The federal sequester is siphoning away part of the funds that the medical device industry is paying for FDA review of new technologies, and that means the agency may not be able to keep all the promises it made in exchange for hiking its user fees.
The federal watchdog agency will have $210 million, or about 5.1% of its $4.1 billion budget, cut from its 2013 budget March 1 as a result of sequestration, the bargain between the White House and Congress. About $2.9 million of that comes from the user fees that medical device companies pay in order to ensure timely reviews of new products, according to one estimate.
"Those monies are being collected from industry, but they’re going into a bank so to speak," FDA commissioner Margaret Hamburg told a House of Representatives appropriations subcommittee in April. "They can’t be used to support our programs and activities."
The siphoning of user fees came as a surprise to both the industry as well as the FDA. Hamburg said the agency was not expecting user fees to be included in the automatic spending cuts initiated last September by the Office of Management & Budget, according to the Alliance for a Stronger FDA.
Medical device industry lobbying group AdvaMed earlier this year promised to stand “shoulder to shoulder” with the federal watchdog agency to avert cuts that could impact medical innovation, but user fee dollars are slowly trickling away and that means the agency may have to be more conservative than it had hoped in developing programs to support and improve medical device review.
That also means the agency will have to take another look at the promises it made last June when penning the latest iteration of the user fee program, which doubled medical device user fees from $295 million over 5 years to $595 million.
"We will not be able to use all of those user fees to achieve the performance goals that were negotiated with industry," Hamburg told the appropriations subcommittee. "I think that will be reflected in a slowing of some of our ability to build up key programs, to advance medical products, review programs in critical ways."
The agency won’t have to resort to layoffs, Hamburg said, but hiring won’t be as robust as projected, Roll Call reported. The FDA had estimated that the increase in medtech user fees would allow the agency to hire more than 200 full-time equivalent workers, but Hamburg told subcommittee members that the FDA won’t be able to hire "as much as we would like."