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Budget sequestration could impact FDA device reviews

by Loren Bonner , DOTmed News Online Editor
Medical device approval processes could be severely impacted due to automatic, across-the-board spending cuts set for March 1.

According to analysts at the health care consulting firm Avalere Health, so-called sequestration would deprive the agency of critical resources needed for the timely review of important medical products. Sequestration would cut 8.2 percent from the federal budget unless Congress and the White House can agree on a way to cut spending through other means like tax reform.

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"If you go whack the FDA budget there will be layoffs," Dan Mendelson, CEO of Avalere, told DOTmed News. "It's just the only way they can survive relative to a highly labor intensive environment."

For example, clinical trials for devices, which require FDA approval, could be impacted if the FDA lacks the resources to let the manufacturers know that the trial is unsafe and should not proceed.

"By statute, the FDA has to let them [manufacturers] know in 30 days to stop and fix something before going forward," said Lakshman Ramamurthy, director FDA regulatory policy at Avalere. "If no one is there because of confusion, then the trial will proceed because they haven't been told to stop." Post-review processes could be equally impacted, according to Ramamurthy.

In addition, sequestration sets up a rare situation for the agency where increased user fees for 2013 are collected but not available to the agency.

In 2013, new user fee rates went into effect and as a result, the FDA agreed to hire more people.

"It's ironic because all the user fee payments will continue unabated but the agency will not be able to access that money so it sets up this world where the life sciences companies have to pay but the agency does not benefit," said Mendelson.

The problem is further exacerbated by the fact that FDA appropriations for fiscal year 2013 are set at 2012 funding levels.

While the FDA will have to make its own plans in the event they face budget cuts, Avalere officials hope the FDA is prepared for what may come on March 1.

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