Industry compromises on user fees to speed up FDA approval process

June 29, 1994

Performance goals would end approval backlogManufacturers of medical imaging devices may soon be paying to submit their products to the federal government for regulatory clearance. User fees moveda step closer to reality after Congressional

Performance goals would end approval backlog

Manufacturers of medical imaging devices may soon be paying to submit their products to the federal government for regulatory clearance. User fees moveda step closer to reality after Congressional staff drafting legislationchanged its language in response to criticism from the medicaldevice industry. It is believed that a bill will be introducedduring this Congressional term.

The compromise was worked out between staff on the House Energyand Commerce Committee and industry groups, including the NationalElectrical Manufacturers Association and the Health Industry ManufacturersAssociation.

The major points in the debate involved lowering the fees thatcompanies would have to pay when submitting device applicationsto the Food and Drug Administration, as well as setting certainperformance goals for the FDA. Because most applications to commercializenew imaging devices go through the 510(k) review process, oneof the major concerns of industry is the proposed fee for thesesubmissions. The fee was reduced from $5900 to $4100 after theindustry made its concerns known.

The medical device industry has historically fought the levyof any kind of user fee. But political realities have intervened,particularly the FDA's huge backlog of products under regulatoryreview. Legislation that would have levied user fees as a meansof generating revenue to reduce the deficit almost made it throughCongress last year.

"We've concluded that with the frantic search for moneyto pay for the administration's spending programs, Clinton mightdo something with user fee legislation this year," said RobertBritain, vice president of medical products at NEMA.

An important stipulation of the proposed regulation is thatthe money from user fees be added to the FDA's budget and notused in place of funds that are otherwise budgeted by Congress.Also, all fees collected would be directed to support productreview activities.

A requirement of NEMA and other groups is that the legislationset explicit performance goals to which the FDA must adhere. Thesegoals are aimed at virtually eliminating the backlog of 510(k)sand premarket approval applications (PMAs) that have bogged downthe review of new submissions.

More than 1000 510(k) devices have been under review at theFDA for over 90 days, according to the agency (SCAN 6/1/94). Thelegislation calls for the FDA to wipe out 95% of that backlogand 90% of the backlogged PMAs within two years after receivingthe first user fees. The agency would then be committed to completingaction on 95% of 510(k)s within 90 days of receiving a submissionand would have to complete substantive review of 90% of PMAs within180 days of receipt.

Along with these performance goals, the reduction in proposeduser fees has made the imposition of the fees more palatable.In addition to the drop in 510(k) fees, the proposed cost forsubmitting a PMA supplement with clinical data fell substantially,from a set fee of $55,000 down to $9000. Also cut were proposedfees for an original PMA, from $105,000 to $62,000, as well asthe fee for PMA supplements without clinical data, which was initiallyproposed at $5900 but was dropped slightly to $5700.

Taxing innovation. Companies in the medical imaging industryhave used PMA and PMA supplement submissions sparingly since thelate 1980s, when the FDA reclassified MRI scanners, allowing themto go through the less intensive 510(k) process. But as vendorsseek to extend the clinical applications of their products, theymay have to go through the PMA process after all.

ATL of Bothell, WA, for example, is pursuing a PMA for theuse of its Ultramark 9 HDI system to differentiate malignant frombenign solid lesions in the breast (SCAN 5/18/94). The PMA application,which was filed in February, is based on clinical data obtainedduring a two-year study supported by the company. If the proposeduser fees had been in place at the time, ATL would have had topay $62,000.

"There was some discussion about making the fees retroactivebased on the time of filing, but we will probably be outside thatretroactive date by the time they enact the legislation,"said Terry Sweeney, ATL's director of worldwide regulatory affairs.

The proposed legislation calls for fees being applied to applicationsmade 90 days prior to enactment.

Sweeney said the company supports user fees if the money goesto the FDA and it helps the agency speed the review of medicaldevices. ATL is seeking a PMA for its Ultramark 9 HDI becausethe agency has identified the use of ultrasound scanners for thediagnosis of cancer as not substantially equivalent to devicesthat preceded the 1976 legislation requiring the agency to reviewmedical devices for safety and efficacy. If competitors want tokeep on an even footing with ATL, will they will have to submitPMAs as well?"That's our understanding," Sweeney said.

User fees could raise a lot of money, not just from the medicalimaging industry but from the rest of the medical device community.The FDA expects to receive about 4100 510(k)s, 60 PMAs, 20 PMAsupplements with clinical data, and 520 PMA supplements withoutclinical data in the 1995 fiscal year.

The proposed legislation sets caps, however, on how much theFDA can collect annually in the first four years of the program.Those caps are set at $26.7 million during fiscal year 1995; $28.5million in FY 1997; $29 million in FY 1998; and $30 million inFY 1999. If the amount exceeds the cap, applications will geta credit that can be used toward fees paid in the following fiscalyear. That all depends, of course, on passage of the legislation,which is anything but a sure thing, according to NEMA's Britain.

"There is a lot of other important legislation that isgoing to be on Congress' plate this summer, like health-care reform,"Britain said. "They are shooting for an enactment date ofSeptember, and if they are able to do that, I would think thestaff on Capitol Hill will have achieved a great deal."