Medical Device & Diagnostic Industry Magazine
MDDI Article Index

Originally Published MDDI October 2005

NEWSTRENDS

By Erik Swain

There is no more controversy about user-fee increases. After two consecutive double-digit hikes that sparked outrage from industry, increases for FY 2006 have been limited to 8.5% for premarket approval (PMA) applications and 9.4% for 510(k) submissions.

The increases were kept low because the two mechanisms that caused the earlier hikes are no longer part of the fee calculations. Instead, the Medical Device User Fee Stabilization Act of 2005 (MDUFSA) caps PMA fee hikes at 8.5%. Before, workload and compensating adjustments triggered large increases if CDRH had received fewer applications than expected the previous year. MDUFSA, which became law in August, has eliminated those adjustments. In addition, small businesses are now defined as those with less than $100 million in annual revenues—instead of less than $30 million.

So, for FY 2006, which began October 1, the PMA fee is $259,600 and the 510(k) fee is $3833. For small businesses, the PMA fee is $98,648 and the 510(k) fee is $3066. FDA estimates that 19% of 510(k) submissions will qualify for the reduced fee.

For a firm to qualify to have its first PMA fee waived, it must have less than $30 million in annual revenues, as before.

Even with the fee hikes capped, stakeholders are optimistic that CDRH will have the funding it needs to meet its performance goals. That is because MDUFSA requires Congress to fully fund its promised increase in the CDRH budget in FY 2006 and FY 2007. In the first two years of the user-fee program, FY 2003 and FY 2004, Congress did not come through with all of its promised appropriations increases.

"AdvaMed is pleased that MDUFSA will bring down the rate of user-fee increases to the single-digit range," says Mark Brager, spokesman for AdvaMed. The association is also pleased that MDUFSA eliminates the adjusters that contributed to the unsustainable fee-rate hikes in FY 2004 and FY 2005.

Medical Device Manufacturers Association (MDMA) executive director Mark

Leahey says the increases "are a lot easier to stomach, but still substantial." He noted that much work remains to ensure that the Medical Device User Fee and Modernization Act of 2002 (MDUFMA) operates as intended. "While MDUFSA allows the program to continue, reauthorization is needed to extend the program beyond September 30, 2007," he says. "MDMA will continue to evaluate the program and determine what additional modifications are needed to ensure that patients have timely access to safe and effective products, while not stifling innovation."

The law specifies that 180-day supplements are set at 21.5% of the PMA fee and that real-time supplements are set at 7.2% of the PMA fee. This makes their fees $55,814 and $18,691, respectively, for FY 2006.

Firms that qualified for the reduced fee available to small businesses in FY 2005 must obtain a new certification and decision number from FDA for FY 2006. The agency recommends applying for qualification at least 60 days before submitting an application. Firms must complete Form FDA 3602, which can be accessed at www.fda.gov/cdrh/mdufma/guidance/2006.pdf. They also must submit certified copies of the latest federal income tax return of the firm, as well as those of any affiliates, partners, and parent companies.

The four-step procedure for paying user fees can be found at www.fda.gov/OHRMS/DOCKETS/98fr/05-15863.pdf.

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