Dramatic User Fee Increases Threaten Innovative Medical Technology Companies, Advocacy Group Asserts

WASHINGTON -- The Food and Drug Administration (FDA) recently published the FY04 device user fee rates in the Federal Register. The new rates, associated with the Medical Device User Fee and Modernization Act (MDUFMA), take effect Oct. 1, 2003. Fees for Pre-Market Approval Applications (PMAs) and PMA supplements rose over 34 percent. Original PMA fees increased from $154,000 to $206,811. Fees for pre-market notifications [510(k)'s] jumped 59.1 percent for companies with sales more than $30 million and 27.3 percent for companies with less than $30 million in sales. Companies with sales over $30 million will pay $3,480 for a 510(k) submission and companies with less than $30 million in sales will pay $2,784.

Under MDUFMA, the FDA is mandated by law to set fees based on certain "adjustment" provisions.

"We do not blame FDA or Congress, specifically, for the dramatic fee increases," commented Mark Leahey, executive director of the Medical Device Manufacturers Association (MDMA). "However, the burden that these increased fees place on small medical device manufacturing companies serves to emphasize our concern over the way MDUFMA was originally structured, and further justifies our original opposition to certain provisions of the legislation. Those provisions were primarily supported by large device manufacturers and promoted by their trade association. I only hope that these increases will not have a permanent effect on innovation as we move forward with MDUFMA."

This escalation in fees is not without precedent. The pharmaceutical industry faced a similar increase during the first year of the Prescription Drug User Fee Act (PDUFA) in 1992. First year fees were approximately $100,000 per application. The following year fees increased substantially. Fees have continued to increase such that fees for FY 2004 are set at $573,000, a whopping 573 percent increase over 12 years. If MDUFMA fees follow suit, the application fee for a PMA will climb to $871,000 within 12 years, and 510(k) fees will escalate to $12,500.

"MDMA is extremely concerned that MDUFMA will follow the same fate as PDUFA," stated Leahey. "There is a stark difference between the device industry and the drug industry. Very few devices have the revenue potential of a blockbuster drug. In addition, unlike drugs, the majority of device innovation comes from smaller companies. In fact, small companies (less than 500 employees) represent well over 90% of the device industry. That is a very different set of demographics when compared to the universe of drug companies."

Leahey concluded, "MDMA will continue to monitor this program closely and work with congressional appropriators and the administration to fully fund MDUFMA."

The Medical Device Manufacturers Association (MDMA) is a national trade association based in Washington, D.C. that represents and serves the innovators and entrepreneurs in the medical device industry. The thousands of innovative companies that MDMA represents, including over 160 dues paying members, consist of manufacturers of medical devices, diagnostic products, and health care information systems. MDMA seeks to improve the quality of patient care by encouraging the development of new medical technology and fostering the availability of innovative products in the marketplace.

Source: Medical Device Manufacturers Association