HIMA LOBBYING IN SUPPORT OF DEVICE USER FEE BILL is focused on key members of the House and Senate committees that will consider the measure. The Health Industry Manufacturers Association is attempting to persuade opponents of the bill, introduced July 12, not to set up obstacles to its passage, arguing that if the measure fails Congress could end up adopting legislation that is less friendly to industry.

Although not entirely happy with the bill, HIMA is not pursuing amendments to the legislation (HR 4782) in the belief that efforts to do so could stall the bill or result in different versions in the House and Senate. Differing versions of the bill would complicate its passage, which will have to be a relatively simple affair in a Congress that is preoccupied with health care reform.

House members targeted by HIMA include Thomas Bliley (R-Va.), the ranking minority member of the Energy and Commerce/Health Subcommittee, who aired his concerns with the bill at the subcommittee's device user fee hearing July 14.

On the House side, the measure is being sponsored by subcommittee chairman Henry Waxman (D-Calif.) and Energy and Commerce Committee Chairman John Dingell (D-Mich.). Sen. Edward Kennedy (D-Mass.), chairman of the Senate Labor and Human Resources Committee, introduced S 2276, a companion measure in the Senate. A hearing on the bill has not been scheduled on the Senate side.

Although the device user fee legislation will be debated first in the House, the Senate, where individual members can kill bills by putting them "on hold," is likely to be a more crucial proving ground. Opponents may include Labor Committee minority member Sen. Orrin Hatch (R-Utah), who is not convinced that user fees are the answer to problems in FDA's device program. Minnesota Republican David Durenberger, another minority Labor Committee member, is still reviewing the bill and does not yet have a position on it.

As expected, lower per application fees were one of the few differences between earlier discussion drafts and HR 4782 ("The Gray Sheet" July 11, p. 4). Under the proposed legislation, the charge would be $3,200 per 51 0(k) and $52,000 for premarket approval and product license applications. The fees represent a 22% drop for 510(k) charges from the May 17 version of the bill, and a 16% decrease for PMA charges.

Fees for PMA supplements also have been reduced since the May draft. PMA supplements with clinical data would cost $7,100; those without clinical data, $4,500. These figures are 15% and 21% lower, respectively, than those in the May draft. The figures were lowered because provisions for FDA review of applications under the Clinical Laboratory Improvement Amendments of 1988 were dropped from the bill.

The caps on device user fees FDA may collect annually under the legislation also are lower than in earlier drafts. The limits for fiscal years 1995 through 1999 now range between $21.3 mil. and $24 mil.; the caps previously were set between-$26.7 mil. and $30 mil. The lowest ceiling would occur in fiscal 1996, the highest in fiscal 1999.

The bill would guarantee that device user fees would not go to deficit reduction and would be directed to device review activities. Performance goals to which FDA commits, such as improved application review times and guidance document development, are spelled out in a July 8 "letter agreement" ("The Gray Sheet" July 11, p. 1).

In a written copy of testimony delivered at the subcommittee hearing by HIMA President Alan Magazine and Chairman William Zadel, the association said that it "reluctantly" took its position on the bill because it feels that industry opposition to and subsequent failure of the measure could mean a worse bill in the future, with the possibility of user fees being applied to deficit reduction. The reasons are similar to those HIMA gave when it softened its position against user fees and entered into discussions with FDA in October 1993.

Addressing deficit reduction, the association noted that the Senate could propose user fees that would go to the general treasury as it did last year. The Senate Appropriations Committee reported out a fiscal year 1995 FDA budget measure last month calling for $150 mil. in general user fees. The full Senate is expected to consider the bill the week of July 18. Last year, user fees for deficit reduction proposed by the Senate were dropped in House/Senate conference on the budget.

HIMA urged elimination of general user fees from the current budget measure, warning that "nothing could more rapidly jeopardize this industry's support of a device user fee bill than the passage of general user fee legislation. It would simply not be fair for our members to be triple taxed" through income taxes and two types of user fees.

In arguing that successful efforts to kill the user fee bill could result in harsher legislation next year, HIMA pointed to the device industry's experience with the Safe Medical Devices Act of 1990. Congress was close to passing a medical device law in 1988 when three companies turned against the bill and were able to have it defeated. Two years later, Congress passed the more onerous device law.

HIMA also argued that further delay of a device user fee law would mean that FDA could not make necessary improvements in its device review program and that applications to market new devices would continue to languish at the agency. The revenues lost as a result of FDA delays, HIMA asserted, far outweigh the cost that would be imposed by user fees.

Noting its traditional opposition to the idea, HIMA said it still believes user fees are a "tax on innovation," but that "in today's budgetary climate, a user fee program that dedicates the revenues to device reviews appears the only likely means through which FDA will secure the resources it needs."

HIMA's board recently gave its "nearly" unanimous but unenthusiastic endorsement to HR 4782, which the association said reflects the device industry's "resignation" to the inevitability of user fees.

Although HIMA is not pursuing amendments to the legislation, it would have liked the bill to include provisions for statutory rather than regulatory exemption of additional Class I devices from 510(k) requirements, specific FDA performance goals and stronger incentives for the agency to meet those goals.

The association has raised concern that the government may take too long to implement the 510(k) exemptions, but FDA Commissioner David Kessler indicated at the hearing that the agency is making progress in publishing the regs. A Federal Register notice "will go on display" early in the week of July 18 proposing "the exemption of 162 types of generic Class I devices from the 510(k) requirements," Kessler said. He added that the exemptions should reduce the agency's 510(k) workload "by 641 submissions, approximately 10%" annually. "Later this year" FDA plans to publish a reg proposing 510(k) exemption for Class II, Tier I devices, which would cut FDA's workload by "another 700 submissions annually."

HIMA also is concerned that FDA activities identified in the bill, involving postmarket surveillance and manufacturer and user incident reporting, "not become major activities to which user fees are applied."

HIMA said it is pleased to see that HR 4728 does not hew too closely to the Prescription Drug User Fee Act. "Strict adherence of all of its provisions would not be appropriate for a device bill." Unlike the drug user fee bill, the device proposal does not include registration and listing fees. The exception for small businesses in HR 4728, which allows employers with fewer than 20 employees and no marketed devices to defer all or pan of the fee for review of its first device until one year after final FDA action, "recognizes that device firms are often much smaller than pharmaceutical firms," HIMA noted. Under the drug user fee legislation, companies with under 500 employees and no approved products would be required to pay half the fee one year after submission.

The fee waiver provision in HR 4728 "contains more objective criteria than those in the pharmaceutical bill. As a result, we anticipate that the administration of HR 4728 will require fewer resources at FDA," HIMA said. The device bill allows FDA to waive or reduce a fee if the application is for a humanitarian use device, if the waiver is "necessary to protect the public health," and if the fee "would present a significant barrier to innovation because of limited resources available to such person or other circumstances." Drug application fees could be waived if there is a public health need, a cost barrier to innovation, or if a sponsor can show that total fees would exceed FDA's costs for review of the drug.

Unlike the drug user fee bill, HR 4728 includes a provision to address FDA collection of excessive user fee funds in a given year and a statutory reference to FDA performance goals. The device bill also defines review activities more broadly.

"Some in this industry might oppose this legislation because it does not contain every particular the industry would prefer to see in a user fee bill," HIMA said. However, HR 4782 "incorporates the key principles HIMA's Board of Directors established when negotiations began" on device user fees in October 1993.

Some industry groups not sharing HIMA's user fee strategy are urging amendments or trying to stop the bill. The lone industry dissenter at the July 14 House hearing on the legislation was Wayne Barlow, chairman of the Utah Biomedical Industry Council. Barlow testified that device user fees are opposed by the UBIC, the Medical Device Manufacturers Association, the In Vitro Diagnostic Manufacturers Coalition (IMC) and the American Electronics Association.

Barlow proclaimed that "the problems besetting [FDA] did not evolve from a lack of resources, but rather from a lack of judgment, common sense and good management in the agency's approach to the regulation of medical devices." User fees, Barlow predicted, would "merely institutionalize the agency's bad management practices." Barlow advocated major reform of device laws, limiting "FDA's regulatory purview" and encouraging "a risk/benefit regulatory culture in the FDA."

Medical Alley, whose request to testify at the July 14 hearing was denied, wants HR 4782 to include "an explicit statement of performance goals for the FDA" and statutory 510(k) exemption of Class I devices. Medical Alley is "not seeking to stop the movement of the legislation at this time," but plans "to work in both the Senate and the House to make fundamental improvements," Medical Alley Executive Director Thomas Meskan said in a July 12 press release.

Medical Alley believes the current situation is not comparable to that during 1988 consideration of the medical device law because a much larger number of companies want changes to the bill and because they are only seeking to "improve" the bill, not kill it.

In a June 22 statement, IMC asserted that proposed submission fees "will pose a significant deterrent for the introduction of new technology," and suggested a user fee program based on a graduated scale of "premarket submission qualification" (establishment) fees based on company size. Companies paying the annual fee could submit an unlimited number of premarket applications.

IMC "is aware that some large companies have decided to support the proposed user fee legislation," which is "understandable since they can spread the cost of the fees over their income from a very large product line. Further, the large companies will develop products only for those diseases which have markets of several million dollars."

"Smaller device manufacturers," on the other hand, often develop products "to diagnose diseases of lower prevalence" that "may have markets in the hundreds of thousands rather than millions" of dollars. These products "will no longer be developed under the proposed legislative fee structure," IMC contended, and the smaller companies "will be destroyed by the proposed legislation."

HIMA LOBBYING IN SUPPORT OF DEVICE USER FEE BILL

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