Contribution
My Lords, I am glad to introduce these regulations, which will take effect from 1 April. These regulations will amend the fees structure for the relevant medical devices regulations and provide for a new annual medical device fee to replace an existing fee. The fee will enable funding for the MHRA’s strengthened post-market surveillance—or PMS—activities in respect of medical devices. I want to clarify that, for 2026-27, the fee will be part-subsidised by the Department of Health and Social Care, with the intention, subject to further ministerial and parliamentary approval, to move to a fully cost-recovering annual fee from 2027-28.
Why are these regulations needed? Post-market surveillance refers to the work that the MHRA does to collect, review and act on safety and performance issues relating to devices on the market. The Independent Medicines and Medical Devices Safety Review highlighted the need for a high-quality PMS framework. That is necessary because the framework strengthens the medical devices safety and surveillance framework, improving patient safety and supporting the Government’s risk-proportionate, pro-innovation approach to regulation. The framework is estimated to increase the MHRA workload by 60% to 70%, at an annual cost of around £17 million, so it is vital to get the right level of funding. Historically, PMS activities have been funded mainly by subsidy from the DHSC, and partly by the current device registration fee.
I should say that subsidising ongoing regulatory activity through general taxation is not the usual approach of the MHRA to fees and services. The usual approach is based on HM Treasury’s Managing Public Money guidance, which states that fees should be set on a full cost-recovery basis. Therefore, as noble Lords will appreciate, these regulations reduce subsidy by introducing an annual fee, so that those who benefit from access to the market fund the regulatory activity that supports it.
I turn to how the regulations are intended to operate in practice. The new annual fee apportions the overall costs of the MHRA activities by using the Global Medical Device Nomenclature system, or GMDN for short. The fee will be calculated using the number of registered devices with the MHRA. In practice, the MHRA will charge based on the number of chargeable GMDN categories in which a manufacturer has registered devices. If a manufacturer has multiple devices within the same category, it will be charged once a year for that category.
A consultation was done by the MHRA on this fee as part of its last statutory fees uplift, so this is a new fee rather than an additional increase to a fee in the last fees uplift. The consultation ran from the end of August to 24 October 2024, and it was widely promoted, including through an SME webinar. In the consultation, the annual fee was proposed at £210 per GMDN code, using the most granular level of the GMDN structure. Several changes have been made following the consultation feedback, which we appreciated, in response to the concerns that were raised. The MHRA set up a group of industry representatives to assist with this, to discuss the approach and to seek advice on implementation. This has been welcomed and has provided useful feedback and assurance.
To meet the concerns that were raised, the fee is being phased in. It will give the sector time to adapt, as I outlined in my earlier comments. The costs have been fully subsidised in 2025-26, and this instrument introduces a part-subsidised annual fee for 2026-27. The fee was remodelled to be charged at a higher grouping of GMDN category, rather than individual codes, resulting in the costs being more equitably spread. The MHRA estimates that 56% of manufacturers will pay £300 a year and 82% will pay no more than £900 a year. Small and medium-sized enterprises are likely to pay only £300 a year, as they are likely to have a more limited range of products compared to larger companies.
Let me put this in context. The medtech sector generated an estimated £48 billion in turnover in 2023-24, and the total PMS cost of £17 million represents about 0.035% of this. I recognise that businesses would prefer to avoid any additional costs, but I am satisfied that moving to a fair, predictable, cost-recovering approach, along with the changes that have been made, will help address the key concerns and make the measure workable and fair.
On implementation and readiness, the MHRA has been working with the sector. The phased rollout has given the sector time to get ready. The MHRA published guidance explaining the new fee, how it will be calculated, what account holders need to do to ensure that their registration data is accurate, and how and when payment will be made. The MHRA is improving its systems currently, so that businesses will be able to see their GMDN categories, which will help them understand what they will be charged for by 1 April this year.
In closing, these regulations introduce a necessary and fair new annual fee from 1 April to help fund the MHRA’s strengthened PMS work. The approach has been improved in response to consultation feedback—for which we are most grateful, as I said—and is being introduced in a phased way, giving the sector the time it needs to adapt while ensuring that the MHRA has the resource it needs to protect patients and maintain confidence in the market. I beg to move.