Device Makers Said to Double FDA Fees to Produce Faster Reviews

Medical device makers will double the fees they pay U.S. regulators to get products reviewed over the next five years, to $595 million, in a deal designed to secure faster and more predictable evaluations, the Food and Drug Administration said today.

The pact, which must be authorized by Congress, replaces one that cost Medtronic Inc. (MDT), Johnson & Johnson and other device makers $287 million over the last five years and expires on Sept. 30. The agreement, which is still being finalized, would allow the FDA to hire 200 full-time employees by the end of the five-year program, the agency said in a statement.

The agreement requires FDA evaluators to meet midway through reviews with device applicants to give the companies time to address concerns and sets goals for the agency to reduce review times, according to a statement from the Advanced Medical Technology Association, the device industry’s Washington lobby.

“If this is tied to faster, better visibility, more efficiency, it’s worth its weight in gold,” Thomas Gunderson, a Piper Jaffray & Co. analyst based in Minneapolis, said in a telephone interview, of the fee deal.

One of the biggest barriers to medical device investment has been the FDA’s slow approval times, particularly in the last three years, Gunderson said.

The industry has been seeking more meetings with FDA staff during reviews to head off 11th-hour requests for safety data that companies said were delaying approvals, even with the fee system. The sides had traded proposals for how much such a system would cost.

Industry Comment

“The improvements in the agreement provide FDA and medical technology companies the tools needed to improve the efficiency and consistency of the review process,” said Stephen Ubl, AdvaMed president and chief executive officer, in the statement.

Drugmakers including Pfizer Inc. (PFE), the world’s biggest, and Merck & Co. also pay user fees. The House Energy and Commerce health subcommittee is conducting a hearing today to examine the agreement the FDA reached with the pharmaceutical industry and made public in September.

The medicine companies will pay more than $700 million in fiscal 2013 in fees under its agreement, Representative Joe Pitts, Republican of Pennsylvania, said at the hearing. The drugmaker fees pay about 60 percent of the cost of agency reviews of 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, New York-based Pfizer’s president and general manager of specialty care and oncology, said in an interview.

Starting Point

Device manufacturers and the FDA have been negotiating the new agreement for more than a year. The FDA said it will use any added money to increase evaluation staff.

The agency had sought as much as $805 million in fees, according to minutes of a Nov. 29 meeting posted on the agency’s website. The medical-device industry countered with a $447 million offer, minutes for a Dec. 6 meeting showed.

The $595 million agreement will support about 35 percent of the FDA’s review activities, Karen Riley, a spokeswoman said in an e-mail. Current fees cover 20 percent, she said.

The FDA took 73 days on average in 2010 to complete less- stringent reviews of devices that pose a low- to moderate-risk to patients, compared with 80 days before companies paid fees in 2001, according to a Bloomberg Government study. More than 90 percent of devices are reviewed under the less-stringent process, known as 510(k).

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net

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