While the final legislation is still more than two years away, stakeholders are already gearing up for the next reauthorization of the Medical Device User Fee Amendments, or MDUFA, which will run from 2028 through 2032.
And what might stand out during this go-round is the split over user fees between leadership at the US Department of Health and Human Services and the Food and Drug Administration.
It’s well known that HHS Secretary Robert F. Kennedy Jr., who’s been a vocal critic of corporate corruption throughout his career, sees user fees as “regulatory capture” — which occurs when a government agency acts in the interest of the industry it’s meant to regulate rather than the public.
Calley Means, an adviser to Kennedy and a prominent figure in the MAHA (Make America Healthy Again) movement, has argued that user fees compromise the agency’s independence.
And various reports cite Kennedy as referring to the FDA as a “sock puppet” for the industry. Though most of Kennedy’s ire has been targeted at the food and drug sectors, medical devices are not immune.
But it’s not just those in the MAHA movement who recognize the potential for user fees to create regulatory capture.
It’s worth noting that former FDA commissioner Robert Califf, who led the agency during the Obama and Biden administrations, expressed his preference for taxpayer funding rather than user fees and said it was incumbent on the agency to justify how it spent its money.
“Philosophically, I wish the taxpayer paid for all the FDA and there weren’t user fees,” he said, as quoted in a September 15, 2022 New York Times article.
Considering today’s political climate on The Hill, however, it’s a safe bet nobody is expecting Congress to appropriate more tax dollars to the agency to replace the revenue it receives from user fees.
“I think at the very least we’re going to see status quo user fee funding, if not increased funding. And I would argue it’s going to be increased funding because I think Makary will push really hard for it.”
Kyle Faget
On the other hand, FDA commissioner Marty Makary holds a more orthodox view of user fees, recognizing their significant function in funding essential agency activities, such as medical device review and reviewer salaries.
The Role of AI
Kyle Faget, a Boston-based partner and healthcare and life sciences lawyer at Foley & Lardner, told Medtech Insight that the emergence of AI has only further solidified Makary’s position that user fees are a must-have, which will likely play a pivotal role in the upcoming MDUFA process.
That’s because the advancement of AI, Faget said, is how Makary wants to make his mark on the agency.
As Faget sees it, Makary can achieve this through two means: deregulation, which doesn’t involve MDUFA, and funding for AI initiatives, which does.
Makary, Faget said, understands that AI is the future and that to keep pace the FDA will need to maintain a solid stable of AI experts — which requires the funds to pay them.
Earlier this year, the FDA was thrown into chaos after scores of staffers working on AI were caught up in Elon Musk’s Department of Government Efficiency, or DOGE, chain saw.
Shortly after the cuts, it became abundantly clear that those staffers were mission-critical and that Makary’s vision of establishing an AI-driven agency was impossible without them.
Most of those staffers, particularly those reviewing AI devices, have since been brought back.
Makary’s announcement earlier this month that the agency was rolling out generative AI tool Elsa ahead of schedule substantiates Faget’s argument.
Including in that announcement, Jeremy Walsh, the agency’s chief AI officer, said Elsa, which was designed to help employees across the agency work more effectively, represents the dawn of the AI era at the FDA.
“One of the things that allows for so much innovation and growth in the medtech sector, particularly in the US, is a healthy and robust FDA regulatory system for industry.”
Philip Desjardins
But if Makary wants increased funding through user fees, he’s going to have give something in return. And Faget believes such a concession will involve some type of ethics reform, which will enable Kennedy to also walk away with a win.
For instance, Faget envisions a potential scenario in which the final MDFUA package includes a stipulation preventing reviewers from working in the industry for a couple of years after leaving the FDA.
But, in the end, she believes Makary will win out.
“I think at the very least we’re going to see status quo user fee funding, if not increased funding,” Faget said. “And I would argue it’s going to be increased funding because I think Makary will push really hard for it.”
Pay for Play?
But while Makary’s approach to user fees is a widely accepted one, does that mean Kennedy’s belief in regulatory capture is unfounded?
Philip Desjardins, a partner at the DC-based firm Arnold & Porter, addressed these concerns.
Though Desjardins, who spent nearly a decade at the agency’s Center for Devices and Radiological Health and another working with the center as an attorney, told Medtech Insight that he understands the thinking behind regulatory capture, but said a deeper look at the process weakens the case.
Medical device firms, he said, do not expect the FDA to scrutinize their products with any less rigor because of the fees they pay.
Rather, he said, industry looks at the fees as a vehicle through which the agency provides a level of predictability and timing around the review process.
For example, under the current MDUFA V agreement, industry pays fees for reviews of 510(k) submissions and in return the FDA commits to complete those reviews within 90 days, with the goal of providing “substantive interactions” with the submitter within 60 days. For de novo requests, the FDA seeks to complete its review within 150 days.
And as Desjardins noted, time is also money — especially when trying to get a product cleared for the market — and the medical device sector, as with all sectors and financial markets, like predictability.
But as he also pointed out, those commitments only pertain to time frames, not to outcomes.
“Many large, sophisticated companies get told no on a regular basis,” he said, noting that FDA often cites deficient product safety, lack of data, and the need for additional testing as reasons for rejecting a submission. “Sometimes companies are told they have to go back and validate and verify their information and the datasets and theories they’re putting forward. And I think that’s evidence of a system that is working appropriately.”
A report from medtech solutions firm Essenvia backs this up.
The FDA, according to Essenvia, rejects more than 64% of 510(k) applications, with some 30% of those not even accepted for initial review.
“I think for the most part, most in industry and most at the FDA feel like the user fee process that’s been established for at least the last two or three cycles has been efficient, effective, and places industry and other stakeholders, including patient advocacy groups, on equal footing,” Desjardins said.
He agreed with Faget, however, that a final package could include some type of reform to alleviate some of Kennedy’s misgivings, such as more public workshops like the one scheduled for August 4.
The FDA says the August workshop presents an opportunity for the agency and industry to negotiate transparently on a package that suits all stakeholders.
Registration for in-person attendance for the Aug. 4 event, which is scheduled for five hours at the FDA’s White Oak campus, is open through July 29, while webcast registration will be open from Aug. 1 through 3.
Stakeholders can also submit comments through Sept. 4.
The FDA is asking commenters to focus on their assessment of the overall performance of MDUFA V thus far; current features of MDUFA that should be reduced or discontinued; new features the agency should consider adding; and any changes they feel should be made to the current fee structure.
The final draft of the updated user fee agreement is due to Congress by Jan. 15, 2027. It will then be published for one more round of comments, but must be signed into law by Sept. 30, 2027, to avoid funding disruptions.
Keep It Running Smoothly
Desjardins also stressed the importance for the FDA to have the resources it needs to keep running efficiently at all levels.
“One of the things that allows for so much innovation and growth in the medtech sector, particularly in the US, is a healthy and robust FDA regulatory system for industry,” he said. “There’s a level of comfort in launching a product in the US knowing that it went through one of the most strenuous and scrutinized regulatory processes looking at safety and efficacy that can be done, and that if you make it through that process, that there’s some level of validation and oversight that’s been applied there.”
Desjardins also praised FDA reviewers who, based on his personal experience, hold themselves to the highest ethical standards.
“And I don’t see that changing simply because there’s a discussion on mutual areas of focus and investment,” he said.
Emerging Tech
Desjardins also highlighted the need for the FDA to continue to invest and research emerging fields, such as real-world evidence and AI, areas, he noted, the agency understands today better than it did a decade ago. “And much of that has to do with the FDA working together with industry,” he added.
As it stands now, the FDA, Desjardins said, is operating relatively smoothly in terms of predictability and the timelines it establishes for approving and clearing products. That’s because the FDA and the device center currently have the resources to get the job done, he said — thanks, in large part, to user fees.
But it’s no guarantee this trend will continue.
Placing himself in Makary’s shoes, Desjardins said his top concern would be making sure that this predictability continues; and that means ensuring user fees, which account for nearly half the agency’s total budget and 60% of reviewer salaries, are locked in.
“If user fees were to disappear, I would anticipate that performance, quality of work, product, subject matter, expertise and knowledge would disappear from the agency as well,” he said.
