A third-party audit of FDA review costs and workload data associated with the Medical Device User Fee & Modernization Act may be in the offing.

AdvaMed and the Medical Device Manufacturers Association, two industry groups with diametrically opposed views on major aspects of the user fee law, are independently proposing an outside review of MDUFMA funding issues.

In AdvaMed's case, the concept has been floated internally for the past several weeks; in mid-September, the possibility of an audit was discussed by AdvaMed board members, with CDRH Director David Feigal in attendance. AdvaMed is also talking with potential auditors: Feigal told "The Gray Sheet" Oct. 3 that he "wouldn't object to an audit or any other mechanism that would provide transparency about the use of the funds."

KPMG division "Peat Marwick did audits of CDER and CBER during the last PDUFA [in 2002], and I wouldn't object to them auditing CDRH," the center director said. "I think I have a pretty good handle on what our different programs and types of review cost us, but if it would help the confidence in the program, let's have an independent look."

By ensuring that the cumulative amount of annual fees do not exceed FDA's total costs in conducting device reviews, a third-party audit could yield the methodology to make "compensating adjustments" to user fee collection more predictable.

As of Oct. 1, CDRH's user fee revenue target has climbed 35%, with the majority of the increase attributed to a $5.5 mil. shortfall in FY 2003, resulting from fewer-than-anticipated PMA applications filed (¹ Also see "User Fees Hiked In FY ’04: Fewer Submissions, Bundling Cited As Factors" - Medtech Insight, 4 August, 2003., p. 3).

MDMA, which opposed the compensating-adjustment provision during MDUFMA negotiations - the small manufacturer trade group favors only inflationary adjustments - is also weighing third-party audits of CDRH as a policy proposal. In recent weeks, MDMA has met with Congressional staff over the MDUFMA funding scenario. The group faults an Administration proposal that would hit MDUFMA funding targets for fiscal years 2005 through 2007 by "forgiving" the appropriations triggers for FY 2003 and FY 2004.

Under the plan, the Office of Management & Budget would propose an approximately $32 mil. increase for device premarket activity in FY 2005, with only inflationary adjustments provided in FYs 2006 and 2007. The pledge would appear in the President's fiscal 2005 budget request, but may be forecast this month by FDA.

MDUFMA's "triggers" require $45 mil. in additional CDRH appropriations over three years to sustain user fee collection and performance goal adherence beyond 2005. Adjustment of the triggers would need to be accomplished in 2004 through the House Energy & Commerce and Senate HELP Committees.

FDA Commissioner Mark McClellan, Associate Commissioner for Legislative Affairs Amit Sachdev and Chief Counsel Daniel Troy are said to be deeply involved in MDUFMA discussions on the Hill.

Not to be overlooked in this process are the vagaries of House and Senate appropriations, a factor with which device advocates are typically unaccustomed. The FY 2004 Senate Appropriations/Ag bill, which has yet to go the floor, includes a $10 mil. increase for CDRH, while the House-cleared version contains $5.7 mil.

If OMB announces its commitment to obtaining sufficient MDUFMA-related appropriations, it would send a strong signal to Congressional budget planners as well as to industry. The President's FY 2004 budget request proposed $184.5 mil. for CDRH, with only a $1 mil. set-aside for premarket review activity.

Furthermore, if OMB were to disclose its FY 2005 $32 mil. pledge this month, the Administration would be taking the unprecedented step of releasing budget details well in advance of the President's proposal. "We are pretty confident that we have the support we need to get the base appropriation on track in 2005," Feigal said. "Nothing will be public until the President's budget is announced next April, but we think that industry and the commissioner have done a great deal to convince OMB to support the program."

MDMA is eyeing the Dec. 3 MDUFMA stakeholders' meeting in Gaithersburg, Md. as a forum for raising concerns with the potential trigger adjustment. "Any proposal that would allow Congress to be 'forgiven' for the $11 mil. shortfall in FY '03 and the potential $18 mil. shortfall in FY '04 without extending the same 'forgiveness' to the industry for the $5.5 mil. shortfall and any shortfalls moving forward is unjust," MDMA writes in an Oct. 3 e-mail to members.

OMB Likely Will Pledge 2005 User Fee Funds; Dec. 3 Is Round Two For MDMA

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