Fee reform at the MHRA – a new era for the regulatory authorities?

The Medicines and Healthcare products Regulatory Agency (MHRA ) plays a central role in the regulation of medical devices in the United Kingdom, similar to the FDA in the United States. The agency monitors medical devices on the UK market – a process that could soon become significantly more expensive for manufacturers.

The MHRA has announced that it will be making sweeping changes to its fee structure from 2025 onwards. The planned increases are intended to ensure the financial stability of the agency and reduce the tax burden on the British National Health Service (NHS). However, this step poses challenges, particularly for small and medium-sized enterprises (SMEs) that want to sell their products in the UK. The fees are not scaled according to company size or expected sales, which means that smaller manufacturers are hit much harder than large companies.

In this article, we take a close look at the planned changes, their political context and possible consequences for the UK market. Finally, we compare the MHRA model with the FDA approach and the somewhat different European model.

Details of the MHRA's planned fee increase¹

• Increase of all basic fees by 8.85%
• There will be a flat-rate increase of almost 9% in the fees for registering medical devices.
• This is justified with the 4.5% increase in salaries in the public sector in the 2023/24 fiscal year and an expected increase of a further 2.2%. The remaining 2.15% remain unfounded for the time being.
• Introduction of a post-market surveillance fee of £210 per year.
• A new annual fee of £210 per registered product is introduced, defined by the specific GMDN number.
• A manufacturer with two products will therefore pay an additional £420 per year.
• Introduction of a consultation fee for counselling sessions.
• Companies that require consultation with the MHRA will in future pay £987 pro Stunde.
• According to the MHRA, this service is only required for particularly complex products.

Political classification: austerity instead of inclusivity?

The MHRA justifies the fee increases by citing the strain of rising personnel costs on the budget. However, the measure should also be seen in the context of a political paradigm shift. The UK is increasingly following the user-pays principle, which states that specific state services should be paid for directly by the users in order to relieve the general public.

This reflects the UK government's austerity policy in the post-Brexit era. While the goal of cost recovery and independence is understandable, the unstaggered fees could place an excessive burden on small companies and hinder innovation in the long term.

Comparison of the fee models: MHRA, FDA and EUDAMED

MHRA and FDA: centralised regulation with high hurdles

With its new fee structure, the MHRA is moving closer to the model of the FDA, the US regulatory authority. The FDA charges high fees for the approval of medical devices (user fees), including through the Medical Device User Fee Amendments (MDUFA) programme and a recurring (annual establishment registration fee) regardless of the risk class of the medical devices. This approach enables the FDA to ensure a high level of service quality and international recognition. Products with FDA approval are considered the ‘gold standard’ worldwide.

But the FDA's high fees have downsides:

• SMEs at a disadvantage: Many smaller manufacturers cannot bear the costs, which limits competition.
• There is no small business-discount for FDA annual fees, which again highlights the fact that smaller companies or those with lower revenues are at a disadvantage.
• Market concentration: large companies dominate, while innovative niche providers are often left out.

EU: fee-free registration, decentralised approval

By contrast, EU market access is generally free of charge. However, manufacturers (except for class I) also require certification by notified bodies, independent organisations that operate in a competitive system. While the registration of medical devices in the EU is centralised through the EUDAMED database, licensing is carried out decentrally by various private and semi-governmental notified bodies such as TÜV SÜD, DEKRA or the BSI Group.

• Tiered Fees: Notified bodies often offer flexible fee structures that are adjusted based on company size.
• Innovation-Friendly: Lower financial barriers encourage market entry for smaller manufacturers, thereby fostering innovation.
• Harmonization through MDR: Despite the decentralized structure, the requirements of the Medical Device Regulation (MDR) largely ensure uniform standards.

Impact of the MHRA decision on SMEs and innovation

The MHRA's new fees could have far-reaching consequences:

1. Distortion of competition
   • Large manufacturers can absorb the fees more easily, while SMEs are often disproportionately affected.
   • This could lead to smaller companies avoiding the British market, which limits competition.
2. Risk of monopolisation
   • Market dominance by large companies could slow down innovation and reduce market diversity.
3. Higher consumer prices
   • Less competition and higher costs for manufacturers could lead to rising prices for medical products.

Conclusion

The MHRA's fee increase follows a clear political line: the UK government wants to make its agencies more financially independent and reduce the burden on taxpayers. However, the unstaggered fee structure poses a significant hurdle for small and medium-sized companies, which often drive innovation.

Compared to the FDA and EUDAMED models, it can be seen that high barriers to entry, as exist with the MHRA and FDA, can have long-term negative effects on market diversity and competition. The EU and the Notified Bodies offer a more flexible and inclusive approach here, which has a positive effect on smaller companies.

In the future, the MHRA will have to carefully monitor the balance between austerity and inclusivity in order to maintain the UK as an attractive market for medical devices. A tiered fee structure could be a crucial step in relieving the burden on SMEs, promoting innovation and keeping the UK market competitive in the long term.

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