Senate Bill Aims to Protect Device User Fees from Sequestration

On Aug. 1, legislation was introduced in the Senate to help save millions of dollars allocated to the U.S. Food and Drug Administration (FDA) from budget cuts mandated by sequestration. The bill, if passed, would allow the agency to use industry-provided money—in the form of user fees—to ensure timely review of new devices.

The bill, introduced by Sen. Mark Pryor (D-Ark.), is almost the same as a version introduced in the U.S. House of Representatives two weeks ago by Rep. Anna Eshoo (D-Calif.). Titled the “FDA User Fee Protection Act,” the Senate bill would alter the 1985 legislation that sets the rules for sequestration, adding a provision to shield what the FDA gathers directly from industry.

The agency plans to collect roughly $1 billion in user fees in fiscal 2013, including about $100 million from medical device outfits. However, thanks to sequestration, the FDA can’t touch about $85 million of that, making it nearly impossible for the agency to keep the promises it made last summer when Congress approved a hike in what device and drug companies pay for approvals.
Industry groups such as the Advanced Medical Technology Association (AdvaMed) came out quickly in support of the proposed legislation.

“Since the sequester took effect earlier this year, medical device and diagnostics companies have been paying the full amount of user fees to FDA as negotiated under last year’s new Medical Device User Fee Agreement, as enacted in the FDA Safety and Innovation Act (FDASIA),” said Steve Ubl, president and CEO of AdvaMed in a prepared statement.

Ubl added that sequestration prevents the agency from accessing the full amount of fees. In FY 2013, according to AdvaMed, $2.9 million in medical device user fees will not be available to the agency, and going forward, additional user fees are at risk because of sequestration.

Across different industries, such as pharmaceuticals, biotechnology and devices, sequestration is preventing the FDA from accessing nearly $83 million in industry-paid user fees in the current fiscal year.

“User fees paid by industry to FDA should not be treated the same way as taxpayer dollars,” Ubl said. “The fees paid by medical technology companies under FDASIA represent an agreement between industry, FDA and Congress. Under that agreement, industry agrees to supplement FDA’s appropriated budget with user fees, and the agency agrees to performance commitments designed to increase the efficiency and predictability of the review process.”

Co-sponsors of the Senate bill so far include: Sens. Roy Blunt (R-Mo.), Daniel Coats (R-Ind.), Al Franken (D-Minn.), and Jerry Moran (R-Kan.). The House version, called the “FDA Safety Over Sequestration Act,” was introduced July 19 by Reps. Leonard Lance (R-N.J.), Anna Eshoo, Doris Matsui (D-Calif.) and Mike Rogers (R-Mich.).

“Many Minnesotans depend on medical devices to keep them alive and depend on this important industry to support their families,” said Franken. “That’s why I’m working to ensure that the FDA has full access to the user fees it receives, and that the approval process for medical devices doesn’t come to a halt because of the sequester’s across-the-board, indiscriminate cuts. As I work to pass this bill, I will also continue to fight for a full replacement of the sequester, which will bring relief to many Minnesota families, businesses, and organizations.”

During an April hearing of the House appropriations subcommittee that covers agriculture programs and the FDA, Margaret Hamburg, M.D., FDA commissioner, said: “Those monies are being collected from industry, but they’re going into a bank so to speak … and they can’t be used to support our programs and activities. At the same time, they can’t be used to offset the debt, as I understand it.”