Financial Aspects of MDUFMA Presentation at Public Meeting by Frank Claunts November 18, 2004.
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Transcript of Financial Aspects of MDUFMA Presentation at Public Meeting by Frank Claunts November 18, 2004.
Financial Aspects of Financial Aspects of MDUFMAMDUFMA
Presentation at Public Meeting by
Frank Claunts
November 18, 2004
MDUFMA--MDUFMA--How Fees are Set
Determined by three things:
1. Revenue Target
2. Statutory Relationship of Fees
3. Numbers of Fee-paying Applications
5HHS/FDA/Office of Management
How Fees are Set—How Fees are Set—Revenue TargetRevenue Target
2003 2004 2005 2006Estimate
2007Estimate
Target In 2003 $
$25,125,000 $27,255,000 $29,785,000 $32,465,000 $35,000,000
% Increase
%Inflation
Adjusted $ Target
% Change Year to Year
6HHS/FDA/Office of Management
How Fees are Set—How Fees are Set—Revenue TargetRevenue Target
2003 2004 2005 2006Estimate
2007Estimate
Target In 2003 $
$25,125,000 $27,255,000 $29,785,000 $32,465,000 $35,000,000
% Increase 8.5% 9.3% 9.0% 7.8%
%Inflation
Adjusted $ Target
% Change Year to Year
7HHS/FDA/Office of Management
How Fees are Set—How Fees are Set—Revenue TargetRevenue Target
2003 2004 2005 2006Estimate
2007Estimate
Target In 2003 $
$25,125,000 $27,255,000 $29,785,000 $32,465,000 $35,000,000
% Increase 8.5% 9.3% 9.0% 7.8%
%Inflation 4.3% 4.4% 4 % 4 %
Adjusted $ Target
% Change Year to Year
8HHS/FDA/Office of Management
How Fees are Set—How Fees are Set—Revenue TargetRevenue Target
2003 2004 2005 2006Estimate
2007Estimate
Target In 2003 $
$25,125,000 $27,255,000 $29,785,000 $32,465,000 $35,000,000
% Increase 8.5% 9.3% 9.0% 7.8%
%Inflation 4.3% 4.4% 4 % 4 %
Adjusted $ Target
$25,125,000 $28,418,789 $32,429,908 $36,761,380 $41,217,134
% Change Year to Year
9HHS/FDA/Office of Management
How Fees are Set—How Fees are Set—Revenue TargetRevenue Target
2003 2004 2005 2006Estimate
2007Estimate
Target In 2003 $
$25,125,000 $27,255,000 $29,785,000 $32,465,000 $35,000,000
% Increase 8.5% 9.3% 9.0% 7.8%
%Inflation 4.3% 4.4% 4 % 4 %
Adjusted $ Target
$25,125,000 $28,418,789 $32,429,908 $36,761,380 $41,217,134
% Change Year to Year
13.1% 14.1% 13.4 % 12.1 %
Revenue Amounts before Workload and Compensating Adjustments
10HHS/FDA/Office of Management
How Fees Are Set—How Fees Are Set—Compensating AdjustmentCompensating Adjustment
Purpose—Stable & Predictable Revenues Essential to have dependable revenue stream for
program to grow Other FDA user fee programs use product,
establishment and sponsor fees for stable revenue Device industry rejected these Preferred compensating adjustment instead Compensating adjustment: any shortfall would be
added to revenue target for future years
11HHS/FDA/Office of Management
How Fees are SetHow Fees are SetStatutory Fee RelationshipsStatutory Fee RelationshipsApplication Type Full Fee
% of PMA
Small Business
% of Full Fee for Same Type
PMA/BLA/Panel Track 100%
180 Day Supplements
Real Time Supplements
510(k)’s
12HHS/FDA/Office of Management
How Fees are SetHow Fees are SetStatutory Fee RelationshipsStatutory Fee RelationshipsApplication Type Full Fee
% of PMA
Small Business
% of Full Fee for Same Type
PMA/BLA/Panel Track 100%
180 Day Supplements 21.5%
Real Time Supplements
510(k)’s
13HHS/FDA/Office of Management
How Fees are SetHow Fees are SetStatutory Fee RelationshipsStatutory Fee RelationshipsApplication Type Full Fee
% of PMA
Small Business
% of Full Fee for Same Type
PMA/BLA/Panel Track 100%
180 Day Supplements 21.5%
Real Time Supplements 7.2%
510(k)’s
14HHS/FDA/Office of Management
How Fees are SetHow Fees are SetStatutory Fee RelationshipsStatutory Fee RelationshipsApplication Type Full Fee
% of PMA
Small Business
% of Full Fee for Same Type
PMA/BLA/Panel Track 100% 38%
180 Day Supplements 21.5% 38%
Real Time Supplements 7.2% 38%
510(k)’s
15HHS/FDA/Office of Management
How Fees are SetHow Fees are SetStatutory Fee RelationshipsStatutory Fee RelationshipsApplication Type Full Fee
% of PMA
Small Business
% of Full Fee for Same Type
PMA/BLA/Panel Track 100% 38%
180 Day Supplements 21.5% 38%
Real Time Supplements 7.2% 38%
510(k)’s 1.42%+ 80%
+ For 510(k)’s, fees are to be set to generate a level of revenue as if all applications were charged 1.42% of the full PMA fee, but adjusted so that revenues from reduced fees (80%), when added to revenues from full fees, equal this overall revenue level.
How Fees are SetHow Fees are SetNumbers of Fee-paying ApplicationsNumbers of Fee-paying Applications
03/04Estimate
03 Actual
04 Proj. 3-31-04
05 Fee Basis
PMA/BLA 58
“ S.B. 10
180-Day 171
“ S.B. 24
Real-Time 86
“ S.B. 14
510(k) 4000
“ S.B.
How Fees are SetHow Fees are SetNumbers of Fee-paying ApplicationsNumbers of Fee-paying Applications
03/04Estimate
03 Actual
04 Proj. 3-31-04
05 Fee Basis
PMA/BLA 58 46
“ S.B. 10 6
180-Day 171 118
“ S.B. 24 22
Real-Time 86 136
“ S.B. 14 19
510(k) 4000 4001
“ S.B.
How Fees are SetHow Fees are SetNumbers of Fee-paying ApplicationsNumbers of Fee-paying Applications
03/04Estimate
03 Actual
04 Proj. 3-31-04
05 Fee Basis
PMA/BLA 58 46 47
“ S.B. 10 6 5
180-Day 171 118 86
“ S.B. 24 22 9
Real-Time 86 136 159
“ S.B. 14 19 15
510(k) 4000 4001 2853
“ S.B. 482
How Fees are SetHow Fees are SetNumbers of Fee-paying ApplicationsNumbers of Fee-paying Applications
03/04Estimate
03 Actual
04 Proj. 3-31-04
05 Fee Basis
PMA/BLA 58 46 47 51
“ S.B. 10 6 5 6
180-Day 171 118 86 86
“ S.B. 24 22 9 9
Real-Time 86 136 159 160
“ S.B. 14 19 15 15
510(k) 4000 4001 2853 3060
“ S.B. 482 540
20HHS/FDA/Office of Management
How Fees are Set for FY 2005How Fees are Set for FY 2005Doing the Math to Total $32,429,908Doing the Math to Total $32,429,908
Application Type Full Fee
% of PMA
Small Business
% of Full Fee for Same Type
PMA/BLA/Panel Track $239,237 $90,910
180 Day Supplements $51,436 $19,546
Real Time Supplements $17,225 $6,546
510(k)’s $3,502 $2,802
+ For 510(k)’s, fees are to be set to generate a level of revenue as if all applications were charged 1.42% of the full PMA fee, but adjusted so that revenues from reduced fees (80%), when added to revenues from full fees, equal this overall revenue level.
22HHS/FDA/Office of Management
Revenue Percents by QuarterRevenue Percents by Quarter
25.6
20.7
24.3
29.4
0
5
10
15
20
25
30
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
2003
2004
23HHS/FDA/Office of Management
Revenue Percents by QuarterRevenue Percents by Quarter
25.627.6
20.723.7 24.3
22.2
29.426.5
0
5
10
15
20
25
30
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
2003
2004
24HHS/FDA/Office of Management
Numbers of PMA/BLA/Panel TrackNumbers of PMA/BLA/Panel Track
03 Actual
04 Actual
Original
Forecast
05 Fee Basis
Full Fee 45 40.5 58 51
S.B. Fee 6 4 10 6
Fee Paying 51 44.5 68 57
Exempt S.B. 16 19
Exempt Ped. 0 1
Bundled 2 4
Non Fee-Paying 18 24
Total 69 68.5
25HHS/FDA/Office of Management
Numbers of 180-Day SupplementsNumbers of 180-Day Supplements
03 Actual
04 Actual
Original
Forecast
05 Fee Basis
Full Fee 117 93 171 86
S.B. Fee 22 13 24 9
Fee Paying 139 106 195 95
Exempt Ped. 2 1
Bundled 13 4
Non Fee-Paying 15 5
Total 154 111
26HHS/FDA/Office of Management
Numbers of Real Time SupplementsNumbers of Real Time Supplements
03 Actual
04 Actual
Original
Forecast
05 Fee Basis
Full Fee 136 157 86 160
S.B. Fee 19 20 14 15
Fee Paying 155 177 100 175
Exempt Ped. 1 1
Bundled 21 26
Non Fee-Paying 22 27
Total 177 204
27HHS/FDA/Office of Management
Numbers of 510k’sNumbers of 510k’s
03 Actual
04 Actual
Original
Forecast
05 Fee Basis
Full Fee 2874 3060
S.B. Fee 517 540
Fee Paying 3999 3391 4000 3600
Exempt 3rd Party 190 255
Fee Exempt 13 21
Not a device/etc. 67 127
Non Fee-Paying 270 385
Total 4269 3776
28HHS/FDA/Office of Management
FY 2004 Preliminary Revenue FY 2004 Preliminary Revenue SummarySummary
Full Fee SB Fees Total
PMA/BLA/etc. $8,375,846 $314,352 $8,690,198
180 Day Supp’s $4,179,616 $219,648 $4,399,264
RT Supp’s $2,322,840 $118,818 $2,441,658
510k’s $10,001,520 $1,149,328 $11,440,848
Subtotal $26,971,968
FY 2003 Adj. ($139,932)
Net Collected $26,832,036
29HHS/FDA/Office of Management
FY 2004 Cumulative Fee FY 2004 Cumulative Fee Revenue ShortfallRevenue Shortfall
FY 2004 Revenue Target $31,654,207FY 2004 Net Collected $26,852,036
Shortfall $4,802,171
Collection of shortfall will be spread between FY 2006 and 2007
31HHS/FDA/Office of Management
What’s Working WellWhat’s Working Well Fee Collection Process Keeping Collection Apart from Review Small Business Determinations Setting Fees Timely Utilizing Fees for Device Review Work Without MDUFMA in 2004
– Program would have contracted– Performance would have deteriorated
Visibility and Respect for Device Review Program
33HHS/FDA/Office of Management
What’s Not Working WellWhat’s Not Working WellRevenues are NOT Stable and Predictable Fee revenues less than envisioned Appropriations less than envisioned Therefore
– Staffing has increased more slowly than originally envisioned
– Urgent need to add staff to meet MDUFMA goals
34HHS/FDA/Office of Management
What’s Not Working Well—What’s Not Working Well—Unstable Fee RevenueUnstable Fee Revenue
FY 2003 FY 2004 Combined
Revenue TargetWithout Compensating Adjustment
$25,125,000 $28,418,789 $53,543,789
Received
Shortfall
35HHS/FDA/Office of Management
What’s Not Working Well—What’s Not Working Well—Unstable Fee RevenueUnstable Fee Revenue
FY 2003 FY 2004 Combined
Revenue TargetWithout Compensating Adjustment
$25,125,000 $28,418,789 $53,543,789
Received $21,889,582 $26,852,036 $48,741,618
Shortfall
36HHS/FDA/Office of Management
What’s Not Working Well—What’s Not Working Well—Unstable Fee RevenueUnstable Fee Revenue
FY 2003 FY 2004 Combined
Revenue TargetWithout Compensating Adjustment
$25,125,000 $28,418,789 $53,543,789
Received $21,889,582 $26,852,036 $48,741,618
Shortfall $3,235,418
(-13%)
37HHS/FDA/Office of Management
What’s Not Working Well—What’s Not Working Well—Unstable Fee RevenueUnstable Fee Revenue
FY 2003 FY 2004 Combined
Revenue TargetWithout Compensating Adjustment
$25,125,000 $28,418,789 $53,543,789
Received $21,889,582 $26,852,036 $48,741,618
Shortfall $3,235,418
(-13%)
$1,566,753
(-6%)
38HHS/FDA/Office of Management
What’s Not Working Well—What’s Not Working Well—Unstable Fee RevenueUnstable Fee Revenue
FY 2003 FY 2004 Combined
Revenue TargetWithout Compensating Adjustment
$25,125,000 $28,418,789 $53,543,789
Received $21,889,582 $26,852,036 $48,741,618
Shortfall $3,235,418
(-13%)
$1,566,753
(-6%)
$4,802,171
(-9%)
39HHS/FDA/Office of Management
Fixing Fee ShortfallsFixing Fee Shortfalls
Revised estimated number of fee-paying applications when fees were set for FY 2005
Fix may have been too modestStill expect collections closer to revenue
targets in 2005 through 2007 Bigger issue now is appropriations shortfalls
40HHS/FDA/Office of Management
FY 2003 Funding ShortfallsFY 2003 Funding ShortfallsIn Millions of DollarsIn Millions of Dollars
0
50
100
150
200
250
2003
Approp Minimum
Actual Approps
Appropriation Shortfall--$12.4 Million or 6%
41HHS/FDA/Office of Management
FY 2004 Device AppropriationsFY 2004 Device Appropriations In Millions of Dollars In Millions of Dollars
Actual Appropriation down by $2.2 million from FY 2003 level
Pay raise alone cost $8.5 million
Cut over $11 million for IT and admin savings
Impact of appropriation cuts barely offset by fee revenue
0
50
100
150
200
250
2004
Approp Minimum
Actual Approps
Appropriation Shortfall--$19.5 Million or 9%
42HHS/FDA/Office of Management
Appropriations IssuesAppropriations Issues
Increases in staffing have been less than planned due to FY 2004 appropriations
Administration recognizes funding needs in 2005 & future years and will request funds at MDUFMA trigger levels
Two things essential for program to survive and thrive
43HHS/FDA/Office of Management
Appropriations—Urgent IssuesAppropriations—Urgent Issues
1. FY 2005 device appropriations must be at level envisioned in MDUFMA ($217 million)
2. MDUFMA must be amended to eliminate the catch-up appropriation requirement for FY 2003 and FY 2004
Otherwise MDUFMA program will end October 1, 2005
– Performance will deteriorate dramatically– Fix needed now or staffing in jeopardy
44HHS/FDA/Office of Management
Brighter Prospects for FY 2005Brighter Prospects for FY 2005
Indications are that in FY 2005 the device program will get the appropriations increase envisioned in MDUFMA.
The combination of increased appropriations and fee revenues should result in FDA receiving the amount envisioned in MDUFMA.
45HHS/FDA/Office of Management
FY 2005 Funding ProspectsFY 2005 Funding Prospects In Millions of Dollars In Millions of Dollars
0
50
100
150
200
250
2005
Approp Minimum
House Mark
Senate Mark
Senate mark meets appropriation minimum—House mark is very close.
46HHS/FDA/Office of Management
FY 2005 Funding ProspectsFY 2005 Funding Prospects In Millions of Dollars In Millions of Dollars
0
50
100
150
200
250
2005
Approp Minimum
From Fees
In FY 2005, 85% of funds come from appropriations and 15% from fees