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Politics as Usual

Medical Device & Diagnostic Industry Magazine
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An MD&DI May 1997 Column


The Clinton administration is advocating user fees for medical device review--but neither industry nor Congress is buying in.

You might think a lame-duck president would lay politics aside in his final term and do something historic for a change--like seriously reform FDA. Not Bill Clinton. If his 1998 budget request for FDA is any yardstick, his second term will be characterized by political gamesmanship and deference to the longstanding tax-reduction politics of the Office of Management and Budget.

OMB strategies include placing user fees in executive-branch budget requests to Congress as a means of theoretically lowering taxes. (In this scenario, instead of a government service being paid for out of tax dollars from general revenues, the government charges users of the service a fee, thus enabling taxes to be lowered or not increased.) It is then up to Congress to reject such user-fee proposals and make up the shortfall out of tax revenues. By its own rhetoric, then, the administration looks good with the uninformed public for having its heart in the right place, and the tax-and-spend Congress looks bad.

Clinton's 1998 budget plays this OMB game with FDA more aggressively than it's ever been played before. Hewing close to a timeworn tactic usually seen in labor-management bargaining, the budget asks Congress for the politically unthinkable--medical device user fees without any consultation with, and acceptance by, industry--with the hope that Congress will trade down to something FDA can live with. There is no evidence that the administration cares whether that hypothetical compromise will rest well with industry--that's up to Congress to take care of.

And during a House Appropriations agriculture subcommittee hearing on February 27, Congress demonstrated that it, at least, is listening to industry. Predictably, it is doing so with some anger directed at the administration's high-roller gamesmanship.

Targeting the budget request's reduction in the tax dollars it is seeking (a reduction that would be made up by proposed user fees), subcommittee chairman Joe Skeen (R­NM) countered the tactic with the suggestion that Congress appropriate the lower figure requested and "then tell [OMB] to go suck eggs for the rest of it. What we're seeing here is a phony budget process."

Skeen had obviously heeded what he had been told just two days earlier in a letter from the Medical Device Manufacturers Association (MDMA). In that letter, MDMA executive director Jeff Kimbell pointed out that 65% of the device industry consists of firms with fewer than 20 employees. MDMA is "greatly disturbed," said Kimbell, because the administration's budget request "would reduce the medical device program by $40 million [the equivalent of 388 full-time equivalent (FTE) positions], but would add $34 million to a questionable program relating to tobacco products. If the device program were to lose 388 FTEs, the program itself would deteriorate and the impact on our companies would be devastating."

The larger Health Industry Manufacturers Association (HIMA) expressed the same strong view, urging a full appropriation at last year's level and charging that the Clinton proposal "masks severe and dangerous cuts in the budget authority . . . and undermines attempts by the FDA to fulfill its statutory obligations to protect and promote the public health."

Almost as if he wished to fuel even further the industry's heated rejection of the Clinton proposal, FDA lead deputy commissioner Michael Friedman would not promise the subcommittee that the requested device user fees would yield any specific review improvements. "We can't compromise on safety," he explained. When Congressman George Nethercutt (R­WA) inquired about the rationale for the dollar figures in the user-fee request, FDA's associate commissioner for management Robert Byrd responded that he didn't want to "give any real sense of precision."

Clearly, the user-fee ploy had been thrown together clumsily for the sake of politics. It did not come from any carefully thought-out FDA initiative. Nor did it show the hallmarks of Vice President Al Gore's successful Reinventing Government initiative, which requires that agencies like FDA poll their constituencies before taking significant actions.

With respect to user fees, this year's budget process is aberrantly different from earlier negotiations that produced (through a Democratic Congress) the highly successful user-fee program for prescription drugs. In that now-abandoned model of give-and-take, the industry came aboard after some persuasion. Its acquiescence was obtained in exchange for certain guaranteed review improvements, as well as the key guarantee that the user fees would not go into the Treasury, but would supplement the agency's usual appropriation for product review enhancements.

In its 1998 budget preparations, FDA tried to get industry to accept user fees in exchange for program improvements, but industry was divided. Some HIMA members, presumably the large multinationals, were willing, but other manufacturers shared MDMA's concerns--that they simply could not afford to pay for FDA reviews.

As MDMA's Kimbell wrote in his letter to Skeen, those who favor device user fees don't seem to understand the differences between drugs and devices. Kimbell's explanation of the difference was both apt and lucid: "Once a drug is approved by the FDA the molecular structure of the drug is set in stone. However, a medical device is constantly going through refinements to reflect advancement in technology. The product evolution of a device and a drug are completely different and the legal structure, as mandated by Congress, recognizes this fact. The industries themselves are dissimilar, in company size and makeup, research and development costs, liabilities, reimbursement schedules, etc. A prime example of this would be the evolution of the pacemaker versus common aspirin in the last 25 years--multiple changes have been made to the pacemaker to make it smaller, safer, and more scientifically advanced, whereas the aspirin has gone through no change at all."

That is a big difference, but it does not exempt medical devices from the economic reality that government costs (i.e., taxpayer costs) are involved in commercializing a product. Such costs may legitimately be recouped from the profit-maker in the form of user fees and passed along to end-users (or their insurers) in the prices charged for those products.

FDA believed it could fine-tune its device review process to the point where industry would come to see direct financial gain for itself from user fees--as the drug industry eventually did, years before--and then join FDA in a joint appeal to Congress for authorizing legislation.

But this year the balky process between FDA and industry was overwhelmed by the raw politics of the Clinton administration and Capitol Hill. The name of the game is still politics as usual.


In February FDA finalized its long-incubating guidance document, "Deciding When to Submit a 510(k) for a Change to an Existing Device." Uncertainty about how to answer this question has caused a lot of discord between FDA and industry. First proposed in April 1994, the draft guidance was the subject of over 60 comments and underwent a second iteration last October, which brought forth 11 generally supportive comments. Although the guidance is now final, FDA is seeking even more comments and it promises to consider them if the guidance is revised.

In her preamble to the final guidance, Susan Alpert, director of the Office of Device Evaluation at the Center for Devices and Radiological Health (CDRH), says that many changes may be made without filing a new 510(k), but to determine whether to submit one a manufacturer should compare the changed device to the most recently cleared version or to the preamendment device cited in the original 510(k). "In effect, manufacturers need to submit a new 510(k) only when a change, or the sum of incremental changes, exceeds the 807.81(a)(3) threshold, [namely, when it] 'could materially affect the safety or effectiveness of the device.'

"Because many simultaneous changes may be considered in the evolution of device design," Alpert's preamble continues, "each type of change should be assessed separately. When any one change leads the manufacturer to decide to submit a 510(k), then the 510(k) requesting the change should compare the modified device to the legally marketed device (the manufacturer's device or a competitor's legally marketed device). In the instance where the legally marketed device is the manufacturer's own device, the 510(k) should identify previous changes that did not necessitate a 510(k) submission, to avoid confusion when we compare the current 510(k) to the previous clearance."

To request a copy of the guidance, contact Heather Rosecrans, CDRH (HFZ-404), FDA, 9200 Corporate Blvd., Rockville, MD 20850; 301/594-1190.


In 28 months, FDA has found it necessary to discipline 32 of its 7300 employees--none of them for retaliating against industry, apparently. Sparse details of the personnel actions since October 1994 were released in February, in response to a spoken request made by Congressman Tom Coburn (R­OK) during a May 1, 1996, hearing on FDA's management problems. Coburn made his request in the context of a discussion on alleged FDA arrogance, retaliation, and cover-ups that occur when industry complains about regulatory processes and the behavior of FDA employees.

In the 32 actions, seven employees were suspended--two for unauthorized use of a government vehicle, one for threatening a coworker, one for failing to disclose outside employment, one for accepting a gift from industry, one for destroying government property, and one for using government equipment for personal business purposes.

Five employees resigned--two for time and attendance abuse, one for misuse of confidential documents, one for time and attendance abuse and threatening coworkers, and one for obtaining false FDA identification cards.

Another was fired for purchasing a computer from a relative, and three contractor employees were fired for misusing FDA computers.

The rest of the disciplinary actions were less severe, and, judging from the brief descriptions released, none seems to have involved misbehavior toward industry.


The number of major submissions processed by the CDRH Office of Device Evaluation (ODE) fell 20% in 1996--from 12,013 reviewed in FY 1995 to 9667 in 1996, according to the office's annual report. "Output reflects input," says ODE clinical and review policy deputy director Kimber Richter, pointing out that 574 device types were exempted from review in FY 1995, contributing to the decrease in overall submissions--20,236 in 1996, down from 21,990 in 1995.

In addition, the 510(k) backlog was practically eliminated in FY 1995, which also correlates to the drop in submissions reviewed.


Former FDA commissioner David Kessler officially begins his new duties as dean of the Yale University School of Medicine on July 1. The school ranks fourth among universities in grants received from the National Institutes of Health, with a research budget of $200 million. Yale president Richard Levin said in a February 13 statement that Kessler brings "a unique array of skills" to the school. He also said that Kessler "has the intelligence, energy, and vision to enhance" its quality and to "help it establish a new standard for excellence in education, research, and patient care." FDA bade Kessler farewell at a March 6 dinner in his honor.

James G. Dickinson is a veteran reporter on regulatory affairs in the medical device industry.

Copyright ©1997 Medical Device & Diagnostic Industry

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