FDA, Medical Device Makers Reach Agreement On Fees

The U.S. Food and Drug Administration (FDA) and medical device makers just reached an agreement on fees following the FDA’s recently-missed a deadline to submit a new arrangement on medical device fees to U.S. lawmakers.

Device makers will double product review fees paid to U.S. regulators over the next five years to $595 million. The deal is intended to ensure faster and more predictable evaluations, the FDA said, wrote Bloomberg Businessweek.

The deal must be authorized by Congress and replaces the arrangement that cost device makers $287 million over the last five years, said Businessweek. That deal expires September 30th.

Under a law enacted in 2007, the industry group—led by Johnson & Johnson and Medtronic Inc.—was charged $295 million over the five-year period since, to ensure that device products were reviewed in a time-appropriate way.

The FDA originally sought $805 million over the next five years to add 225-331 new staff members to respond to industry and Congressional complaints that its current device approval system is far too slow. On December 6th, industry announced it planned to only pay $447 million.

The new arrangement, which has not yet been finalized, enables the agency to hire 200 full-time employees by the end of the five-year program, according to an FDA statement, said Businessweek. The agreement also mandates agency evaluators to meet with device makers in the middle of device review so that manufacturers have sufficient time to correct problems and create goals for the FDA to reduce review times, said Businessweek, citing a statement from the Advanced Medical Technology Association, an industry lobbyist.

“If this is tied to faster, better visibility, more efficiency, it’s worth its weight in gold,” Thomas Gunderson, a Piper Jaffray & Co. analyst told Businessweek in a telephone. Gunderson noted that the FDA’s notoriously slow approval times—specifically in the past three years—has been problematic to medical device investment.

The agreement is under examination by The House Energy and Commerce health subcommittee.

FDA spokeswoman, Karen Riley, told Businessweek that the $595 million agreement will support about 35 percent of the FDA’s review activities. Today’s fees cover 20 percent, Riley noted.

Under the agreement, medicine companies will pay more than $700 million in fiscal 2013 in fees, said Representative Joe Pitts (Pennsylvania-Republican) at the hearing, wrote Businessweek. Drug maker fees pay approximately 60 percent of the cost of agency reviews for proposed new medicines. User fees are “critical for the health of the pharmaceutical industry and the ability to bring new drugs to patients,” Geno Germano, Pfizer’s president and general manager of specialty care and oncology, told Businessweek.

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