Will a New FDA User Fee Discourage Innovation in Medical Devices?


More medical device companies have been using an alternative pathway to get innovative products on the market faster, but a new user fee on industry could affect the use of this pathway.

The “de novo” classification pathway has been used to get devices on the U.S. market such as Accelerate Diagnostics Inc.'s PhenoTest BC Kit, the first test to identify organisms that cause bloodstream infections and provide information on the correct antibiotics for treatment. De novo is a way to get products on the market without going through the Food and Drug Administration’s most stringent review process, known as premarket approval.

However, if companies have to pay a new fee that is seen as relatively burdensome, it could dissuade applicants from seeking de novo classification.

There’s no current user fee on de novo, but that’s expected to change by the start of the next fiscal year Oct. 1. De novo is designed to accommodate novel devices that aren’t like a “predicate” device on the market. Most devices reach the U.S. market by a premarket notification or 510(k) submission, based on a predicate already on the market. As the FDA website notes, once a device gets a lower or moderate risk classification under de novo, it can be used as a predicate for someone else’s premarket notification, or 510(k).

A de novo submission is a premarket request for the FDA to classify a novel device into Class I (lowest risk) or Class II (moderate risk). Receiving the Class I or Class II classification means the devices aren’t subject to the most stringent FDA review process, premarket approval (PMA), which is for the highest-risk category, Class III. A PMA must contain sufficient valid scientific evidence to assure that the device is safe and effective for its intended use.

“While in theory the de novo pathway serves a real need, the amount of the user fee could discourage innovation,” Bradley Merrill Thompson, a Washington-based health-care attorney with Epstein Becker & Green PC told me. Thompson is also a Bloomberg BNA advisory board member.

Thompson said his fear “is that the FDA is making the user fee so high that it will actually make the PMA process look more attractive for larger companies. Or worse, it will simply discourage new technology from small companies that don’t have the resources to pay the fee” and the medical device industry “relies on small companies for many of the most groundbreaking innovations.”

The new user fee is included in the medical device user fee agreement for fiscal years 2018-2022. For de novo submissions, the user fee will be 30 percent of the premarket approval application fee. Small businesses receive a discount and pay 25 percent of the de novo fee. Congress is still in the process of passing the legislation to reauthorize the user fees, so the user fee amounts for FY 2018 haven’t yet been announced. But the PMA fee in FY 2017 is $234,495 and that would mean a de novo fee of more than $70,000 and a small business fee of about $17,500. The standard 510(k) fee for FY 2017 is much lower, only $4,690.

Read my full article here.

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