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FDA User Fee Increases Meet Resistance

    Originally Published MDDI February 2004 WASHINGTON WRAP-UP FDA User Fee Increases Meet Resistance

Originally Published MDDI February 2004


At a December meeting of FDA stakeholders, industry speakers were positive about FDA's implementation of MDUFMA, but expressed concern about user fees. Device reuse issues also caused controversy.

James G. Dickinson

FDA Defends Cypher Stent Approval | Guidance on Bundling | FDA Staff Buyout Brings Problems | Part 11 Gets Cloudier | Joe Levitt Leaves FDA | Expediting Premarket Submissions | User Fees and Refunds Guidance | GE Medical Systems Gets Warning 

Barely a year old, medical device user fees at FDA are running into industry resistance. Hikes in those fees by Congress, barely a year after implementation of the 2002 Medical Device User Fee and Modernization Act of 2002 (MDUFMA), are the main cause of concern. 
In December, representatives of smaller companies warned that too-high fees will stifle innovation and threaten public health. Addressing an FDA stakeholders meeting, they told the agency that an independent group should determine the resources actually needed to operate the program. Their goal, presumably, is to pressure Congress to put more government funds behind it. 

Medical Device Manufacturers Association (MDMA) executive director Mark Leahey put the blame on Congress. “In FY 2003, Congress appropriated only $4 million in new money for MDUFMA,” he said. “The administration's FY 2004 budget actually proposes a cut for the program. Meanwhile, FDA is guaranteed over $81 million in industry user fees during the first three years of MDUFMA.”

Leahey noted that even though the number of submissions to FDA decreased in 2003, user-fee rates have increased for FY 2004. “Fees for PMAs and PMA supplements rose over 34%,” he said. “Fees for 510(k)s rose 59.1% for companies with sales over $30 million and 27.3% for companies with less than $30 million in sales. MDMA believes that a reduction in workload should not prompt a rise in user-fee rates.”

Leahey warned that device companies could witness the same huge increase in user fees seen by drug companies under the Prescription Drug User Fee Act. Over the past 12 years, he said, Congress only increased funding from $127 million to roughly $185 million. But in the same period, the drug industry's contributions rose more than 2600%. Such increases “cannot be sustained by the innovative sector of the medical device industry,” he added. “Devices have a much shorter life span than drugs, but face similar research and development costs.”

FDA panelist Frank Claunts, from the Office of Financial Management, counseled patience. He described the various independent audits already conducted of the agency, urging that industry officials wait to review those results before asking for anything more. That drew a response from AdvaMed executive vice president for technology and regulatory affairs Elizabeth Jacobson. Although industry has been requesting an “audit,” she said, it is not seeking the traditional financial audit of income and expenses but rather an independent assessment of the level of funds required for the program.

FDA called the meeting to update industry and learn its perspective on MDUFMA. Agency officials painted a generally rosy picture, saying they have done well in meeting the many statutory deadlines set for the first year of implementation. They said they have tried to improve much-needed communication with industry. As an example, they cited a teleconference in April 2003, in which more than one industry participant expressed ignorance of the law and its requirements.

CDRH deputy director Linda Kahn said FDA has written to all companies and distributed fact sheets and other materials, created a dedicated Web site (, met with stakeholders on request, and created an open docket to receive comments and recommendations on any aspect of the law. She acknowledged industry complaints about not being able to consult on guidances before publication, but said time and legal constraints have made it difficult. She urged use of the open docket as a way for industry to comment on guidance topics.

Industry representatives were generally complimentary and appreciative of the work FDA has done in implementing MDUFMA. They raised several specific concerns, however, in addition to the question of user fees and adequate congressional funding.

Electronic Labeling. Section 301 of MDUFMA requires that device labeling identify the maker. Industry panelists said this rule was a good idea to correct a narrow problem, but has become too broad and unworkable. They praised FDA's current discretion in enforcement. FDA officials said it will be hard to know how to approach the waivers that are permitted under this section and asked for industry help in identifying classes of devices that might be eligible for a waiver. 

One division in industry ranks that became apparent is between original equipment manufacturers and companies that reprocess single-use devices. Association of Medical Device Reprocessors (AMDR) executive director Pam Furman said it was clear that Congress intended the section to apply to all devices and not just to reprocessed devices. She said AMDR rejects any notion that the provisions should not be applied to all manufacturers.

Bundling, Modular PMA, and Expedited Applications. FDA officials presented information contained in a recent guidance on bundling and also discussed modular and expedited PMA submissions. They noted that industry would prefer a 75-day review clock (instead of the current 90 days), but acknowledged that FDA probably cannot yet support a shorter review period. Industry comments focused on the need to be aware of the financial implications of bundling on the program (that is, that there is a potential for less income from user fees).
Third-Party Inspections. Steve Niedelman, from FDA's Office of Regulatory Affairs, said the Inspection by Accredited Persons program is becoming a reality. This is good, he said, because efficiency can thus be increased for both manufacturers and FDA. 

Niedelman said that 15 people are ready to begin training early next year to be listed as accredited persons for inspections. While the program is independent of mutual recognition agreements, the two have some things in common, he said. Companies eligible to take advantage of the program are those whose last inspection produced reports for “No Action Indicated” or “Voluntary Action Indicated.”

Representatives of AdvaMed said industry does not expect FDA to compromise on compliance standards under the program, but does look for increased flexibility. They called for a guidance as soon as possible to ensure that people understand the program and that it is implemented consistently.

Reuse of Single-Use Devices. Next to user fees, the issue that brought the most disagreement was device reprocessing. CDRH officials described what has been done so far to enforce the rule that reprocessors of certain single-use devices must submit data demonstrating substantial equivalence. 

AMDR's Furman said there was no public health need for the requirement and blamed its inclusion on lobbying by OEMs. The manufacturers disagreed. They said there was a great need for the rule. Reprocessed devices should be treated as remanufactured devices, they argued, and reprocessors as manufacturers. 

“Original equipment manufacturers are not just trying to make money,” declared Boston Scientific's Tony Blank. “We're concerned because we design our devices to be safe and effective, and we want to preserve them that way.” 

The American Hospital Association backed the reprocessors, saying many hospitals use reprocessed devices and have had no safety issues. And Center for Patient Advocacy founder Neil Kahanovitz submitted a statement raising questions about the safety of reprocessed devices. It suggested that the validation data sought by FDA may not be sufficient to show that reprocessed devices are substantially equivalent to their predicate devices.

FDA Defends Cypher Stent Approval

CDRH says that despite earlier reports of subacute thromboses (SATs) and hypersensitivity reactions associated with Cordis's Cypher Stent, it still considers the device safe and effective “when used according to the labeling, particularly concerning patient selection and appropriate periprocedural medications.” In late November, the center said it had received more than 290 reports of SAT involving the stent since it was approved in April. More than 60 of these events were associated with patient deaths. Most events occurred between 24 hours and 30 days post-procedure, CDRH said. 

In addition, more than 50 reports, including some associated with deaths, involved hypersensitivity reactions. On November 24, CDRH issued an update intended to reassure physicians using the stent about its safety. The update described the ongoing postmarketing surveillance, including a 2000-patient postapproval registry that was a condition for approval. CDRH's update may be accessed at  

Guidance on Bundling 

CDRH and the Center for Biologics Evaluation and Research have issued a guidance for industry, Bundling Multiple Devices or Multiple Indications in a Single Submission. It is intended to help companies know when and how to bundle their FDA submissions.

Before MDUFMA, the guidance says, bundling of device submissions was primarily an administrative issue improving the efficiency of the review process. But under MDUFMA, bundling within a single premarket submission takes on additional importance because of the fees associated with premarket submissions and the agency's performance goals. FDA says it has considered many stakeholder comments in formulating this guidance and continues to invite comments.

The guidance defines bundling as “the inclusion of multiple devices or multiple indications for use for a device in a single premarket submission including products subject to the device and biologics license application authorities, for purposes of review and user fee payment. Multiple devices may include different models within a generic type of device or devices that are of differing generic types.”
General principles identified in the guidance include the following:

• Bundling is appropriate for devices that present scientific and regulatory issues that can most efficiently be addressed during one review.
• FDA should not cull out a device or an indication for use from a premarket submission for the purpose of collecting additional user fees.
• Applicants should not inappropriately combine devices in a premarket submission for the purpose of avoiding user fees.

Because there still can be gray areas and questions about the applicability of the process, the guidance uses a question-and-answer format to give many examples of how and when bundling could be done.

One of the examples cited deals with bundling reprocessed single-use devices, which was the subject of a recent AdvaMed comment to FDA asking that bundling not be allowed.

The guidance says that although some aspects of the validation process may be common to various reprocessed single-use devices, the designs of the devices may be unique. If the devices are within the same generic type and have the same original equipment manufacturer, according to the guidance, the validation data may apply equally to each of the devices and a single 510(k) would be appropriate. However, if the devices were produced by different original manufacturers, reprocessors would be expected to explain to FDA how the submitted data apply to all the devices in the submission, and only bundle 510(k)s that can be reviewed together. 

“In addition,” the guidance says, “reprocessors generally should not bundle differing generic device types in one submission because different data requirements will typically apply.” The guidance may be accessed at

FDA Staff Buyout Brings Problems

Although it did not attract as many early retirements from FDA as the Bush administration had hoped it would, the $25,000 payout inducement reported here last month drew enough takers to make it difficult for the agency to replace critical staffers who are suddenly gone.

One reason is that the first groups offered the buyout were in personnel—the people who hire replacement employees—and they had to be out of the government by the end of the fiscal year, September 30. Because so many of them have gone, there is now a shortage of employees who are able to perform hiring tasks.

The cost of the buyout has come out of affected operational areas. For example, FDA's Office of Regional Operations (ORA) lost $2.5 million from operating funds by paying 100 support employees $25,000 each.

Operating funds usually cover the purchase of new equipment, regulatory travel, and employee salaries, to name a few. This deficit in funding may also affect the refilling of critical positions. 

In the category of computer specialist, some FDA regions have reportedly lost 50% or more of personnel with these skills. Some individual districts will have no skilled staff left when the buyout process is complete. This is expected to hamper FDA's already-foundering electronic submissions and signatures rule.

Overall, about 300 employees are said to have accepted the buyout. The agency was hoping for 1000. To meet the reduction in force goals of the Bush administration, the buyout offer may be made again. This time, it will cover more than support personnel—perhaps field investigators and analysts, who were excluded from the first offer.

If this comes about, senior FDA investigators will be the most likely to accept. The result will be a large increase in the number of consultants with recent FDA compliance experience available to industry.

Part 11 Gets Cloudier 

Did industry fail to see the complexities of FDA's Part 11 (electronic submissions and signatures) regulation? Or did FDA overestimate the capabilities of the industry to comply with it? According to some observers, the more FDA tries to clarify the matter, the cloudier it becomes.

Gordon Richman is a vice president with EduQuest, a consulting firm founded by Martin Browning, who co-chaired the FDA committee that wrote Part 11. He states that the reason that Part 11 has become such a problem isn't that it was so overreaching in the first place. Most of what the regulation requires is based on good systems- and software-development practice. Instead, Richman says, a key problem is that industry has a huge legacy of older systems that weren't built using this basic good practice.

There is some merit to industry's arguments that they are in effect enslaved by software vendors who haven't delivered because FDA-regulated industry is only a small portion of their business. The health product makers may make up only a very small share of the software vendors' business, Richman says. Under these circumstances, a vendor is not going to permit this small segment of its business to dictate how a program should be developed. This leaves industry to deal with a supplier that is not regulated by FDA while trying to meet FDA's expectations.

Some FDA-regulated manufacturers have been forced to use small, specialized software firms on whose development boards they could place a member to ensure that they are getting the product they need.

The situation is further complicated by FDA's shifting interpretations of Part 11. Richman says FDA sometimes went to extremes that were far beyond the original intent of the regulation. As a result, much of the industry is still lagging behind where it should be and sees Part 11 as unnecessary and cumbersome. 

Joe Levitt Leaves FDA 

Former CDRH deputy director for regulations and policy Joseph A. Levitt retired from the agency effective December 31 to join the Washington law firm of Hogan and Hartson. His colleagues there include former FDA attorneys Linda Horton, Meredith Manning, and Ben England. Since January 1998, Levitt had been director of FDA's Center for Food Safety and Applied Nutrition.

Expediting Premarket Submissions 

CDRH has issued a guidance for industry, Expedited Review of Premarket Submission for Devices. Its goal is to develop a common understanding of the statutory criteria for expedited review of premarket submissions and to outline procedures for achieving an efficient expedited review.

There have been expedited review provisions since 1994. The guidance notes that the agency considers a device suited to expedited review if it is intended to treat or diagnose a life-threatening or irreversibly debilitating disease or condition and addresses an unmet medical need.
Suitable market applications are placed at the beginning of the appropriate review queue and receive additional review resources as needed. If multiple applications for devices that offer comparable advantages over existing approved alternatives have been granted expedited review, they are reviewed with priority assigned on a first-in, first-reviewed basis.

So that expedited reviews can be tracked against PMA performance goals, applicants should have a prefiling meeting with FDA. In it, they should go over the timeline for submission, the format of the PMA, the level of information necessary to permit a substantive review, preapproval inspection issues, and issues related to advisory panel review, as appropriate. In addition, the application should be substantively complete. It should contain a complete manufacturing section and a statement that the facility is prepared for a GMP inspection. 

The guidance covers both industry and FDA responsibilities in requesting expedited review and the process for PMA prefiling meetings, as well as FDA's expedited review procedures. The guidance is available at

User Fees and Refunds Guidance 

A new FDA guidance document provides industry with information on the types of submissions requiring a user fee under MDUFMA. The document, titled User Fees and Refunds for Premarket Approval Applications, also identifies industry or FDA actions on a submission that may result in a refund of fees. It may be accessed at

GE Medical Systems Gets Warning 

FDA says inspection of a GE Medical Systems diagnostic x-ray system at an undisclosed user's site found a Class A violation (poses a serious radiation hazard). In a recent warning letter to the company, FDA says the x-ray system allowed x-ray production even when the primary protective barrier was not in position to intercept the x-ray beam as required by agency regulations. 

FDA notes in the warning letter that GE Medical's response to the FDA 483 indicated that the firm had adjusted the system to correct the hazard. However, FDA's letter requests “additional detail so that we can determine if this serious hazard was assembler-based, manufacturer-based, or of user-based origin.” It asks GE Medical to provide an assessment of the hazard potential, specifically to determine whether it is related to the single unit or has model-wide implications.

GE Medical spokesperson Jennifer Christensen said the problem was an “isolated incident” that the company had corrected on the same day as it received the warning letter. “The finding was related to a backup component of the system,” Christensen added. “Because it was a backup system, the issue did not impact patient care or safety.” 

Copyright ©2004 Medical Device & Diagnostic Industry

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