Medical Device Improvements Act of 1986 - Amends the Federal Food, Drug, and Cosmetic Act to make class II devices for which it can be determined whether or not a performance standard is appropriate rather than requiring a performance standard as under current law.

Authorizes the Secretary of Health and Human Services to reclassify class III devices (devices requiring premarket approval) into class I (devices requiring general controls) or class II as appropriate to assure the safety and effectiveness of such devices.

Revises the procedures for establishing performance standards for devices.

Authorizes the Secretary to waive application requirements for premarket approval for a class III device. Defines "substantially identical" for purposes of classifying devices, requiring same intended use and same technological characteristics. Requires the submission of clinical data demonstrating the substantial equivalence of a device, defined as having the same intended use as another device, but different technological characteristics. Requires a person seeking substantial identity or equivalence to a class III device to certify that a search of published information on such device has been concluded and may be required to include relevant adverse safety and effectiveness data.

Requires the Secretary within five years to reclassify class III devices into class I or into class II or to state that the classification is appropriate. Requires devices placed in class III as a transitional measure to be reclassified into class I or class II.

Removes the non-state-of-the-art design and manufacture basis for repair, replacement, or refund remedy.

Eliminates devices from the color additives regulation.

Authorizes the Secretary to charge fees for the filing of reports and device application approval. Establishes in the Treasury the Medical Devices Trust Fund for such fees to used in administering devices regulation. Requires the Secretary of the Treasury to report to the Congress annually for the next five years on such Fund.

Makes it discretionary rather than mandatory to refer device applications to a panel for evaluation.

Amends the Orphan Drug Act to include medical devices.