[Congressional Record Volume 151, Number 106 (Friday, July 29, 2005)]
[Extensions of Remarks]
[Pages E1687-E1688]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           MEDICAL DEVICE USER FEE STABILIZATION ACT OF 2005

                                 ______
                                 

                               speech of

                            HON. JOE BARTON

                                of texas

                    in the house of representatives

                         Tuesday, July 26, 2005

  Mr. BARTON of Texas. Mr. Speaker, on October 26, 2002, the Medical 
Device User Fee and Modernization Act, MDUFMA, was signed into law.


                 I. background and need for legislation

  MDUFMA amended the Federal Food Drug and Cosmetic Act, FFDCA, to 
authorize the Food and Drug Administration, FDA, to collect user fees 
from manufacturers who submit certain applications to market medical 
devices. The premise behind initiating a user fee program for medical 
devices was to provide for more timely and predictable review of 
medical device applications, as well as to make the necessary 
infrastructure investments required to conduct the review of 
increasingly complex medical device applications in the future in a 
timely and predictable fashion.
  The FFDCA as amended by MDUFMA, authorizes FDA to collect user fees 
for certain medical device applications in FY 2006 and FY 2007 only if 
certain conditions are met. MDUFMA specifies that for FY 2006 fees may 
not be assessed if the total amounts appropriated for FY 2003 through 
FY 2005 for FDA's device and radiological health program did not meet 
certain targets. Appropriations for FY 2003 through FY 2005 for FDA's 
device and radiological health program were below the amount specified 
in MDUFMA. This legislation modifies those conditions, minimum 
appropriation levels for FY 2003 through FY 2005, to allow FDA to 
continue to collect user fees until October 1, 2007.
  User fees make possible investments in information technology 
infrastructure and human capital, more comprehensive training for 
reviewers, greater use of experts in academia and the private sector, 
enhanced project management, increased guidance development, expanded 
participation in globalization and standards setting activities, and 
increased interaction with industry both before and during the 
application review process. As medical device applications become 
progressively more complex, this investment will become ever more 
necessary to keep up with performance standards that FDA has thus far 
been successful in meeting. Keeping the device review program on sound 
financial footing is essential to ensure timely and predictable review 
of medical device applications. Providing the device review program 
with sufficient resources to fulfill its mission is critical to ensure 
that patients have access to the latest and most effective technology.
  The Committee also believes it is important to provide industry with 
predictable annual increases in application fees. Since the inception 
of MDUFMA, user fees for certain application types have increased 
dramatically from year to year. To address these concerns, H.R. 3423 
will limit fee increases in FY 2006 and FY 2007 until MDUFMA sunsets on 
October 1, 2007. This legislation is designed to provide a transition 
until Congress reauthorizes the program in 2007. During deliberations 
on the reauthorization of the program the Committee on Energy and 
Commerce recognizes the need to consider comprehensive changes to the 
structure of the program to provide for stability and predictability in 
both application fees and fee revenues for companies that pay user fees 
and for the FDA.


                    II. ANALYSIS OF THE LEGISLATION

  H.R. 3423 removes the requirement that the total amounts appropriated 
for FY 2003 through FY 2005 for FDA's device and radiological health 
program must meet levels specified in MDUFMA before FDA can collect 
user fees in FY 2006 and FY 2007. As a result, FDA will be able to 
collect user fees in FY 2006. To avoid similar problems in FY 2007, FDA 
may continue to collect user fees as long as appropriations are not 
more than 1 percent below the target amount.
  This legislation also provides industry with greater predictability 
as to the amount by which fees will increase over the next two fiscal 
years. The fee rate for a premarket approval application (PMA) will 
increase by 8.5 percent in FY 2006 to $259,600 and by 8.5 percent in FY 
2007 to $281,600. Small businesses will receive additional financial 
relief by expanding the definition of a small business to include 
entities that reported $100,000,000 or less of gross receipts or sales 
in their most recent Federal income tax return for a taxable year, 
except that the small business threshold for an entity to be eligible 
for a first time, full-fee waiver for a PMA application will remain at 
$30,000,000. For FY 2006 and FY 2007, FDA will report to Congress on 
the number of different applications and notifications, and the total 
amount of fees paid for each type, from businesses with gross receipts 
or sales at or below $100,000,000.
  To provide FDA with a measure of financial security should fee 
revenues fall short of current projections, the agency may use 
unobligated carryover balances from fees collected in previous fiscal 
years if the following conditions are met: (1) Insufficient fee 
revenues are available in that fiscal year, (2) the agency maintains 
unobligated carryover balances of not less than one month of operating 
reserves for the first month of FY 2008, and (3) the agency sends a 
notice to the Committee on Health, Education, Labor, and Pensions, the 
Committee on Energy and Commerce, and the Committee on Appropriations 
of the United States Senate and the United States House of 
Representatives at least 14 days prior to using these funds. To ensure 
that funds are not directed away from device safety activities, FDA 
must certify that the amounts spent by the agency for salaries and 
expenses to perform device-related activities not pertaining to the 
review of applications are no less than the amounts spent on those 
functions in FY 2002 multiplied by the rate of inflation.
  Section 301 of MDUFMA added a new subsection (u) to section 502 of 
the FFDCA that required devices or attachments to a device prominently 
and conspicuously to bear the name of the manufacturer of the original 
device or of the reprocessed device, if it was reprocessed, a generally 
recognized abbreviation of that entity, or a unique and generally 
recognized symbol identifying the manufacturer. This provision was 
intended to ensure that the manufacturer of the device, whether the 
original manufacturer or reprocessor, could be properly identified. In 
developing the original provisions of Section 301, the Committee 
believed it was important for device user facilities and the agency to 
have the ability to correctly identify the responsible party for a 
device when there is an adverse event associated with a device.
  However, under the current language of Section 301, the FDA could 
waive the branding requirement if compliance is not feasible or 
compromises the reasonable assurance of safety or effectiveness of the 
device. For some devices it may be difficult to comply with the marking 
requirement due to their physical characteristics, such as size and 
composition. Even if the physical characteristics make it difficult to 
mark a device, the Committee believes it is important that every device 
have a mechanism to identify the manufacturer of the product when there 
is an adverse event.

  Reporting of adverse events of medical devices by manufacturers and 
device user facilities is fundamental to the FDA's post-market

[[Page E1688]]

regulation of medical devices. Concerns have been raised that once a 
medical device is removed from its packaging and placed on a tray ready 
for use on a patient, physicians and nurses are likely to identify the 
device with the OEM. While medical device user facilities are required 
to report manufacturer information beyond the product labeling, the 
lack of specific labeling to identify devices has led to claims of 
underreporting of patient injuries and product malfunctions involving 
reprocessed devices. It is important to the Committee that device 
facilities are properly reporting the manufacturer responsible for the 
device. The Committee believes the effectiveness of the FDA's medical 
device reporting system is undermined when the agency does not receive 
proper information regarding the party responsible for the safety of 
the device, and that FDA should take steps to ensure it is in fact 
receiving such information.
  The Committee has carefully considered the concerns about section 
502(u) as originally adopted and has amended it to provide for a more 
comprehensive provision that does not allow waivers to branding 
requirements. Section 502(u) now focuses on reprocessed single-use 
devices. Any single-use device reprocessed from an original device that 
the original manufacturer has prominently and conspicuously marked 
(which may be accomplished through marking an attachment to the device) 
with its name, a generally recognized abbreviation of its name, or a 
unique and a generally recognized symbol for it, must be prominently 
and conspicuously marked (which may be accomplished through marking an 
attachment to the device) with the reprocessor's name, a generally 
recognized abbreviation of its name, or a unique and a generally 
recognized symbol for it.
  H.R. 3423, while limiting compliance to reprocessed devices, allows 
such a device to satisfy this labeling requirement by using a 
detachable label that identifies the reprocessor if the original device 
did not prominently and conspicuously bear the name of, abbreviation 
of, or symbol for the manufacturer. Under this new provision, there 
will be no possibility of a waiver of the branding requirements, and 
every device should be traceable back to the responsible party. The 
Committee recognizes the benefits of the detachable label can only be 
recognized if the labels are used as intended by being affixed to a 
patient's medical records. The Committee believes the amended provision 
will strengthen the medical device reporting system. However, the 
Committee will continue to closely monitor the use of detachable labels 
by device user facilities to ensure that the intent of the provision is 
realized.
  Although the Committee encourages the use of these detachable labels 
on all reprocessed devices, the use of such a detachable label on a 
reprocessed single-use device that is prominently and conspicuously 
marked by the original manufacturer is not a legitimate substitute for 
the requirement of section 502(u)(I) that the reprocessor directly mark 
the reprocessed device or an attachment to it. In order to avoid 
erroneous identification of the original manufacturer as the source of 
a reprocessed device and to ensure that the MDR system provides FDA 
with the information it needs with respect to reprocessed devices to 
adequately protect patients, the identification of the reprocessor by 
means of a detachable package label is strictly limited to those 
circumstances where the device itself, or an attachment thereto, does 
not prominently and conspicuously reflect the identity of the original 
manufacturer.

  The effective date of this provision is 12 months from the date of 
enactment. In the interim, the FDA is charged with developing guidance 
to identify circumstances where the original equipment manufacturer's 
marking is not prominent and conspicuous. Section 519 of the FFDCA, and 
FDA's Medical Device Reporting (MDR) regulations, require manufacturers 
to report patient injuries and product malfunctions to FDA, and device 
user facilities to report these adverse events to FDA and 
manufacturers. The Committee believes that the requirements of section 
502(u), as amended, will operate to improve this post-market 
surveillance system, and thus patient safety. It is the intention of 
the Committee that upon the effective date of this provision device 
user facilities should in every instance be able to determine the 
proper party responsible for this device.
  For those devices that already contain a marking by the original 
equipment manufacturer the Committee believes that companies currently 
reprocessing devices should begin to place identifiable markings as 
soon as possible. The Committee also believes the 12-month effective 
date should give ample opportunity for the regulated companies to 
comply with this provision, and the Committee expects the FDA will 
enforce this provision on the date it becomes effective.

Section 1. Short title.

  This section provides the short title of the bill, the ``Medical 
Device User Fee Stabilization Act of 2005.''

Section 2. Amendments to the Federal Food, Drug and Cosmetic Act.

  This section amends Section 738 of the FFDCA (Authority to Assess and 
Use Device Fees), Section 103 of MDUFMA, Section 502(u) of the FFDCA 
(Misbranded Devices), and Section 301(b) of MDUFMA.
  Subsection (a) addresses amendments to the device user fee program 
authorized in Section 738 of the FFDCA. Subsection (a)(1) eliminates 
the statutory fee revenue targets for device user fees in fiscal years 
2006 and 2007 in section 738(b).
  Subsection (a)(2) eliminates the inflationary, workload, 
compensating, and final year adjustments previously used in annual fee-
setting calculations, as provided for in Section 738(c). Subsection 
(a)(2) also sets the pre-market application user fee at $259,600 for 
fiscal year 2006 and $281,600 for fiscal year 2007, which is an 8.5 
percent increase each year (fees for other device submissions are then 
determined as a percentage of the pre-market application fee, as 
provided generally in section 738(a)(2)(A)). Finally, subsection (a)(2) 
also amends Section 738(c) to permit FDA to use up to two-thirds of 
fees carried over from previous years to supplement fee revenues in 
fiscal years 2006 and 2007. FDA must notify Congress if it intends to 
use these carryover balances.
  Subsection (a)(3) amends section 738(d) to clarify that the small 
business threshold for the purposes of a first-time waiver of the fee 
on a pre-market approval application or a pre-market report remains at 
$30 million, as under current law. It raises the small business 
threshold from $30 million to $100 million for the purposes of fee 
reductions on all other applications, reports, and supplements. 
Subsection (a)(3) also eliminates the ability of the FDA to reset this 
new small business threshold if user fee revenues are reduced by 16 
percent because of the small business fee reduction. Subsection (a)(4) 
amends section 738(e) to raise the small business threshold from $30 
million to $100 million for the purposes of fee reductions on pre-
market notifications.
  Subsection (a)(5) amends section 738(g) to eliminate the ``trigger'' 
requirement of additional appropriations in the FY 2003 and FY 2004 for 
FDA to be able to collect user fees in FY 2006 and FY 2007. It also 
builds in a 1 percent tolerance on the appropriations trigger for FY 
2006 and FY 2007, to cushion against possible across-the-board 
rescission in the appropriations process for those years, which would 
lead to accidental termination of the program.
  Subsection (a)(6) eliminates the statutory authorization targets for 
FY 2006 and FY 2007, and subsection (a)(7) makes a conforming amendment 
throughout Section 738.
  Subsection (b) amends section 103 of MDUFMA to require additional 
information in FDA's medical device user fee program annual reports for 
FY 2006 and FY 2007 on the number and types of applications received by 
the size of small business up to the new small business threshold of 
$100 million, and to require a certification by the Secretary of Health 
and Human Services in the annual report that appropriated funds 
obligated for other purposes relating to medical devices are not 
diverted for device review.
  Subsection (c)(1) amends section 502(u) of the FFDCA to address the 
marking and tracking of reprocessed medical devices intended for 
single-use by the original manufacturer. Section 502(u) as amended 
requires reprocessors to mark a reprocessed device if the original 
manufacturer has marked the device. If the original manufacturer does 
not mark the device, the reprocessor must still mark the device, but 
has more flexibility in how to mark the device, such as by using a 
detachable label on the package of the device that is intended to be 
placed in the medical record of the patient on whom the device is used.
  Subsection (c)(2) requires FDA to issue a guidance document no later 
than 180 days after the act becomes effective to address compliance 
with section 502(u) in circumstances where an original manufacturer has 
not marked the original device prominently and conspicuously.
  Subsection (d) amends section 301(b) of MDUFMA to make the amendment 
made by subsection (c)(1) to section 502(u) of the FFDCA effective 12 
months after the date of enactment of the act, or 12 months after the 
original manufacturer has first marked its device, if that is later.

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