MDUFA V: We have a deal

Regulatory NewsRegulatory News | 08 March 2022 |  By 

Updated 11 March 2022 to clarify ACLA's role in the MDUFA negotiations.

The US Food and Drug Administration (FDA) and medical device industry groups have finally struck a user fee deal after a two-month delay, sources with intimate knowledge of the negotiations tell Regulatory Focus. The deal states the FDA will receive $1.784 billion in user fees over the next five years but that number could go up to $1.9 billion if the agency meets all its performance goals.
The FDA’s Center for Devices and Radiological Health (CDRH), and industry groups have agreed to a new Medical Device User Fee Amendment (MDUFA V) deal that could determine the cost of premarket applications over the next five years and set new performance benchmarks for regulators. If the FDA meets all its targets, it could receive nearly twice the level of funding compared to MDUFA IV which authorized the agency to collect about $1.1 billion.
Representing the medtech industry were AdvaMed, the Medical Device Manufacturers Association and the Medical Imaging and Technology Alliance. The American Clinical Laboratory Association was also part of the negotiations though they are technically not bound by the MDUFA deal unless Congress and the FDA decides to regulate their member companies as medical device manufacturers.
According to the sources who spoke to Regulatory Focus, the agreement includes funding for the FDA’s proposed total product lifecycle program (TAP) that initially had been a major sticking point during negotiations. The program would bring in outside stakeholders such as physician advisors and private health insurance providers significantly increasing user fees. The agency argued the program would help product sponsors get a better idea of what key stakeholders want during product development and clinical trials, but industry was initially resistant to the idea.
Another major sticking point has been carryover funding FDA has from MDUFA IV, part of which has already been used to upgrade the agency’s IT systems.
In the MDUFA V agreement, industry and the FDA agreed to not go all in on the TAP program but rather invest in a pilot program using $110 million from MDUFA IV carryover funds as well as an additional $45 million from its base funding. The TAP pilot program will also include a mid-point assessment that will allow the agency and industry to evaluate how well the program has worked.
The new agreement would also cap the FDA’s user fee carryover funds to three months and any additional funds would be used to reduce sponsor registration fees. Industry and the agency can also come back to the table in such a situation to discuss how further carryover funds can be best reinvested into the premarket review process.
The MDUFA V deal sets new hiring targets for the FDA. By 2023, the agency will have to hit an 85% hiring target for that fiscal year and that rate goes up to 90% in 2024. Failure to do so, would allow industry to claw back some of the user fees it’s already paid into the MDUFA V program while hitting those targets will allow FDA to receive additional funding to hire more staff.
Other claw back provisions in the new agreement are tied to certain fiscal performance goals of the FDA’s 510(k), pre-submission, de novo and premarket approval programs. Failure to hit those targets could also trigger claw backs while hitting those targets could lead to additional funding on top of the $1.784 billion.
While MDUFA negotiations are an opportunity for industry and the FDA to reevaluate how the user fee program is going, the latest deal in a way allows them to do so annually, except for the last two years of the program. Product application cohorts are not fully closed out over the course of those two years, making those years more difficult to accurately assess.
The significant increase in user fees according to a source is because the FDA needs the funding to handle the increasing speed of innovation in the medtech industry. The agency has also seen increasing complexity in product applications that requires more resources and specialization. Finally, the source said the new deal provides a higher level of certainty and predictability that benefits device makers.
"If it means we can invest a little bit more money to get better certainty and predictability about the outcomes... that's a good investment because that is so important to an innovator," they said. “Most industry people will tell you that as long as we’re getting more predictability in the process, we know how long it will take to get an answer, it’s much more effective for companies to raise capital.”
The MDUFA V negotiations were initially supposed to kick off in spring 2020 with a public meeting but were delayed to the fall due to the COVID-19 pandemic. It took until February 2021 for the agency and industry to finally start face-to-face meeting to hash out a deal. On top of the COVID-19 related delays, the negotiations have been drawn out after major disagreements between the two sides.
As stated, a major point of contention was the FDA’s proposed TAP program and use of carryover funds from MDUFA IV to update its disparate IT systems.
Industry argued that the decision was not cleared with them and was not previously agreed upon under the current user fee deal.
IT modernization has been a top priority for the FDA which has sought congressional funding to upgrade and integrate its systems, and former FDA Principal Deputy Commissioner Amy Abernethy was specifically hired to lead the agency’s efforts.
The FDA had also asked for additional funding to hire new agency staff, but industry argued that the agency still had vacancies that had not been filled from MDUFA IV.
A key concern of the device center during the COVID-19 pandemic has been that its staff are burned out and CDRH Director Jeff Shuren has said that he fears a mass exodus of some of his best officers as soon as the public health emergency is over due to being overworked.
A source said industry is also concerned about potential burn out at the agency and they don’t want to see the agency lose excellent employees.
Despite the disagreements the two sides pushed on with negotiation meetings though the last meeting the FDA has provided meeting minutes for publicly is June 2021. According to several sources the agency continued to meet through November when there was a sudden pause in meetings.
Consequently, CDRH ultimately did not include a commitment letter to Congress for a MDUFA V deal on January 15; the date the agency was legally required to send that letter and other user fee letters to lawmakers. The missing user fee deal had top lawmakers on the hill scratching their heads, and several senators and house representatives even wrote to then FDA Acting Commissioner Janet Woodcock to know why the agency had missed its deadline.
Since then however, CDRH set up back-to-back intense negotiations with industry to work out a deal over the past month. Those meetings seem to have finally borne fruit.
The tentative agreement is expected to be sent to the US Senate Health, Energy, Labor and Pensions committee, as well as the House Energy and Commerce committee for their blessing. Once the deal is debated in the two chambers, they will be reconciled and eventually voted on their respective legislative floors to be made into law.
The FDA and the industry groups declined to comment for this story.


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