Industry supporters of medical device user fees are assuming a formidable challenge by linking the legislative proposal with the "Medical Device Amendments of 2001" (HR 3580), introduced by Reps. Jim Greenwood (R-Penn.) and Anna Eshoo (D-Calif.).

"I am disappointed that we could not reach agreement on legislation enacting medical device user fees," Senate HELP Chair Edward Kennedy (D-Mass.) said during a May 23 floor statement in support of the "Public Health Security and Bioterrorism Preparedness and Response Act" of 2002. Device user fee language and HR 3580 provisions were nearly included in the measure but did not enter the final agreement. The House and Senate passed the measure May 22 and May 23, respectively; it is currently awaiting President Bush's signature.

"Some in the device industry insisted on including extraneous proposals that could not be worked out in the limited time available," Kennedy explained, referring to language in HR 3580 covering inspection of device manufacturers by third parties as well as third-party review of premarket submissions.

"I believe that we can enact [user fee] legislation [this year], so long as we can dispense with extraneous controversies and focus on the common goals of restoring the resources of FDA's device center," he concluded.

Despite their challenge, proponents of HR 3580 continue to emphasize their preference for keeping the bill together with the user fee language - the "Medical Technology Enhancement Act of 2002." HR 3580 "is all about preparing FDA with the expertise and the resources to review the technologies of the future, and it is a perfect complement to the user fee package," AdvaMed President Pam Bailey maintained in a May 20 conference call. AdvaMed Executive VP-Government Relations Stephen Ubl agreed with Bailey's assessment. "I don't foresee the user fee agreement ever being introduced as legislation" on its own, he noted May 23. AdvaMed's board voted to endorse the user fee proposal May 20.

In a May 22 e-mail bulletin to members, AdvaMed promised it would continue to work during the remainder of the 107^th Congress to secure passage of user fees, HR 3580 and separate device reuse legislation. The association is planning a CEO "fly-in" in Washington for June 19, which could coincide with the next push to gain congressional support for the device reforms. Industry members anticipate identifying another vehicle for the measures. "There are other...conference reports on the horizon, so you could see the same thing playing out in the next few weeks," Ubl predicted.

House Energy & Commerce Chairman Billy Tauzin (R-La.) has also expressed confidence that the device reform provisions may be able to pass in the future. "In stand-alone legislation, we could probably have closed the gap," the Louisiana Republican noted at a May 22 press conference on Capitol Hill, calling the device reform discussions "very close." Tauzin noted that if there had been an additional 48-72 hours to work on the provision, an agreement could have been reached. "We just ran out of time."

At the Medical Device Manufacturers Association annual meeting May 22 in Washington, D.C., MDMA President Larry Holden expressed confidence that differences with congressional leaders over third-party language could be overcome. "Our hope is to work with Sen. Kennedy's staff to mollify his concerns about protecting the public interest, and I think at the end of the day we will be able to do that," he stated.

"The provisions within 3580 are very important to the industry. It will actually allow the FDA some relief from some of the revenue issues they've had, and if you can do third-party inspections and expand third-party review, that takes some of the burden off the FDA, and that's our hope," Holden said.

MDMA, which had originally come out against the AdvaMed-backed user fee proposal, now appears ready to break with its traditional stance and support user fees. The association claimed it had been excluded from key negotiations between industry and FDA.

At the annual meeting, Holden said he would back a device user fee proposal if "at the end of the day we come to an agreement where FDA has the appropriate funding. If [the agreement] partially include user fees in addition to appropriations [and] as long as the small device companies are protected," then MDMA would support it, he explained.

While AdvaMed maintains that timing, not the third-party provisions, prevented inclusion in the bioterrorism bill of user fee language, Holden asserts that "the big sticking point is with the remaining parts of 3580 that weren't already worked out [which were] third-party review, third-party inspection."

Kennedy reportedly met May 21 with FDA Acting Commissioner Lester Crawford on the inspection issue, after which the Massachusetts Democrat was understood to have rejected third-party proposals. Staffers say his position has not changed.

Retaining the third-party language is crucial to maintaining industry consensus needed to keep the device user fee proposal afloat. The third-party provisions are strongly supported by both the National Electrical Manufacturers Association and AdvaMed imaging firm members.

Some diagnostic imaging firms have stated their support of user fees is contingent on inclusion of the language from the Greenwood/Eshoo bill, which would allow eligible firms to pay for a third-party quality system audit in lieu of a visit from FDA inspectors. The bill would also expand CDRH's existing third-party program to all Class II device applications, including those with clinical data.

According to AdvaMed, the device user fee provisions would not affect companies choosing to have third parties review their 510(k)s. It remains to be seen whether this caveat will be enough to keep some imaging diagnostic companies on board should third-party language be dropped in the future.

AdvaMed's small business council held a teleconference May 21 to discuss the user fee package. The firms were eager to know whether 510(k) review times would be substantially improved under the proposal, and also what the total cost would be to small companies.

Although AdvaMed maintains that its members support both HR 3580 and user fees, a number of small member companies are understood to be opposed to any device user fee proposal; one board member voted against it by proxy May 21.

Explaining her decision in an e-mail, AdvaMed board member and Andersen Caledonia Executive Chairman Lauren Andersen refers to the $2,500 fee for 510(k) reviews. She points that "$2,500 seems at first glance to be low for a 510(k) application, but if a small company were filing a sheaf of several 510(k)s at once, it could become the projected speed improvement is only 35 days (and there are no guarantees of that)." Scottish firm Andersen Caledonia provides sterilization and laboratory services to device manufacturers throughout Europe. According to Andersen, the user fee proposal was drafted with "insufficient small company input."

On the other hand, a group of small firms chose to support user fees because of the FDA performance criteria included within the proposal. According to AdvaMed, the performance criteria include a 30% improvement in year five in making 510(k) decisions and a 22% improvement on PMA decision actions in year five. An overall average of 25% improvement is expected across all categories of premarket submissions over a five-year window.

AdvaMed maintains that it considered the needs of small manufacturers in drafting the document. For example, firms claiming $5 mil. or less in revenues in their most recent federal tax filings are allowed to defer PMA user fee payments for one year under the proposal.

The program will cost an aggregate of $225 mil., with $25 mil. per year coming from user fees and $15 mil. from an increase in appropriations, subject to congressional approval. AdvaMed officials noted that FDA would like to ramp up the annual amount coming in from user fees.

According to the provision, the amount authorized for user fees is approximately $25 mil. in fiscal 2003; $27 mil. in 2004; $30 mil. in 2005; $33 mil. in 2006; and $35 mil. in 2007.

Premarket approval applications will cost $125,000, and PMA supplements $25,000. Companies using third parties to review 510(k)s will be exempt from user fees.

The proposal also requires FDA to release an annual report to the House Energy & Commerce and Senate HELP Committees on user fee program progress.

For now, CDRH will refocus on the appropriations process to achieve proper funding levels, CDRH Director David Feigal reported May 22 at the MDMA annual meeting.

While the possibility remains that user fees could be adopted before the 107^th Congress adjourns, Feigal said that the device center will proceed on the assumption that it will not receive user fees through FY 2004. The White House has requested a total of $191.8 mil. for the center.

Kennedy To Industry: User Fees Still In Play If Third Party Sits This One Out

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