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Proposed US FDA User Fee Increase would Impact Smaller Medical Device Firms the Most

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EMERGO SUMMARY OF KEY POINTS:

  • The Trump Administration has proposed user fee increases for drug, medical device and other FDA registrants in 2018.
  • Few specifics on the proposed increases make it difficult to determine exactly how medical device firms would be impacted.
  • Smaller manufacturers make up the vast majority of the US medical device industry, and would be most substantially affected by higher FDA fees.

Trump Administration proposes US FDA user fee increases for medical device companiesUS Food and Drug Administration user fee increases in the Trump Administration’s proposed 2018 federal budget would disproportionately impact smaller medical device companies, as these firms make up the majority of the US medical device industry.

President Trump’s recently released budget blueprint for 2018 would adjust FDA user fees for 2018 to more than $2 billion, “approximately $1 billion over the 2017 annualized…level, and replaces the need for new budget authority to cover pre-market review costs.” These increases would be offset by administrative initiatives to boost regulatory efficiencies and speed up market authorization timeframes, according to the text of the proposed budget.

Smaller medical device manufacturers would bear the brunt

Although the proposal lacks specifics in terms of how these increases would apply to manufacturers of drugs, devices and other health products under the FDA’s purview, any such increase would clearly have a more significant effect on smaller FDA registrants.

Based on data from the US Department of Commerce, more than 80% of the roughly 6,500 medical device companies operating in the country have 50 or fewer employees, and many such firms have little or no sales revenues. Thus, the Trump Administration’s proposed fee hike would most directly affect these smaller firms, making it essentially more expensive to sell their devices and maintain FDA registration in the US. Would the budget blueprint’s proposed administrative actions to allow faster market access be enough to offset higher FDA user fees? Or would more expensive market access continue to drive down US FDA registrations among US companies, as Emergo previously reported?

FDA user fee increases: Far from set in stone

Again, the proposals do not provide enough specifics to prescribe a course of action for industry, and Trump’s budget as a whole has drawn bipartisan opposition in Congress to many of its components. Also, Congress—not the Trump Administration—bears ultimate responsibility for setting the FDA’s annual budget, so industry stands a fair chance of dodging the bullet of higher FDA fees. In the meantime, some manufacturers may want to consider pursuing FDA registration sooner, before potential 2018 fee increases kick in.

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