Senate OKs limits on fees to approve medical devices

Innovation in creating potentially life-saving medical devices got a boost with U.S. Senate passage this week of a medical device bill that will limit the cost small manufacturers incur getting devices approved, say Utah device manufacturers and one of the bill's co-sponsors, Sen. Orrin Hatch, R-Utah.

Hatch says the bill, HR3423, will allow "more small businesses to avoid . . . onerous fees." Previously passed by the House, it is identical to the Senate bill he worked on.

The issue centers on two fees levied against medical device manufacturers since 2002. The fees are designed to help cover the costs incurred by the Food and Drug Administration in approving devices for market.

Manufacturers seeking approval for a new innovation (a premarket application, or PMA) must pay a fee that can be as high as a quarter-million dollars. Those seeking approval for a device that has changed somewhat but is based on existing technology (called a 510k, after a section of the legal code) pays several thousand dollars. The fee is paid whether the device is approved or not.

For many companies, such fees are "a tax on innovation," according to Kelvyn Cullimore Jr., president and CEO of Utah-based Dynatronics, which makes physical therapy devices, and a board member for the Medical Device Manufacturers Association.

Hatch held up the bill that established the fees, the Medical Device User Fee and Modernization Act of 2002, until a provision was agreed on that would exempt companies with revenues below $30 million. The just-passed bill raises the exemption to $100 million and also limits fee increases to 8.5 percent. They have been rising an average of 20 percent a year.

If it makes it easier for a company to qualify as a small business, it will help, says Paul Turner, senior vice president, chief technical officer and chairman of BSD Medical, which makes thermal therapy products to treat cancer.

Cullimore says the original bill, set to sunset this year, exempted businesses with sales under $30 million, but Congress didn't fund it, creating a significant shortfall that led to the fee increases. This fixes that problem and expands the number of businesses that can get a break on the fees.

While the pharmaceutical industry is dominated by some giants, most medical device firms are small, he says, so this is important for the industry. "This is going to be a big boon for small manufacturers."

Large manufacturers supported the fees in part because it limited their competition and they could afford it, fee opponents say.