Trump’s budget would add $313M to medical device user fees, but Congress is unlikely to follow through

Donald Trump speaking
Trump is sticking by a proposal to increase FDA user fees that could impact digital health startups seeking approval. Gage Skidmore / CC BY-SA 2.0

President Donald Trump wants to increase FDA medical device user fees by more than $300 million in 2018, a move that has raised muted concern—and some bewilderment—from the digital health and medical technology industries as lawmakers prepare to vote on a new user fee reauthorization bill.

Under Trump’s proposed budget, medical device user fees would jump to $439 billion in 2018, more than three times the current levels. The fees are part of an $1.3 billion increase to all user fees that would replace the need for a new budget authority each year and “reduce the burden on American taxpayers.”

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When Trump released his budget blueprint in March, it included a vague reference to increasing FDA user fees by $1 billion. At that time, policy experts seemed unsure about the proposal, but worried that it could impact digital health companies seeking FDA approval, especially startups that have less cash to spend on user fees.

With more specificity in the full FDA budget, those concerns remain, for some. Although not all digital health devices or tools require FDA approval, those that do could face an additional financial barrier. Furthermore, as digital devices become more integrated into the healthcare, the FDA is expected to rethink its approach to digital health regulation.  

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“An increase in fees would likely have a disproportionally greater impact on smaller companies, particularly those developing digital health companies as they generally do not have significant revenues,” David Rosen, a partner at Foley & Lardner LLP and a former regulatory attorney with the FDA told FierceHealthcare. “The user fees are required to be paid at the time of submission of the application to FDA and could deter companies from pursuing the R&D necessary to design and develop products and ultimately the submission of applications to FDA.”

But Bethany Hills, chair of Mintz Levin’s FDA practice, countered that she’s “never heard that the user fee price was a deterrent to filing.” Instead, most companies are struggling to determine whether their product falls under the FDA’s regulatory purview.  

Ultimately, it seems unlikely that the proposal would come to fruition. The FDA Reauthorization Act is currently working its way through the House and Senate with bipartisan support, and lawmakers appear eager to get it to the president’s desk by July. On Wednesday, U.S. Senate Republican Leaders Mitch McConnell told Reuters that he expects the bill will be met with bipartisan approval.  

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Lawmakers and industry representatives have been hashing out the agreement for the last two years, so it’s strange that Trump, and several others in his administration, are taking this stand. FDA Commissioner Scott Gottlieb expressed support for increasing user fees in the agency’s budget justification, and last week, Department of Health and Human Services Secretary Tom Price urged the Senate to include the user fee increases in the final bill—which Sen. Patty Murray, D-Wash., quickly shot down.  

“Like most of this administration’s budget, it’s highly presumptuous and slightly dubious to think that user fees could be unilaterally changed at this stage of the process,” said Jeff Smith, vice president of public policy at the American Medical Informatics Association (AMIA).

In a statement to FierceHealthcare, Scott Whitaker, president and CEO of the Advanced Medical Technology Association (AdvaMed), said the organization was pleased with the progress Congress has made in reauthorizing the user fee agreement, and argued that any changes to the bill would cause significant disruption for both the FDA and the industry.

“Any renegotiation at this point could significantly delay any final user fee legislation, resulting in substantial layoffs at the [FDA],” he said. “This is not in the best interests of patients or American innovation.”