MDUFMA: How Far Has It Come?

Originally Published MDDI January 2005

Q&A

MDUFMA: How Far Has It Come?

Experts look at the benefits of MDUFMA and issues that need to be resolved.

Erik Swain

The Medical Device User Fee and Modernization Act of 2002 (MDUFMA) reshaped certain aspects of medical device regulation. Most significantly, it created a new funding structure for review of new product applications by introducing a user-fee program. For the first time in history, the device industry contributed to FDA's budget to pay for the staff and infrastructure to review applications in a timely manner. As part of the deal, Congress was supposed to increase its appropriation for the CDRH budget as well, but that has not yet occurred at the level that was promised. The legislation also introduced other major changes such as a third-party inspection program and more regulation over the reprocessing of single-use devices (SUDs).

Now that MDUFMA has been in place for more than two years, it is an appropriate time to assess what parts of the regulation have worked, what parts of it haven't worked, and what improvements might need to be made.

MD&DI asked four experts on medical device regulation for their assessment of MDUFMA's successes and the challenges that remain. Executive vice president of technology and regulatory affairs for AdvaMed, Janet Trunzo represents the industry trade associations along with Mark Leahey, executive director of the Medical Device Manufacturers Association. Patricia Garvey is the corporate vice president of regulatory, quality, and clinical affairs at Edwards Lifesciences (Irvine, CA). And Linda Kahan is deputy director of CDRH.

What has been MDUFMA's greatest success?

Janet Trunzo: It is difficult to single out MDUFMA's greatest success since the legislation contains many provisions that positively affect FDA's medical device program and, by extension, industry as well.

Providing CDRH with an adequate and predictable revenue stream via increases in appropriations and user fees is certainly one of the most important consequences of MDUFMA. Without these funds, CDRH would continue to experience shrinking budgets and dwindling resources, leading to a significant slowdown in product approval times. This, in turn, would have a stifling effect on medical technology innovation.

MDUFMA also builds more consistency and accountability into FDA's device review program. The agency is committed to meeting strict premarket review performance goals beginning this year.

Another important provision of MDUFMA resulted in the creation of an Office of Combination Products within FDA. While still in the beginning stages, the office is making significant progress in defining policies and procedures for pre- and postmarket oversight of device, drug, and biologics combinations.

These initial steps are crucial to ensure that, as innovative combination products make their way through the developmental pipeline, patients will have access to them as soon as possible.

Mark Leahey: MDUFMA's greatest success was establishing the framework for protecting patients from multiple use of devices that FDA cleared for
single use only.

Patricia Garvey: The increased funding has allowed FDA to hire many new reviewers, which we hope will ultimately accelerate review times and increase the quality of the review. The funding has also allowed the agency to bring in some external consultants who will fill the gaps in expertise where needed.

Linda Kahan: One major benefit is that it has raised the profile of device review. It has given us more attention within the agency and within the whole government. The Office of Management and Budget (OMB) wrote to Congress requesting it to fund the FY 2005 CDRH budget promised in MDUFMA. Something like that had never happened before. It gives us a sense that what we want counts, and we now have a seat at the table.

Our processes are now better coordinated and integrated across all offices involved in premarket review. MDUFMA has forced us to consider the total product life cycle. And there are methods in place to ensure that we use all the experts that we can, whether they are on our review teams, from other centers, or consultants from the outside.

What has been MDUFMA's greatest shortcoming?

Trunzo: Certainly industry has been dismayed by the significant increases in user-fee rates—more than 50%—that have occurred in just the first two years of the program. AdvaMed was particularly disappointed in the 16% increase in user-fee rates for FY 2005 that FDA announced in August. The association proposed a methodology for calculating the fees based on our projection of a robust number of premarket submissions. This calculation would have capped the fee increase at 9%. However, FDA chose to use a far more conservative submission estimate in its calculations, which led to the higher fee increase.

Leahey: The user fee imposed by Article I of MDUFMA has been the act's greatest shortcoming. Industry supported the idea of a user fee in anticipation of faster FDA review times and additional congressional funding. However, after just two years, the industry's fees skyrocketed more than 60%, and Congress has appropriated only approximately $5 million out of the $60 million committed. And the performance goals laid out in MDUFMA do not represent, based on FDA's own data, the 25% improvement that the industry was promised.

Garvey: The large influx of new reviewers in some divisions of CDRH seems to have actually slowed down the review process. This may be because the new reviewers are not yet fully trained and can be extremely cautious and conservative in terms of decision making. Another reason for the lack of acceleration in review times may be that there are a lot of changes in personnel and positions, which requires informal coordinating that doesn't really further the review process.

Kahan: There are two issues that stand out, though I would call them frustrations rather than shortcomings. One is that we have not been able to benefit from a stable funding base. For the agency, that means we can't predict how much revenue we will receive, nor can we ramp up the programs as effectively as we would like. And we understand that causes concern from industry about not knowing what the fees will be.

The second is that we don't have the resources to upgrade our IT system, which remains fragmented and outdated when it needs to be state-of-the-art. An updated system would enable us to get our work done as efficiently as possible. It would enable tracking and reporting to the extent we need it.

Has there been sufficient interaction between industry, FDA, and Congress regarding how MDUFMA should be implemented?

Trunzo: Industry meets with FDA on a fairly consistent basis to discuss all aspects of MDUFMA implementation. For example, FDA meets with key industry groups quarterly to discuss user-fee metrics. The key topics include submission numbers, amount of fees collected, resource allocation, and progress in meeting performance goals.

Industry shares its comments and concerns regarding MDUFMA implementation with key members of Congress on a regular basis as well.

Leahey: Yes. The interaction between FDA, Capitol Hill, and the industry has been very good. MDMA continues to participate in the quarterly updates with FDA. In addition, we continue to keep Congress abreast of our concerns with the skyrocketing fees and the need for legislative modifications to address this issue.

Garvey: With regard to FDA and industry, there is a great deal of interaction. Agency representatives frequently attend our industry association meetings, proactively solicit input, and are transparent in communicating their intentions. But while the top management at FDA is engaged with industry, the communication does not always translate to the rank-and-file.

Kahan: We have put a priority on communication and are working to have as transparent a process as possible. Quarterly reports on MDUFMA's implementation process are posted on our Web site, and we host quarterly meetings with industry stakeholders to discuss MDUFMA issues. All of us, including other affected branches of FDA, interact with industry at as many educational events as possible. And we participate in conferences that have a strong industry presence. We have used the Internet to get information out quicker. We continue to meet with individual applicants regarding individual applications. We have been listening to industry's comments and responding to them, and some suggestions have been incorporated.

Has the user-fee provision of MDUFMA worked as expected? If not, what changes would you suggest?

Trunzo: We are still gathering data on the user-fee provision and will probably propose changes as part of re-
authorization in FY 2007.

Leahey: Unfortunately, the user-fee program is playing out as we feared. MDMA was concerned about the fact that the industry was held accountable for funding the program from day one, while Congress was given three years to appropriate the additional funding. In addition, the structure of MDUFMA did not provide for predictable user fees from year to year.

Structural changes should be made to stabilize the fees and ensure that all parties are held accountable. Compensating and workload adjustments should be eliminated to prevent the severe fee increases from continuing. Moreover, industry agreed to pay a reasonable fee in exchange for faster FDA reviews of premarket submissions. However, based on FDA's own performance statistics, the current MDUFMA decision goals do not represent faster reviews in more than 90% of the submissions. FDA should revisit the performance goals to see where they can be enhanced. Finally, the lack of congressional appropriations is extremely troubling. MDUFMA was established to provide additional funds to FDA to enhance performance. Yet, in the first two years, the industry user fees have been used to supplement government shortfalls in their budget. If this program is to continue, full congressional appropriations must occur.

Garvey: It is premature to make a call now. Initially, the intention of the legislation—to increase the speed of agency review—has not been accomplished uniformly across reviewing divisions. There are a few possible reasons for this, including lack of adequate funds to train new personnel due to insufficient funding from Congress, and a potential FDA miscalculation on the volume of original PMAs designed to bring in revenues, which resulted in a more than 60% increase in user fees in two years.

Kahan: What's working well is that the fee collection process is in place; collection has been kept apart from review so reviewers don't have to be concerned with it. DSMICA is doing a great job with timely decisions about who qualifies as a small business. Fees are set in a timely manner and they are being used for device review work. The program has created visibility and respect for device review. Without MDUFMA in 2004, the review program would have contracted and review performance would have deteriorated.

What's not working well is that revenues are not stable and predictable. Fee revenues and appropriations are less than envisioned. Therefore, staffing has increased more slowly and there is an urgent need to add staff to meet MDUFMA goals. To fix fee shortfalls, we revised our estimated number of fee-paying applications when fees were set for FY 2005, but the fix may have been too modest. Still, we expect collections to be closer to revenue targets in 2005–2007 than they were in 2003 and 2004. The bigger issue now is appropriations shortfalls.

In your opinion, are CDRH review times now sufficient?

Trunzo: Review times have, in general, shown a gradual improvement in recent years. However, we continue to receive reports from our members that certain review activities are not under the clock. Scheduling early collaboration meetings, for example, has been difficult to achieve. In addition, we hear anecdotally that some 510(k) submissions that previously were typically reviewed in 60 to 70 days are now taking the full 90 days. So review times are far from optimal and more efficiency and consistency could be achieved.

Leahey: Although CDRH has steadily been improving performance since 1999, the time it takes to get a medical device cleared or approved still often exceeds the statutory time frames. So long as the statutory time frames are not met, review times are not sufficient. Furthermore, the goals under MDUFMA do not necessarily represent faster reviews from FDA. For MDUFMA to achieve the goal of faster reviews, the goals should be modified to ensure enhanced performance.

Garvey: No, approval times are inadequately slow and need to be improved.

Kahan: MDUFMA goals are receipt-cohort-based. Because PMAs take a very long time to review, the final data for this coming year are not in yet. But based on the statistics available, we have done very well. For example, in FY 2003 we received 47 original PMAs and panel-track supplements, of which we know decisions for 43. Of those with decisions, 95% produced a decision within 320 days, and our goal was 80% decisions within 320 days. Even if the other six miss the deadline, 83% will have met the goal. For 510(k) applications in FY 2003, we met our goal on decision times but not on cycle times. Preliminary data from FY 2004 suggest improvement in performance on cycle goals.

What is left to do? We look at MDUFMA goals not as a ceiling but as a floor from which to measure both cycle and decision times. We want to continue to improve productivity, but there are challenges ahead. Applications are getting more complex, and our existing staff is working at their limits.

How have the application formats codified under MDUFMA improved the review process?

Trunzo: Both expedited and modular review formats were in place before MDUFMA. However, while the FDA Modernization Act of 1997 authorized expedited reviews, MDUFMA set the performance goals for these types of reviews. The modular review program was a result of CDRH's reengineering initiative, though the program was codified under MDUFMA.

Leahey: The new avenues for approval have given industry additional mechanisms to determine the most appropriate and expeditious pathway to market. These new mechanisms are a significant achievement of the act.

Garvey: It is too early for us to say if the modular PMA application format has improved the process, as we have yet to take one to its conclusion. It is our observation that expedited applications are actually slower, so based on that measure, there needs to be
improvement.

Kahan: Before MDUFMA, we did not have clear definitions for panel-track, 180-day, and real-time supplements. It was sometimes confusing as changes in device design, manufacturing, and even indications for use were submitted without much attention paid to the type of supplement they actually were.

In addition, the guidance on modular PMAs has helped some firms better organize their applications. We have made some improvements to that program. For example, we now allow panel-track supplements to be submitted as modular PMAs. We also allow modules to be submitted at the same time if that is acceptable to the review division. Now that PMA review teams are bigger, we can handle that better.

We are working with industry to establish goals for the modular submission program. The number of modules is decreasing, as per our guidance document. But that means each module is more complex, which makes for unpredictable review times.

There are two options proposed to standardize review times. One would require a high percentage of modules received to have an action taken within 120 days for each review cycle. That means review times would be more predictable, but also more likely to take longer. The other option would involve having a lower percentage of modules received to have an action taken within 90 days for each review cycle. In that case, the average review time would be shorter, but less predictable. We expect input from stakeholders on these and other options.

Has the third-party inspection program worked as expected? If not, what changes would you suggest?

Trunzo: It is too soon to comment on this program because FDA is still in the final phases of training and certifying the third parties that will perform the inspections.

Leahey: The third-party inspection program has taken longer than expected to implement. FDA recently published revised accreditation criteria to incorporate changes to MDUFMA made by a technical corrections bill enacted in April 2004. FDA issued a guidance document on implementation of the program last month. However, this program cannot be evaluated until a number of manufacturers have been through the process.

Garvey: We have no experience with this provision.

Kahan: It's still too early to judge. Four firms designated as accredited persons have two auditors each who have completed all training and joint audits, and can conduct independent inspections. So far, 59 auditors have completed the required training and exam, and approximately half of them have conducted at least their first joint audit. But we have had some difficulty in scheduling joint audits. Qualified manufacturers are encouraged to participate and consider hosting a joint audit.

Has MDUFMA adequately addressed concerns about the reprocessing of single-use devices?

Trunzo: With MDUFMA, Congress sent a clear message that increased regulation was needed over the practice of reprocessing of single-use devices, so that, in essence, reprocessors are held to the same standards as OEMs. MDUFMA gives FDA some good tools to achieve more-stringent oversight of reprocessors, but it is up to the agency to effectively implement those provisions.

Industry was disappointed that FDA gave reprocessors two 90-day extensions to provide the agency with the supplemental validation data as required under MDUFMA. Since reprocessors have been required to maintain these data under FDA's quality system regulation since 1997, I don't understand why so much extra time was necessary.

The results of FDA's review of these validation data raise additional questions about the agency's oversight of reprocessors. FDA deemed that nearly 50% of the more than 1900 device models for which validation data was required could no longer be legally marketed. What assurances can FDA give the public that validation data exist to support continued marketing of the vast majority (nearly 80%) of reprocessed single-use devices that did not require data submissions to the agency? And how will FDA ensure that hospitals and other end-users are properly notified that a large number of reprocessed devices cannot be legally marketed?

In addition, industry continues to urge FDA to reconsider exempting some critical reprocessed single-use devices from the requirement to submit supplemental validation data for agency review, such as heart stabilizers and positioners. AdvaMed recently sent a letter to FDA highlighting known adverse events involving reprocessed heart stabilizers.

Leahey: While MDUFMA has addressed some concerns related to the reprocessing of single-use devices, we look forward to working with FDA to ensure that patients are protected from potentially harmful medical devices. Specifically, we continue to urge FDA to take enforcement action against reprocessors who have not complied with the January 2004 deadline for submitting enhanced 510(k)s including required validation data. FDA has stated that it has received only 5% of the enhanced 510(k)s that are required. Reprocessors who have not submitted the required validation data are currently in violation of federal law and their products are misbranded if they are still being sold to customers.

Because of the severity of risks associated with the reprocessing of SUDs, we believe that FDA should take immediate action to protect the public from such misbranded devices. The risk posed by these devices is illustrated by the results of the agency's review of supplemental validation data that have been submitted to date by reprocessors of SUDs. As announced [in November, 2004], of the 44 supplemental validation submissions reviewed, FDA found that 11 were not substantially equivalent, and an additional 12 were substantially equivalent for only some models of the device. FDA enforcement is essential to ensure that all data are submitted for reprocessed SUDs as required by MDUFMA and that reprocessors comply with the determinations resulting from FDA's review.

Garvey: No. Reprocessors still appear to be held to different, less-stringent standards.

Kahan: FDA has met the requirements of Section 302 of MDUFMA. The agency published lists detailing which reprocessed SUDs are no longer exempt from 510(k) requirements, and which require submission of validation data. The agency anticipated 53 supplemental validation submissions (SVSs), accounting for 1800 device models. Nine of those were not submitted by the statutory deadline, and thus are declared not substantially equivalent and must be pulled from the market. Of the 44 SVSs received, the agency declared 19 substantially equivalent for all models, 12 substantially equivalent for some models, and 11 not substantially equivalent, some of the latter having been withdrawn by the sponsor. Two are still under review. Of the 1800 device models accounted for, 52% were found substantially equivalent and may continue to be legally marketed, 33% were found not substantially equivalent, and 15% were withdrawn by the reprocessor. Those withdrawn or found not substantially equivalent can no longer be legally marketed. However, the reprocessor can submit a new 510(k) with validation data to FDA, if desired. Reviewing these submissions was a careful, thorough, and resource-intensive process, and we are confident that the decisions were scientifically grounded. We also spent a lot of time defining cleaning validation protocols, for which there were no standards.

Has MDUFMA adequately addressed concerns about labeling?

Trunzo: MDUFMA allows manufacturers to provide labeling in electronic formats to healthcare providers. Unfortunately, electronic labeling has not yet been accepted by other countries. We are pleased that the United States has led the way in this area, but for it to be completely successful, electronic labeling needs to be accepted worldwide.

Leahey: Section 301 established new labeling requirements for both OEMs and reprocessors of SUDs. It addresses underreporting of patient injuries and product malfunctions attributed to reprocessed SUDs. It also ensures that users know the SUDs they use have been reprocessed and by whom. However, by applying the device labeling requirements to both OEMs and reprocessors of SUDs, Section 301 has created an unnecessary administrative burden that threatens to undercut this provision entirely. There has generally been little difficulty in identifying the OEM of a particular SUD. Therefore, it is not necessary to identify the OEM on a label attached directly to the device. In contrast, once a device has been removed from its packaging it is difficult to know whether a particular device has been reprocessed and by which reprocessing company. Without a label, a reprocessed device is likely to be associated with the OEM, rather than the reprocessor.

Reporting patient injuries and product malfunctions is a cornerstone of FDA's postmarketing surveillance system. If the user cannot identify that a product was reprocessed and by what company, the user cannot accurately report malfunctions to FDA. In order to track and account for injuries associated with reprocessed devices, Section 301's labeling requirement should be limited to reprocessors of used SUDs to address significant problems of identifying whether, how many times, and by whom the device was reprocessed.

Garvey: While FDA should be recognized for leading the world in allowing electronic labeling, we have not yet been able to implement it on a global basis due to a lack of international standards.

Kahan: The agency is trying to find the best way to implement Section 301, which requires the name of the manufacturer or reprocessor to appear on all devices. We realize it has raised concerns for industry and the agency, in terms of what it means and how to implement it. We have requested that people give us their ideas and thoughts about how to do this. We have also assured industry that we are exercising enforcement discretion. Enforcement will not begin until 18 months after the final guidance is issued.

Is further legislation required to meet the goals MDUFMA set out to address?

Trunzo: To ensure that the user-fee program continues after FY 2005, it will be necessary to amend MDUFMA so that a premature sunset clause will not be triggered as a result of Congress' failure to provide the amount of CDRH appropriations specified in the legislation during the first two years of the user-fee program.

Leahey: Many of the goals were being met before MDUFMA's implementation. However, legislation is required to amend MDUFMA's labeling provision to better identify reprocessed versions of SUDs. The user-fee program must be modified to eliminate compensating and workload adjustments in order to cap fee increases that accompany inflation. Full congressional funding will help establish meaningful performance goals for FDA.

Garvey: Something needs to be done to address the shortcomings of MDUFMA, although it is not immediately clear that legislation is the answer. In addition to solutions to the problems that have already been mentioned, there need to be some technical fixes on the trigger mechanism that kills the program if FDA fails to meet performance goals or if Congress fails to provide appropriations. It is hard to expect the agency to meet its performance goals if it doesn't have continued funding, and if Congress continually fails to fund the program under its original commitment, then there can be little hope for improvement in performance.

Kahan: As written, MDUFMA will end on October 1, 2005, if Congress does not provide the full appropriation for the first three fiscal years of the program by then. Full funding is not possible, so we need to have legislation passed that waives the requirement for the shortfall and allows the program to continue through 2007.

OMB sent draft legislation to the Hill in May 2004 to fix the trigger. This is a ‘clean bill' that has no other provisions. Its purpose is to keep the program going for the five years that Congress, industry, and FDA expect. We want to get it fixed as soon as possible so we can hire new staff with confidence that we won't have to let them go once FY 2005 ends.

Renegotiations about any other aspects of MDUFMA should be part of discussions about reauthorization of the program after 2007, when the five-year program is scheduled to end. While we share industry's concerns that the fees are unpredictable and that we need a stable funding base, this is not the right time to be addressing those issues or issues about changing the agreed-upon goals. Realistically, if the program stays in place because the trigger has been fixed, negotiations about a second MDUFMA authorization would probably begin early in 2006. That would be the right time to discuss concerns that any stakeholders have about substantive goals, new mechanisms for achieving stable funding, or assigning resources to postmarket safety.

We look forward to putting these and other issues that stakeholders have on the table for “MDUFMA II.” But our focus for the moment is getting a clean fix to the trigger provision so that we can continue to hire, train, and improve performance without worrying about the program grinding to a halt at the end of this fiscal year.

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