FDA's ability to achieve timely review of premarket applications will be closely monitored by Congress and industry if the agency implements a planned medical device user fee program.

Device user fee legislation that cleared the House Energy & Commerce Committee Oct. 2 could go for a floor vote the week of Oct. 7; key Senate HELP Committee staffers are currently involved in the bill's development.

In a mark-up of Reps. James Greenwood (R-Penn.) and Anna Eshoo's (D-Calif.) device reform package (HR 3580), Energy & Commerce Committee Chairman Billy Tauzin (R-La.) offered the "Medical Device User Fee & Modernization Act" as substitute language.

The House package is the result of months of negotiations between FDA, medical device industry stakeholders and congressional staffers on user fee amounts and the use of outside expertise to review premarket applications and inspect manufacturing facilities. An additional issue is the reprocessing of single-use devices.

Previously, one major point of contention was language establishing performance goals, which industry reps believed necessary to ensure FDA's adherence to timely review cycles.

Under the "Medical Technology Enhancement Act," a version unveiled in May, FDA was exempted from any performance goal if it did not receive $15 mil. in additional appropriations in any given year (¹ Also see "Kennedy To Industry: User Fees Still In Play If Third Party Sits This One Out" - Medtech Insight, 27 May, 2002., p. 3).

According to congressional aides, device stakeholders later reneged on that portion of the agreement, fearing the agency would receive user fee money without being held accountable.

Although CDRH is not held to rigorous performance goals within the first three years, the bill features one concession to industry - the requirement of a General Accounting Office report to Congress, meaning the agency will not go entirely unwatched during the early years of the program.

The revised version of HR 3580 specifies that for fiscal years 2003-2005, if the minimum amount of $15 mil. per year is not appropriated, FDA must meet performance goals only "to the extent practicable."

In that case, GAO would report no later than July 1 of the fiscal year whether FDA had met the goals - outlined by the agency in a May letter to the Energy & Commerce and Senate HELP Committees.

Under HR 3580, user fees may not be assessed and collected after fiscal 2005 if FDA appropriations are less than $15 mil. per year.

If the minimum amount is appropriated, the program continues until 2007, and more stringent performance goals kick in (see charts: " ² Summary of The Medical Device User Fee and Modernization Act ").

Another nod to industry is the "offset" provision, which ensures that user fees are additive.

The bill states that user fees collected in a fiscal year that exceed "the amount of fees specified in appropriation acts for such fiscal year shall be credited to the appropriation account" of FDA and "shall be subtracted from the amount of fees that would otherwise be authorized to be collected under this section pursuant to appropriation acts for a subsequent fiscal year."

If the agency does not receive payment of fees within 30 days after they are due, the amount will be treated as a receivable for the U.S. Treasury.

Roughly, the amounts authorized to be appropriated for user fees are $25 mil. for FY 2003; $27.3 mil. for FY 2004; $29.8 mil. for FY 2005; $32.6 mil. for FY 2006; and $35 mil. for FY 2007.

In addition to differences over performance goals between industry and FDA, conflict arose within the device industry itself - represented by AdvaMed and the Medical Device Manufacturers Association.

One article of dissent was the issue of the user fee amounts to be paid by "small" and "large" companies, as well as what defines a small company.

According to MDUFMA, device user fee amounts (based on inflationary adjustments) would be published annually in the Federal Register. The PMA user fee amount for fiscal 2003 is $139,000, and $2,400 per 510(k) submission.

Small businesses would receive a waiver for first-time PMA applications, and a reduced rate thereafter for PMA supplements. The reduced rate for original PMAs is $53,000.

A small business is defined as a company reporting sales of $10 mil. or less in its most recent federal tax filing. MDMA had requested that small companies be defined as those generating $100 mil. or less in yearly sales. The trade group maintains the $10 mil. threshold is unacceptable and will push for a number closer to $90 mil. during Senate negotiations.

Under the bill, user fees are waived entirely for PMAs, 510(k)s and PMA supplements involving devices intended solely for pediatric populations.

Firms may ask for refunds of user fees, but must submit a written request to FDA no later than 180 days after the fees are due.

The bill also notes that the number of full-time equivalents not engaged in device review applications should not be reduced to offset the number of FTEs involved.

The user fee agreement also authorizes increased appropriations for postmarket surveillance activities. For FY 2003, an additional $3 mil. is allocated to FDA; for FY 2004, $6 mil.; and for FY 2005 and each subsequent year, "an increase of such sums as may be necessary."

Besides user fee amounts, a further complication of HR 3580 was opposition by congressional Democrats to third-party review and inspection provisions. Those provisions were critical in achieving an industry consensus. Imaging companies had threatened to withdraw support of the bill if the third-party provisions were removed.

In the recent House package, however, the provisions are somewhat pared down from the original language, largely a concession to Democratic Reps. Henry Waxman (Calif.) and John Dingell (Mich.), and Sen. Edward Kennedy (Mass.).

For inspections, FDA has the authority to audit third parties "on a periodic basis." The agency is also authorized to accredit third parties and withdraw that accreditation. FDA is required to provide or deny clearance to a third party no later than 60 days after receiving compliance data.

The bill instructs the agency to publish the criteria to accredit or deny third parties in the Federal Register no later than 180 days after the legislation is enacted.

The third-party review program is essentially an extension of the current pilot under way at FDA. The agency is expected to provide a report to Congress by Jan. 10, 2007, detailing the program's results.

While Waxman and Dingell have signed on to the existing agreement, it remains unclear whether such language will be acceptable to Kennedy.

The Massachusetts Democrat has previously voiced concern that firms would use third parties to sidestep a more thorough FDA inspection.

Industry reps counter that the program is really a way to cut costs; accredited third parties could potentially perform audits for foreign governments, reducing the overall number of inspections that each facility must undergo (³ Also see "Two-Tiered User Fee Plan Gains Ascendancy; Kennedy Inspects Third-Party" - Medtech Insight, 2 September, 2002., p. 14).

The fact that FDA can accredit and audit which third parties manufacturers use under the House agreement could mollify Kennedy's concerns. Plans to give FDA authority to actually select third parties were opposed by some manufacturers, however, because of concern that those parties would not conform with EU requirements.

Ultimately, the bill may bypass Senate HELP Committee mark-up, given the extent of participation from both chambers.

In recent rounds of negotiations, provisions from other Energy & Commerce legislation were added, including parts of the "Breast Implant Research and Information Act" (HR 1961), introduced by Reps. Roy Blunt (R-Mo.) and Gene Green (D-Tex.) in 2001(⁴ Also see "Breast Implant Research Bill Seeks CDRH Postmarket Reports To Congress" - Medtech Insight, 28 May, 2001., p. 11).

The language requires GAO to report on the content of information provided to women by health care professionals, and whether women fully understand the risks involved with the procedure.

The National Institutes of Health are also instructed to perform retrospective or prospective research on long-term implications of saline and silicone breast implants.

GAO Oversight Of FDA Performance Included In House Device User Fee Bill

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