical technology markets, well-positioned to play an important role in the treatment of a wide variety of cardiac diseases, including atrial fibrillation and heart failure, and shareholder value has increased fivefold."
He said Shepherd, Dan Starks (president and chief operating officer) and the company's senior management team "provide the customers, shareholders and employees of St. Jude Medical with a unique combination of leadership, operations focus and industry knowledge."
Shepherd saluted Matricaria for "laying the cornerstones" of the company's current success. "Ron created a new St. Jude Medical on the strong foundation of our heart valve franchise." Shepherd said. "It was his vision to enter the cardiac rhythm management business."