Medical Device & Diagnostic Industry Magazine
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Originally Published MDDI September 2005

EDITOR'S PAGE

Surprisingly, Washington Walks the Walk

Though many said it couldn't be done this quickly, industry, Congress, and FDA banded together to come up with legislation preserving the user-fee program but curbing its exorbitant increases.

It is rare these days to see Washington insiders back up their talk with action. But that is exactly what happened in early August when President Bush signed a law making extensive modifications to the Medical Device User Fee and Modernization Act of 2002 (MDUFMA). This is extremely encouraging to the device industry for two reasons. One, the new law puts an end to the skyrocketing user-fee increases that placed a huge burden on industry, especially smaller companies. Two, it shows that the device industry's concerns are still being heard in an era when the government is preoccupied with so many other things, from funding a war to overhauling Medicare.

In the June 2005 issue (“Time to Turn Talk into Action”), we were skeptical about whether Congress, FDA, and industry would be able to pull this off. The intention was to keep the user-fee program going while modifying it to make increases more predictable. At the very least, MDUFMA would have to be amended by the end of September 2005 to eliminate a “trigger” provision. The original legislation called for the user-fee program to end after three years if Congress did not deliver on the full amount of appropriations promised. Congress did not live up to its end of the bargain and wasn't going to, thanks to the war and other priorities. But all of the stakeholders realized that letting the program die would have been a bad idea, so at the very least, the “trigger” needed to be eliminated.

Last fall at the MDUFMA stakeholders meeting, Mark Leahey, executive director of the Medical Device Manufacturers Association (MDMA), suggested making broad changes to the law in 2005, since new legislation would be needed anyway. Almost no one else present agreed, because there was little faith that the stakeholders could come to an agreement and if they did, that Congress would pass such a bill before the program was to sunset.

But fortunately, MDMA and the other stakeholders defied the conventional wisdom. After countless hours of meetings and phone calls, they put together the Medical Device User Fee and Stabilization Act of 2005 (MDUFSA), which has some surefire measures to keep fee hikes down.

Annual increases will be capped at 8.5%. The workload and compensating adjustments, which were blamed for much of the fee jumps, have been eliminated. The small-business threshold has been raised from $30 million in annual sales to $100 million, and FDA is barred from modifying it. (Firms below that figure can qualify for reduced fees. The $30 million figure still applies to a waiver of a first PMA fee.) Congress and industry are forgiven for shortfalls up to this point. Full congressional funding of the program is required in fiscal years 2006 and 2007.

Not surprisingly, industry is quite pleased with the result.

“These critical modifications represent many of the provisions that MDMA lobbied to be incorporated into the original law,” says Leahey. “Thankfully, members of Congress…understood the importance of creating a healthy environment for smaller companies to innovate and grow.”

“MDUFSA will improve an already-strong user-fee program that has successfully expedited patient access to lifesaving and life-enhancing medical technologies and holds FDA to strict performance standards,” says AdvaMed president Stephen J. Ubl.

The question that remains is whether the new formula will give FDA enough resources to meet its performance goals. That will most likely depend on whether Congress keeps its promise this time. But if the collaboration that went into the crafting and passage of MDUFSA is any indication, all stakeholders appear committed to do whatever it takes to make the program succeed. That's no small feat in this day and age.

Erik Swain for The Editors

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