SHORTFALL IN FDA FUNDING MAY FORCE INCREASED FEES ON DEVICE INDUSTRY IN FUTURE

WASHINGTON, October 30, 2003 - Medical device manufacturers could be forced to pay more in user fees in the future because the Bush Administration's revised proposal to fund FDA's Center for Devices and Radiological Health (CDRH) falls well short of the funding levels agreed to last year under the Medical Device User Fee and Modernization Act of 2002 (MDUFMA).

The Bush Administration's letter to Capitol Hill yesterday formalized the position floated by Administration officials in recent months. The proposal would provide CDRH with approximately $38 million less than originally agreed to under MDUFMA. The proposal would forgive the appropriations shortfall incurred during FY 2003 and the expected shortfall in FY 2004. In 2003, there was a shortfall of $11 million. The letter called on Congress to "fully fund the FY 2004 President's Budget request for the device and radiological health program." This would result in a shortfall of approximately $27 million for 2004 and a total of roughly $38 million for the two years combined.

"A year ago, Congress and the Administration committed to increase CDRH funding by approximately $60 million (including inflationary adjustments) from the FY 2002 baseline, in return for the industry paying a user fee," said MDMA Executive Director, Mark B. Leahey. "Now it appears, the Administration wants to dramatically reduce its funding commitment to less than 50% of the original agreement. In addition, as of October 1, 2003, the industry's fees went up by an average of 34%. This is not equitable." Leahey went on to say, "The industry has lived up to its end of the agreement: We expect the Administration and the Congress to do the same."

Under MDUFMA, the government's ability to collect user fees in 2006 and 2007 is contingent upon the appropriations shortfalls from the first two years being made up by 2005. As a result, the Administration's funding proposal would require a material alteration to the original agreement. Leahey stated, "If Congress is willing to look at altering the original terms of MDUFMA, the three relevant parties; the industry, the Administration and Congress must reach agreement as well. Currently, the industry does not support forgiving the shortfall. In the event that full funding is not attainable, all aspects of the program must be reviewed in order to ensure that the innovators and entrepreneurs are not faced with the dramatic fee increases that occurred between 2003 and 2004." Leahey continued, "Our industry is very different from the drug industry and these types of fee increases cannot be sustained moving forward."

MDMA and its member companies are committed to helping FDA obtain the resources needed to ensure that patients have access to innovative technologies in a more timely fashion. However, MDMA is not willing to do so at the expense of the innovative sector of the marketplace. "Any decrease in funding to CDRH today will ultimately result in increased user fees in the future. The additional financial burden will kill innovation from the entrepreneurial sector of the medical technology industry."

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The Medical Device Manufacturers Association (MDMA), a national trade association based in Washington, D.C., represents and serves the innovators and entrepreneurs involved in the manufacture of medical devices, diagnostic products, and health care information systems. MDMA seeks to improve the quality of patient care by encouraging the development of new medical technology and fostering the availability of innovative products in the marketplace.