1. Innovation Today for Better Healthcare Tomorrow How is the User Fee Process Working? December 3, 2003 (November 18, 2004) MDUFMA Stakeholder Meeting Mark B. Leahey, Esq. Executive Director, MDMA

2. Innovation Today for Better Healthcare Tomorrow Title 1 of MDUFMA-User Fees The impact of user fees on smaller companies and innovation has been controversial for years The impact of user fees on smaller companies and innovation has been controversial for years The issue isn’t whether CDRH need additional resources, it does The issue isn’t whether CDRH need additional resources, it does Bill had three critical components: industry user fees, Congressional appropriations and FDA performance Bill had three critical components: industry user fees, Congressional appropriations and FDA performance

3. Innovation Today for Better Healthcare Tomorrow One Year Later-Where Are (Were) We? Average 35% increase in fees Average 35% increase in fees Appropriations shortfall of $11 million in 2003 Appropriations shortfall of $11 million in 2003 Improved Performance? Improved Performance?

4. Innovation Today for Better Healthcare Tomorrow Next year and beyond Appropriations shortfall between $20-$27 million expected in 2004 Appropriations shortfall between $20-$27 million expected in 2004 FDA is projecting decreased submissions in 2004 which will result in increased fees in 2005 FDA is projecting decreased submissions in 2004 which will result in increased fees in 2005 Smaller companies cannot sustain continued dramatic spikes in fees Smaller companies cannot sustain continued dramatic spikes in fees

5. Innovation Today for Better Healthcare Tomorrow Two Years Later-Where Are We? Fees have gone up over 55% in just two years Fees have gone up over 55% in just two years $4.8 million industry shortfall will result in another 15% fee increase $4.8 million industry shortfall will result in another 15% fee increase Appropriations shortfall of $20 million in FY04 Appropriations shortfall of $20 million in FY04 Optimistic for full funding in FY05, but this will not address the $30+ million appropriations shortfall from FY03 & FY04 Optimistic for full funding in FY05, but this will not address the $30+ million appropriations shortfall from FY03 & FY04 Improved Performance? Improved Performance?

6. Innovation Today for Better Healthcare Tomorrow Reforms Needed to Ensure a Strong, Viable User Fee Program that Fosters Innovation (2003) If there is an appropriations shortfall, Congress will be forced to revisit MDUFMA in 2004(5) If there is an appropriations shortfall, Congress will be forced to revisit MDUFMA in 2004(5) 3 rd Party Audit: What money does FDA need and where does it go? 3 rd Party Audit: What money does FDA need and where does it go? Eliminate workload and compensating adjustments (only allow increase for inflation) Eliminate workload and compensating adjustments (only allow increase for inflation)

7. Innovation Today for Better Healthcare Tomorrow Reforms Needed to Ensure a Strong, Viable User Fee Program that Fosters Innovation (2004) Any legislation to “forgive” Congress for the appropriations shortfall must be accompanied by: Full funding for FDA in FY05; Full funding for FDA in FY05; Forgiveness of the industry’s shortfall; Forgiveness of the industry’s shortfall; Fee increases for inflation only (elimination of the workload and compensating adjustments); Fee increases for inflation only (elimination of the workload and compensating adjustments); Revisiting the performance goals and enhancing where appropriate; and Revisiting the performance goals and enhancing where appropriate; and 3 rd Party Audit: What money does FDA need and where does it go? 3 rd Party Audit: What money does FDA need and where does it go?