User Fee Re-Authorization Clears the Senate

Sen. Orrin Hatch’s (R-Utah) effort to add an amendment to a recent piece of legislation to renew U.S. Food and Drug Administration (FDA) user fees fell flat.

The excise tax is part of the Affordable Care Act, and the tax alone is intended to raise more than $30 billion in 10 years to help pay for the cost of heathcare reform. This number is debated, but no matter what end total, the tax will undoubtedly hurt the revenues of medical device companies significantly, industry insiders and sympathetic lawmakers have asserted.

“Scrapping this tax would ensure medical device manufacturers can invest in hiring new workers and developing innovative 21st century, life-saving medical devices,” Hatch said in an announcement.

The Hatch Amendment, as it was known for a short while, was not added to the FDA legislation because if it is, co-sponsor Sen. Dan Coats (R-Ind.) admitted, it will stall the FDA user fee agreements.

Hatch’s agenda expands beyond the device tax, though this is the avenue he is taking to chip away at the Affordable Care Act.

“One way or another, the whole law has to go—that is something Republicans will never stop fighting for. With this amendment, we are shining a spotlight on why the $28.5 billion tax hike hurts economic growth, job creation and innovation,” said Hatch of the now-dead amendment. “Scrapping this tax would ensure medical device manufacturers can invest in hiring new workers and developing innovative 21st century, life-saving medical devices.”

Hatch was supported by a host of Republican co-sponsors including Scott Brown, (R-Mass), senator from one of the largest medtech hubs in the United States.

Meanwhile, the FDA use fee renewal legislation was passed in the senate in a vote of 96-1, to the happiness of most involved: regulators, industry players, and consumers alike. Stephen J. Ubl, president of the Advanced Medical Technology Association (AdvaMed) expressed his pleasure with the “expeditious passage of this important piece of legislation.”

The passage of the bill is certainly a landmark. Not only does it extend the 20-year program that helps fund the FDA’s budget for reviewing new drugs and medical implants, but it also had dozens of amendments and provisions tacked on by lawmakers that will affect the FDA and medtech industry deeply.

For instance, the FDA will now be able to relax certain requirements for drugs that appear to have breakthrough potential, bringing such medications to approval faster (its important to note here that a study published in the New England Journal of Medicine this week shows that the FDA actually approves drugs faster than regulatory bodies in Europe and Canada). As for devices, the FDA will now have to provide reasoning for denying a low-risk device clearance within 30 days of the rejection date. This may mitigate accusations of the FDA being overly cautious and unpredictable.

In a prepared statement, Ubl went on to say, “We believe the strong bipartisan support this measure received today reflects the acknowledgement that this legislation will benefit not only FDA and the medical technology industry, but most importantly American patients.”

Ubl made sure to make a pointed statement about the importance of the medtech industry in the United States: “We are a strong contributor to the U.S. economy, creating more than 400,000 high-paying jobs across the country. The user fee agreement reached between FDA and industry and implemented by this legislation is a potential game-changer that could help accelerate the development and approval of safe and effective treatments and diagnostics.”

As far as the device tax repeal goes, House Rep. Erik Paulsen (R-Minn.) is reviving hope. House Republicans, driven by Paulsen, will begin to push a vote on a standalone bill to repeal the device tax following Memorial Day weekend.

Along with Rep. Anna Eshoo (D-Calif.), Paulsen co-chairs the House Medical Technology Caucus. The caucus’ job is to raise awareness regarding issues that affect the medtech industry.

The device tax repeal bill has plenty of GOP support—but not much from the other side of the aisle. There are, however, currently eight Democratic co-sponsors, including Rep. Michael Capuano (D-Mass.), Democratic candidate for Senate from Massachusetts Elizabeth Warren has also been a vocal supporter of repealing the tax.

Sen. Brown put the necessity of the tax repeal in perspective during Senate hearings for the FDA user fee bill: “Massachusetts alone is expected to lose over 2,600 jobs as a direct result of this tax, and up to about 10 percent of our entire medical device manufacturing workforce will be affected,” Brown said. “The bottom line is that we cannot have this kind of job loss in any sector of our economy when we are still struggling.”