Year-one implementation of the Medical Device User Fee & Modernization Act was marked by both progress and challenges as FDA worked to build a foundation for meeting new performance goals and to execute some of the 2002 law's more controversial provisions.

Spending two-thirds of the nearly $22 mil. received in user fee payments in fiscal 2003 (ended Sept. 30), the agency expanded its device review staff, provided employee training and upgraded information technology systems used in premarket review programs.

In addition, the Center for Devices & Radiological Health issued a flurry of guidances aimed at getting MDUFMA programs up and running, and developed new databases and measurement tools that will enable the agency, Congress and stakeholders to monitor FDA's progress toward meeting performance goals in the coming years.

Goals for faster premarket reviews set by the user fee law are scheduled to go into effect in fiscal 2005, with requirements growing increasingly stringent each successive year.

Administration Promises CDRH $217 Mil. For FY 2005

Speaking at a MDUFMA stakeholders meeting Dec. 3, CDRH Director David Feigal expressed satisfaction with a recent commitment by the Bush Administration to seek $217 mil. for FDA's devices and radiological health program in FY 2005.

The pledge, contained in an Oct. 29 letter to House Speaker Dennis Hastert (R-Ill.), represents a $32 mil. increase over the Administration's FY 2004 request. "The funding increase will be dedicated exclusively to the device review program," the White House Office of Management & Budget stated in the letter.

If approved by Congress during this year's appropriations process, the funding will mark the first time since MDUFMA was passed that the government has come close to appropriating the amounts called for in the 2002 law.

The act calls for steady appropriations of $15 mil. a year through FY 2007 on top of the pre-MDUFMA baseline funding level to help pay for improvements in premarket review times. However, Congress approved only $4 mil. of the authorized increase in FY 2003, and a fiscal 2004 approps bill passed by the House in early December and by the Senate Jan. 22 includes just $6 mil. in MDUFMA-authorized premarket review funds.

Based on staffing priorities set by individual product teams, CDRH added 67 people to its device review staff in fiscal 2003. The hires included 26 new staffers in the Office of Device Evaluation, 11 in the Office of In Vitro Diagnostic Devices Evaluation & Safety, and 10 in the Office of Compliance, among others.

The additions raised the total number of review staff members in CDRH to 748, up from 681 in FY 2002.

Heading Into '04: Bigger Staff, New "Scorecards"

Measured another way, the new employees contributed 22 more staff years to the device review process in 2003 than in the previous year. According to FDA, this number was low because most of the new staff members were hired after FY 2003 appropriations and user fee revenues came in, late in the fiscal year.

The full impact of the expanded staff will be felt in 2004, when CDRH expects to dedicate 100 more staff years for the device review process than in 2002.

In another key effort, CDRH worked to develop "scorecards" to quantitatively measure its progress toward meeting the MDUFMA performance goals. The scorecards will track premarket review performance "through the offices to the divisions and even down to the branch level," according to Office of Device Evaluation Director Daniel Schultz.

The device center is working to enter baseline data and adjust the measurement tools, Schultz explained. "A lot of these measures that were mandated in MDUFMA are things that we have not measured before, and just getting the baseline data, getting the measurement tools, getting the databases in place, has been a monumental effort," he said.

Another way CDRH is preparing to meet MDUFMA performance goals is by providing ongoing training for all staff. In fiscal 2003, ODE spent $632,000 on professional development for all of its continuing employees, an average $2,200 per staff member, Schultz said.

The training - long sought by industry - is aimed at keeping device application reviewers "at the top of their game," CDRH Deputy Director Linda Kahan told stakeholders.

CDRH's largest MDUFMA expenditure in fiscal 2003, however, went toward the uninspiring but critical task of bolstering the center's IT infrastructure - in particular, the electronic system used to scan and store 510(k)s and premarket applications.

User fees paid for a $3.7 mil. investment in this system, which currently holds more than 21 mil. pages of scanned images, Feigal noted at an October meeting of the Regulatory Affairs Professionals Society.

Finally, in a rush of activity that strained staff workloads, according to Kahan, FDA issued ¹ 14 guidances last year to set up user fee operations, increase efficiency in premarket submissions and review processes, and implement reprocessing and other MDUFMA provisions. All are available on CDRH's website.

"The goal of these guidance documents was to get the program up and running, to provide enough information for both our own staff and to the industry to allow this program to take off," Schultz noted.

Still under development are at least seven additional guidances that will address the 510(k) review clock, user fees and refunds for 510(k)s, electronic labeling, branding of devices with the manufacturer's name or symbol, manufacturer eligibility for the third-party inspection program, appeals procedures, preapproval inspections and combination product reviews, according to FDA staff.

Despite progress in many areas, the first year of MDUFMA implementation was not without troubles. On the funding front, the possibility of continuing appropriations shortfalls has worried industry, while sharp user fee increases in fiscal 2004 have caused particular distress to smaller device firms.

While praising the Bush Administration's FY 2005 commitment to increased MDUFMA funding, AdvaMed has questioned FDA's ability to meet premarket performance goals without the full, multi-year appropriations increases called for in the act.

"AdvaMed is concerned by the significant revision in the Administration's estimation of the aggregate resources necessary to fulfill MDUFMA performance goals," the trade group wrote in a recent release. "Thus, the association will request an independent audit of CDRH to more fully examine its resource needs and spending allocations."

"Industry is really united in feeling that we'd like to take a look, now that we are a year out, at estimates on what it really is costing to get the job done," AdvaMed Exec VP-Technology & Regulatory Affairs Elizabeth Jacobson said at the December meeting. "We think it would be extremely useful in informing the discussions that we're going to have on how to keep the user fees from getting out of control to the point where companies can't afford them."

For the moment, FDA is resisting the pressure. At the Dec. 3 meeting, user fee finance chief Frank Claunts explained that the agency's finances already are being audited by accounting firm Ernst & Young as part of an annual third-party assessment. He urged industry to wait until they have a chance to review the results before calling for an additional independent review.

Meanwhile, a substantial hike in user fees for fiscal 2004 is being strongly criticized by the Medical Device Manufacturers Association.

The new fees, which went into effect Oct. 1, are 34% higher than 2003 rates for PMAs, PMA panel-track supplements and biologic license applications. The fee for standard 510(k)s rose 59%, while the small business rate jumped 47%.

"The escalation in device user fees we saw this year simply can't be sustained by smaller companies," MDMA Executive Director Mark Leahey said at the stakeholders meeting.

Several factors contributed to the rate increases, according to FDA. First, user fee revenue in FY 2003, which totaled $21.9 mil., was $3.2 mil. below the statutory target for the fiscal year due to a smaller-than-anticipated number of premarket applications. The new rates in part reflect an attempt by the agency to make up the difference in fiscal 2004 - a "compensating adjustment" which MDUFMA permits.

Second, the statute raises by almost $2.2 mil. the dollar amount to be collected through user fees in fiscal 2004. In FY 2003, the statutory revenue target was $25.1 mil.; in fiscal 2004, it is $27.2 mil. Finally, a nearly $1.2 mil. adjustment for inflation - also permitted under the act - was factored into the 2004 rates.

Leahey implored FDA to ensure that user fee increases "are moderate going forward." He also noted concern that FDA's premarket improvements will wind up being paid for solely by user fees if Congress continues to appropriate less than its share toward the effort.

Reprocessors, OEM Firms Spar Over SUD Types

Significant concern with FDA's approach to implementing MDUFMA's provisions for reprocessed single-use devices also has surfaced in recent months.

The act requires FDA to tighten its regulation of such devices by deciding which previously-exempt, reprocessed SUDs should now be subject to 510(k) submissions and/or cleaning validation.

While the American Hospital Association and the Association of Medical Device Reprocessors argue that pre-MDUFMA regulations already were adequate to ensure the safety and efficacy of reprocessed devices, original equipment manufacturers (OEMs) disagree - and take issue with some of the ways FDA is implementing the MDUFMA reprocessing provisions.

Following the agency's listing of specific types of reprocessed SUDs that will require closer scrutiny, AdvaMed expressed concern with FDA's method for identifying these devices.

The association believes it is wrong for FDA to focus its risk assessments on device types, arguing instead that the agency should scientifically assess "the unique design characteristics of each individual device."

Noting that a single device category may include a wide variety of designs, AdvaMed contends FDA's methodology, which does not consider device- and model-specific data, "cannot fully determine which devices present increased risk and which do not."

Speaking on behalf of AdvaMed at the stakeholders meeting, Boston Scientific Regulatory Affairs Manager Tony Blank said FDA should reconsider the risk determinations for reprocessed SUDs it made in 2003.

"We would ask that FDA revisit the lists generated and published and somehow take into account the individual design characteristics of those devices in defining which reprocessed devices should be subject to enhanced 510(k)s [and] which reprocessed devices that are Class I should have their exemptions terminated," he said.

Headaches also continue for both FDA and OEMs regarding MDUFMA Sec. 301, which requires manufacturers to brand each device with their name or symbol unless the agency grants a waiver.

"This has been a really, really difficult task to figure out how to approach this," Office of Compliance Special Assistant Casper Uldriks said at the meeting. Sec. 301 "is not the darling of MDUFMA."

Branding Requirements Postponed By 18 Months

Bowing to cries that the April 26, 2004, deadline for complying with Sec. 301 is too difficult to meet, particularly in the absence of FDA guidance, the House and Senate each approved an amendment extending the effective date by 18 months as part of the technical corrections bill.

Even without the legislation, industry has a temporary reprieve from the April deadline due to FDA's announcement last summer that it does not intend to enforce Sec. 301 until 18 months after the agency issues final guidance on the provision.

So far, that guidance is proving tricky to develop, FDA staff report. Original equipment manufacturers argue that the branding requirement is costly to implement and provides little public health benefit.

Part of the solution, Uldriks ventured, will be to propose criteria for granting waivers to certain categories of devices. This approach "seems to relieve the burden of this a little bit and set[s] some groups aside. So we want to think about criteria we could use," he said.

"Basically, what are we going to think about when we say [branding] is not feasible? Is it impossible? Or possible but too costly? Or is it based on risk? Or is it based on brand confusion? We are going to be developing draft guidance and asking you to comment on those kinds of ideas," Uldriks stated.

- Mary Houghton

[Editor's note: The preceding is a condensed version of the December 2003 issue of "The Silver Sheet" - FDC Reports, Inc.'s monthly newsletter dedicated to medical device quality system regulation. For a free trial, call customer service at 800-332-2181.]

MDUFMA Update: FDA Tackles Performance Goals, Premarket Review Funding

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