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www.fdanews.com/articles/84984-gao-no-annual-payment-updates-for-class-iii-devices

GAO: NO ANNUAL PAYMENT UPDATES FOR CLASS III DEVICES

March 2, 2006

In a recently released study, the Government Accountability Office (GAO) found that manufacturers of Class III devices, with limited exceptions, have higher premarketing costs than do manufacturers of Class II devices that are similar to Class III devices and that they do no not warrant a distinct annual payment update.

The study said the premarketing costs consist of FDA user fees and research and development costs, both for any clinical data that the manufacturer is required to submit and for other research and development costs. Manufacturers of Class III devices pay higher FDA user fees than manufacturers of Class II devices, due to the more complex FDA review required prior to marketing, noted the report.

In addition, the GAO interviews found that manufacturers of Class III devices stated that when setting their retail prices, they take into account the premarketing costs of complying with federal regulatory requirements including the costs of required clinical data collection and other research and development. The study was conducted because the Medicare fee schedule payments for durable medical equipment -- which the FDA regulates as Class III devices, those that pose the greatest risk -- increased by 215 percent form 2001 through 2004.

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