Medical Device Industry Impacted by Federal Budget Process
The recent federal “sequestration” machinations will have an impact on the medical device industry. Included in the $85 billion package are reductions to the U.S. Food and Drug Administration’s budget.
One reasonable prediction is that timely reviews of medical devices could be impacted. The sequester cuts apply to the FDA’s appropriated budget, as well as new industry user fees, which went into effect in 2013. The current federal budget continuing resolution, unless corrected on March 27th, limits the FDA’s ability to access user fees, since FDA appropriations for fiscal year 2013 are set at 2012 funding levels. Some optimists suggest that a continuing resolution might be negotiated by March 27th which would include a provision to maintain current funding levels relative to medical devices.
Critics explain that the timing of the decrease in FDA funding is inappropriate, because the sequester cuts conflict with the purpose of the new Medical Device User Fee Amendments (MDUFA) for the FDA. New user fees that went into effect in 2013 were intended to help improve and speed up the review and approval of new medical products with additional FDA staff. The decrease in FDA funding will minimize or eliminate the additional funding expected from the new fees.
In addition, sequester cuts included a 2 percent payment reduction to doctors and hospitals that provide care to Medicare patients. The Congressional Budget Office reports that these cuts become effective on April 1, 2013.
A representative of The American College of Radiology recently offered these remarks: “We are disappointed, as is everyone, that the White House and the Congress could not reconcile their philosophical differences and come to agreement on an acceptable plan to meet the spending cuts target mandated in 2011. No one can think that a blunt force, across the board cut to critical federal programs is the appropriate way to make public policy.”
Although many medical associations have come out in recent days to blast legislators for failing to prevent the Medicare reduction, some experts opined that in the grand scheme of things sequestration is a much better option than what would result from a repeal.
The sequester was, to a greater or lesser extent, a mechanism designed to compel Congress to cut the deficit and create a plan that would balance the nation’s debt. Because lawmakers failed to reach an agreement on March 1, and over the weekend at President Obama’s urging, the mandatory cuts took hold. They expire at the end of the federal fiscal year on Oct. 1, 2013.
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