Preparing FDA for 21st Century Medical Technology

Over the past decade, America has experienced a revolution in medical technology innovation, which has improved the quality and efficiency of patient care across multiple settings. However, as the pace of innovation accelerated rapidly, an innovation “bottleneck” formed at FDA due to the device review program’s shrinking budget and manpower. As a result, delays at FDA were growing longer and threatening patient access to new lifesaving and life-enhancing technologies.

To address the problem, Congress unanimously passed The Medical Device User Fee and Modernization Act of 2002 (MDUFMA; P.L.107-250 of October 26, 2002), giving FDA the tools and resources to keep pace with 21st Century medical technology. This historic legislation represented a three-way commitment among FDA, Congress and industry to assure timely, predictable reviews of new tests and treatments. In exchange for a 25 percent improvement in review times at FDA over the five-year life of the program, America’s medical technology companies agreed to pay $150 million in user fees for new product applications and Congress committed to appropriating an additional $75 million to the Agency’s device review activities.

Problem:

Despite strong support from Congress, the Bush Administration, medical technology companies and FDA, the user fee program got off to a rocky start. Due to a tight budgetary environment, congressional appropriations for fiscal years 2003 and 2004 fell short by approximately $40 million. To ensure that user fees are additive and that the Agency receives the funding, MDUFMA terminates the program in FY06 if full Congressional appropriations are not realized. The Bush Administration demonstrated its commitment to the user fee program by proposing a record increase in FDA’s medical technology review budget for FY 2005 and pledging to fully fund the Agency for the remaining years of the program. However, the proposal does not address the $40 million shortfall from previous years.

In addition, medical technology companies have experienced excessive and unexpected user fee rate increases in the first two years of the program – more than 50 percent combined – setting a pace that cannot be maintained. The increases resulted from the enactment of MDUFMA provisions designed to ensure FDA can rely on a stable user fee revenue stream in the event of fluctuations in the number of new technology applications from year-to-year. However, these dramatic rate increases have placed undue burdens on America’s medical technology companies, threatening future innovation.

Congressional Action:

The 109th Congress will need to take steps to ensure the medical technology user fee program continues, which include:

• Fully funding of FDA’s medical technology review program by honoring the Bush Administration’s FY 2005 budget request and passing legislation to prevent the program from ending next year.
• Enacting safeguards to ensure future user fee rate changes are both predictable and reasonable, as Congress originally intended.

-September 30, 2004