[House Report 107-728]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-728

======================================================================



 
         MEDICAL DEVICE USER FEE AND MODERNIZATION ACT OF 2002

                                _______
                                

October 7, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3580]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3580) to amend the Federal Food, Drug, and 
Cosmetic Act to make improvements in the regulation of medical 
devices, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     1
Purpose and Summary..............................................    21
Background and Need for Legislation..............................    21
Hearings.........................................................    22
Committee Consideration..........................................    22
Committee Votes..................................................    22
Committee Oversight Findings.....................................    22
Statement of General Performance Goals and Objectives............    22
New Budget Authority, Entitlement Authority, and Tax Expenditures    22
Committee Cost Estimate..........................................    23
Congressional Budget Office Estimate.............................    23
Federal Mandates Statement.......................................    23
Advisory Committee Statement.....................................    23
Constitutional Authority Statement...............................    23
Applicability to Legislative Branch..............................    23
Section-by-Section Analysis of the Legislation...................    23
Changes in Existing Law Made by the Bill, as Reported............    47

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Medical Device User 
Fee and Modernization Act of 2002''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

                TITLE I--FEES RELATED TO MEDICAL DEVICES

Sec. 101. Findings.
Sec. 102. Establishment of program.
Sec. 103. Annual reports.
Sec. 104. Postmarket surveillance.
Sec. 105. Consultation.
Sec. 106. Effective date.
Sec. 107. Sunset clause.

      TITLE II--AMENDMENTS REGARDING REGULATION OF MEDICAL DEVICES

Sec. 201. Inspections by accredited persons.
Sec. 202. Third party review of premarket notification.
Sec. 203. Designation and regulation of combination products.
Sec. 204. Report on certain devices.
Sec. 205. Electronic labeling.
Sec. 206. Electronic registration.
Sec. 207. Intended use.
Sec. 208. Modular review.
Sec. 209. Pediatric expertise regarding classification-panel review of 
premarket applications.
Sec. 210. Internet list of class II devices exempted from requirement 
of premarket notification.
Sec. 211. Study by Institute of Medicine of postmarket surveillance 
regarding pediatric populations.
Sec. 212. Guidance regarding pediatric devices.
Sec. 213. Breast implants; study by Comptroller General.
Sec. 214. Breast implants; research through National Institutes of 
Health.

                    TITLE III--ADDITIONAL AMENDMENTS

Sec. 301. Identification of manufacturer of medical devices.
Sec. 302. Single-use medical devices.

                TITLE I--FEES RELATED TO MEDICAL DEVICES

SEC. 101. FINDINGS.

  The Congress finds that--
          (1) prompt approval and clearance of safe and effective 
        devices is critical to the improvement of the public health so 
        that patients may enjoy the benefits of devices to diagnose, 
        treat, and prevent disease;
          (2) the public health will be served by furnishing additional 
        funds for the review of devices so that statutorily mandated 
        deadlines may be met; and
          (3) the fees authorized by the amendment made by section 102 
        will be dedicated to meeting the goals identified in the 
        letters from the Secretary of Health and Human Services to the 
        Committee on Energy and Commerce of the House of 
        Representatives and the Committee on Health, Education, Labor, 
        and Pensions of the Senate.

SEC. 102. ESTABLISHMENT OF PROGRAM.

  (a) In General.--Subchapter C of chapter VII of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 379F et seq.) is amended by adding at 
the end the following part:

                   ``PART 3--FEES RELATING TO DEVICES

``SEC. 737. DEFINITIONS.

  ``For purposes of this subchapter:
          ``(1) The term `premarket application' means--
                  ``(A) an application for approval of a device 
                submitted under section 515(c) or section 351 of the 
                Public Health Service Act; or
                  ``(B) a product development protocol described in 
                section 515(f).
        Such term does not include a supplement, a premarket report, or 
        a premarket notification submission.
          ``(2) The term `premarket report' means a report submitted 
        under section 510(o)(3).
          ``(3) The term `premarket notification submission' means a 
        report submitted under section 510(k).
          ``(4)(A) The term `supplement', with respect to a panel-track 
        supplement, a 180-day supplement, a real-time supplement, or an 
        efficacy supplement, means a request to the Secretary to 
        approve a change in a device for which--
                  ``(i) an application has been approved under section 
                515(d) or under section 351 of the Public Health 
                Service Act; or
                  ``(ii) a notice of completion has become effective 
                under section 515(f).
          ``(B) The term `panel-track supplement' means a supplement to 
        an approved premarket application under section 515 that 
        requests a significant change in design or performance of the 
        device, or a new indication for use of the device, and for 
        which clinical data are generally necessary to provide a 
        reasonable assurance of safety and effectiveness.
          ``(C) The term `180-day supplement' means a supplement to an 
        approved premarket application under section 515 that is not a 
        panel-track supplement and requests a significant change in 
        components, materials, design, specification, software, color 
        additives, or labeling.
          ``(D) The term `real-time supplement' means a supplement to 
        an approved premarket application under section 515 that 
        requests a minor change to the device, such as a minor change 
        to the design of the device, software, manufacturing, 
        sterilization, or labeling, and for which the applicant has 
        requested and the agency has granted a meeting or similar forum 
        to jointly review and determine the status of the supplement.
          ``(E) The term `efficacy supplement' means a supplement to an 
        approved premarket application under section 351 of the Public 
        Health Service Act that requires substantive clinical data.
          ``(5) The term `process for the review of device 
        applications' means the following activities of the Secretary 
        with respect to the review of premarket applications, premarket 
        reports, supplements, and premarket notification submissions:
                  ``(A) The activities necessary for the review of 
                premarket applications, premarket reports, supplements, 
                and premarket notification submissions.
                  ``(B) The issuance of action letters that allow the 
                marketing of devices or which set forth in detail the 
                specific deficiencies in such applications, reports, 
                supplements, or submissions and, where appropriate, the 
                actions necessary to place them in condition for 
                approval.
                  ``(C) The inspection of manufacturing establishments 
                and other facilities undertaken as part of the 
                Secretary's review of pending premarket applications, 
                premarket reports, and supplements.
                  ``(D) Monitoring of research conducted in connection 
                with the review of such applications, reports, 
                supplements, and submissions.
                  ``(E) Review of device applications subject to 
                section 351 of the Public Health Service Act for an 
                investigational new drug application under section 
                505(i) or for an investigational device exemption under 
                section 520(g) and activities conducted in anticipation 
                of the submission of such applications under section 
                505(i) or 520(g).
                  ``(F) The development of guidance, policy documents, 
                or regulations to improve the process for the review of 
                premarket applications, premarket reports, supplements, 
                and premarket notification submissions.
                  ``(G) The development of voluntary test methods, 
                consensus standards, or mandatory performance standards 
                under section 514 in connection with the review of such 
                applications, reports, supplements, or submissions and 
                related activities.
                  ``(H) The provision of technical assistance to device 
                manufacturers in connection with the submission of such 
                applications, reports, supplements, or submissions.
                  ``(I) Any activity undertaken under section 513 or 
                515(i) in connection with the initial classification or 
                reclassification of a device or under section 515(b) in 
                connection with any requirement for approval of a 
                device.
                  ``(J) Evaluation of postmarket studies required as a 
                condition of an approval of a premarket application 
                under section 515 or section 351 of the Public Health 
                Service Act.
                  ``(K) Compiling, developing, and reviewing 
                information on relevant devices to identify safety and 
                effectiveness issues for devices subject to premarket 
                applications, premarket reports, supplements, or 
                premarket notification submissions.
          ``(6) The term `costs of resources allocated for the process 
        for the review of device applications' means the expenses 
        incurred in connection with the process for the review of 
        device applications for--
                  ``(A) officers and employees of the Food and Drug 
                Administration, contractors of the Food and Drug 
                Administration, advisory committees, and costs related 
                to such officers, employees, and committees and to 
                contracts with such contractors;
                  ``(B) management of information, and the acquisition, 
                maintenance, and repair of computer resources;
                  ``(C) leasing, maintenance, renovation, and repair of 
                facilities and acquisition, maintenance, and repair of 
                fixtures, furniture, scientific equipment, and other 
                necessary materials and supplies; and
                  ``(D) collecting fees and accounting for resources 
                allocated for the review of premarket applications, 
                premarket reports, supplements, and submissions.
          ``(7) The term `adjustment factor' applicable to a fiscal 
        year is the Consumer Price Index for all urban consumers (all 
        items; United States city average) for April of the preceding 
        fiscal year divided by such Index for April 2002.
          ``(8) The term `affiliate' means a business entity that has a 
        relationship with a second business entity if, directly or 
        indirectly--
                  ``(A) one business entity controls, or has the power 
                to control, the other business entity; or
                  ``(B) a third party controls, or has power to 
                control, both of the business entities.

``SEC. 738. AUTHORITY TO ASSESS AND USE DEVICE FEES.

  ``(a) Types of Fees.--Beginning on the date of the enactment of the 
Medical Device User Fee and Modernization Act of 2002, the Secretary 
shall assess and collect fees in accordance with this section as 
follows:
          ``(1) Premarket application, premarket report, supplement, 
        and submission fee.--
                  ``(A) In general.--Except as provided in subparagraph 
                (B) and subsection (d), each person who submits any of 
                the following, on or after October 1, 2002, shall be 
                subject to a fee established under subsection (c)(5) 
                for the fiscal year involved in accordance with the 
                following:
                          ``(i) A premarket application.
                          ``(ii) For a premarket report, a fee equal to 
                        the fee that applies under clause (i).
                          ``(iii) For a panel track supplement, a fee 
                        equal to the fee that applies under clause (i).
                          ``(iv) For a 180-day supplement, a fee equal 
                        to 21.5 percent of the fee that applies under 
                        clause (i), subject to any adjustment under 
                        subsection (c)(3).
                          ``(v) For a real-time supplement, a fee equal 
                        to 7.2 percent of the fee that applies under 
                        clause (i).
                          ``(vi) For an efficacy supplement, a fee 
                        equal to the fee that applies under clause (i).
                          ``(vii) For a premarket notification 
                        submission, a fee equal to 1.75 percent of the 
                        fee that applies under clause (i), subject to 
                        any adjustment under subsection (c)(3).
                  ``(B) Exceptions.--
                          ``(i) Humanitarian device exemption.--A 
                        device for which a humanitarian device 
                        exemption has been granted is not subject to 
                        the fees established in subparagraph (A).
                          ``(ii) Further manufacturing use.--No fee 
                        shall be required under subparagraph (A) for 
                        the submission of a premarket application under 
                        section 351 of the Public Health Service Act 
                        for a product licensed for further 
                        manufacturing use only.
                          ``(iii) State or federal government 
                        sponsors.--No fee shall be required under 
                        subparagraph (A) for a premarket application, 
                        premarket report, supplement, or premarket 
                        notification submission submitted by a State or 
                        Federal Government entity unless the device 
                        involved is to be distributed commercially.
                          ``(iv) Premarket notifications by third 
                        parties.--No fee shall be required under 
                        subparagraph (A) for a premarket notification 
                        submission reviewed by an accredited person 
                        pursuant to section 523.
                          ``(v) Pediatric conditions of use.--
                                  ``(I) In general.--No fee shall be 
                                required under subparagraph (A) for a 
                                premarket application or premarket 
                                notification submission if the proposed 
                                conditions of use for the device 
                                involved are solely for a pediatric 
                                population. No fee shall be required 
                                under such subparagraph for a 
                                supplement if the sole purpose of the 
                                supplement is to propose conditions of 
                                use for a pediatric population.
                                  ``(II) Subsequent proposal of adult 
                                conditions of use.--In the case of a 
                                person who submits a premarket 
                                application for which, under subclause 
                                (I), a fee under subparagraph (A) is 
                                not required, any supplement to such 
                                application that proposes conditions of 
                                use for any adult population is subject 
                                to the fee that applies under such 
                                subparagraph for a premarket 
                                application.
                  ``(C) Payment.--The fee required by subparagraph (A) 
                shall be due upon submission of the premarket 
                application, premarket report, supplement, or premarket 
                notification submission except that invoices for 
                applications submitted between October 1, 2002, and the 
                date of the enactment of the Medical Device User Fee 
                and Modernization Act of 2002 shall be payable on 
                October 30, 2002. Applicants submitting portions of 
                applications pursuant to section 515(c)(3) shall pay 
                such fees upon submission of the first portion of such 
                applications. The fees credited to fiscal year 2003 
                under this section shall include all fees payable from 
                October 1, 2002, through September 30, 2003.
                  ``(D) Refunds.--
                          ``(i) Application refused for filing.--The 
                        Secretary shall refund 75 percent of the fee 
                        paid under subparagraph (A) for any application 
                        or supplement that is refused for filing.
                          ``(ii) Application withdrawn before filing.--
                        The Secretary shall refund 75 percent of the 
                        fee paid under subparagraph (A) for any 
                        application or supplement that is withdrawn 
                        prior to the filing decision of the Secretary.
                          ``(iii) Application withdrawn before first 
                        action.--After receipt of a request for a 
                        refund of the fee paid under subparagraph (A) 
                        for a premarket application, premarket report, 
                        or supplement that is withdrawn after filing 
                        but before a first action, the Secretary may 
                        return some or all of the fee. The amount of 
                        refund, if any, shall be based on the level of 
                        effort already expended on the review of such 
                        application, report, or supplement. The 
                        Secretary shall have sole discretion to refund 
                        a fee or portion of the fee under this 
                        subparagraph. A determination by the Secretary 
                        concerning a refund under this paragraph shall 
                        not be reviewable.
  ``(b) Fee Revenue Amounts.--Except as provided in subsections (c), 
(d), (f), and (g), the fees under subsection (a) shall be established 
to generate the following revenue amounts: $25,125,000 in fiscal year 
2003; $27,255,000 in fiscal year 2004; $29,785,000 in fiscal year 2005; 
$32,615,000 in fiscal year 2006, and $35,000,000 in fiscal year 2007. 
If legislation is enacted after the date of the enactment of this Act 
requiring the Secretary to fund additional costs of the retirement of 
Federal personnel, fee revenue amounts under this subsection shall be 
increased in each year by the amount necessary to fully fund the 
portion of such additional costs that are attributable to the process 
for the review of device applications.
  ``(c) Adjustments.--
          ``(1) Inflation adjustment.--The revenues established in 
        subsection (b) shall be adjusted by the Secretary by notice, 
        published in the Federal Register, for a fiscal year to reflect 
        the greater of--
                  ``(A) the total percentage change that occurred in 
                the Consumer Price Index for all urban consumers (all 
                items; U.S. city average) for the 12 month period 
                ending June 30 preceding the fiscal year for which fees 
                are being established, or
                  ``(B) the total percentage change for the previous 
                fiscal year in basic pay under the General Schedule in 
                accordance with section 5332 of title 5, United States 
                Code, as adjusted by any locality-based comparability 
                payment pursuant to section 5304 of such title for 
                Federal employees stationed in the District of 
                Columbia.
        The adjustment made each fiscal year by this subsection shall 
        be added on a compounded basis to the sum of all adjustments 
        made each fiscal year after fiscal year 2003 under this 
        subsection.
          ``(2) Workload adjustment.--After the fee revenues 
        established in subsection (b) are adjusted for a fiscal year 
        for inflation in accordance with paragraph (1), the fee 
        revenues shall, beginning with fiscal year 2004, be adjusted 
        further each fiscal year to reflect changes in the workload of 
        the Secretary for the process for the review of device 
        applications. With respect to such adjustment:
                  ``(A) The adjustment shall be determined by the 
                Secretary based on a weighted average of the change in 
                the total number of premarket applications, 
                investigational new device applications, premarket 
                reports, supplements, and premarket notification 
                submissions submitted to the Secretary. The Secretary 
                shall publish in the Federal Register the fee revenues 
                and fees resulting from the adjustment and the 
                supporting methodologies.
                  ``(B) Under no circumstances shall the adjustment 
                result in fee revenues for a fiscal year that are less 
                than the fee revenues for the fiscal year established 
                in subsection (b), as adjusted for inflation under 
                paragraph (1).
          ``(3) Compensating adjustment.--After the fee revenues 
        established in subsection (b) are adjusted for a fiscal year 
        for inflation in accordance with paragraph (1), and for 
        workload in accordance with paragraph (2), the fee revenues 
        shall, beginning with fiscal year 2004, be adjusted further 
        each fiscal year, if necessary, to reflect the cumulative 
        amount by which collections for previous fiscal years, 
        beginning with fiscal year 2003, fell below the cumulative 
        revenue amounts for such fiscal years specified in subsection 
        (b), adjusted for such fiscal years for inflation in accordance 
        with paragraph (1), and for workload in accordance with 
        paragraph (2). Only fees for 180 day supplements and premarket 
        notification submissions shall be increased to generate 
        compensating adjustment revenues.
          ``(4) Final year adjustment.--For fiscal year 2007, the 
        Secretary may, in addition to adjustments under paragraphs (1) 
        and (2), further increase the fees and fee revenues established 
        in subsection (b) if such adjustment is necessary to provide 
        for not more than three months of operating reserves of 
        carryover user fees for the process for the review of device 
        applications for the first three months of fiscal year 2008. If 
        such an adjustment is necessary, the rationale for the amount 
        of the increase shall be contained in the annual notice 
        establishing fee revenues and fees for fiscal year 2007. If the 
        Secretary has carryover user fee balances for such process in 
        excess of three months of such operating reserves, the 
        adjustment under this paragraph shall not be made.
          ``(5) Annual fee setting.--The Secretary shall, 60 days 
        before the start of each fiscal year after September 30, 2002, 
        establish, for the next fiscal year, and publish in the Federal 
        Register, fees under subsection (a), based on the revenue 
        amounts established under subsection (b) and the adjustment 
        provided under this subsection, except that the fees 
        established for fiscal year 2003 shall be based on a premarket 
        application fee of $139,000.
          ``(6) Limit.--The total amount of fees charged, as adjusted 
        under this subsection, for a fiscal year may not exceed the 
        total costs for such fiscal year for the resources allocated 
        for the process for the review of device applications.
  ``(d) Small Business Fee Waiver and Fee Reduction.--
          ``(1) In general.--The Secretary shall grant a waiver of the 
        fee required under subsection (a) for one premarket 
        application, or one premarket report, where the Secretary finds 
        that the applicant involved is a small business submitting its 
        first premarket application to the Secretary, or its first 
        premarket report, respectively, for review. In addition, for 
        subsequent premarket applications, premarket reports, and 
        supplements where the Secretary finds that the applicant 
        involved is a small business, the fees specified in clauses (i) 
        through (vi) of subsection (a)(1)(A) may be paid at a reduced 
        rate in accordance with paragraph (2)(C).
          ``(2) Rules relating to small businesses.--
                  ``(A) Definition.--
                          ``(i) For purposes of this subsection, the 
                        term `small business' means an entity that 
                        reported $10,000,000 or less of gross receipts 
                        or sales in its most recent Federal income tax 
                        return for a taxable year, including such 
                        returns of all of its affiliates, partners, or 
                        parent firms.
                          ``(ii) The Secretary may adjust the 
                        $10,000,000 threshold established in clause (i) 
                        if the Secretary has evidence from actual 
                        experience that this threshold results in a 
                        reduction in revenues from premarket 
                        applications, premarket reports, and 
                        supplements that is 13 percent or more than 
                        would occur without small business exemptions 
                        and lower fee rates. To adjust this threshold, 
                        the Secretary shall publish a notice in the 
                        Federal Register setting out the rationale for 
                        the adjustment, and the new threshold.
                  ``(B) Evidence of qualification.--An applicant shall 
                pay the higher fees established by the Secretary each 
                year unless the applicant submits evidence that it 
                qualifies for a waiver of the fee or the lower fee 
                rate. The applicant shall support its claim that it 
                meets the definition under subparagraph (A) by 
                submission of a copy of its most recent Federal income 
                tax return for a taxable year, which shows an amount of 
                gross sales or receipts that is less than the maximum 
                established in subparagraph (A). The applicant shall 
                certify that the information provided is a true and 
                accurate copy of the applicant's actual tax forms as 
                submitted to the Internal Revenue Service.
                  ``(C) Reduced fees.--Where the Secretary finds that 
                the applicant involved meets the definition under 
                subparagraph (A), the fees established under subsection 
                (c)(5) may be paid at reduced rates as follows:
                          ``(i) 38 percent of the fee established under 
                        subsection (c)(5) for a premarket application, 
                        a premarket report, a panel-track supplement, 
                        or an efficacy supplement.
                          ``(ii) 44 percent of the fee established 
                        under subsection (c)(5) for a 180-day 
                        supplement to a medical device application.
                          ``(iii) 25 percent of the fee established 
                        under subsection (c)(5) for a real-time 
                        supplement to a premarket application.
                This subsection may not be construed as authorizing any 
                reduction in the fee established under subsection 
                (c)(5) for a premarket notification submission.
                  ``(D) Request for fee waiver or reduction.--An 
                applicant seeking a fee waiver or reduction under this 
                subsection shall submit supporting information to the 
                Secretary at least 60 days before the fee is required 
                pursuant to subsection (a).
  ``(e) Effect of Failure to Pay Fees.--A premarket application, 
premarket report, supplement, or premarket notification submission 
submitted by a person subject to fees under subsection (a) shall be 
considered incomplete and shall not be accepted for filing by the 
Secretary until all fees owed by such person have been paid.
  ``(f) Conditions.--
          ``(1) Performance goals through fiscal year 2005; termination 
        of program after fiscal year 2005.--With respect to the amount 
        that, under the salaries and expenses account of the Food and 
        Drug Administration, is appropriated for a fiscal year for 
        devices and radiological products:
                  ``(A)(i) For each of the fiscal years 2003 and 2004, 
                the Secretary is expected to meet all of the goals 
                identified for the fiscal year involved in any letter 
                referred to in section 101(3) of the Medical Device 
                User Fee and Modernization Act of 2002 (referred to in 
                this paragraph as `performance goals') if the amount so 
                appropriated for such fiscal year, excluding the amount 
                of fees appropriated for such fiscal year, is equal to 
                or greater than $205,720,000 multiplied by the 
                adjustment factor applicable to the fiscal year.
                  ``(ii) For each of the fiscal years 2003 and 2004, if 
                the amount so appropriated for the fiscal year 
                involved, excluding the amount of fees appropriated for 
                such fiscal year, is less than the amount that applies 
                under clause (i) for such fiscal year, the following 
                applies:
                          ``(I) The Secretary is expected to meet such 
                        goals to the extent practicable, taking into 
                        account the amounts that are available to the 
                        Secretary for such purpose, whether from fees 
                        under subsection (a) or otherwise.
                          ``(II) The Comptroller General of the United 
                        States shall submit to the Congress a report 
                        describing whether and to what extent the 
                        Secretary is meeting the performance goals 
                        identified for such fiscal year, and whether 
                        the Secretary will be able to meet all 
                        performance goals identified for fiscal year 
                        2005. A report under the preceding sentence 
                        shall be submitted to the Congress not later 
                        than July 1 of the fiscal year with which the 
                        report is concerned.
                  ``(B)(i) For fiscal year 2005, the Secretary is 
                expected to meet all of the goals identified for the 
                fiscal year if the total of the amounts so appropriated 
                for fiscal years 2003 through 2005, excluding the 
                amount of fees appropriated for such fiscal years, is 
                equal to or greater than the sum of--
                          ``(I) $205,720,000 multiplied by the 
                        adjustment factor applicable to fiscal year 
                        2003;
                          ``(II) $205,720,000 multiplied by the 
                        adjustment factor applicable to fiscal year 
                        2004; and
                          ``(III) $205,720,000 multiplied by the 
                        adjustment factor applicable to fiscal year 
                        2005.
                  ``(ii) For fiscal year 2005, if the total of the 
                amounts so appropriated for fiscal years 2003 through 
                2005, excluding the amount of fees appropriated for 
                such fiscal years, is less than the sum that applies 
                under clause (i) for fiscal year 2005, the following 
                applies:
                          ``(I) The Secretary is expected to meet such 
                        goals to the extent practicable, taking into 
                        account the amounts that are available to the 
                        Secretary for such purpose, whether from fees 
                        under subsection (a) or otherwise.
                          ``(II) The Comptroller General of the United 
                        States shall submit to the Congress a report 
                        describing whether and to what extent the 
                        Secretary is meeting the performance goals 
                        identified for such fiscal year, and whether 
                        the Secretary will be able to meet all 
                        performance goals identified for fiscal year 
                        2006. The report under the preceding sentence 
                        shall be submitted to the Congress not later 
                        than July 1, 2005.
                  ``(C) For fiscal year 2006, fees may not be assessed 
                under subsection (a) for the fiscal year, and the 
                Secretary is not expected to meet any performance goals 
                identified for the fiscal year, if the total of the 
                amounts so appropriated for fiscal years 2003 through 
                2006, excluding the amount of fees appropriated for 
                such fiscal years, is less than the sum of--
                          ``(i) $205,720,000 multiplied by the 
                        adjustment factor applicable to fiscal year 
                        2006; and
                          ``(ii) an amount equal to the sum that 
                        applies for purposes of subparagraph (B)(i).
                  ``(D) For fiscal year 2007, fees may not be assessed 
                under subsection (a) for the fiscal year, and the 
                Secretary is not expected to meet any performance goals 
                identified for the fiscal year, if--
                          ``(i) the amount so appropriated for the 
                        fiscal year, excluding the amount of fees 
                        appropriated for the fiscal year, is less than 
                        $205,720,000 multiplied by the adjustment 
                        factor applicable to fiscal year 2007; or
                          ``(ii) pursuant to subparagraph (C), fees 
                        were not assessed under subsection (a) for 
                        fiscal year 2006.
          ``(2) Authority.--If the Secretary does not assess fees under 
        subsection (a) during any portion of a fiscal year because of 
        subparagraph (C) or (D) of paragraph (1) and if at a later date 
        in such fiscal year the Secretary may assess such fees, the 
        Secretary may assess and collect such fees, without any 
        modification in the rate for premarket applications, 
        supplements, premarket reports, and premarket notification 
        submissions, and at any time in such fiscal year, 
        notwithstanding the provisions of subsection (a) relating to 
        the date fees are to be paid.
  ``(g) Crediting and Availability of Fees.--
          ``(1) In general.--Fees authorized under subsection (a) shall 
        be collected and available for obligation only to the extent 
        and in the amount provided in advance in appropriation Acts. 
        Such fees are authorized to be appropriated to remain available 
        until expended. Such sums as may be necessary may be 
        transferred from the Food and Drug Administration salaries and 
        expenses appropriation account without fiscal year limitation 
        to such appropriation account for salaries and expenses with 
        such fiscal year limitation. The sums transferred shall be 
        available solely for the process for the review of device 
        applications.
          ``(2) Collections and appropriation acts.--
                  ``(A) In general.--The fees authorized by this 
                section--
                          ``(i) shall be retained in each fiscal year 
                        in an amount not to exceed the amount specified 
                        in appropriation Acts, or otherwise made 
                        available for obligation, for such fiscal year, 
                        and
                          ``(ii) shall only be collected and available 
                        to defray increases in the costs of the 
                        resources allocated for the process for the 
                        review of device applications (including 
                        increases in such costs for an additional 
                        number of full-time equivalent positions in the 
                        Department of Health and Human Services to be 
                        engaged in such process) over such costs, 
                        excluding costs paid from fees collected under 
                        this section, for fiscal year 2002 multiplied 
                        by the adjustment factor.
                  ``(B) Compliance.--The Secretary shall be considered 
                to have met the requirements of subparagraph (A)(ii) in 
                any fiscal year if the costs funded by appropriations 
                and allocated for the process for the review of device 
                applications--
                          ``(i) are not more than 3 percent below the 
                        level specified in subparagraph (A)(ii); or
                          ``(ii)(I) are more than 3 percent below the 
                        level specified in subparagraph (A)(ii), and 
                        fees assessed for a subsequent fiscal year are 
                        decreased by the amount in excess of 3 percent 
                        by which such costs fell below the level 
                        specified in such subparagraph; and
                          ``(II) such costs are not more than 5 percent 
                        below the level specified in such subparagraph.
          ``(3) Authorization of appropriations.--There are authorized 
        to be appropriated for fees under this section--
                  ``(A) $25,125,000 for fiscal year 2003;
                  ``(B) $27,255,000 for fiscal year 2004;
                  ``(C) $29,785,000 for fiscal year 2005;
                  ``(D) $32,615,000 for fiscal year 2006; and
                  ``(E) $35,000,000 for fiscal year 2007,
        as adjusted to reflect adjustments in the total fee revenues 
        made under this section and changes in the total amounts 
        collected by application fees.
          ``(4) Offset.--Any amount of fees collected for a fiscal year 
        under this section that exceeds the amount of fees specified in 
        appropriation Acts for such fiscal year shall be credited to 
        the appropriation account of the Food and Drug Administration 
        as provided in paragraph (1), and shall be subtracted from the 
        amount of fees that would otherwise be authorized to be 
        collected under this section pursuant to appropriation Acts for 
        a subsequent fiscal year.
  ``(h) Collection of Unpaid Fees.--In any case where the Secretary 
does not receive payment of a fee assessed under subsection (a) within 
30 days after it is due, such fee shall be treated as a claim of the 
United States Government subject to subchapter II of chapter 37 of 
title 31, United States Code.
  ``(i) Written Requests for Refunds.--To qualify for consideration for 
a refund under subsection (a)(1)(D), a person shall submit to the 
Secretary a written request for such refund not later than 180 days 
after such fee is due.
  ``(j) Construction.--This section may not be construed to require 
that the number of full-time equivalent positions in the Department of 
Health and Human Services, for officers, employees, and advisory 
committees not engaged in the process of the review of device 
applications, be reduced to offset the number of officers, employees, 
and advisory committees so engaged.''.
  (b) Fee Exemption for Certain Entities Submitting Premarket 
Reports.--
          (1) In general.--A person submitting a premarket report to 
        the Secretary of Health and Human Services is exempt from the 
        fee under section 738(a)(1)(A)(ii) of the Federal Food, Drug, 
        and Cosmetic Act (as added by subsection (a) of this section) 
        if--
                  (A) the premarket report is the first such report 
                submitted to the Secretary by the person; and
                  (B) before October 1, 2002, the person submitted a 
                premarket application to the Secretary for the same 
                device as the device for which the person is submitting 
                the premarket report.
          (2) Definitions.--For purposes of paragraph (1), the terms 
        ``device'', ``premarket application'', and ``premarket report'' 
        have the same meanings as apply to such terms for purposes of 
        section 738 of the Federal Food, Drug, and Cosmetic Act (as 
        added by subsection (a) of this section).

SEC. 103. ANNUAL REPORTS.

  Beginning with fiscal year 2003, the Secretary shall prepare and 
submit to the Committee on Energy and Commerce of the House of 
Representatives and the Committee on Health, Education, Labor and 
Pensions of the Senate a report concerning--
          (1) the progress of the Food and Drug Administration in 
        achieving the goals identified in the letters described in 
        section 101(3) during such fiscal year and the future plans of 
        the Food and Drug Administration for meeting the goals, not 
        later than 60 days after the end of each fiscal year during 
        which fees are collected under this part; and
          (2) the implementation of the authority for such fees during 
        such fiscal year, and the use, by the Food and Drug 
        Administration, of the fees collected during such fiscal year, 
        not later than 120 days after the end of each fiscal year 
        during which fees are collected under the medical device user-
        fee program established under the amendment made by section 
        102.

SEC. 104. POSTMARKET SURVEILLANCE.

  (a) Additional Authorization of Appropriations.--For the purpose of 
carrying out postmarket surveillance of medical devices, there are 
authorized to be appropriated to the Food and Drug Administration the 
following amounts, stated as increases above the amount obligated for 
such purpose by such Administration for fiscal year 2002:
          (1) For fiscal year 2003, an increase of $3,000,000.
          (2) For fiscal year 2004, an increase of $6,000,000.
          (3) For fiscal year 2005 and each subsequent fiscal year, an 
        increase of such sums as may be necessary.
  (b) Study.--
          (1) In general.--The Secretary of Health and Human Services 
        (referred to in this section as the ``Secretary'') shall 
        conduct a study for the purpose of determining the following 
        with respect to the medical device user-fee program established 
        under the amendment made by section 102:
                  (A) The impact of such program on the ability of the 
                Food and Drug Administration to conduct postmarket 
                surveillance on medical devices.
                  (B) The programmatic improvements, if any, needed for 
                adequate postmarket surveillance of medical devices.
                  (C) The amount of funds needed to conduct adequate 
                postmarket surveillance of medical devices.
                  (D) The extent to which device companies comply with 
                the postmarket surveillance requirements, including 
                postmarket study commitments.
                  (E) The recommendations of the Secretary as to 
                whether, and in what amounts, user fees collected under 
                such user-fee program should be dedicated to postmarket 
                surveillance if the program is extended beyond fiscal 
                year 2007.
          (2) Report.--Not later than January 10, 2007, the Secretary 
        shall submit to the Committee on Energy and Commerce of the 
        House of Representatives, and the Committee on Health, 
        Education, Labor, and Pensions of the Senate, a report that 
        describes the findings of the study under paragraph (1).

SEC. 105. CONSULTATION.

  (a) In General.--In developing recommendations to the Congress for 
the goals and plans for meeting the goals for the process for the 
review of medical device applications for fiscal years after fiscal 
year 2007, and for the reauthorization of sections 737 and 738 of the 
Federal Food, Drug, and Cosmetic Act, the Secretary of Health and Human 
Services (referred to in this section as the ``Secretary'') shall 
consult with the Committee on Energy and Commerce of the House of 
Representatives, the Committee on Health, Education, Labor, and 
Pensions of the Senate, appropriate scientific and academic experts, 
health care professionals, representatives of patient and consumer 
advocacy groups, and the regulated industry.
  (b) Recommendations.--The Secretary shall publish in the Federal 
Register recommendations under subsection (a), after negotiations with 
the regulated industry; shall present such recommendations to the 
congressional committees specified in such paragraph; shall hold a 
meeting at which the public may present its views on such 
recommendations; and shall provide for a period of 30 days for the 
public to provide written comments on such recommendations.

SEC. 106. EFFECTIVE DATE.

  The amendments made by this title shall take effect on the date of 
the enactment of this Act, except that fees shall be assessed for all 
premarket applications, premarket reports, supplements, and premarket 
notification submissions received on or after October 1, 2002, 
regardless of the date of enactment.

SEC. 107. SUNSET CLAUSE.

  The amendments made by this title cease to be effective October 1, 
2007, except that section 103 with respect to annual reports ceases to 
be effective January 31, 2008.

      TITLE II--AMENDMENTS REGARDING REGULATION OF MEDICAL DEVICES

SEC. 201. INSPECTIONS BY ACCREDITED PERSONS.

  (a) In General.--Section 704 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 374) is amended by adding at the end the following 
subsection:
  ``(g)(1) Not later than one year after the date of the enactment of 
this subsection, the Secretary shall, subject to the provisions of this 
subsection, accredit persons who are not Federal employees for the 
purpose of conducting the inspections required in section 510(h), or 
pursuant to section 510(i), for establishments that manufacture, 
prepare, propagate, compound, or process class II or class III devices. 
The owner or operator of such an establishment that is eligible under 
paragraph (6) may, from the list published under paragraph (4), select 
an accredited person to conduct such inspections
  ``(2) Not later than 180 days after the date of enactment of this 
subsection, the Secretary shall publish in the Federal Register 
criteria to accredit or deny accreditation to persons who request to 
perform the duties specified in paragraph (1). Thereafter, the 
Secretary shall inform those requesting accreditation, within 60 days 
after the receipt of such request, whether the request for 
accreditation is adequate for review, and the Secretary shall promptly 
act on the request for accreditation. Any resulting accreditation shall 
state that such person is accredited to conduct inspections at 
establishments identified in paragraph (1). The accreditation of such 
person shall specify the particular activities under this subsection 
for which such person is accredited. In the first year following the 
publication in the Federal Register of criteria to accredit or deny 
accreditation to persons who request to perform the duties specified in 
paragraph (1), the Secretary shall accredit no more than 15 persons who 
request to perform duties specified in paragraph (1).
  ``(3) An accredited person shall, at a minimum, meet the following 
requirements:
          ``(A) Such person shall be an independent organization which 
        is not owned or controlled by a manufacturer, supplier, or 
        vendor of articles regulated under this Act and which has no 
        organizational, material, or financial affiliation (including a 
        consultative affiliation) with such a manufacturer, supplier, 
        or vendor.
          ``(B) Such person shall be a legally constituted entity 
        permitted to conduct the activities for which it seeks 
        accreditation.
          ``(C) Such person shall not engage in the design, 
        manufacture, promotion, or sale of articles regulated under 
        this Act.
          ``(D) The operations of such person shall be in accordance 
        with generally accepted professional and ethical business 
        practices, and such person shall agree in writing that at a 
        minimum the person will--
                  ``(i) certify that reported information accurately 
                reflects data reviewed;
                  ``(ii) limit work to that for which competence and 
                capacity are available;
                  ``(iii) treat information received, records, reports, 
                and recommendations as confidential commercial or 
                financial information or trade secret information;
                  ``(iv) promptly respond and attempt to resolve 
                complaints regarding its activities for which it is 
                accredited; and
                  ``(v) protect against the use, in carrying out 
                paragraph (1), of any officer or employee of the 
                accredited person who has a financial conflict of 
                interest regarding any product regulated under this 
                Act, and annually make available to the public 
                disclosures of the extent to which the accredited 
                person, and the officers and employees of the person, 
                have maintained compliance with requirements under this 
                clause relating to financial conflicts of interest.
  ``(4) The Secretary shall publish on the Internet site of the Food 
and Drug Administration a list of accredited persons to conduct 
inspections under paragraph (1). Such list shall be periodically 
updated to ensure that the identity of each accredited person is known 
to the public. The updating of such list shall be no later than one 
month after the accreditation of a person under this subsection or the 
withdrawal of accreditation.
  ``(5)(A) To ensure that persons accredited under this subsection 
continue to meet the standards of accreditation, the Secretary shall 
audit the performance of such persons on a periodic basis through the 
review of inspection reports and inspections by persons designated by 
the Secretary to evaluate the compliance status of an establishment and 
the performance of accredited persons.
  ``(B) The Secretary may withdraw accreditation of any person 
accredited under paragraph (2), after providing notice and an 
opportunity for an informal hearing, when such person is substantially 
not in compliance with the standards of accreditation or poses a threat 
to public health or fails to act in a manner that is consistent with 
the purposes of this subsection. The Secretary may suspend the 
accreditation of such person during the pendency of the process under 
the preceding sentence.
  ``(6)(A) Subject to subparagraphs (B) through (C), a device 
establishment is eligible for inspections by persons accredited under 
paragraph (2) if--
          ``(i) the Secretary classified the results of the most recent 
        inspection of the establishment pursuant to subsection (h) or 
        (i) of section 510 as `no action indicated' or `voluntary 
        action indicated'; and
          ``(ii) with respect to each inspection to be conducted by an 
        accredited person--
                  ``(I) the owner or operator of the establishment 
                submits to the Secretary a notice requesting clearance 
                to use such a person to conduct the inspection, and the 
                Secretary provides such clearance; and
                  ``(II) such notice identifies the accredited person 
                whom the establishment has selected to conduct the 
                inspection, and the Secretary agrees to the selected 
                accredited person.
  ``(B)(i) The Secretary shall respond to a notice under subparagraph 
(A) from an establishment not later than 30 days after the Secretary 
receives the notice. Through such response, the Secretary shall (I) 
provide clearance under such subparagraph, and agree to the selection 
of an accredited person, or (II) make a request under clause (ii). If 
the Secretary fails to respond to the notice within such 30-day period, 
the establishment is deemed to have such clearance, and to have the 
agreement of the Secretary for such selection.
  ``(ii) The request referred to in clause (i)(II) is--
          ``(I) a request to the establishment involved to submit to 
        the Secretary compliance data in accordance with clause (iii); 
        or
          ``(II) a request to the establishment, or to the accredited 
        person identified in the notice under subparagraph (A), for 
        information concerning the relationship between the 
        establishment and such accredited person.
The Secretary may make both such requests.
  ``(iii) The compliance data to be submitted by an establishment under 
clause (ii) are data describing whether the quality controls of the 
establishment have been sufficient for ensuring consistent compliance 
with current good manufacturing practice within the meaning of section 
501(h), and data otherwise describing whether the establishment has 
consistently been in compliance with sections 501 and 502 and other 
applicable provisions of this Act. Such data shall include complete 
reports of inspections regarding good manufacturing practice or other 
quality control audits that, during the preceding two-year period, were 
conducted at the establishment by persons other than the owner or 
operator of the establishment, together with all other data the 
Secretary deems necessary. Data under the preceding sentence shall 
demonstrate to the Secretary whether the establishment has facilitated 
consistent compliance by promptly correcting any compliance problems 
identified in such inspections.
  ``(iv) Not later than 60 days after receiving compliance data under 
clause (iii) from an establishment, the Secretary shall provide or deny 
clearance under subparagraph (A). The Secretary may not deny clearance 
unless the Secretary provides to the establishment detailed findings 
that the establishment has failed to demonstrate consistent compliance 
for purposes of clause (iii). If the Secretary fails to provide such 
findings to the establishment within such 60-day period, the 
establishment is deemed to have such clearance.
  ``(v)(I) A request to an accredited person under clause (ii)(II) may 
not seek any information that is not required to be maintained by such 
person in records under subsection (f)(1). Not later than 60 days after 
receiving the information sought by the request, the Secretary shall 
agree to, or reject, the selection of such person by the establishment 
involved. The Secretary may not reject the selection unless the 
Secretary provides to the establishment the reasons for such rejection. 
Reasons for the rejection may include that the establishment or the 
accredited person, as the case may be, has failed to fully respond to 
the request. If within such 60-day period the Secretary fails to agree 
to or reject the selection in accordance with this subclause, the 
Secretary is deemed to have agreed to the selection.
  ``(II) If the Secretary rejects the selection of an accredited person 
by an establishment, the establishment may make an additional selection 
of an accredited person by submitting to the Secretary a notice that 
identifies the additional selection. Clauses (i) and (ii), and 
subclause (I) of this clause, apply to the selection of an accredited 
person through a notice under the preceding sentence in the same manner 
and to the same extent as such provisions apply to a selection of an 
accredited person through a notice under subparagraph (A).
  ``(vi) In the case of an establishment that under clause (iv) is 
denied clearance under subparagraph (A), or whose selection of an 
accredited person is rejected under clause (v), the Secretary shall 
designate a person to review the findings of the Secretary under such 
clause if, during the 30-day period beginning on the date on which the 
establishment receives the findings, the establishment requests the 
review. The review shall commence not later than 30 days after the 
establishment requests the review, unless the Secretary and the 
establishment otherwise agree.
  ``(C)(i) In the case of a device establishment for which the 
Secretary classified the results of the most recent inspection of the 
establishment by a person accredited under paragraph (2) as `official 
action indicated', the establishment is eligible for further 
inspections by persons accredited under such paragraph if (I) the 
Secretary issues a written statement to the owner or operator of the 
establishment that the violations leading to such classification have 
been resolved, and (II) the Secretary, either upon the Secretary's own 
initiative or a petition of the owner or operator of the establishment, 
notifies the establishment that it has clearance to use an accredited 
person for the inspections. The Secretary shall respond to such 
petition within 30 days after the receipt of the petition.
  ``(ii) If the Secretary denies a petition under clause (i), the 
establishment involved may, after the expiration of one year after such 
denial, again petition the Secretary for a determination of eligibility 
for inspection by persons accredited by the Secretary under paragraph 
(2). If the Secretary denies such petition, the Secretary shall provide 
the establishment with a detailed reason for such denial within 60 days 
after the denial. If, as of the expiration of 48 months after the 
receipt of the first petition, the establishment has not been inspected 
by the Secretary in accordance with section 510(h), or has not during 
such period been inspected pursuant to section 510(i), as applicable, 
the establishment is eligible for further inspections by accredited 
persons.
  ``(7)(A) Persons accredited under paragraph (2) to conduct 
inspections shall record in writing their inspection observations and 
shall present the observations to the device establishment's designated 
representative and discuss each observation. Additionally, such 
accredited person shall prepare an inspection report (including for 
inspections classified as `no action indicated') in a form and manner 
consistent with such reports prepared by employees and officials 
designated by the Secretary to conduct inspections.
  ``(B) At a minimum, an inspection report under subparagraph (A) shall 
identify the persons responsible for good manufacturing practice 
compliance at the inspected establishment involved, the dates of the 
inspection, the scope of the inspection, and shall discuss in detail 
each observation identified by the accredited person, identify other 
matters that relate to or may influence compliance with this Act, and 
discuss any recommendations during the inspection or at the 
inspection's closing meeting.
  ``(C) An inspection report under subparagraph (A) shall be sent to 
the Secretary and the designated representative of the inspected 
establishment involved at the same time, but under no circumstances 
later than three weeks after the last day of the inspection. The report 
to the Secretary shall be accompanied by all written inspection 
observations previously provided to the representative of the 
establishment.
  ``(D) Any statements or representations made by employees or agents 
of a device establishment to persons accredited under paragraph (2) to 
conduct inspections shall be subject to section 1001 of title 18, 
United States Code.
  ``(E) If at any time during an inspection by an accredited person the 
accredited person discovers a condition that could cause or contribute 
to an unreasonable risk to the public health, the accredited person 
shall immediately notify the Secretary of the identification of the 
facility subject to inspection and the conditions of concern.
  ``(8) Compensation for an accredited person shall be determined by 
agreement between the accredited person and the person who engages the 
services of the accredited person, and shall be paid by the person who 
engages such services.
  ``(9) Nothing in this subsection affects the authority of the 
Secretary to inspect establishments pursuant to this Act.
  ``(10)(A) For fiscal year 2005 and subsequent fiscal years, no device 
establishment may be inspected during the fiscal year involved by a 
person accredited under paragraph (2) if--
          ``(i) of the amounts appropriated for salaries and expenses 
        of the Food and Drug Administration for the preceding fiscal 
        year (referred to in this subparagraph as the `first prior 
        fiscal year'), the amount obligated by the Secretary for 
        inspections of device establishments by the Secretary was less 
        than the adjusted base amount applicable to such first prior 
        fiscal year; and
          ``(ii) of the amounts appropriated for salaries and expenses 
        of the Food and Drug Administration for the fiscal year 
        preceding the first prior fiscal year (referred to in this 
        subparagraph as the `second prior fiscal year'), the amount 
        obligated by the Secretary for inspections of device 
        establishments by the Secretary was less than the adjusted base 
        amount applicable to such second prior fiscal year.
  ``(B)(i) Subject to clause (ii), the Comptroller General of the 
United States shall determine the amount that was obligated by the 
Secretary for fiscal year 2002 for compliance activities of the Food 
and Drug Administration with respect to devices (referred to in this 
subparagraph as the `compliance budget'), and of such amount, the 
amount that was obligated for inspections by the Secretary of device 
establishments (referred to in this subparagraph as the `inspection 
budget').
  ``(ii) For purposes of determinations under clause (i), the 
Comptroller General shall not include in the compliance budget or the 
inspection budget any amounts obligated for inspections of device 
establishments conducted as part of the process of reviewing 
applications under section 515.
  ``(iii) Not later than March 31, 2003, the Comptroller General shall 
complete the determinations required in this subparagraph and submit to 
the Secretary and the Congress a reporting describing the findings made 
through such determinations.
  ``(C) For purposes of this paragraph:
          ``(i) The term `base amount' means the inspection budget 
        determined under subparagraph (B) for fiscal year 2002.
          ``(ii) The term `adjusted base amount', in the case of 
        applicability to fiscal year 2003, means an amount equal to the 
        base amount increased by 5 percent.
          ``(iii) The term `adjusted base amount', with respect to 
        applicability to fiscal year 2004 or any subsequent fiscal 
        year, means the adjusted based amount applicable to the 
        preceding year increased by 5 percent.
  ``(11) The authority provided by this subsection terminates on 
October 1, 2012.
  ``(12) No later than four years after the enactment of this 
subsection the Comptroller General shall report to the Committee on 
Energy and Commerce of the House of Representatives and the Committee 
on Health, Education, Labor and Pensions of the Senate--
          ``(A) the number of inspections conducted by accredited 
        persons and the number of inspections pursuant to subsections 
        (h) and (i) of section 510 conducted by Federal employees;
          ``(B) the number of persons who sought accreditation under 
        this subsection, as well as the number of persons who were 
        accredited under this subsection;
          ``(C) the reasons why persons who sought accreditation, but 
        were denied accreditation, were denied;
          ``(D) the number of audits conducted by the Secretary of 
        accredited persons, the quality of inspections conducted by 
        accredited persons, whether accredited persons are meeting 
        their obligations under this Act, and whether the number of 
        audits conducted is sufficient to permit these assessments;
          ``(E) whether this subsection is achieving the goal of 
        ensuring more information about establishment compliance is 
        being presented to the Secretary, and whether that information 
        is of a quality consistent with information obtained by the 
        Secretary pursuant to subsection (h) or (i) of section 510;
          ``(F) whether this subsection is advancing efforts to allow 
        device establishments to rely upon third-party inspections for 
        purposes of compliance with the laws of foreign governments; 
        and
          ``(G) whether the Congress should continue, modify, or 
        terminate the program under this subsection.
  ``(13) The Secretary shall include in the annual report required 
under section 903(g) the names of all accredited persons and the 
particular activities under this subsection for which each such person 
is accredited and the name of each accredited person whose 
accreditation has been withdrawn during the year.''.
  (b) Maintenance of Records.--Section 704(f) of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 374(f)) is amended--
          (1) in paragraph (1), in the first sentence, by striking ``A 
        person accredited'' and all that follows through ``shall 
        maintain records'' and inserting the following: ``An accredited 
        person described in paragraph (3) shall maintain records'';
          (2) in paragraph (2), by striking ``a person accredited under 
        section 523'' and inserting ``an accredited person described in 
        paragraph (3)''; and
          (3) by adding at the end the following paragraph:
  ``(3) For purposes of paragraphs (1) and (2), an accredited person 
described in this paragraph is a person who--
          ``(A) is accredited under subsection (g); or
          ``(B) is accredited under section 523.''.
  (c) Conforming Amendment.--Section 510(h) of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 360(h)) is amended by inserting after 
``duly designated by the Secretary'' the following: ``, or by persons 
accredited to conduct inspections under section 704(g),''.

SEC. 202. THIRD PARTY REVIEW OF PREMARKET NOTIFICATION.

  Section 523 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
360m) is amended--
          (1) in subsection (c), by striking ``The authority'' and all 
        that follows and inserting the following: ``The authority 
        provided by this section terminates October 1, 2007.''; and
          (2) by adding at the end the following subsection:
  ``(d) Report.--Not later than January 10, 2007, the Secretary shall 
conduct a study based on the experience under the program under this 
section and submit to the Committee on Energy and Commerce of the House 
of Representatives, and the Committee on Health, Education, Labor, and 
Pensions of the Senate, a report describing the findings of the study. 
The objectives of the study shall include determining--
          ``(1) the number of devices reviewed under this section;
          ``(2) the number of devices reviewed under this section that 
        were ultimately cleared by the Secretary;
          ``(3) the number of devices reviewed under this section that 
        were ultimately not cleared by the Secretary;
          ``(4) the average time period for a review under this section 
        (including the time it takes for the Secretary to review a 
        recommendation of an accredited person under subsection (a) and 
        determine the initial device classification);
          ``(5) the average time period identified in paragraph (4) 
        compared to the average time period for review of devices 
        solely by the Secretary pursuant to section 510(k);
          ``(6) if there is a difference in the average time period 
        under paragraph (4) and the average time period under paragraph 
        (5), the reasons for such difference;
          ``(7) whether the quality of reviews under this section for 
        devices for which no guidance has been issued is qualitatively 
        inferior to reviews by the Secretary for devices for which no 
        guidance has been issued;
          ``(8) whether the quality of reviews under this section of 
        devices for which no guidance has been issued is qualitatively 
        inferior to reviews under this section of devices for which 
        guidance has been issued;
          ``(9) whether this section has in any way jeopardized or 
        improved the public health;
          ``(10) any impact of this section on resources available to 
        the Secretary to review reports under section 510(k); and
          ``(11) any suggestions for continuation, modification 
        (including expansion of device eligibility), or termination of 
        this section that the Secretary determines to be 
        appropriate.''.

SEC. 203. DESIGNATION AND REGULATION OF COMBINATION PRODUCTS.

  Section 503(g) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
353(g)) is amended--
          (1) in paragraph (1)--
                  (A) in the first sentence, by striking ``shall 
                designate a component of the Food and Drug 
                Administration'' and inserting ``shall in accordance 
                with this subsection assign an agency center''; and
                  (B) in each of subparagraphs (A) through (C), by 
                striking ``the persons charged'' and inserting ``the 
                agency center charged'';
          (2) by redesignating paragraph (4) as paragraph (5);
          (3) by inserting after paragraph (3) the following paragraph:
  ``(4)(A) Not later than 60 days after the date of the enactment of 
this paragraph, the Secretary shall establish within the Office of the 
Commissioner of Food and Drugs an office to ensure the prompt 
assignment of combination products to agency centers, the timely 
premarket review of such products, and consistent and appropriate 
postmarket regulation of like products subject to the same statutory 
requirements to the extent permitted by law. Additionally, the office 
shall, in determining whether a product is to be designated a 
combination product, consult with the component within the Office of 
the Commissioner of Food and Drugs that is responsible for such 
determinations. Such office (referred to in this paragraph as the 
`Office') shall have appropriate scientific and medical expertise, and 
shall be headed by a director.
  ``(B) In carrying out this subsection, the Office shall, for each 
combination product, promptly assign an agency center with primary 
jurisdiction in accordance with paragraph (1) for the premarket review 
of such product.
  ``(C) In carrying out this subsection, the Office shall ensure timely 
and effective premarket reviews by overseeing and coordinating reviews 
involving more than one agency center.
  ``(D) In carrying out this subsection, the Office shall ensure the 
consistency and appropriateness of postmarket regulation of like 
products subject to the same statutory requirements to the extent 
permitted by law. Nothing in this paragraph shall be construed to limit 
the postmarket regulatory authority of any agency center.
  ``(E) In order to ensure the timeliness of the premarket review of a 
combination product, the agency center with primary jurisdiction for 
the product, and the consulting agency center, shall be responsible to 
the Office with respect to the timeliness of the premarket review.
  ``(F)(i) Any dispute regarding the timeliness of the premarket review 
of a combination product may be presented to the Office for resolution, 
unless the timeliness of the dispute is clearly premature.
  ``(ii) During the review process, any dispute regarding the substance 
of the premarket review may be presented to the Commissioner of Food 
and Drugs after first being considered by the agency center with 
primary jurisdiction of the premarket review, under the scientific 
dispute resolution procedures for such center. The Commissioner of Food 
and Drugs shall consult with the Director of the Office in resolving 
the substantive dispute.
  ``(G) The Secretary, acting through the Office, shall review each 
agreement, guidance, or practice of the Secretary that is specific to 
the assignment of combination products to agency centers and shall 
determine whether the agreement, guidance, or practice is consistent 
with the requirements of this subsection. In carrying out such review, 
the Secretary shall consult with stakeholders and the directors of the 
agency centers. After such consultation, the Secretary shall determine 
whether to continue in effect, modify, revise, or eliminate such 
agreement, guidance, or practice, and shall publish in the Federal 
Register a notice of the availability of such modified or revised 
agreement, guidance or practice. Nothing in this paragraph shall be 
construed as preventing the Secretary from following each agreement, 
guidance, or practice until continued, modified, revised, or 
eliminated.
  ``(H) Not later than one year after the date of the enactment of this 
paragraph and annually thereafter, the Secretary shall report to the 
appropriate committees of Congress on the activities and impact of the 
Office. The report shall include provisions--
          ``(i) describing the numbers and types of combination 
        products under review and the timeliness in days of such 
        assignments, reviews, and dispute resolutions;
          ``(ii) identifying the number of premarket reviews of such 
        products that involved a consulting agency center; and
          ``(iii) describing improvements in the consistency of 
        postmarket regulation of combination products.''; and
          (4) in paragraph (5) (as redesignated by paragraph (2) of 
        this section)--
                  (A) by redesignating subparagraphs (A) and (B) as 
                subparagraphs (B) and (C), respectively; and
                  (B) by inserting before subparagraph (B) the 
                following subparagraph:
          ``(A) The term `agency center' means a center or alternative 
        organizational component of the Food and Drug 
        Administration.''.

SEC. 204. REPORT ON CERTAIN DEVICES.

  Not later than one year after the date of enactment of this Act, the 
Secretary of Health and Human Services shall report to the appropriate 
committees of Congress on the timeliness and effectiveness of device 
premarket reviews by centers other than the Center for Devices and 
Radiological Health. Such report shall include information on the times 
required to log in and review original submissions and supplements, 
times required to review manufacturers' replies to submissions, and 
times to approve or clear such devices. Such report shall contain the 
Secretary's recommendations on any measures needed to improve 
performance including, but not limited to, the allocation of additional 
resources. Such report also shall include the Secretary's specific 
recommendation on whether responsibility for regulating such devices 
should be reassigned to those persons within the Food and Drug 
Administration who are primarily charged with regulating other types of 
devices, and whether such a transfer could have a deleterious impact on 
the public health and on the safety of such devices.

SEC. 205. ELECTRONIC LABELING.

  Section 502(f) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
352(f)) is amended by adding at the end the following: ``Required 
labeling for prescription devices intended for use in health care 
facilities may be made available solely by electronic means provided 
that the labeling complies with all applicable requirements of law and, 
that the manufacturer affords health care facilities the opportunity to 
request the labeling in paper form, and after such request, promptly 
provides the health care facility the requested information without 
additional cost.''.

SEC. 206. ELECTRONIC REGISTRATION.

  Section 510 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
360) is amended by adding at the end the following:
  ``(p) Registrations under subsections (b), (c), (d), and (i) 
(including the submission of updated information) shall be submitted to 
the Secretary by electronic means, upon a finding by the Secretary that 
the electronic receipt of such registrations is feasible, unless the 
Secretary grants a request for waiver of such requirement because use 
of electronic means is not reasonable for the person requesting such 
waiver.''.

SEC. 207. INTENDED USE.

  Section 513(i)(1)(E) of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 360c(i)(1)(E)) is amended by striking clause (iv).

SEC. 208. MODULAR REVIEW.

  Section 515(c) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
360e(c)) is amended by adding at the end the following:
  ``(3)(A) Prior to the submission of an application under this 
subsection, the Secretary shall accept and review portions of such 
applications that applicants and the Secretary agree are complete, 
ready, and appropriate for review.
  ``(B) Each portion of a submission reviewed under subparagraph (A) 
and found acceptable by the Secretary shall not be further reviewed 
after receipt of an application that satisfies the requirements of 
paragraph (1), unless issues of safety or effectiveness provide the 
Secretary cause to review such accepted portion.
  ``(C) Whenever the Secretary determines that a portion of a 
submission under subparagraph (A) is unacceptable, the Secretary shall 
specifically identify, in writing, the deficiency of such portion and 
describe in detail the means by which it may be made acceptable, unless 
the sponsor is no longer pursuing the application.''.

SEC. 209. PEDIATRIC EXPERTISE REGARDING CLASSIFICATION-PANEL REVIEW OF 
                    PREMARKET APPLICATIONS.

  Section 515(c)(2) of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 360e(c)(2)) is amended by adding at the end the following: ``If 
the Secretary determines that there is a reasonable likelihood that the 
device involved will be used in a pediatric population, the Secretary 
shall ensure that such panel includes, or consults with, one or more 
pediatric experts.''.

SEC. 210. INTERNET LIST OF CLASS II DEVICES EXEMPTED FROM REQUIREMENT 
                    OF PREMARKET NOTIFICATION.

  Section 510(m)(1) of the Federal Food, Drug, and Cosmetic Act (21 
U.S.C. 360(m)(1)) is amended by adding at the end the following: ``The 
Secretary shall publish such list on the Internet site of the Food and 
Drug Administration. The list so published shall be updated not later 
than 30 days after each revision of the list by the Secretary.''.

SEC. 211. STUDY BY INSTITUTE OF MEDICINE OF POSTMARKET SURVEILLANCE 
                    REGARDING PEDIATRIC POPULATIONS.

  (a) In General.--The Secretary of Health and Human Services (referred 
to in this section as the ``Secretary'') shall request the Institute of 
Medicine to enter into an agreement with the Secretary under which such 
Institute conducts a study for the purpose of determining whether the 
system under the Federal Food, Drug, and Cosmetic Act for the 
postmarket surveillance of medical devices provides adequate safeguards 
regarding the use of devices in pediatric populations.
  (b) Certain Matters.--The Secretary shall ensure that determinations 
made in the study under subsection (a) include determinations of--
          (1) whether postmarket surveillance studies of implanted 
        medical devices are of long enough duration to evaluate the 
        impact of growth and development for the number of years that 
        the child will have the implant, and whether the studies are 
        adequate to evaluate how children's active lifestyles may 
        affect the failure rate and longevity of the implant; and
          (2) whether the amount of funds allocated for postmarket 
        surveillance by the Food and Drug Administration of medical 
        devices used in pediatric populations is sufficient to provide 
        adequate safeguards for such populations, taking into account 
        the Secretary's monitoring of commitments made at the time of 
        approval of medical devices, such as phase IV trials, and the 
        Secretary's monitoring and use of adverse reaction reports, 
        registries, and other postmarket surveillance activities.
  (c) Report to Congress.--The Secretary shall ensure that, not later 
than four years after the date of the enactment of this Act, a report 
describing the findings of the study under subsection (a) is submitted 
to the Congress. The report shall include any recommendations of the 
Secretary for administrative or legislative changes to the system of 
postmarket surveillance referred to in such subsection.

SEC. 212. GUIDANCE REGARDING PEDIATRIC DEVICES.

  Section 520 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
360j) is amended by adding at the end the following subsection:

                 ``Guidance Regarding Pediatric Devices

  ``(n) Not later than 270 days after the date of the enactment of the 
Medical Device User Fee and Modernization Act of 2002, the Secretary 
shall issue guidance on the following:
          ``(1) The type of information necessary to provide reasonable 
        assurance of the safety and effectiveness of devices intended 
        for use in pediatric populations.
          ``(2) Protections for pediatric subjects in clinical 
        investigations of the safety or effectiveness of such 
        devices.''.

SEC. 213. BREAST IMPLANTS; STUDY BY COMPTROLLER GENERAL.

  (a) In General.--The Comptroller General of the United States shall 
conduct a study to determine the following with respect to breast 
implants:
          (1) The content of information typically provided by health 
        professionals to women who consult with such professionals on 
        the issue of whether to undergo breast implant surgery.
          (2) Whether such information is provided by physicians or 
        other health professionals, and whether the information is 
        provided verbally or in writing.
          (3) Whether the information provided presents a fair and 
        balanced statement of the risks and benefits of receiving the 
        implants (taking into account the frequency of updates to the 
        information), and if so, at what point in the process of 
        determining whether to undergo surgery is such information 
        provided.
          (4) Whether women understand the information that is provided 
        (including full appreciation of the risks), and whether and to 
        what extent the information influences the decision to receive 
        the implants.
          (5) The number of adverse events that have been reported, and 
        whether such events have been adequately investigated.
          (6) With respect to women who participate as subjects in 
        research being carried out regarding the safety and 
        effectiveness of breast implants:
                  (A) The content of information provided to the women 
                during the process of obtaining the informed consent of 
                the women to be subjects, and whether such information 
                is appropriately updated.
                  (B) Whether such process provides written 
                explanations of the criteria for being subjects in the 
                research.
                  (C) The point at which, in the planning or conduct of 
                the research, the women are provided information 
                regarding the provision of informed consent to be 
                subjects.
                  (D) Whether, before providing informed consent, the 
                women fully appreciate the risks of being subjects in 
                the research.
  (b) Report.--The Comptroller General shall submit to the Congress a 
report describing the findings of the study.
  (c) Definition.--For purposes of this section, the term ``breast 
implant'' means a breast prosthesis that is implanted to augment or 
reconstruct the female breast.

SEC. 214. BREAST IMPLANTS; RESEARCH THROUGH NATIONAL INSTITUTES OF 
                    HEALTH.

  (a) Report on Status of Current Research.--Not later than 180 days 
after the date of the enactment of this Act, the Director of the 
National Institutes of Health shall submit to the Congress a report 
describing the status of research on breast implants (as defined in 
section 213(c)) being conducted or supported by such Institutes.
  (b) Research on Long-Term Implications.--Part H of title IV of the 
Public Health Service Act (42 U.S.C. 289 et seq.) is amended by adding 
at the end of the following section:

``SEC. 498C. BREAST IMPLANT RESEARCH.

  ``(a) In General.--The Director of NIH shall conduct or support 
prospective or retrospective research to examine the long-term health 
implications of both saline and silicone breast implants. If 
scientifically appropriate, such research studies may include the 
following:
          ``(1) A multidisciplinary study of women who have received 
        silicone and saline implants and have had an implant for a 
        sufficient amount of time to allow for appropriate comparison 
        as to the long-term health consequences.
          ``(2) A comparison of women receiving implants for 
        reconstruction after mastectomy to breast cancer patients who 
        have not had reconstruction, including subsets of women with 
        saline implants and women with silicone implants.
  ``(b) Definition.--For purposes of this section, the term `breast 
implant' means a breast prosthesis that is implanted to augment or 
reconstruct the female breast.''.

                    TITLE III--ADDITIONAL AMENDMENTS

SEC. 301. IDENTIFICATION OF MANUFACTURER OF MEDICAL DEVICES.

  (a) In General.--Section 502 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 352) is amended by adding at the end the following:
  ``(u) If it is a device, unless it, or an attachment thereto, 
prominently and conspicuously bears the name of the manufacturer of the 
device, a generally recognized abbreviation of such name, or a unique 
and generally recognized symbol identifying such manufacturer, except 
that the Secretary may waive any requirement under this paragraph for 
the device if the Secretary determines that compliance with the 
requirement is not feasible for the device or would compromise the 
provision of reasonable assurance of the safety or effectiveness of the 
device.''.
  (b) Effective Date.--The amendment made by subsection (a) takes 
effect 18 months after the date of the enactment of this Act, and only 
applies to devices introduced or delivered for introduction into 
interstate commerce after such effective date.

SEC. 302. SINGLE-USE MEDICAL DEVICES.

  (a) Required Statements on Labeling.--
          (1) In general.--Section 502 of the Federal Food, Drug, and 
        Cosmetic Act, as amended by section 301 of this Act, is amended 
        by adding at the end the following:
  ``(v) If it is a reprocessed single-use device, unless all labeling 
of the device prominently and conspicuously bears the statement 
`Reprocessed device for single use. Reprocessed by ____.' The name of 
the manufacturer of the reprocessed device shall be placed in the space 
identifying the person responsible for reprocessing.''.
          (2) Effective date.--The amendment made by paragraph (1) 
        takes effect 15 months after the date of the enactment of this 
        Act, and only applies to devices introduced or delivered for 
        introduction into interstate commerce after such effective 
        date.
  (b) Premarket Notification.--Section 510 of the Federal Food, Drug, 
and Cosmetic Act (21 U.S.C. 360) is amended by inserting after 
subsection (n) the following:
  ``(o)(1) With respect to reprocessed single-use devices for which 
reports are required under subsection (k):
          ``(A) The Secretary shall identify such devices or types of 
        devices for which reports under such subsection must, in order 
        to ensure that the device is substantially equivalent to a 
        predicate device, include validation data, the types of which 
        shall be specified by the Secretary, regarding cleaning and 
        sterilization, and functional performance demonstrating that 
        the single-use device will remain substantially equivalent to 
        its predicate device after the maximum number of times the 
        device is reprocessed as intended by the person submitting the 
        premarket notification. Within one year after enactment of this 
        subsection, the Secretary shall publish in the Federal Register 
        a list of the types so identified, and shall revise the list as 
        appropriate. Reports under subsection (k) for devices or types 
        of devices within a type included on the list are, upon 
        publication of the list, required to include such validation 
        data.
          ``(B) In the case of each report under subsection (k) that 
        was submitted to the Secretary before the publication of the 
        initial list under subparagraph (A), or any revision thereof, 
        and was for a device or type of device included on such list, 
        the person who submitted the report under subsection (k) shall 
        submit validation data as described in subparagraph (A) to the 
        Secretary not later than nine months after the publication of 
        the list. During such nine-month period, the Secretary may not 
        take any action under this Act against such device solely on 
        the basis that the validation data for the device have not been 
        submitted to the Secretary. After the submission of the 
        validation data to the Secretary, the Secretary may not 
        determine that the device is misbranded under section 502(o), 
        adulterated under section 501(f)(1)(B), or take action against 
        the device under section 301(p) for failure to provide any 
        information required by subsection (k) until (i) the review is 
        terminated by withdrawal of the submission of the report under 
        subsection (k); (ii) the Secretary finds the data to be 
        acceptable and issues a letter; or (iii) the Secretary 
        determines that the device is not substantially equivalent to a 
        predicate device. Upon a determination that a device is not 
        substantially equivalent to a predicate device, or if such 
        submission is withdrawn, the device can no longer be legally 
        marketed.
          ``(C) In the case of a report under subsection (k) for a 
        device identified under subparagraph (A) that is of a type for 
        which the Secretary has not previously received a report under 
        such subsection, the Secretary may, in advance of revising the 
        list under subparagraph (A) to include such type, require that 
        the report include the validation data specified in 
        subparagraph (A).
          ``(D) Section 502(o) applies with respect to the failure of a 
        report under subsection (k) to include validation data required 
        under subparagraph (A).
  ``(2) With respect to critical or semicritical reprocessed single-use 
devices that, under subsection (l) or (m), are exempt from the 
requirement of submitting reports under subsection (k):
          ``(A) The Secretary shall identify such devices or types of 
        devices for which such exemptions should be terminated in order 
        to provide a reasonable assurance of the safety and 
        effectiveness of the devices. The Secretary shall publish in 
        the Federal Register a list of the devices or types of devices 
        so identified, and shall revise the list as appropriate. The 
        exemption for each device or type included on the list is 
        terminated upon the publication of the list. For each report 
        under subsection (k) submitted pursuant to this subparagraph 
        the Secretary shall require the validation data described in 
        paragraph (1)(A).
          ``(B) For each device or type of device included on the list 
        under subparagraph (A), a report under subsection (k) shall be 
        submitted to the Secretary not later than 15 months after the 
        publication of the initial list, or a revision of the list, 
        whichever terminates the exemption for the device. During such 
        15-month period, the Secretary may not take any action under 
        this Act against such device solely on the basis that such 
        report has not been submitted to the Secretary. After the 
        submission of the report to the Secretary the Secretary may not 
        determine that the device is misbranded under section 502(o), 
        adulterated under section 501(f)(1)(B), or take action against 
        the device under section 301(p) for failure to provide any 
        information required by subsection (k) until (i) the review is 
        terminated by withdrawal of the submission; (ii) the Secretary 
        determines by order that the device is substantially equivalent 
        to a predicate device; or (iii) the Secretary determines by 
        order that the device is not substantially equivalent to a 
        predicate device. Upon a determination that a device is not 
        substantially equivalent to a predicate device, the device can 
        no longer be legally marketed.
          ``(C) The initial list under subparagraph (A) shall be 
        published not later than 18 months after the effective date of 
        this subsection.
          ``(D) Section 502(o) applies with respect to the failure to 
        submit a report under subsection (k) that is required pursuant 
        to subparagraph (A), including a failure of the report to 
        include validation data required in such subparagraph.
          ``(E) The termination under subparagraph (A) of an exemption 
        under subsection (l) or (m) for a critical or semicritical 
        reprocessed single-use device does not terminate the exemption 
        under subsection (l) or (m) for the original device.
  ``(3) In the case of a reprocessed single-use device that is 
classified in class III and for which a premarket application is 
required, the following provisions apply with respect to such 
reprocessed device in lieu of an application for premarket approval 
under section 515:
          ``(A) The device shall not be introduced into interstate 
        commerce or delivered for introduction into interstate commerce 
        unless the person involved has submitted to the Secretary a 
        report in accordance with this paragraph and the Secretary, 
        after reviewing the report, issues an order determining there 
        is a reasonable assurance of the safety and effectiveness for 
        the device.
          ``(B) The report under subparagraph (A) shall contain the 
        following:
                  ``(i) The device name, including both the trade or 
                proprietary name and the common or usual name.
                  ``(ii) The establishment registration number of the 
                owner or operator submitting the report.
                  ``(iii) Actions taken to comply with performance 
                standards under section 514.
                  ``(iv) Proposed labels, labeling, and advertising 
                sufficient to describe the device, its intended use, 
                and directions for use.
                  ``(v) Full reports of all information, published or 
                known to or which should be reasonably known to the 
                applicant, concerning investigations which have been 
                made to show whether or not a device is safe or 
                effective.
                  ``(vi) A description of the device's components, 
                ingredients, and properties.
                  ``(vii) A full description of the methods used in, 
                and the facilities and controls used for, the 
                reprocessing and packing of the device.
                  ``(viii) Such samples of the device that the 
                Secretary may reasonably require.
                  ``(ix) A financial certification or disclosure 
                statement or both, as required by part 54 of title 21, 
                Code of Federal Regulations.
                  ``(x) A statement that the applicant believes to the 
                best of the applicant's knowledge that all data and 
                information submitted to the Secretary are truthful and 
                accurate and that no material fact has been omitted in 
                the report.
                  ``(xi) Any additional data and information that the 
                Secretary determines is necessary to determine whether 
                there is reasonable assurance of safety and 
                effectiveness for the reprocessed device.
          ``(C) In addition to the information or data required in 
        subparagraph (B), the report under subparagraph (A) shall 
        include the validation data described in paragraph (1)(A) that 
        demonstrates that the reasonable assurance of the safety or 
        effectiveness of the device will remain after the maximum 
        number of times the device is reprocessed as intended by the 
        person submitting the report under this paragraph.''.
  (c) Definitions.--Section 201 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 321) is amended by adding at the end the following:
  ``(ll)(1) The term `single-use device' means a device that is 
intended for one use, or on a single patient during a single procedure.
  ``(2)(A) The term `reprocessed', with respect to a single-use device, 
means an original device that has previously been used on a patient and 
has been subjected to additional processing and manufacturing for the 
purpose of an additional single use on a patient. The subsequent 
processing and manufacture of a reprocessed single-use device shall 
result in a device that is reprocessed within the meaning of this 
definition.
  ``(B) A single-use device that meets the definition under 
subparagraph (A) shall be considered a reprocessed device without 
regard to any description of the device used by the manufacturer of the 
device or other persons, including a description that uses the term 
`recycled' rather than the term `reprocessed'.
  ``(3) The term `original device' means a new, unused single-use 
device.
  ``(mm)(1) The term `critical reprocessed single-use device' means a 
reprocessed single-use device that is intended to contact normally 
sterile tissue or body spaces during use.
  ``(2) The term `semi-critical reprocessed single-use device' means a 
reprocessed single-use device that is intended to contact intact mucous 
membranes and not penetrate normally sterile areas of the body.''.
  (d) Prohibited Acts.--Section 301 of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 331), as amended by section 321(b)(2) of Public 
Law 107-188, is amended by adding at the end the following:
  ``(gg) The introduction or delivery for introduction into interstate 
commerce of any device in violation of section 510(o)(3).''.

                          Purpose and Summary

    The purpose of H.R. 3580 is to establish a medical device 
user fee program at the Food and Drug Administration (FDA) in 
order to provide FDA with the resources necessary to better 
review medical devices, to enact needed regulatory reforms so 
that medical device manufacturers can bring their safe and 
effective devices to the American people at an earlier point in 
time, and to ensure that reprocessed medical devices are as 
safe and effective as original devices.

                  Background and Need for Legislation

    There are more than 10,000 medical device manufacturers in 
the United States, and these manufacturers submit nearly 5,000 
device applications and submissions to the FDA on a yearly 
basis. While the FDA has done a good job reviewing these 
applications and submissions, there is recognition that FDA 
resources are limited, and that without a new infusion of 
funding, it is likely that review times will increase in the 
future.
    Providing FDA with new resources to review applications and 
submissions is just one way to ensure expedited review times. 
Another way to ensure swift approval of safe and effective 
devices is to enact needed regulatory reforms. The medical 
device industry is one of the most innovative industries in the 
United States. The average life cycle for a new medical device 
frequently lasts less than one year, compared with multi-year 
life cycles for other FDA-regulated products. It is best for 
American consumers to receive innovative, safe, and effective 
medical devices at the earliest point in time, and regulatory 
reforms will assist in accomplishing this objective.
    Further, safe and effective reprocessed medical devices are 
important to the American health care marketplace because they 
cost less than original medical devices, thus reducing overall 
health care costs. However, in certain situations reprocessed 
medical devices raise questions of functionality and safety and 
effectiveness that original medical devices may not. Therefore, 
it is important to enact reforms which take into account the 
differences between these two types of devices, where they 
exist.
    H.R. 3580 responds to these issues by enacting a medical 
device user fee program which will provide FDA with more than 
$200 million over the five year life of the program. Such new 
money will allow FDA to hire more reviewers and improve its 
infrastructure. The money, to be provided by medical device 
manufacturers (in the form of application fees) and increased 
appropriations, will be used by the FDA to meet agreed-upon 
performance goals. H.R. 3580 further enacts needed regulatory 
reforms such as third-party inspection and the statutory 
creation of the Office of Combination Products, both of which 
will address concerns raised by the medical device industry. 
Last, this legislation enacts needed medical device 
reprocessing reforms intended to provide end-users with 
information about whether the medical devices they use are, or 
are not, reprocessed, while at the same time providing FDA with 
more information about whether medical devices can be cleaned, 
sterilized, and reprocessed without affecting functional 
performance.

                                Hearings

    The Committee on Energy and Commerce has not held hearings 
on the legislation.

                        Committee Consideration

    On Wednesday, October 2, 2002, the Committee on Energy and 
Commerce met in open markup session and favorably ordered 
reported H.R. 3580, as amended, by a voice vote, a quorum being 
present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 3580 reported. A motion by Mr. Tauzin to order H.R. 3580 
reported to the House, as amended, was agreed to by a voice 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation.

         Statement of General Performance Goals and Objectives

    The goals and objectives of this legislation are to 
establish a medical device user fee program that enables the 
FDA to better approve safe and effective medical devices; to 
enact needed regulatory reforms; and to ensure that reprocessed 
medical devices are safe and effective in all instances.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3580, the Medical Device User Fee and Modernization Act, would 
result in no new or increased budget authority, entitlement 
authority, or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee has reviewed this legislation for its 
budgetary impact and has concluded that it will result in 
increased discretionary spending of slightly less than $100 
million over a five-year period. This score was developed in 
close consultation with the Congressional Budget Office (CBO). 
While CBO has not yet completed its score of this legislation, 
we believe that their numbers will be comparable to the 
Committee's estimate.

  Congressional Budget Office Estimate and Federal Mandates Statement

    The Congressional Budget Office estimate required pursuant 
to clause 3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, and the estimate of Federal mandates required pursuant 
to section 423 of the Unfunded Mandates Reform Act were 
requested from the Congressional Budget Office, but were not 
prepared as of the date of filing of this report. The 
Congressional Budget Office estimate and accompanying materials 
will be contained in a supplemental report.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 101. Findings

    The medical device industry is growing rapidly. The 
complexity of medical technology is increasing at an equally 
rapid pace. Unfortunately, FDA's device review program lacks 
the resources to keep up with the rapidly growing industry and 
changing technology. Because prompt approval and clearance of 
safe and effective medical devices is critical to improving 
public health, it is the sense of the Committee that adequate 
funding for the program is essential.

Section 102. Establishment of program

    This title gives FDA the authority to collect user fees 
from manufacturers seeking to market medical devices. In this 
new program, manufacturers pay fees to FDA in exchange for 
FDA's agreement to endeavor to meet device review performance 
goals that will significantly improve the timeliness, quality, 
and predictability of the agency's review of devices.
    Under this new program, fees will be charged for certain 
applications, reports, supplements and submissions sent to the 
Food and Drug Administration for evaluation. Unlike the fees 
assessed under the Prescription Drug User Fee Act (PDUFA), no 
annual fees are charged for establishments and products. The 
fees are based on the relative level of effort required for 
reviews. The fees for each application category are prescribed 
in section 738(a) as a percent of the fee for an original 
premarket approval application (PMA), considered the most 
resource-intensive type of review. Table 1 below shows the 
types of applications for which fees will be assessed, the fee 
as a percent of the fee for a premarket approval application, 
and the fees that will be assessed for each type of application 
in FY 2003.

TABLE 1.--APPLICATION FEE TYPES, PERCENT OF PMA FEE, AND FY 2003 AMOUNTS
------------------------------------------------------------------------
                                          Fee as % of
           Type of application                PMA       FY 2003 fee  ($)
------------------------------------------------------------------------
Premarket Application (submitted under            100            139,000
 section 515(c) or section 351 of the
 Public Health Service Act).............
Panel-track Supplements to applications           100            139,000
 approved under section 515.............
Efficacy Supplement to an application             100            139,000
 approved under section 351 of the
 Public Health Service Act..............
Premarket Report under section 510(o)(3)          100            139,000
180-day supplement to an approved PMA...     \1\ 21.5             29,885
Real Time Supplements to applications             7.2             10,008
 approved under section 515.............
Premarket Notification Submissions under     \1\ 1.75              2,433
 section 510(k).........................
------------------------------------------------------------------------
\1\ This is the percentage unless the compensating adjustments is
  triggered in any year. Then the percentages for 180-day supplements
  and premarket notification submissions would be higher, since these
  fees will be increased to generate additional revenues associated with
  the compensating adjustment.

    Fees will be assessed for all applications submitted on or 
after October 1, 2002. Certain applications are exempted from 
these fees, including devices for which a humanitarian device 
exemption has been granted, applications licensed solely for 
further manufacturing use, noncommercial applications from 
federal and state government sponsors, premarket notifications 
reviewed by an accredited third party, as well as devices 
solely intended for pediatric conditions of use.
    Fees can be used by FDA for the ``process for the review of 
device applications.'' The ``process for the review of device 
applications'' is defined to include a number of activities, 
including: activities necessary to review applications; the 
issuance of action letters; preapproval inspections; monitoring 
of research conducted in connection with reviews; review of 
devices submitted pursuant to section 351 of the Public Health 
Service Act; the development of guidance and policy documents 
to improve the device review process; the development of 
voluntary test methods and consistent standards; the provision 
of technical assistance to device manufacturers; device 
classification activities; evaluation of postmarket studies 
required as a condition of device approval; and the compiling, 
developing, and reviewing information on relevant devices to 
identify safety and effectiveness issues for devices subject to 
premarket applications, premarket reports, supplements, or 
premarket notification submissions. The Committee believes that 
FDA should ensure that adequate user fee resources are 
dedicated to identifying safety and effectiveness issues for 
devices subject to premarket applications, premarket reports, 
supplements, and premarket notification submissions when 
reviewing information on relevant devices.
    Further, the Committee wishes to emphasize the importance 
of the use of both fees and appropriated dollars to develop the 
technological expertise available to the FDA for review 
purposes. The changes in medical technology over the last 
quarter of a century have been dramatic. The technologies 
involved in today's medical devices were not even dreamed of 25 
years ago. The ability of the Center for Devices and 
Radiological Health to remain current and expert in these 
rapidly evolving technologies will certainly be stressed as we 
move toward devices based on advanced technologies such as 
nanotechnology and tissue engineering. For this reason, the 
Committee expects the Center for Devices and Radiological 
Health to develop a pool of outside technical experts, who 
would be available on short notice, to provide technical advice 
on product reviews, pre-approval inspections, and other 
technical issues for which the Center may need assistance. Such 
outside expertise is to be funded by a combination of user fees 
and appropriations and shall be pre-cleared through the 
appropriate conflict of interest process. The Center's current 
advisory committee members represent a source for developing 
such a pool. The Committee intends that this section provides 
the funds necessary to expand the current advisory committee 
resource into a preeminent, multi-disciplinary scientific 
resource the Center can draw on as it sees fit.
    The bill uses a revenue model that is based on the latest 
PDUFA reauthorization, enacted on June 12, 2002--referred to as 
PDUFA III. The major features of this revenue model are 
described below.
    Statutory Revenue Amounts.--Like PDUFA III, the revenue 
amounts FDA is expected to collect each year are stated in 
section 738(b), not the amounts of application fees. The fees 
will be established to generate $25.1 million in FY 2003, and 
reaching $35 million in FY 2007, plus adjustments. Adjustments 
are to be made to these statutory amounts for years after FY 
2003. Most adjustment provisions follow in subsection 738(c). 
However, one adjustment contingency is addressed in subsection 
738(b). If, after the date of enactment, new legislation should 
require the funding of additional Federal personnel retirement 
costs, the fee revenue amounts in this section shall be 
increased to fund the portion of those costs attributable to 
the device review process. Each of the other specific 
adjustment provisions set forth in subsection 738(c) is 
discussed below.
    Inflation Adjustment.--An inflation provision, subsection 
738(c)(1), identical to the inflation adjustment provisions in 
PDUFA III, adjusts statutory revenue levels each year after FY 
2003. Fee revenues are adjusted each year by the greater of 
either the increase in the CPI index for all urban consumers 
for the most recent year, or for the most recent change in pay 
for Federal employees stationed in the Washington, DC 
metropolitan area. These adjustments assure that the personnel 
resources acquired with additional fee revenue are not 
diminished over time by inflation.
    Workload Adjustment.--A workload adjustment provision, 
subsection 738(c)(2), increases fee revenue if, over time, 
there is an increase in aggregate in the major components of 
FDA's device review work. This parallels the workload 
adjustment provision included in PDUFA III. The components of 
the device review workload that will be considered in making 
this measurement are: (1) Premarket applications, whether or 
not they pay fees; (2) supplements, whether or not they pay 
fees; (3) investigational new device applications; and (4) 
premarket notification submissions.
    The workload adjuster for each component has as its base 
the average number of applications of each particular type that 
FDA received over the five-year period FY 1998 through FY 2002. 
It requires calculation of a rolling average of submissions for 
the latest five-year period that ends before the end of each 
fiscal year beginning on or after October 1, 2002. The percent 
change in the latest five-year average, compared to the base 
year, would then be multiplied by the weighting factor for that 
component. Then all 4 components of the workload adjuster are 
added together, and the total percentage that results is the 
workload adjuster that will be used to further adjust the 
inflation-adjusted statutory revenue levels each year after FY 
2003. Use of 5-year rolling averages in this process dampens 
the impact of revenue fluctuations. The Secretary shall publish 
in the Federal Register the fees resulting from this adjustment 
and the supporting methodologies. Because a revenue target for 
each year is set in the statute rather than specific fee 
levels, this adjustment is essential to assure revenues remain 
in balance with workload. If, over time, the number of 
applications submitted to FDA for review increases, this will 
generate additional revenue in proportion to such a workload 
increase. If there were no workload increase, there would be no 
increase in fee revenues as a result of this provision.
    Compensating Adjustment.--A compensating adjustment 
provision, subsection 738(c)(3), guarantees stability to the 
device fee revenues in the absence of more stable annual 
product and establishment fees that generate two-thirds of 
PDUFA fee revenues. The compensating adjustment provision will 
only be invoked if cumulative fee revenues account for less 
than the statutory revenue levels, adjusted for inflation and 
workload. If the compensating adjustment becomes necessary in 
any year, it will impact only fees for the two highest volume 
application types--180-day supplements and premarket 
notification submissions. Fees for each of these two types of 
application would be increased proportionally during the next 
year by an amount sufficient to make up for this cumulative 
shortfall in device fee revenue.
    Final Year Adjustment.--Subsection 738(c)(4) also allows 
FDA to make a one-time increase in fees in FY 2007, if 
necessary, to assure that the agency will have no less than 
three months of operating reserves on hand at the end of FY 
2007 when this legislation will sunset. This will allow the 
agency to operate for up to 3 months in FY 2008. Further, 
delaying this payment until FY 2007 minimizes the need for FDA 
to carry large balances over from year to year, reducing 
industry outlays until they are necessary to support 
operations.
    Annual Fee Setting.--Subsection 738(c)(5) requires FDA to 
publish the actual fees for each year in a notice in the 
Federal Register 60 days before the beginning of the fiscal 
year. This is the same process used for PDUFA fees. The fee 
levels will be established to generate the revenue levels set 
in the statute, plus adjustments in years after FY 2003 as 
provided in the statute. This annual fee setting may also take 
into account the most current information available about the 
volume of each type of application forecast for the coming 
year. However, since FY 2003 has already begun, the statute 
sets the fees for FY 2003, based on a fee of $139,000 for a 
premarket application fee. All of the other fees for FY 2003 
flow from this amount, and are set out in Table 1 above.
    The Committee also understands that the device industry is 
very different from the drug and biologic industries, in that 
the device industry is largely made up of companies with fewer 
than 50 employees. Therefore, the Committee strongly believes 
that the device user fee program should take into account that 
some smaller companies will not be able to pay the full user 
fee, due to their lack of revenues. Given that the Committee in 
no way wants to create governmental barriers to entry into the 
device marketplace, the user fee program contains a provision 
to protect small device firms. For purposes of this 
legislation, a small business is defined as an entity that 
reported $10 million or less in ``gross receipts or sales'' in 
its most recent Federal income tax return, including the 
returns of its affiliates, partners, or parent firms. Federal 
corporate and partnership tax forms all contain a fairly 
standard line item for reporting the total of ``gross receipts 
or sales.'' Firms wishing to take advantage of the small 
business provisions will have to submit certified copies of 
their most recent Federal income tax filings, including those 
of their affiliate, partner and parent firms, to verify that 
they qualify for the small business provisions. Firms that do 
not submit accurate or complete information in their 
submissions to qualify for the exemption or reduction will be 
subject to penalties under 18 U.S.C. 1001.
    A fee waiver is granted to a qualifying small business 
submitting its first premarket application or premarket report. 
In addition, for subsequent submissions, qualifying small 
businesses will pay fees at the following reduced rates:

         TABLE 2.--REDUCED RATES FOR QUALIFYING SMALL BUSINESSES
------------------------------------------------------------------------
                                           Fee as a %   FY 2003 reduced
           Type of submission             of full fee       fee  ($)
------------------------------------------------------------------------
Premarket Application, Premarket Report,           38             52,820
 Panel-track Supplement, or Efficacy
 Supplement.............................
180-Day Supplement......................           44             13,149
Real Time Supplement....................           25              2,502
------------------------------------------------------------------------

    There is no reduction to the fee for a premarket 
notification for small firms. The fee is set at a level that 
all firms, regardless of size, will be able to pay.
    Using this $10 million criterion, and the five-year average 
number received for each type of submission, FDA estimated that 
the following numbers of submissions would have been exempt 
from fees or paid lower fees in each year:

         TABLE 3.--ESTIMATED IMPACT OF SMALL BUSINESS CRITERION
------------------------------------------------------------------------
         Submission type                FY 2000             FY 2001
------------------------------------------------------------------------
Original PMA's/BLA's............  11 Exempt, 1 Pays   11 Exempt, 5 Pay
                                   Less (18.8%).       Less (24.0%)
Panel Track Supplements.........  None pay less       1 Pays Less (9.1%)
                                   (0.0%).
180 Day Design Supps............  14 Pay Less (7.4%)  9 Pay Less (4.6%)
Real Time Supplements...........  9 Pay less (9.5%).  4 Pay Less (4.1%)
------------------------------------------------------------------------

In developing this $10 million criterion for small businesses 
and applying it to a number of scenarios, it caused the total 
revenue FDA collected to be less than 13 percent less than it 
would have been if there had been no waiver and reduced fees 
for small businesses. Subsection 738(d)(2)(A)(ii) also allows 
FDA to modify this $10 million small business criterion if it 
develops evidence from experience that it results in revenue 
loss to FDA of 13 percent or more, compared with revenue that 
would be collected with no waiver or reduced rates for small 
businesses. To effect a change in the $10 million level, the 
data and analysis supporting a change must be published in a 
notice in the Federal Register.
    In order to meet the performance goals associated with 
device user fees, it is understood that FDA will need 
substantially increased resources--$40 million more in FY 2003, 
increasing to $50 million more by FY 2007. The fees established 
in this legislation provide only a portion of the resources 
needed--$25.1 million in FY 2003, increasing to $35 million by 
FY 2007. In addition to this fee revenue, FDA will need an 
increase in its base appropriations of $15 million, and 
adjustments for inflation, to meet the performance goals.
    In FY 2003 the administration request for appropriated 
budget authority for FDA's devices and radiological health 
program (which funds the Center for Devices and Radiological 
Health and related field activities of the Office of Regulatory 
Affairs), exclusive of funds from fees, is $190,720,000. This 
portion of the user fee legislation specifies that FDA must 
receive appropriated budget authority of $15 million more than 
this level, or $205,720,000, exclusive of user fees, each year 
for the next five years, and that this base level must also be 
increased each year for inflation. Further, consequences are 
established if FDA's appropriated budget authority falls short 
of this level.
    In FY 2003 and FY 2004, if the $15 million in appropriated 
funds is built into the base, the Committee expects that FDA 
will meet all the performance goals specified in the letter 
referred to in the Act. There is no statutory obligation to 
meet the goals. Nevertheless, we expect FDA to strive to meet 
the goals, not only in FY 2003 and FY 2004, but also throughout 
the existence of this user fee program.
    In FY 2003 and FY 2004, if appropriated budget authority 
for FDA's devices and radiological health program falls short 
of this level ($205,720,000 in FY 2003 and the same amount 
adjusted for inflation in FY 2004), FDA will still collect user 
fees, and will be expected to meet the performance goals to the 
extent practicable. It is the Committee's intent that under 
this language, a slight shortfall in funds will result in FDA 
meeting the performance goals, or slightly missing the goals. 
Of course, if the shortfall is great, FDA's ability to meet the 
performance goals will decline correspondingly.
    In FY 2005, the total budget appropriated budget authority 
for the devices and radiological health program, exclusive of 
fees, for the fiscal years 2003 through 2005 must equal the sum 
of the minimum levels set for each of these years. In other 
words, if there was a shortfall in appropriated budget 
authority, exclusive of fees, in any year, it must be fully 
made up by FY 2005. If this benchmark is reached, FDA will be 
expected to meet the performance goals. If this benchmark is 
missed, then FDA will continue to collect user fees in 2005, 
but it will only be expected to meet the performance goals to 
the extent practicable, taking into account the amounts that 
are available to the Secretary for such purpose.
    For each of Fiscal Years 2003, 2004, and 2005, if the 
additional $15 million has not been built into the base of the 
budget, and the FDA has not been made whole by being given a 
total of 45 million new dollars over this three year period, 
then the Comptroller General will be required to issue a report 
to the Congress describing whether and to what extent the 
Secretary is meeting the performance goals identified for such 
Fiscal Years. The General Accounting Office will be expected to 
report: the number of new employees hired to assist the FDA in 
meeting the performance goals; a detailed utilization analysis 
of user fee revenues to date; the impact of user fees on 
review-related activity; the status of systems infrastructure 
enhancement; actual performance of FDA in meeting the goals; an 
FTE cost analysis; the use of contract resources for reviews; 
and recommendations on management, systems, and other changes 
that could be undertaken to enhance performance to ensure that 
the goals will be met in FY 2006 and FY 2007.
    In FY 2006, the total appropriated budget authority for the 
devices and radiological health program, exclusive of fees, for 
the fiscal years 2003 through 2006 must also equal the sum of 
the minimum levels set for each of these years. In other words, 
if there was a shortfall in appropriated budget authority, 
exclusive of fees, in any of the previous three years, it must 
be fully made up by FY 2006. If this benchmark is missed then 
the consequences are more severe the program terminates. FDA 
would no longer be able to collect device user fees, and all 
associated performance goals would be dissolved.
    For FY 2007, FDA's appropriated budget authority for the 
devices and radiological health program, exclusive of fees, 
must equal $205,720,000, adjusted for inflation, and user fees 
must have been collected in fiscal year 2006, or the program 
would terminate, fees would not be collected and performance 
goals would be dissolved.
    A failsafe mechanism is provided in the event that the 
required appropriations are not in place on the first day of 
each fiscal year. If the required appropriations are 
subsequently made available, FDA can charge fees for 
submissions received at any time in the fiscal year, even if 
the required appropriations were not enacted at the time an 
application was submitted.
    Subsection 738(g)(1) provides standard language that 
assures that the fees subsequently appropriated under this act 
are treated as revenue generated and appropriated at the same 
time, so that they are neutral in their budget impact. FDA is 
also given the authority to transfer these fees to 
appropriation accounts for specific fiscal years, in order to 
pay for operations each year. This language parallels 
provisions in PDUFA III.
    Spending from Appropriations on Device Review.--Subsection 
738(g)(2)(A) provides two further limitations, both parallel to 
limitations in PDUFA III.
    The first limitation, subsection 738(g)(2)(A)(i), is that 
fees may be retained in each fiscal year only up to the amount 
specified in each year for appropriation acts. FDA may begin 
collecting fees in any year in which an appropriation for fees 
for the year, or any portion of it, has been enacted. However, 
the appropriation act itself sets the upper limit each year on 
the amount of fees that may be kept and spent each year. 
Subsection 738(g)(4) specifies that if, in any year, FDA 
collects more fees than specified in appropriations, the excess 
fees collected shall be used to reduce fees that would 
otherwise be collected in a subsequent fiscal year. Those 
excess fee revenues would then be used in such subsequent 
fiscal year.
    The second limitation, in subsection 738(g)(2)(A)(ii), 
dissolves FDA's authority to collect and spend fees in any year 
that FDA fails to spend on the process for the review of device 
applications from appropriations as much as it spent on that 
process from appropriations in FY 2002, adjusted for inflation.
    The trigger is based on the amount FDA spends from 
appropriations on the device review process each year. FDA's 
accounting system measures spending by organization component. 
Spending on the device review process, however, is usually only 
a portion of spending of organization components in CDRH, CBER 
and ORA. That determination can only be made definitively by 
merging information from FDA's accounting system, after the 
close of the fiscal year, with results from time reporting 
systems that reflect the percent of time each organization 
component spends on the device review process. This provides 
the total dollar figure that FDA spent on the device review 
process. From this total, FDA has to subtract the amount of fee 
revenue that was spent to determine the amount of spending on 
the process that came from appropriations. This process does 
not finally identify exactly how much was spent from 
appropriations until after the end of the fiscal year.
    Like a similar provision in PDUFA III, subsection 
738(g)(2)(B) provides FDA a margin of error in its effort to 
meet this requirement. If FDA's spending is within 5 percent of 
the amount required by this provision of law, the requirement 
of this section is considered satisfied. If FDA under-spends by 
3 percent or less, there is no penalty. If FDA under-spends by 
more that 3 percent but not more than 5 percent, FDA will be 
required to reduce collections in a subsequent year by the 
amount in excess of 3 percent by which FDA under-spent from 
appropriations. Spending from appropriations on the device 
review process each year is expected to be at or very close to 
the amount specified by this trigger, and may never be more 
than 5 percent less than the trigger amount. Clearly, over 
time, as FDA's appropriations increase in the future, as 
required under subsection 738(f), FDA's spending above this 
level is expected to increase.

Section 103. Annual reports

    The annual reports included in this section replicate the 
annual reports required by the Prescription Drug User Fee Act.

Section 104. Postmarket surveillance

    The Committee understands that the overwhelming majority of 
medical devices subject to FDA review need only demonstrate 
substantial equivalence to a predicate device that was 
previously found by the FDA to demonstrate a reasonable 
assurance of safety and effectiveness, or the predicate device 
was on the market prior to the Medical Device Amendments of 
1976. Active postmarket surveillance is therefore critical to 
confirming such an assurance of the reasonable assurance of 
safety and effectiveness. The Committee strongly supports the 
FDA's present postmarket surveillance efforts. Nonetheless, the 
Committee recognizes that more monies need to be dedicated to 
this very vital public health and safety function within FDA. 
The Agency estimates that it spent roughly $18 million on 
postmarket surveillance efforts in Fiscal Year 2002. Therefore, 
this section authorizes an additional $3 million in Fiscal Year 
2003 for this activity, and then another $3 million increase in 
Fiscal Year 2004, for these purposes. Further, this section 
includes a provision requiring the Secretary to conduct a study 
identifying the impact of the new device user fee program on 
its vital postmarket surveillance activities, the types of 
improvements necessary for adequate postmarket surveillance, 
and other important inquiries. When the Secretary issues this 
study in January, 2007, the Congress will be in a better 
position to determine whether user fees should be used 
extensively for postmarket surveillance activities as they now 
are in the Prescription Drug User Fee Act. While under the user 
fee program established by this Act user fees can be used for 
some postmarket surveillance (see section 737(5) (J) and (K)), 
such uses are limited.
    The Committee believes that the increase in authorized 
funds should be employed by FDA (1) to do a better job 
monitoring the long-term, safety, efficacy and reliability of 
approved medical devices, especially implanted devices; (2) to 
monitor, document and audit device postmarket studies; (3) to 
improve adverse event reporting; (4) to facilitate prompt 
recall of devices that because of unforeseen design flaws, or 
failure to meet good manufacturing practices, are defective 
(particularly those whose defects pose a threat to human 
health); and (5) to better monitor and understand long-term 
effects of the use of devices in pediatric populations.

Section 105. Consultation

    This provision ensures that the Secretary will consult with 
various stakeholders, both private and public, when developing 
the next set of performance goals if the medical device user 
fee act is to be reauthorized. Such consultation should result 
in performance goals which take into account the concerns of 
the Congress, academic and scientific experts, health care 
professionals, patient and consumer advocacy groups, and the 
regulated industry. Further, if and when the Secretary develops 
recommendations for the reauthorization of the device user fee 
program, the Secretary is required to hold a public meeting to 
solicit input from affected stakeholders.

Section 106. Effective date

    This section indicates that the effective date of the 
device user fee program is October 1, 2002.

Section 107. Sunset

    This section indicates the expiration date of device user 
fee program.

Section 201. Inspections by accredited persons

    This section represents a very carefully crafted compromise 
between Members of the Committee with widely disparate views on 
the benefits and risks of permitting third parties, compensated 
by regulated companies, to perform inspections for the 
government. As a result of extensive examination of the 
relevant risks inherent in any imperfect inspection program 
(whether it be a FDA or third party inspection program), the 
Committee concludes that the potential improvement in the 
safety of medical devices outweighs the risk associated with 
creation of a third party inspection program. One of the 
critical tools at the FDA's disposal to achieve its goal of 
protecting the public from unsafe or ineffective medical 
devices is the authority to conduct inspections of all medical 
device establishments, foreign or domestic, that market their 
products in the United States.
    There are a number of salient facts not in dispute. Over 
the last several years the number of medical device firms, 
domestic and international, has grown dramatically from 9,061 
in FY 1997 to 13,701 in FY 2001. The FDA expects this growth to 
continue, projecting the total number of device firms to exceed 
15,000 in FY 2003. The sharp growth of the medical device 
industry, combined with resource constraints at the FDA, has 
made it difficult for the FDA to meet its statutory obligation 
of inspecting each medical device establishment at least once 
every two years. For this reason it is not surprising to find 
that the FDA's 2002 Annual Performance Plan ``scorecard'' rated 
the ``Device Inspection'' area as one of those areas at the 
Agency that is ``Not Working Well.''
    The domestic inspections coverage was only 20 percent in FY 
2001 compared to the statutory requirement of 50 percent. This 
means that the Agency was only inspecting 40% of the number of 
firms domestically that they are required to inspect under the 
law. The situation for FDA foreign inspections is even worse. 
The Agency indicates that the inspection coverage for foreign 
firms that market their products in the United States was only 
11 percent in FY 2001.
    It is concerning to the Committee that the Agency does not 
project improvement in their inspections coverage for the 
device industry. For FY 2002 and FY 2003 the Agency has 
targeted domestic inspection coverage to continue at 20 percent 
and foreign inspection coverage at only 9 percent.
    It is also a matter of fact that this poor inspectional 
record is a function of inadequate resources. Further, the 
threat of bioterrorism, particularly from abroad, to our food 
and drug supplies, forces the Committee to conclude that it is 
highly likely that FDA will not be able to provide the 
requisite resources or priority to ensuring an adequate level 
of device inspections, at least for the near future.
    While the FDA struggles to meet its statutory mandate of 
conducting a routine inspection of each domestic medical device 
firm at least once every two years, some segments of the 
medical device industry have faced a significant growth in the 
total number of inspections being required by foreign health 
agencies and departments. According to information from one 
large U.S. medical device company, the number of total 
inspections of their medical device facilities almost doubled 
from 16 in the period July 1997-June 1998 to 29 in the period 
July 1999 to June 2000. During this same period the number of 
FDA inspections for this company declined from nine to six. 
Other medical device companies have reported a similar dramatic 
growth in the number of foreign inspections taking place in 
their facilities.
    Ironically, this proliferation of the total number of 
medical device inspections is taking place at a time when 
significant progress is being made to harmonize inspectional 
requirements around the world. The Global Harmonization Task 
Force (GHTF) has been working since 1992 to harmonize a wide 
range of medical device regulatory requirements, with important 
successes to date. In addition, in 1996 the FDA rewrote its GMP 
regulation to align it as much as possible with the growing 
quality systems approach being used by European public health 
regulatory agencies. Also a widespread system of voluntary 
quality systems verification and validation such as those of 
the International Standards Organization (ISO) has developed to 
provide confidence to original equipment manufacturers, 
customers, consumers and users of medical devices. As a result 
of these activities, there has been a significant and 
substantial international convergence and agreement on the 
nature of the manufacturing quality system requirements 
necessary to ensure the production of safe medical devices. 
Despite this progress, however, the increase in the total 
number of inspections is causing the FDA and companies alike to 
look for new ways to streamline systems and avoid duplicative 
inspections. It has become clear that if each country insists 
on its own individual medical device inspections then 
harmonization, while important, is not enough.
    Congress has already taken steps to address this situation. 
In the 1997 FDA Modernization Act (FDAMA) a section is included 
which provides ``[t]he Secretary shall support the Office of 
the United States Trade Representative, in consultation with 
the Secretary of Commerce, in efforts to move toward the 
acceptance of mutual recognition agreements relating to the 
regulation of drugs, biological products, devices, foods, food 
additives, and color additives, and the regulation of good 
manufacturing practices, between the European Union and the 
United States.'' In addition, Congress mandated in this same 
provision: ``The Secretary shall, not later than 180 days after 
the date of enactment of the Food and Drug Administration 
Modernization Act of 1997, make public a plan that establishes 
a framework for achieving mutual recognition of good 
manufacturing practices inspections.''
    Mutual recognition, unlike harmonization, does not require 
similar or identical regulatory requirements. A mutual 
recognition arrangement provides that each party is capable of 
verifying and validating the requirements of the other party, 
and for that activity to be acceptable in lieu of each party's 
own activities. In other words, a mutual recognition agreement 
between the United States and the European Union would permit a 
properly trained and accredited European entity to inspect a 
European-based manufacturer which intends to market its product 
in the United States to FDA standards, and for the FDA to 
recognize that inspection as though it had conducted it itself.
    Such a Mutual Recognition Agreement (MRA) between the 
United States and the European Union was signed on May 18, 
1998. The FDA published a final rule on November 6, 1998 for 
medical devices and pharmaceuticals under the MRA. The MRA 
became effective on December 7, 1998. Under this MRA, the FDA 
approves accredited European third party organizations 
(referred to under the MRA as ``conformity assessment bodies'' 
(CAB)) to perform quality systems inspections on EU 
manufacturers that export devices to the United States. 
Likewise, under the MRA, the EU is approving accredited U.S. 
third parties to evaluate U.S. manufacturers against EU 
requirements for devices to be exported to the EU. Earlier this 
year the FDA notified the EU that the first European third 
party had been accredited to conduct independent inspections to 
FDA standards under the MRA. The Committee understands further 
that the FDA has just accredited a second third party to 
conduct inspections to FDA standards under the MRA.
    Consequently, for the past five years, through the 
development and implementation of the MRA, the FDA has gained 
some experience in establishing a third party-based system for 
conducting quality systems inspections and other regulatory 
activities. Additionally, the FDA third party review program 
has given the Agency experience in establishing a third party 
program, in training and accrediting third parties, in 
operating in a system where initial actions are conducted by 
third parties but final action is required by the Agency, and 
in working through important conflict of interest issues.
    The affirmative case for third party inspections rests on 
the view of the Agency's experience with third party programs, 
plus the fact that FDA resources do not allow for an adequate 
rate of biennial and foreign inspections. Thus, a program 
specifically aimed at utilizing third party services in the 
context of medical device quality systems inspections is 
appropriate.
    There are numerous potential advantages to the public in 
implementing a third party inspections program. Such a program 
may increase the number of inspections of medical device firms 
which market their products in the United States and thereby 
increase the amount of information that the Agency has on the 
quality systems program at certain specific companies and on 
the industry as a whole. If the quality of third party 
inspections is consistently comparable to that of FDA 
inspections, this should lead to an improvement in the public 
health and companies' compliance with existing inspectional 
requirements. Such a program should also provide the FDA with 
important new and timely information on more medical device 
companies than is now possible given the resource constraints 
at the Agency. Under such a third party inspections system the 
FDA would retain final say on the status of the company's 
quality system at the completion of the third party inspection. 
In addition, third parties would be obligated to notify the FDA 
immediately in the event that they find a significant public 
health risk in the course of an investigation.
    With the establishment of a voluntary third party 
inspection program in the United States, the Committee 
anticipates that at some time in the future, more and more 
countries would move towards mutual recognition. The Committee 
believes that at some point a medical device company that 
markets its products in the European Union, Canada, the United 
States, China, Brazil, Mexico and other countries should be 
able to contract with a single independent third party which 
has sought and received accreditation from each of these 
countries to conduct inspections to each of their national 
standards. Under these circumstances, the third party could 
perform a single inspection that would cover each nation's 
medical device quality systems requirements. Such a system 
would ease the threat of the improper use of unnecessary 
regulatory requirements to stifle legitimate international 
trade.
    In crafting the compromised embodied in section 201, the 
Committee carefully analyzed the potential risks that an 
improperly crafted third party inspection program could 
present. FDA inspections of device manufacturing facilities are 
the primary means of assuring that postmarket device safety and 
effectiveness is not jeopardized by poor manufacturing 
practices. The Committee examined entrusting this 
responsibility to private parties, compensated by the device 
manufacturer, and the potential conflicts of interest raised by 
such arrangements. Further, the Committee examined the risks 
associated with inspections performed by entities lacking 
experience or expertise. The Committee addressed the most 
serious of these legitimate concerns by giving FDA the ability 
to determine appropriate candidates for participation in the 
third party program, the ability to disagree with a third party 
selection based due to conflicts of interest, and by empowering 
FDA to only accredit third parties with appropriate experience 
or expertise. And, of course, FDA retains full authority to 
inspect at will.
    No manufacturer seeks to sell defective products, and most 
are willing to expend the capital necessary to implement 
meaningful quality control systems. Inherent in any business, 
however, is the legitimate aim of maximizing profits. The 
specter of inspection by governmental bodies (in this case the 
FDA) with the authority to take prompt remedial action with 
potential consequence to profit ensures that meaningful quality 
control systems are not compromised in the effort to maximize 
profits. To ensure that the specter of governmental inspection 
is maintained, section 201 ensures that FDA must maintain its 
present level of inspectional resources for biennial, for 
cause, and international inspections.
    The Committee reconciled these disparate views of the third 
party device inspection question by providing a third party 
inspection program that is entirely additive to existing FDA 
efforts to inspect medical device manufacturing facilities for 
compliance with good manufacturing practices. The cornerstones 
of the compromise are no dimunition of either FDA authority to 
conduct such inspections, or of the resources that the Agency 
must devote to such inspections. Under such a third party 
inspection system FDA would retain final say on the status of a 
company's quality system at the completion of the third party 
inspection. In addition, third parties would be obligated to 
notify FDA immediately in the event they find a significant 
public health risk in the course of an investigation.
    Section 201 establishes a third party inspection program 
that will permit eligible firms to select, from a list 
established by FDA, an accredited non-government entity to 
perform quality system inspections, other than preapproval 
inspections. FDA determines which persons can qualify to be 
third party inspectors. A device establishment which had its 
most recent FDA-inspection characterized as ``no action 
indicated'' or ``voluntary action indicated'' are eligible to 
use FDA-accredited third parties, after the FDA clears its 
participation in the program and does not disagree with the 
establishment's selection of an accredited third party. The 
purpose of this provision is to increase inspection activity 
for medical devices so that the public and firms benefit from 
regular inspections, and to permit FDA to focus government 
inspection resources on firms that have greater problems and 
devices that present higher risks. In addition, the third party 
inspection program is intended to help qualified firms schedule 
inspections in a manner that will help them meet the multiple 
inspection requirements of a global market.
    Section 201 describes the minimum requirements a person 
must meet to qualify to conduct inspections under the program. 
It establishes stringent conflict of interest standards to 
ensure that any person qualified to do third party inspections 
will not have a financial interest in the firm or products 
being inspected. The provisions of this subsection describe 
minimum criteria, and the FDA may publish additional criteria 
for acceptance of third parties including, for example, 
satisfactory completion of training designed to ensure that the 
inspections conducted by these third parties are equivalent to 
the inspections federal employees currently conduct. Once the 
FDA establishes the criteria it will use to accredit third 
parties to conduct inspections, the FDA must then promptly 
respond to accreditation requests by potential third parties. 
Because the accreditation process will consume FDA resources, 
in order to allow the process to unfold in an orderly manner 
this provision limits the number of entities which can be 
accredited in the first year after the criteria are published 
to no more than 15 such entities. In addition, FDA is required 
to audit and monitor the work of accredited third parties and 
may withdraw accreditation from those that no longer qualify. 
The third party has the opportunity for an informal hearing 
prior to withdrawal of its accreditation, but FDA may suspend 
the accreditation while the matter is being resolved.
    Third party inspectors will be expected to conduct 
inspections that are equivalent to quality system inspections 
performed by federal employees. Because these accredited 
persons will be conducting inspections on behalf of FDA, any 
statement or representations establishment employees make to 
these accredited persons will be subject to section 1001 of 
title 18, which provides criminal penalties for making false 
statements to the government.
    The accredited person will also be required to prepare an 
inspection report for each inspection in a form and manner 
consistent with reports prepared by federal employees. At a 
minimum, these reports will identify the persons responsible 
for GMPs at the establishment, the date and scope of the 
inspection, the observations identified, and any other 
information that may be relevant. FDA may develop additional 
elements that will be part of these reports and may revise the 
format and content of what will be required as the program 
gains experience. The accredited party's observations and 
report will be sent to FDA no later than three weeks following 
the last day of the inspection. FDA is to be notified 
immediately any time an accredited person discovers a condition 
that could cause or contribute to an unreasonable risk to 
public health.
    Compensation for inspection by an accredited third party 
will be determined by an agreement between the firm and the 
third party and will be paid by the person who engages the 
third party. The Congress will receive a report detailing how 
the third party program has performed, and the program will 
terminate in ten years unless reauthorized by Congress.
    The program is designed to be available to establishments 
that have been able to demonstrate in the past that they are 
capable of ``consistent compliance'' with the quality system 
regulations. Accordingly, only if FDA has classified the most 
recent inspection of a device establishment as ``no action 
indicated,'' or as ``voluntary action indicated,'' is that firm 
eligible to participate in the program. If an establishment's 
most recent inspection by FDA was classified as ``official 
action indicated,'' that establishment is not eligible to 
participate in this program. Eligible firms must submit a 
notice to FDA that (1) requests clearance to participate in the 
program and (2) identifies the third party the firm intends to 
employ. FDA can provide clearance and agree to the selection of 
the identified third party or can ask for additional 
information. The additional information may relate to the 
compliance history of the firm or it may relate to the 
relationship between the firm and the identified third party, 
or it may relate to both. The statute sets forth deadlines for 
FDA action on a request or following the receipt of additional 
information. If FDA fails to meet these deadlines, a request is 
deemed cleared and/or agreed to. Only those device 
establishments which have a good history of compliance with 
good manufacturing practice requirements will be eligible to 
participate. Further, FDA will be able to deny an 
establishment's selection of a third party upon a finding a 
conflict of interest, such as a financial relationship (other 
than the third party arrangement) between the device 
manufacturer and the third party inspector, exists.
    Clearance for an establishment to participate in the 
program remains in the discretion of FDA. Firms wishing to 
participate must not be subject to a finding of ``official 
action indicated'' in its last FDA inspection. Further, upon a 
request by FDA within 30 days of notification for clearance, 
the Secretary can require the establishment to demonstrate 
``consistent compliance'' with cGMPs. By ``consistent 
compliance'' the Committee understands that the management of 
the establishment applying for inspections by an accredited 
third party has put into effect a rigorous system of quality 
assurance and quality control designed to detect breakdowns in 
the production, inspection, and other processes vital to the 
safety and effectiveness of the product and is in full 
conformance with the requirements under the Act. This does not 
mean that the production system must be fail-safe. Rather, it 
means that the system must be able to detect any significant 
problems, and the management must move quickly to determine the 
cause, and affect a solution. Demonstration of such 
``consistent compliance'' would be either a history of recent 
inspections by FDA and/or third parties that resulted in ``no 
action indicated'' findings or prompt and effective attention 
to any findings of ``voluntary action indicated.'' Usually, 
such information about ``consistent compliance'' will be based 
upon all cGMP or other quality control inspections by FDA and 
outside parties within the previous two years. Such information 
may or may not be sufficient to demonstrate ``consistent 
compliance'' as the Committee understands the term. This 
judgment is reserved to FDA.
    The Committee instructs FDA to prioritize the focus the 
program on those qualified firms subject to multiple, 
duplicative inspections owing to their extensive sales outside 
of the United States. The Committee relies upon the judgment of 
FDA to detect any firm that may attempt to abuse the program.
    An establishment that has been denied clearance or whose 
selection of an accredited person has been rejected may request 
a review of FDA's findings. The review may be conducted by a 
designee of FDA who is part of the Food and Drug 
Administration, such as the FDA's Ombudsman, or by another 
person within or outside the agency that FDA chooses.
    Section 201 also addresses the situation where an 
establishment that has previously been cleared to participate 
in the program receives an inspection report from an accredited 
person that FDA has classified as ``official action 
indicated.'' In this case, the establishment will continue to 
be eligible for future third party inspections only if (1) FDA 
issues a written statement that the violations leading to the 
classification have been addressed and (2) FDA notifies the 
establishment, either on FDA's own initiative or in response to 
a petition from the establishment, that the establishment has 
clearance to use an identified third party for an inspection. 
If FDA denies a petition from a firm for further participation 
in the program following an adverse inspection report by an 
accredited person, the firm may submit an additional petition 
one year following the first denial. If FDA does not inspect 
the establishment within 48 months following the denial of the 
firm's initial petition, the establishment will become eligible 
for inspection by accredited persons. The Committee has 
included this provision because it intends to facilitate 
responsible inspections of device establishments and seeks to 
avoid creating incentives for conflicts of interest that might 
result from negative findings by a third party inspection.
    The Committee intends the accredited person inspection 
program to supplement funds currently dedicated to biennial 
GMP, international, and for cause inspections of medical device 
establishments. It is very important to the Committee that the 
establishment of an accredited person inspection program does 
not undermine or decrease any of the resources currently being 
directed to such inspections. In order to avoid the possibility 
that current inspectional resources will be diminished or 
diverted to other activities, section 201 provides that the 
program will remain in effect so long as the amount of monies 
presently dedicated to biennial, for cause, and international 
device establishment inspections is maintained. This will be 
accomplished by having the Comptroller General determine the 
amount of monies obligated by the Secretary in 2002 for 
biennal, international and for cause device inspections. This 
amount will be determined by examining FDA's compliance budget 
for devices. Once this figure is determined, in order for the 
third party inspection program to continue this figure must not 
only be maintained, but must also increase by five percent per 
year. The Committee understands that a five percent growth rate 
will allow FDA to maintain its present level of biennial, for 
cause, and international device establishment inspections. Due 
to certain budgetary vagaries which at times arise, such as 
Continuing Resolutions, the maintenance of effort provision 
allows FDA to miss the base amount in any given year without 
causing the expiration of the program. However, if the base 
amount is missed for two consecutive years, this program 
terminates.
    Most importantly, it must be noted that nothing in this 
section in any way limits FDA's authority to inspect a device 
manufacturer at any time, regardless of whether the 
manufacturer has also been inspected by a third party. This 
program is intended to be entirely additive to FDA's present 
commitment to inspections.

Section 202. Third party review of premarket notification

    Under current law, independent third parties accredited by 
the Secretary are permitted to review certain devices subject 
to the premarket notification requirements under Section 
510(k). When a device is reviewed by a third party under 
Section 523 of the Federal Food, Drug, and Cosmetic Act, the 
Secretary retains the authority to accept or reject the 
recommendation of the third party. Presently, Section 523 will 
sunset in 2006.
    This section delays the sunset of Section 523 until October 
1, 2007. Further, in order to provide better evidence about 
whether this provision should be extended in 2007, this section 
requires the Secretary to submit to the Congress a study 
analyzing whether the program is working to bring devices to 
the market in a more timely manner, or whether this provision 
is in any way jeopardizing the public health. Specifically, 
this section requires the Secretary to recommend to Congress by 
January, 2007 whether Section 523 should be continued, 
modified, or terminated.

Section 203. Designation and regulation of combination products

    The Committee intends to establish within the Office of the 
Commissioner of Food and Drugs an Office of Combination 
Products to promptly assign, and to oversee and coordinate the 
reviews of combination products. Under this section, the 
Committee intends for the Office to designate a lead center 
based upon the product's primary mode of action, as is required 
under present law.
    FDA recently established a Combination Products Program 
within the Office of the Ombudsman. This Program develops 
policies, procedures and processes to facilitate the 
intercenter review process; develops guidance to clarify the 
regulation of combination products; serves as a focal point to 
resolve issues arising during premarket review of combination 
products; and serves as an advocate for combination products. 
It is the intent of the Committee that these efforts continue 
under this new Office.
    The Office shall consult with the component of the FDA 
within the Office of the Commissioner responsible for 
determining whether a product is to be designated (i.e., 
classified under section 563 of the Act) a combination product. 
Since the agency's product classification function applies to 
all FDA-regulated products that may present questions about 
regulatory jurisdiction, not just combination products, it is 
the Committee's intent that the product classification function 
remain intact within an umbrella component of FDA, currently 
the Office of the Ombudsman, though consultation with the new 
Office is required in making this determination. Once a 
combination product is so classified, the new Office shall 
assume responsibility for its assignment to an agency center. 
The existing criteria in 503(g)(1) for determining a product's 
primary mode of action and assigning a product to an agency 
center with primary jurisdiction shall apply. Also, this 
provision does not upset the current practice wherein 
manufacturers are allowed to submit their products to the 
Agency Centers they believe should be responsible for the 
review.
    Further, this section ensures that the postmarket 
regulation of combination products will be consistent and 
appropriate. By using the word ``consistent,'' the Committee 
intends that like products will be treated in a like fashion. 
If the FDA is not being consistent presently in their 
postmarket regulation of combination products, this section is 
not intended to codify the present inconsistency. Nothing in 
this section is intended to limit current postmarket regulatory 
authorities. Rather, the Committee intends that combination 
products be regulated appropriately after marketing under the 
currently applicable provisions of the law.
    A major function of this Office will be ensuring the 
timeliness of review by coordinating the performance of the 
reviews in the responsible Agency Centers. The Committee does 
not intend for the new Office to be micro-managing line 
reviewers within the different Agency Centers. The bill instead 
contemplates that, with respect to the timeliness of reviews, 
the Centers themselves will be responsible to the new Office. 
The Office will resolve disputes regarding the timeliness of 
reviews unless the timeliness question is clearly premature. 
Generally, disputes regarding timeliness are ``premature'' when 
the statutory time frame for approval has not yet passed.
    Disputes regarding the substance of a premarket review that 
arise during the review process may be presented to the 
Commissioner after first being considered by the Center with 
primary jurisdiction under established scientific dispute 
resolution procedures. The Commissioner shall consult with the 
Director of the Office in resolving the dispute. It is the 
Committee's intent that this avenue not be available to resolve 
disputes regarding the outcome (i.e., approval or denial of 
approval) of a review, as there exist sufficient mechanisms to 
address such disputes for all products, including those that 
are combination products.
    The Secretary, acting through the Office, and after 
consulting with stakeholders and agency center directors, shall 
review each agreement, guidance or practice specific to the 
assignment of combination products to Centers to determine 
whether each is consistent with the requirements of new 
subsection 503(g)(4). The Secretary shall determine whether to 
continue, modify, revise, or eliminate each such agreement, 
guidance or practice and shall publish a Notice of Availability 
in the Federal Register of such modified or revised agreement, 
guidance or practice. It is the Committee's intent that the 
Office shall not be bound by any existing agreement, guidance 
or agency practice in determining whether to continue, modify, 
revise or eliminate any such agreement, guidance or practice, 
or in ensuring the consistent and appropriate postmarket 
regulation of combination products. Existing agreements, 
guidances, or practices shall continue in effect until 
continued, modified, revised, or eliminated.
    The Secretary shall report to The Committee within one year 
of enactment, and annually thereafter, on the activities and 
impact of the Office. The Committee recognizes that one year 
may not be sufficient time to realize significant and 
measurable improvements in some activities related to 
combination products.

Section 204.  Report on certain devices

    The Committee is aware of concerns from regulated persons 
that centers at FDA other than the Center for Devices and 
Radiological Health review original device submissions and 
supplements. Comments have been made about the failure to 
conduct timely and effective reviews. Concerns have also been 
raised about the risks to the safety of the blood supply if the 
review of devices critical to assuring blood safety is removed 
from the Center responsible for the integrated blood safety 
program. As a result, section 204 requires the Secretary to 
submit a report to the appropriate committees of Congress 
analyzing key aspects of the performance of the Centers other 
than CDRH in conducting premarket device reviews. As part of 
that report, the bill states that the Secretary is required to 
include a specific recommendation about whether the review 
responsibility of devices outside of CDRH should be transferred 
to persons ``who are primarily charged with regulating other 
types of devices, . . .'' This reference is intended to 
identify CDRH. In other words, if the review of devices, or 
certain types of devices, by CBER or CDER is inadequate, and 
the Secretary determines that review by CDRH would provide 
adequate assurance of safety and effectiveness, the Secretary 
may recommend a transfer of those device reviews to CDRH, if 
the transfer will not have a deleterious impact on the public 
health.

Section 205.  Electronic labeling

    The Internet and increased computer usage have created a 
preference in many users for information for use applicable to 
prescription devices in electronic form. Even casual users of 
computers have become used to receiving electronic information. 
The bill conforms FDA practice to the norm by allowing 
manufacturers to provide health care facilities (such as 
hospitals, doctors' offices and clinics) labeling in this 
alternative medium, so long as the labeling complies with 
applicable requirements of law. This will better allow 
manufacturers to provide such facilities with information that 
is more robust, up-to-date, and user-friendly.
    There may be some purchasers of prescription devices, 
however, that are not computer literate or who lack the 
necessary equipment to receive electronic information. For 
these limited cases where a purchaser needs labeling in a more 
traditional format, this provision allows the purchaser to 
request such labeling. The Committee intends that manufacturers 
will respond to such a request promptly and at no cost to the 
user.

Section 206.  Electronic registration

    Given the increased reliance on computer usage, this 
provision requires manufacturers to provide registration 
information required under section 510 by electronic means, but 
only upon a finding by the Secretary that electronic receipt of 
such information is feasible. In assessing the feasibility of 
electronic registration, the Secretary shall consider whether 
there are sufficient resources available to FDA to develop and 
maintain such a system. Once electronic registration is 
feasible, under this section the Secretary is given the 
authority to waive the requirement of electronic submission of 
registration information for manufacturers who cannot 
reasonably comply with the requirements in this section, and 
permit them to register through submission to FDA of a hard 
copy of the required information.

Section 207.  Intended use

    This provision eliminates the current law sunset on 
``intended use'' for substantial equivalence determinations 
found within section 513 of the Federal Food, Drug, and 
Cosmetic Act.

Section 208.  Modular review

    This provision allows manufacturers to apply for review of 
portions of their premarket applications, but only when both 
the Secretary and the applicant agree that such portions, or 
modules, are complete, ready, and appropriate for review. Under 
this provision, once a module is reviewed and found acceptable 
to the Secretary, the Secretary will not be allowed to review 
the determination again, unless issues of safety or 
effectiveness cause the Secretary to review such determination.

Section 209.  Pediatric expertise regarding classification-panel review 
        of premarket applications

    The Committee believes that it is important for advisory 
committees providing recommendations to the Secretary on 
devices likely to be used in children to have access to 
appropriate pediatric expertise. This section requires these 
advisory committees to either include, or consult with, one or 
more pediatric experts when the device considered by the 
advisory committee is reasonably likely to be used in the 
pediatric population.

Section 210. Internet list of class II devices exempted from 
        requirement of premarket notification

    Under the Food and Drug Administration Modernization Act of 
1997 (FDAMA), the Secretary was required to publish in the 
Federal Register a list of each type of class II device exempt 
from the premarket notification reporting requirements under 
section 510(k). This section ensures that the list of class II 
devices exempt from the reporting requirements under section 
510(k) is also published on the internet site of the FDA, and 
that such list be updated not later than 30 days after 
revisions to the list.

Section 211. Study by Institute of Medicine of postmarket surveillance 
        regarding pediatric populations

    This section requires the Secretary to request that the 
Institute of Medicine contract with the Secretary for the 
conduct of a study analyzing the adequacy of postmarket 
surveillance of devices used in, or implanted into, the 
pediatric population. Of especial importance to the Committee 
is analysis reviewing the long-term effects, if any, of devices 
implanted in children. The Secretary is required to ensure that 
the report is transmitted to the Congress no later than four 
years after the enactment of this Act.

Section 212. Guidance regarding pediatric devices

    This section requires the Secretary to issue guidance about 
the type of information necessary to meet the reasonable 
assurance of safety and effectiveness of devices intended for 
use in the pediatric populations. In no way is the provision 
intended to lower, change, or heighten the current law standard 
for approval of pediatric devices. Instead, this provision is 
meant to encourage the development of safe and effective 
devices intended for pediatric populations by having the 
Secretary specifically and clearly delineate what type of 
information is necessary to meet the current standard of 
approval. In developing this guidance, the Committee intends 
for the Secretary to abide by all current law requirements, 
including ``least burdensome'' requirements.

Section 213. Breast implants; study by the Comptroller General

    This section requires the General Accounting Office to 
conduct a study to determine the content of information 
typically provided to women who consult with health 
professionals on the issue of whether to undergo breast implant 
surgery; whether this information is provided in oral or verbal 
form; whether the information provided is fair and balanced; 
whether women understand the information that is provided; and 
adverse event information, among other things.
    The Committee believes that it is vital that women 
considering an implant procedure be provided objective, 
understandable information about the risks and benefits of 
implant surgery. Therefore, the Committee strongly encourages 
the Food and Drug Administration to ensure that women receive 
such information in a timely fashion, particularly if the 
procedure is elective. In particular, the agency should 
consider working with an advisory panel, patients, consumer 
groups, implant manufacturers, plastic surgeons, and other 
interested parties to ensure such information is updated 
correctly, and as soon as possible when new information about 
adverse events becomes available. The agency should consider 
writing product guides if it believes it could help communicate 
fair and balanced information, and if so ensure that such 
guides are appropriately updated.
    The agency should also work with patients, consumer groups, 
manufacturers, plastic surgeons, and other interested parties 
to ensure that women enrolling in clinical trials for silicone 
breast implants are provided with up-to-date, easy to 
understand informed consent documents, early in the clinical 
trial enrollment process. The agency should also take 
appropriate steps to ensure that clinical trial participants 
receive information on how to report problems about their 
participation or continued enrollment in a study or a 
particular clinical trial.

Section 214. Breast implants; research through the National Institutes 
        of Health

    The Committee is aware of conflicting research as to the 
long- term health implications of breast implants. Therefore, 
the Committee has asked the NIH to report on all of its 
research in this area. Furthermore, we urge the NIH continue 
and expand research programs that examine the long-term health 
implications of breast implants. If scientifically appropriate, 
such a study should allow for comparisons of women receiving 
implants for reconstruction after mastectomy to breast cancer 
patients who have not had reconstruction. The committee 
believes that it is important for these studies to include 
women who have had implants for at least eight years, 
separately analyzing women with saline implants and those with 
silicone gel implants. Such a study should include the rate of 
local complications, which may include capsular contracture, 
leakage, loss of nipple sensation, problems in breast feeding, 
deflation and rupture as well as systemic health problems which 
may include neurological and/or auto-immune irregularities that 
show possible links to silicone migration, or other leakage or 
breakage related issues.
    The Committee is aware of conflicting research as to the 
long-term health implications of breast implants. Therefore, 
the Committee has asked the NIH to report on all if its 
historical research in this area. Furthermore, we would suggest 
that the NIH continue and expand research programs that examine 
the long-term health implications of breast implants. If 
scientifically appropriate, such a study should allow for 
comparisons of women receiving implants for reconstruction 
after mastectomy to breast cancer patients who have not had 
reconstruction. If appropriate, the agency should also consider 
comparisons of mastectomy patients with those women receiving 
implants through elective augmentation procedures, and 
comparisons with patients who have received other types of 
plastic surgery. The committee believes that it is important 
for these studies to include women who have had implants for at 
least eight years. Such a study might also focus on the rate of 
local complications, which may include capsular contracture, 
leakage, loss of nipple sensation, problems in breast feeding, 
deflation and rupture as well as systemic health problems which 
may include neurological and/or auto-immune irregularities that 
show possible links to silicone migration, or other leakage or 
breakage related issues.

Section 301. Identification of manufacturer of medical devices

    Title III makes changes to the regulatory scheme for single 
use devices that are reprocessed. A single use device is a 
device that is intended for use by the end user on only one 
patient during a single procedure. A device has been 
reprocessed when the original device has been used on a patient 
and then subject to additional processing and manufacturing so 
that it can be used again (one time) on a patient.
    The changes being effected by Title III reflect a balancing 
of competing concerns. The Committee recognizes that there are 
cost savings associated with using devices that have been 
reprocessed. Therefore, we want to ensure access to safe and 
effective reprocessed devices. FDA's current regulatory scheme 
creates certain barriers for those in the business of 
reprocessing devices. We want to eliminate those barriers in a 
way that does not undercut the FDA's ability to protect the 
public health. The Committee also recognizes that the 
reprocessing of a single-use device may raise issues that are 
not addressed and need not be addressed when the device is 
originally manufactured. The Committee wants to ensure that 
devices that undergo reprocessing continue to be safe for use 
on patients and continue to work as intended. We want to ensure 
that FDA has adequate tools to do this.
    Section 301 requires all devices (or permanent attachments 
thereto) prominently and conspicuously to bear the name of the 
manufacturer, a generally recognized abbreviation of such name, 
or a unique and generally recognized symbol that identifies 
such manufacturer. It permits FDA to waive the requirements if 
it is not feasible or would compromise the provision of 
reasonable assurance of the safety or effectiveness of the 
device. For example, if a manufacturer believes that the 
medical device is too small or too fragile to bear the name or 
attachment, the manufacturer may petition the agency to waive 
this requirement. Further, the Secretary should consider 
waiving this requirement when compliance with the requirement 
would heighten the clearance/approval burden for the 
manufacturer. Such a situation exists where compliance would 
obligate the manufacturer to conduct additional 
biocompatibility testing in order to obtain clearance/approval. 
The Committee intends for FDA to post on its website or publish 
in the Federal Register any waivers it grants to provide the 
information to similarly situated manufacturers. This section 
applies to all devices, not just reprocessed single use 
devices.

Section 302. Single-use medical devices

    Section 302 includes a requirement that all of the labeling 
of reprocessed single-use devices bear a statement indicating 
that the device has been reprocessed and who has done the 
reprocessing. This new requirement, combined with the new 
requirement in Section 301, is important for several reasons. 
Both requirements let the end user know which company is 
responsible for manufacturing or reprocessing the device. 
Section 302 allows users of reprocessed devices to know that 
they are using a reprocessed device as well as who has done 
such reprocessing. This disclosure is important not only to 
ensure that the user has all relevant information about the 
device, but also to help ensure that any reports about the 
device, particularly those related to problems with the device, 
will accurately identify the manufacturer and whether the 
device was reprocessed. The Committee understands that FDA has 
not been able to compile information regarding adverse events 
associated with reprocessed devices and whether this is a 
problem, in part, because reports may not be identifying 
certain devices as reprocessed.
    Section 302 also gives FDA authority to identify (by 
publishing a list in the Federal Register), reprocessed single-
use devices for which it determines that validation data 
regarding cleaning and sterilization, and functional 
performance are needed to ensure that the device will remain 
substantially equivalent to its predicate after the maximum 
number of times the device is reprocessed as intended by the 
reprocessor. FDA can also require such information for a device 
not included on the list if it is for a device or type of 
device for which FDA has not previously received a 510(k).
    The type of validation data that is necessary for clearance 
will vary. In some cases FDA may be able to rely primarily on a 
sound scientific rationale that the reprocessing does not 
adversely affect device integrity or function. In other cases 
it will be necessary for the manufacturer to provide test data 
demonstrating that the reprocessed device continues to meet its 
specifications. The Committee intends that the Secretary have 
flexibility in determining the type of validation data required 
under Section 510(o)(1)(A), and that the Secretary only require 
the type or types of validation data that are necessary to 
protect the public health. In determining the type or types of 
data to be submitted for FDA's review, the Secretary should be 
mindful of FDAMA, which obligates FDA to impose the least 
burdensome requirements on companies seeking premarket 
clearance/approval for their devices. Additionally, the 
Committee recognizes there is a difference between validation 
and verification. The former involves a level of rigor and 
statistical probability that a device or a process will 
consistently perform as intended; the latter demonstrates 
through testing or observation that a specific requirement has 
been fulfilled.
    Section 302 also gives FDA the authority to terminate an 
exemption from the requirement to submit a 510(k) for a 
critical or semi-critical reprocessed single use device if FDA 
determines that such termination is needed to provide a 
reasonable assurance of safety and effectiveness. The Committee 
is providing this authority in recognition of the fact that 
although a single use device as originally manufactured may be 
of sufficiently low risk to warrant an exemption from the 
requirement to submit a 510(k), reprocessing may, in certain 
circumstances, raise issues (e.g., related to appropriate 
cleaning and/or sterilization, and functional performance) to 
warrant review by FDA. The definitions for critical and semi-
critical devices are adopted from the criteria established by 
E.H. Spaulding (Proceedings of International Conference on 
Nosocomial Infections, 1970. American Hospital Association, 
Chicago 1971; 254-274).
    In order to permit reprocessors to submit validation data 
for single use devices listed by the Secretary, the Committee 
included in the legislation a grace period in which the 
Secretary would not take an enforcement action against the 
reprocessor or a listed device until certain events occurred, 
if the reprocessor timely submitted validation data. The 
Committee believes that the Secretary shall take action 
promptly if the Secretary finds that the data shows a 
reprocessed single use device is not substantially equivalent 
to its predicate device. Certainly if a party fails to submit 
data to the Secretary according to the timeframes in this 
legislation, the Secretary should issue an order determining 
the single use reprocessed device is not substantially 
equivalent to its predicate, thus resulting in its removal from 
commercial distribution.
    Finally, section 302 creates a new type of application for 
class III reprocessed single use devices that previously would 
have required submission of a PMA. New section 510(o)(3) 
requires the manufacturer of such devices to submit a report in 
accordance with the paragraph. The device cannot be marketed 
unless after reviewing such report, the Secretary issues an 
order determining that there is a reasonable assurance of 
safety and effectiveness for the device. The information 
required to be submitted in such report tracks the information 
required to be submitted in a PMA, except that the manufacturer 
need not supply certain information about the manufacture and 
operation of the original device. It is the inability to 
provide this information (because it is available only from the 
original equipment manufacturer) that has made it difficult for 
reprocessing manufacturers to get PMA approval. The only way 
for reprocessing manufacturers to obtain this information is to 
get a right of reference from the original equipment 
manufacturers (OEMs) and the OEM's have been unwilling to 
provide it. FDA still is able to require all, or some, of the 
other information needed to establish a reasonable assurance of 
safety and effectiveness that would have been required in a 
PMA, including clinical data. The Committee intends that the 
new process for approval of premarket reports allows FDA the 
flexibility to decide precisely what specific data requirements 
for a particular Class III reprocessed single use device are 
appropriate, depending on the specific safety and/or 
effectiveness issues presented by the device under review. 
However, the Committee intends that the standard for approval 
of a premarket report be identical to the standard for a PMA 
approval under section 515: a reasonable assurance of safety 
and effectiveness. Nothing in this section is to be construed 
as lowering this standard. Section 302 also provides that the 
report must include validation data that are appropriate for 
evaluating these devices. Because section 302 is creating a new 
type of application, it also adds a new prohibited act to 
ensure that FDA has adequate enforcement authority.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

FEDERAL FOOD, DRUG, AND COSMETIC ACT

           *       *       *       *       *       *       *



                        CHAPTER II--DEFINITIONS

  Sec. 201. For the purposes of this Act--
  (a)  * * *

           *       *       *       *       *       *       *

  (ll)(1) The term ``single-use device'' means a device that is 
intended for one use, or on a single patient during a single 
procedure.
  (2)(A) The term ``reprocessed'', with respect to a single-use 
device, means an original device that has previously been used 
on a patient and has been subjected to additional processing 
and manufacturing for the purpose of an additional single use 
on a patient. The subsequent processing and manufacture of a 
reprocessed single-use device shall result in a device that is 
reprocessed within the meaning of this definition.
  (B) A single-use device that meets the definition under 
subparagraph (A) shall be considered a reprocessed device 
without regard to any description of the device used by the 
manufacturer of the device or other persons, including a 
description that uses the term ``recycled'' rather than the 
term ``reprocessed''.
  (3) The term ``original device'' means a new, unused single-
use device.
  (mm)(1) The term ``critical reprocessed single-use device'' 
means a reprocessed single-use device that is intended to 
contact normally sterile tissue or body spaces during use.
  (2) The term ``semi-critical reprocessed single-use device'' 
means a reprocessed single-use device that is intended to 
contact intact mucous membranes and not penetrate normally 
sterile areas of the body.

           *       *       *       *       *       *       *


               CHAPTER III--PROHIBITED ACTS AND PENALTIES


                            PROHIBITED ACTS

  Sec. 301. The following acts and the causing thereof are 
hereby prohibited:
  (a)  * * *

           *       *       *       *       *       *       *

  (gg) The introduction or delivery for introduction into 
interstate commerce of any device in violation of section 
510(o)(3).

           *       *       *       *       *       *       *


                      CHAPTER V--DRUGS AND DEVICES


                    Subchapter A--Drugs and Devices

           *       *       *       *       *       *       *



                      MISBRANDED DRUGS AND DEVICES

  Sec. 502. A drug or device shall be deemed to be misbranded--
  (a)  * * *

           *       *       *       *       *       *       *

  (f) Unless its labeling bears (1) adequate directions for 
use; and (2) such adequate warnings against use in those 
pathological conditions or by children where its use may be 
dangerous to health, or against unsafe dosage or methods or 
duration of administration or application, in such manner and 
form, as are necessary for the protection of users, except that 
where any requirement of clause (1) of this paragraph, as 
applied to any drug or device, is not necessary for the 
protection of the public health, the Secretary shall promulgate 
regulations exempting such drug or device from such 
requirement. Required labeling for prescription devices 
intended for use in health care facilities may be made 
available solely by electronic means provided that the labeling 
complies with all applicable requirements of law and, that the 
manufacturer affords health care facilities the opportunity to 
request the labeling in paper form, and after such request, 
promptly provides the health care facility the requested 
information without additional cost.

           *       *       *       *       *       *       *

  (u) If it is a device, unless it, or an attachment thereto, 
prominently and conspicuously bears the name of the 
manufacturer of the device, a generally recognized abbreviation 
of such name, or a unique and generally recognized symbol 
identifying such manufacturer, except that the Secretary may 
waive any requirement under this paragraph for the device if 
the Secretary determines that compliance with the requirement 
is not feasible for the device or would compromise the 
provision of reasonable assurance of the safety or 
effectiveness of the device.
  (v) If it is a reprocessed single-use device, unless all 
labeling of the device prominently and conspicuously bears the 
statement ``Reprocessed device for single use. Reprocessed by 
____.'' The name of the manufacturer of the reprocessed device 
shall be placed in the space identifying the person responsible 
for reprocessing.

EXEMPTIONS AND CONSIDERATION FOR CERTAIN DRUGS, DEVICES, AND BIOLOGICAL 
                                PRODUCTS

  Sec. 503. (a)  * * *

           *       *       *       *       *       *       *

  (g)(1) The Secretary [shall designate a component of the Food 
and Drug Administration] shall in accordance with this 
subsection assign an agency center to regulate products that 
constitute a combination of a drug, device, or biological 
product. The Secretary shall determine the primary mode of 
action of the combination product. If the Secretary determines 
that the primary mode of action is that of--
          (A) a drug (other than a biological product), [the 
        persons charged] the agency center charged with 
        premarket review of drugs shall have primary 
        jurisdiction,
          (B) a device, [the persons charged] the agency center 
        charged with premarket review of devices shall have 
        primary jurisdiction, or
          (C) a biological product, [the persons charged] the 
        agency center charged with premarket review of 
        biological products shall have primary jurisdiction.

           *       *       *       *       *       *       *

  (4)(A) Not later than 60 days after the date of the enactment 
of this paragraph, the Secretary shall establish within the 
Office of the Commissioner of Food and Drugs an office to 
ensure the prompt assignment of combination products to agency 
centers, the timely premarket review of such products, and 
consistent and appropriate postmarket regulation of like 
products subject to the same statutory requirements to the 
extent permitted by law. Additionally, the office shall, in 
determining whether a product is to be designated a combination 
product, consult with the component within the Office of the 
Commissioner of Food and Drugs that is responsible for such 
determinations. Such office (referred to in this paragraph as 
the ``Office'') shall have appropriate scientific and medical 
expertise, and shall be headed by a director.
  (B) In carrying out this subsection, the Office shall, for 
each combination product, promptly assign an agency center with 
primary jurisdiction in accordance with paragraph (1) for the 
premarket review of such product.
  (C) In carrying out this subsection, the Office shall ensure 
timely and effective premarket reviews by overseeing and 
coordinating reviews involving more than one agency center.
  (D) In carrying out this subsection, the Office shall ensure 
the consistency and appropriateness of postmarket regulation of 
like products subject to the same statutory requirements to the 
extent permitted by law. Nothing in this paragraph shall be 
construed to limit the postmarket regulatory authority of any 
agency center.
  (E) In order to ensure the timeliness of the premarket review 
of a combination product, the agency center with primary 
jurisdiction for the product, and the consulting agency center, 
shall be responsible to the Office with respect to the 
timeliness of the premarket review.
  (F)(i) Any dispute regarding the timeliness of the premarket 
review of a combination product may be presented to the Office 
for resolution, unless the timeliness of the dispute is clearly 
premature.
  (ii) During the review process, any dispute regarding the 
substance of the premarket review may be presented to the 
Commissioner of Food and Drugs after first being considered by 
the agency center with primary jurisdiction of the premarket 
review, under the scientific dispute resolution procedures for 
such center. The Commissioner of Food and Drugs shall consult 
with the Director of the Office in resolving the substantive 
dispute.
  (G) The Secretary, acting through the Office, shall review 
each agreement, guidance, or practice of the Secretary that is 
specific to the assignment of combination products to agency 
centers and shall determine whether the agreement, guidance, or 
practice is consistent with the requirements of this 
subsection. In carrying out such review, the Secretary shall 
consult with stakeholders and the directors of the agency 
centers. After such consultation, the Secretary shall determine 
whether to continue in effect, modify, revise, or eliminate 
such agreement, guidance, or practice, and shall publish in the 
Federal Register a notice of the availability of such modified 
or revised agreement, guidance or practice. Nothing in this 
paragraph shall be construed as preventing the Secretary from 
following each agreement, guidance, or practice until 
continued, modified, revised, or eliminated.
  (H) Not later than one year after the date of the enactment 
of this paragraph and annually thereafter, the Secretary shall 
report to the appropriate committees of Congress on the 
activities and impact of the Office. The report shall include 
provisions--
          (i) describing the numbers and types of combination 
        products under review and the timeliness in days of 
        such assignments, reviews, and dispute resolutions;
          (ii) identifying the number of premarket reviews of 
        such products that involved a consulting agency center; 
        and
          (iii) describing improvements in the consistency of 
        postmarket regulation of combination products.
  [(4)] (5) As used in this subsection:
          (A) The term ``agency center'' means a center or 
        alternative organizational component of the Food and 
        Drug Administration.
          [(A)] (B) The term ``biological product'' has the 
        meaning given the term in section 351(i) of the Public 
        Health Service Act (42 U.S.C. 262(i)).
          [(B)] (C) The term ``market clearance'' includes--
                  (i)  * * *

           *       *       *       *       *       *       *


             REGISTRATION OF PRODUCERS OF DRUGS AND DEVICES

  Sec. 510. (a)  * * *

           *       *       *       *       *       *       *

  (h) Every establishment in any State registered with the 
Secretary pursuant to this section shall be subject to 
inspection pursuant to section 704 and every such establishment 
engaged in the manufacture, propagation, compounding, or 
processing of a drug or drugs or of a device or devices 
classified in class II or III shall be so inspected by one or 
more officers or employees duly designated by the Secretary, or 
by persons accredited to conduct inspections under section 
704(g), at least once in the 2-year period beginning with the 
date of registration of such establishment pursuant to this 
section and at least once in every successive 2-year period 
thereafter.

           *       *       *       *       *       *       *

  (m)(1) Not later than 60 days after the date of enactment of 
the Food and Drug Administration Modernization Act of 1997, the 
Secretary shall publish in the Federal Register a list of each 
type of class II device that does not require a report under 
subsection (k) to provide reasonable assurance of safety and 
effectiveness. Each type of class II device identified by the 
Secretary as not requiring the report shall be exempt from the 
requirement to provide a report under subsection (k) as of the 
date of the publication of the list in the Federal Register. 
The Secretary shall publish such list on the Internet site of 
the Food and Drug Administration. The list so published shall 
be updated not later than 30 days after each revision of the 
list by the Secretary.

           *       *       *       *       *       *       *

  (o)(1) With respect to reprocessed single-use devices for 
which reports are required under subsection (k):
          (A) The Secretary shall identify such devices or 
        types of devices for which reports under such 
        subsection must, in order to ensure that the device is 
        substantially equivalent to a predicate device, include 
        validation data, the types of which shall be specified 
        by the Secretary, regarding cleaning and sterilization, 
        and functional performance demonstrating that the 
        single-use device will remain substantially equivalent 
        to its predicate device after the maximum number of 
        times the device is reprocessed as intended by the 
        person submitting the premarket notification. Within 
        one year after enactment of this subsection, the 
        Secretary shall publish in the Federal Register a list 
        of the types so identified, and shall revise the list 
        as appropriate. Reports under subsection (k) for 
        devices or types of devices within a type included on 
        the list are, upon publication of the list, required to 
        include such validation data.
          (B) In the case of each report under subsection (k) 
        that was submitted to the Secretary before the 
        publication of the initial list under subparagraph (A), 
        or any revision thereof, and was for a device or type 
        of device included on such list, the person who 
        submitted the report under subsection (k) shall submit 
        validation data as described in subparagraph (A) to the 
        Secretary not later than nine months after the 
        publication of the list. During such nine-month period, 
        the Secretary may not take any action under this Act 
        against such device solely on the basis that the 
        validation data for the device have not been submitted 
        to the Secretary. After the submission of the 
        validation data to the Secretary, the Secretary may not 
        determine that the device is misbranded under section 
        502(o), adulterated under section 501(f)(1)(B), or take 
        action against the device under section 301(p) for 
        failure to provide any information required by 
        subsection (k) until (i) the review is terminated by 
        withdrawal of the submission of the report under 
        subsection (k); (ii) the Secretary finds the data to be 
        acceptable and issues a letter; or (iii) the Secretary 
        determines that the device is not substantially 
        equivalent to a predicate device. Upon a determination 
        that a device is not substantially equivalent to a 
        predicate device, or if such submission is withdrawn, 
        the device can no longer be legally marketed.
          (C) In the case of a report under subsection (k) for 
        a device identified under subparagraph (A) that is of a 
        type for which the Secretary has not previously 
        received a report under such subsection, the Secretary 
        may, in advance of revising the list under subparagraph 
        (A) to include such type, require that the report 
        include the validation data specified in subparagraph 
        (A).
          (D) Section 502(o) applies with respect to the 
        failure of a report under subsection (k) to include 
        validation data required under subparagraph (A).
  (2) With respect to critical or semicritical reprocessed 
single-use devices that, under subsection (l) or (m), are 
exempt from the requirement of submitting reports under 
subsection (k):
          (A) The Secretary shall identify such devices or 
        types of devices for which such exemptions should be 
        terminated in order to provide a reasonable assurance 
        of the safety and effectiveness of the devices. The 
        Secretary shall publish in the Federal Register a list 
        of the devices or types of devices so identified, and 
        shall revise the list as appropriate. The exemption for 
        each device or type included on the list is terminated 
        upon the publication of the list. For each report under 
        subsection (k) submitted pursuant to this subparagraph 
        the Secretary shall require the validation data 
        described in paragraph (1)(A).
          (B) For each device or type of device included on the 
        list under subparagraph (A), a report under subsection 
        (k) shall be submitted to the Secretary not later than 
        15 months after the publication of the initial list, or 
        a revision of the list, whichever terminates the 
        exemption for the device. During such 15-month period, 
        the Secretary may not take any action under this Act 
        against such device solely on the basis that such 
        report has not been submitted to the Secretary. After 
        the submission of the report to the Secretary the 
        Secretary may not determine that the device is 
        misbranded under section 502(o), adulterated under 
        section 501(f)(1)(B), or take action against the device 
        under section 301(p) for failure to provide any 
        information required by subsection (k) until (i) the 
        review is terminated by withdrawal of the submission; 
        (ii) the Secretary determines by order that the device 
        is substantially equivalent to a predicate device; or 
        (iii) the Secretary determines by order that the device 
        is not substantially equivalent to a predicate device. 
        Upon a determination that a device is not substantially 
        equivalent to a predicate device, the device can no 
        longer be legally marketed.
          (C) The initial list under subparagraph (A) shall be 
        published not later than 18 months after the effective 
        date of this subsection.
          (D) Section 502(o) applies with respect to the 
        failure to submit a report under subsection (k) that is 
        required pursuant to subparagraph (A), including a 
        failure of the report to include validation data 
        required in such subparagraph.
          (E) The termination under subparagraph (A) of an 
        exemption under subsection (l) or (m) for a critical or 
        semicritical reprocessed single-use device does not 
        terminate the exemption under subsection (l) or (m) for 
        the original device.
  (3) In the case of a reprocessed single-use device that is 
classified in class III and for which a premarket application 
is required, the following provisions apply with respect to 
such reprocessed device in lieu of an application for premarket 
approval under section 515:
          (A) The device shall not be introduced into 
        interstate commerce or delivered for introduction into 
        interstate commerce unless the person involved has 
        submitted to the Secretary a report in accordance with 
        this paragraph and the Secretary, after reviewing the 
        report, issues an order determining there is a 
        reasonable assurance of the safety and effectiveness 
        for the device.
          (B) The report under subparagraph (A) shall contain 
        the following:
                  (i) The device name, including both the trade 
                or proprietary name and the common or usual 
                name.
                  (ii) The establishment registration number of 
                the owner or operator submitting the report.
                  (iii) Actions taken to comply with 
                performance standards under section 514.
                  (iv) Proposed labels, labeling, and 
                advertising sufficient to describe the device, 
                its intended use, and directions for use.
                  (v) Full reports of all information, 
                published or known to or which should be 
                reasonably known to the applicant, concerning 
                investigations which have been made to show 
                whether or not a device is safe or effective.
                  (vi) A description of the device's 
                components, ingredients, and properties.
                  (vii) A full description of the methods used 
                in, and the facilities and controls used for, 
                the reprocessing and packing of the device.
                  (viii) Such samples of the device that the 
                Secretary may reasonably require.
                  (ix) A financial certification or disclosure 
                statement or both, as required by part 54 of 
                title 21, Code of Federal Regulations.
                  (x) A statement that the applicant believes 
                to the best of the applicant's knowledge that 
                all data and information submitted to the 
                Secretary are truthful and accurate and that no 
                material fact has been omitted in the report.
                  (xi) Any additional data and information that 
                the Secretary determines is necessary to 
                determine whether there is reasonable assurance 
                of safety and effectiveness for the reprocessed 
                device.
          (C) In addition to the information or data required 
        in subparagraph (B), the report under subparagraph (A) 
        shall include the validation data described in 
        paragraph (1)(A) that demonstrates that the reasonable 
        assurance of the safety or effectiveness of the device 
        will remain after the maximum number of times the 
        device is reprocessed as intended by the person 
        submitting the report under this paragraph.
  (p) Registrations under subsections (b), (c), (d), and (i) 
(including the submission of updated information) shall be 
submitted to the Secretary by electronic means, upon a finding 
by the Secretary that the electronic receipt of such 
registrations is feasible, unless the Secretary grants a 
request for waiver of such requirement because use of 
electronic means is not reasonable for the person requesting 
such waiver.

           *       *       *       *       *       *       *


            CLASSIFICATION OF DEVICES INTENDED FOR HUMAN USE


                             Device Classes

  Sec. 513. (a)  * * *

           *       *       *       *       *       *       *


                        Substantial Equivalence

  (i)(1)(A)  * * *

           *       *       *       *       *       *       *

  (E)(i)  * * *

           *       *       *       *       *       *       *

  [(iv) This subparagraph has no legal effect after the 
expiration of the five-year period beginning on the date of the 
enactment of the Food and Drug Administration Modernization Act 
of 1997.]

           *       *       *       *       *       *       *


                           PREMARKET APPROVAL


                          General Requirement

  Sec. 515. (a)  * * *

           *       *       *       *       *       *       *


                   Application for Premarket Approval

  (c)(1)  * * *
  (2) Upon receipt of an application meeting the requirements 
set forth in paragraph (1), the Secretary--
          (A)  * * *

           *       *       *       *       *       *       *

refer such application to the appropriate panel under section 
513 for study and for submission (within such period as he may 
establish) of a report and recommendation respecting approval 
of the application, together with all underlying data and the 
reasons or basis for the recommendation. If the Secretary 
determines that there is a reasonable likelihood that the 
device involved will be used in a pediatric population, the 
Secretary shall ensure that such panel includes, or consults 
with, one or more pediatric experts.
  (3)(A) Prior to the submission of an application under this 
subsection, the Secretary shall accept and review portions of 
such applications that applicants and the Secretary agree are 
complete, ready, and appropriate for review.
  (B) Each portion of a submission reviewed under subparagraph 
(A) and found acceptable by the Secretary shall not be further 
reviewed after receipt of an application that satisfies the 
requirements of paragraph (1), unless issues of safety or 
effectiveness provide the Secretary cause to review such 
accepted portion.
  (C) Whenever the Secretary determines that a portion of a 
submission under subparagraph (A) is unacceptable, the 
Secretary shall specifically identify, in writing, the 
deficiency of such portion and describe in detail the means by 
which it may be made acceptable, unless the sponsor is no 
longer pursuing the application.

           *       *       *       *       *       *       *


GENERAL PROVISIONS RESPECTING CONTROL OF DEVICES INTENDED FOR HUMAN USE


                              General Rule

  Sec. 520. (a)  * * *

           *       *       *       *       *       *       *


                  Guidance Regarding Pediatric Devices

  (n) Not later than 270 days after the date of the enactment 
of the Medical Device User Fee and Modernization Act of 2002, 
the Secretary shall issue guidance on the following:
          (1) The type of information necessary to provide 
        reasonable assurance of the safety and effectiveness of 
        devices intended for use in pediatric populations.
          (2) Protections for pediatric subjects in clinical 
        investigations of the safety or effectiveness of such 
        devices.

           *       *       *       *       *       *       *


SEC. 523. ACCREDITED PERSONS.

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Duration.--[The authority provided by this section 
terminates--
          [(1) 5 years after the date on which the Secretary 
        notifies Congress that at least 2 persons accredited 
        under subsection (b) are available to review at least 
        60 percent of the submissions under section 510(k), or
          [(2) 4 years after the date on which the Secretary 
        notifies Congress that the Secretary has made a 
        determination described in paragraph (2)(B) of 
        subsection (a) for at least 35 percent of the devices 
        that are subject to review under paragraph (1) of such 
        subsection,
whichever occurs first.] The authority provided by this section 
terminates October 1, 2007.
  (d) Report.--Not later than January 10, 2007, the Secretary 
shall conduct a study based on the experience under the program 
under this section and submit to the Committee on Energy and 
Commerce of the House of Representatives, and the Committee on 
Health, Education, Labor, and Pensions of the Senate, a report 
describing the findings of the study. The objectives of the 
study shall include determining--
          (1) the number of devices reviewed under this 
        section;
          (2) the number of devices reviewed under this section 
        that were ultimately cleared by the Secretary;
          (3) the number of devices reviewed under this section 
        that were ultimately not cleared by the Secretary;
          (4) the average time period for a review under this 
        section (including the time it takes for the Secretary 
        to review a recommendation of an accredited person 
        under subsection (a) and determine the initial device 
        classification);
          (5) the average time period identified in paragraph 
        (4) compared to the average time period for review of 
        devices solely by the Secretary pursuant to section 
        510(k);
          (6) if there is a difference in the average time 
        period under paragraph (4) and the average time period 
        under paragraph (5), the reasons for such difference;
          (7) whether the quality of reviews under this section 
        for devices for which no guidance has been issued is 
        qualitatively inferior to reviews by the Secretary for 
        devices for which no guidance has been issued;
          (8) whether the quality of reviews under this section 
        of devices for which no guidance has been issued is 
        qualitatively inferior to reviews under this section of 
        devices for which guidance has been issued;
          (9) whether this section has in any way jeopardized 
        or improved the public health;
          (10) any impact of this section on resources 
        available to the Secretary to review reports under 
        section 510(k); and
          (11) any suggestions for continuation, modification 
        (including expansion of device eligibility), or 
        termination of this section that the Secretary 
        determines to be appropriate.

           *       *       *       *       *       *       *


                     CHAPTER VII--GENERAL AUTHORITY


            Subchapter A--General Administrative Provisions

           *       *       *       *       *       *       *



                           FACTORY INSPECTION

  Sec. 704. (a)  * * *

           *       *       *       *       *       *       *

  (f)(1) [A person accredited under section 523 to review 
reports made under section 510(k) and make recommendations of 
initial classifications of devices to the Secretary shall 
maintain records] An accredited person described in paragraph 
(3) shall maintain records documenting the training 
qualifications of the person and the employees of the person, 
the procedures used by the person for handling confidential 
information, the compensation arrangements made by the person, 
and the procedures used by the person to identify and avoid 
conflicts of interest. Upon the request of an officer or 
employee designated by the Secretary, the person shall permit 
the officer or employee, at all reasonable times, to have 
access to, to copy, and to verify, the records.
  (2) Within 15 days after the receipt of a written request 
from the Secretary to [a person accredited under section 523] 
an accredited person described in paragraph (3) for copies of 
records described in paragraph (1), the person shall produce 
the copies of the records at the place designated by the 
Secretary.
  (3) For purposes of paragraphs (1) and (2), an accredited 
person described in this paragraph is a person who--
          (A) is accredited under subsection (g); or
          (B) is accredited under section 523.
  (g)(1) Not later than one year after the date of the 
enactment of this subsection, the Secretary shall, subject to 
the provisions of this subsection, accredit persons who are not 
Federal employees for the purpose of conducting the inspections 
required in section 510(h), or pursuant to section 510(i), for 
establishments that manufacture, prepare, propagate, compound, 
or process class II or class III devices. The owner or operator 
of such an establishment that is eligible under paragraph (6) 
may, from the list published under paragraph (4), select an 
accredited person to conduct such inspections
  (2) Not later than 180 days after the date of enactment of 
this subsection, the Secretary shall publish in the Federal 
Register criteria to accredit or deny accreditation to persons 
who request to perform the duties specified in paragraph (1). 
Thereafter, the Secretary shall inform those requesting 
accreditation, within 60 days after the receipt of such 
request, whether the request for accreditation is adequate for 
review, and the Secretary shall promptly act on the request for 
accreditation. Any resulting accreditation shall state that 
such person is accredited to conduct inspections at 
establishments identified in paragraph (1). The accreditation 
of such person shall specify the particular activities under 
this subsection for which such person is accredited. In the 
first year following the publication in the Federal Register of 
criteria to accredit or deny accreditation to persons who 
request to perform the duties specified in paragraph (1), the 
Secretary shall accredit no more than 15 persons who request to 
perform duties specified in paragraph (1).
  (3) An accredited person shall, at a minimum, meet the 
following requirements:
          (A) Such person shall be an independent organization 
        which is not owned or controlled by a manufacturer, 
        supplier, or vendor of articles regulated under this 
        Act and which has no organizational, material, or 
        financial affiliation (including a consultative 
        affiliation) with such a manufacturer, supplier, or 
        vendor.
          (B) Such person shall be a legally constituted entity 
        permitted to conduct the activities for which it seeks 
        accreditation.
          (C) Such person shall not engage in the design, 
        manufacture, promotion, or sale of articles regulated 
        under this Act.
          (D) The operations of such person shall be in 
        accordance with generally accepted professional and 
        ethical business practices, and such person shall agree 
        in writing that at a minimum the person will--
                  (i) certify that reported information 
                accurately reflects data reviewed;
                  (ii) limit work to that for which competence 
                and capacity are available;
                  (iii) treat information received, records, 
                reports, and recommendations as confidential 
                commercial or financial information or trade 
                secret information;
                  (iv) promptly respond and attempt to resolve 
                complaints regarding its activities for which 
                it is accredited; and
                  (v) protect against the use, in carrying out 
                paragraph (1), of any officer or employee of 
                the accredited person who has a financial 
                conflict of interest regarding any product 
                regulated under this Act, and annually make 
                available to the public disclosures of the 
                extent to which the accredited person, and the 
                officers and employees of the person, have 
                maintained compliance with requirements under 
                this clause relating to financial conflicts of 
                interest.
  (4) The Secretary shall publish on the Internet site of the 
Food and Drug Administration a list of accredited persons to 
conduct inspections under paragraph (1). Such list shall be 
periodically updated to ensure that the identity of each 
accredited person is known to the public. The updating of such 
list shall be no later than one month after the accreditation 
of a person under this subsection or the withdrawal of 
accreditation.
  (5)(A) To ensure that persons accredited under this 
subsection continue to meet the standards of accreditation, the 
Secretary shall audit the performance of such persons on a 
periodic basis through the review of inspection reports and 
inspections by persons designated by the Secretary to evaluate 
the compliance status of an establishment and the performance 
of accredited persons.
  (B) The Secretary may withdraw accreditation of any person 
accredited under paragraph (2), after providing notice and an 
opportunity for an informal hearing, when such person is 
substantially not in compliance with the standards of 
accreditation or poses a threat to public health or fails to 
act in a manner that is consistent with the purposes of this 
subsection. The Secretary may suspend the accreditation of such 
person during the pendency of the process under the preceding 
sentence.
  (6)(A) Subject to subparagraphs (B) through (C), a device 
establishment is eligible for inspections by persons accredited 
under paragraph (2) if--
          (i) the Secretary classified the results of the most 
        recent inspection of the establishment pursuant to 
        subsection (h) or (i) of section 510 as ``no action 
        indicated'' or ``voluntary action indicated''; and
          (ii) with respect to each inspection to be conducted 
        by an accredited person--
                  (I) the owner or operator of the 
                establishment submits to the Secretary a notice 
                requesting clearance to use such a person to 
                conduct the inspection, and the Secretary 
                provides such clearance; and
                  (II) such notice identifies the accredited 
                person whom the establishment has selected to 
                conduct the inspection, and the Secretary 
                agrees to the selected accredited person.
  (B)(i) The Secretary shall respond to a notice under 
subparagraph (A) from an establishment not later than 30 days 
after the Secretary receives the notice. Through such response, 
the Secretary shall (I) provide clearance under such 
subparagraph, and agree to the selection of an accredited 
person, or (II) make a request under clause (ii). If the 
Secretary fails to respond to the notice within such 30-day 
period, the establishment is deemed to have such clearance, and 
to have the agreement of the Secretary for such selection.
  (ii) The request referred to in clause (i)(II) is--
          (I) a request to the establishment involved to submit 
        to the Secretary compliance data in accordance with 
        clause (iii); or
          (II) a request to the establishment, or to the 
        accredited person identified in the notice under 
        subparagraph (A), for information concerning the 
        relationship between the establishment and such 
        accredited person.
The Secretary may make both such requests.
  (iii) The compliance data to be submitted by an establishment 
under clause (ii) are data describing whether the quality 
controls of the establishment have been sufficient for ensuring 
consistent compliance with current good manufacturing practice 
within the meaning of section 501(h), and data otherwise 
describing whether the establishment has consistently been in 
compliance with sections 501 and 502 and other applicable 
provisions of this Act. Such data shall include complete 
reports of inspections regarding good manufacturing practice or 
other quality control audits that, during the preceding two-
year period, were conducted at the establishment by persons 
other than the owner or operator of the establishment, together 
with all other data the Secretary deems necessary. Data under 
the preceding sentence shall demonstrate to the Secretary 
whether the establishment has facilitated consistent compliance 
by promptly correcting any compliance problems identified in 
such inspections.
  (iv) Not later than 60 days after receiving compliance data 
under clause (iii) from an establishment, the Secretary shall 
provide or deny clearance under subparagraph (A). The Secretary 
may not deny clearance unless the Secretary provides to the 
establishment detailed findings that the establishment has 
failed to demonstrate consistent compliance for purposes of 
clause (iii). If the Secretary fails to provide such findings 
to the establishment within such 60-day period, the 
establishment is deemed to have such clearance.
  (v)(I) A request to an accredited person under clause 
(ii)(II) may not seek any information that is not required to 
be maintained by such person in records under subsection 
(f)(1). Not later than 60 days after receiving the information 
sought by the request, the Secretary shall agree to, or reject, 
the selection of such person by the establishment involved. The 
Secretary may not reject the selection unless the Secretary 
provides to the establishment the reasons for such rejection. 
Reasons for the rejection may include that the establishment or 
the accredited person, as the case may be, has failed to fully 
respond to the request. If within such 60-day period the 
Secretary fails to agree to or reject the selection in 
accordance with this subclause, the Secretary is deemed to have 
agreed to the selection.
  (II) If the Secretary rejects the selection of an accredited 
person by an establishment, the establishment may make an 
additional selection of an accredited person by submitting to 
the Secretary a notice that identifies the additional 
selection. Clauses (i) and (ii), and subclause (I) of this 
clause, apply to the selection of an accredited person through 
a notice under the preceding sentence in the same manner and to 
the same extent as such provisions apply to a selection of an 
accredited person through a notice under subparagraph (A).
  (vi) In the case of an establishment that under clause (iv) 
is denied clearance under subparagraph (A), or whose selection 
of an accredited person is rejected under clause (v), the 
Secretary shall designate a person to review the findings of 
the Secretary under such clause if, during the 30-day period 
beginning on the date on which the establishment receives the 
findings, the establishment requests the review. The review 
shall commence not later than 30 days after the establishment 
requests the review, unless the Secretary and the establishment 
otherwise agree.
  (C)(i) In the case of a device establishment for which the 
Secretary classified the results of the most recent inspection 
of the establishment by a person accredited under paragraph (2) 
as ``official action indicated'', the establishment is eligible 
for further inspections by persons accredited under such 
paragraph if (I) the Secretary issues a written statement to 
the owner or operator of the establishment that the violations 
leading to such classification have been resolved, and (II) the 
Secretary, either upon the Secretary's own initiative or a 
petition of the owner or operator of the establishment, 
notifies the establishment that it has clearance to use an 
accredited person for the inspections. The Secretary shall 
respond to such petition within 30 days after the receipt of 
the petition.
  (ii) If the Secretary denies a petition under clause (i), the 
establishment involved may, after the expiration of one year 
after such denial, again petition the Secretary for a 
determination of eligibility for inspection by persons 
accredited by the Secretary under paragraph (2). If the 
Secretary denies such petition, the Secretary shall provide the 
establishment with a detailed reason for such denial within 60 
days after the denial. If, as of the expiration of 48 months 
after the receipt of the first petition, the establishment has 
not been inspected by the Secretary in accordance with section 
510(h), or has not during such period been inspected pursuant 
to section 510(i), as applicable, the establishment is eligible 
for further inspections by accredited persons.
  (7)(A) Persons accredited under paragraph (2) to conduct 
inspections shall record in writing their inspection 
observations and shall present the observations to the device 
establishment's designated representative and discuss each 
observation. Additionally, such accredited person shall prepare 
an inspection report (including for inspections classified as 
``no action indicated'') in a form and manner consistent with 
such reports prepared by employees and officials designated by 
the Secretary to conduct inspections.
  (B) At a minimum, an inspection report under subparagraph (A) 
shall identify the persons responsible for good manufacturing 
practice compliance at the inspected establishment involved, 
the dates of the inspection, the scope of the inspection, and 
shall discuss in detail each observation identified by the 
accredited person, identify other matters that relate to or may 
influence compliance with this Act, and discuss any 
recommendations during the inspection or at the inspection's 
closing meeting.
  (C) An inspection report under subparagraph (A) shall be sent 
to the Secretary and the designated representative of the 
inspected establishment involved at the same time, but under no 
circumstances later than three weeks after the last day of the 
inspection. The report to the Secretary shall be accompanied by 
all written inspection observations previously provided to the 
representative of the establishment.
  (D) Any statements or representations made by employees or 
agents of a device establishment to persons accredited under 
paragraph (2) to conduct inspections shall be subject to 
section 1001 of title 18, United States Code.
  (E) If at any time during an inspection by an accredited 
person the accredited person discovers a condition that could 
cause or contribute to an unreasonable risk to the public 
health, the accredited person shall immediately notify the 
Secretary of the identification of the facility subject to 
inspection and the conditions of concern.
  (8) Compensation for an accredited person shall be determined 
by agreement between the accredited person and the person who 
engages the services of the accredited person, and shall be 
paid by the person who engages such services.
  (9) Nothing in this subsection affects the authority of the 
Secretary to inspect establishments pursuant to this Act.
  (10)(A) For fiscal year 2005 and subsequent fiscal years, no 
device establishment may be inspected during the fiscal year 
involved by a person accredited under paragraph (2) if--
          (i) of the amounts appropriated for salaries and 
        expenses of the Food and Drug Administration for the 
        preceding fiscal year (referred to in this subparagraph 
        as the ``first prior fiscal year''), the amount 
        obligated by the Secretary for inspections of device 
        establishments by the Secretary was less than the 
        adjusted base amount applicable to such first prior 
        fiscal year; and
          (ii) of the amounts appropriated for salaries and 
        expenses of the Food and Drug Administration for the 
        fiscal year preceding the first prior fiscal year 
        (referred to in this subparagraph as the ``second prior 
        fiscal year''), the amount obligated by the Secretary 
        for inspections of device establishments by the 
        Secretary was less than the adjusted base amount 
        applicable to such second prior fiscal year.
  (B)(i) Subject to clause (ii), the Comptroller General of the 
United States shall determine the amount that was obligated by 
the Secretary for fiscal year 2002 for compliance activities of 
the Food and Drug Administration with respect to devices 
(referred to in this subparagraph as the ``compliance 
budget''), and of such amount, the amount that was obligated 
for inspections by the Secretary of device establishments 
(referred to in this subparagraph as the ``inspection 
budget'').
  (ii) For purposes of determinations under clause (i), the 
Comptroller General shall not include in the compliance budget 
or the inspection budget any amounts obligated for inspections 
of device establishments conducted as part of the process of 
reviewing applications under section 515.
  (iii) Not later than March 31, 2003, the Comptroller General 
shall complete the determinations required in this subparagraph 
and submit to the Secretary and the Congress a reporting 
describing the findings made through such determinations.
  (C) For purposes of this paragraph:
          (i) The term ``base amount'' means the inspection 
        budget determined under subparagraph (B) for fiscal 
        year 2002.
          (ii) The term ``adjusted base amount'', in the case 
        of applicability to fiscal year 2003, means an amount 
        equal to the base amount increased by 5 percent.
          (iii) The term ``adjusted base amount'', with respect 
        to applicability to fiscal year 2004 or any subsequent 
        fiscal year, means the adjusted based amount applicable 
        to the preceding year increased by 5 percent.
  (11) The authority provided by this subsection terminates on 
October 1, 2012.
  (12) No later than four years after the enactment of this 
subsection the Comptroller General shall report to the 
Committee on Energy and Commerce of the House of 
Representatives and the Committee on Health, Education, Labor 
and Pensions of the Senate--
          (A) the number of inspections conducted by accredited 
        persons and the number of inspections pursuant to 
        subsections (h) and (i) of section 510 conducted by 
        Federal employees;
          (B) the number of persons who sought accreditation 
        under this subsection, as well as the number of persons 
        who were accredited under this subsection;
          (C) the reasons why persons who sought accreditation, 
        but were denied accreditation, were denied;
          (D) the number of audits conducted by the Secretary 
        of accredited persons, the quality of inspections 
        conducted by accredited persons, whether accredited 
        persons are meeting their obligations under this Act, 
        and whether the number of audits conducted is 
        sufficient to permit these assessments;
          (E) whether this subsection is achieving the goal of 
        ensuring more information about establishment 
        compliance is being presented to the Secretary, and 
        whether that information is of a quality consistent 
        with information obtained by the Secretary pursuant to 
        subsection (h) or (i) of section 510;
          (F) whether this subsection is advancing efforts to 
        allow device establishments to rely upon third-party 
        inspections for purposes of compliance with the laws of 
        foreign governments; and
          (G) whether the Congress should continue, modify, or 
        terminate the program under this subsection.
  (13) The Secretary shall include in the annual report 
required under section 903(g) the names of all accredited 
persons and the particular activities under this subsection for 
which each such person is accredited and the name of each 
accredited person whose accreditation has been withdrawn during 
the year.

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                          Subchapter C--Fees

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                    PART 3--FEES RELATING TO DEVICES

SEC. 737. DEFINITIONS.

  For purposes of this subchapter:
          (1) The term ``premarket application'' means--
                  (A) an application for approval of a device 
                submitted under section 515(c) or section 351 
                of the Public Health Service Act; or
                  (B) a product development protocol described 
                in section 515(f).
        Such term does not include a supplement, a premarket 
        report, or a premarket notification submission.
          (2) The term ``premarket report'' means a report 
        submitted under section 510(o)(3).
          (3) The term ``premarket notification submission'' 
        means a report submitted under section 510(k).
          (4)(A) The term ``supplement'', with respect to a 
        panel-track supplement, a 180-day supplement, a real-
        time supplement, or an efficacy supplement, means a 
        request to the Secretary to approve a change in a 
        device for which--
                  (i) an application has been approved under 
                section 515(d) or under section 351 of the 
                Public Health Service Act; or
                  (ii) a notice of completion has become 
                effective under section 515(f).
          (B) The term ``panel-track supplement'' means a 
        supplement to an approved premarket application under 
        section 515 that requests a significant change in 
        design or performance of the device, or a new 
        indication for use of the device, and for which 
        clinical data are generally necessary to provide a 
        reasonable assurance of safety and effectiveness.
          (C) The term ``180-day supplement'' means a 
        supplement to an approved premarket application under 
        section 515 that is not a panel-track supplement and 
        requests a significant change in components, materials, 
        design, specification, software, color additives, or 
        labeling.
          (D) The term ``real-time supplement'' means a 
        supplement to an approved premarket application under 
        section 515 that requests a minor change to the device, 
        such as a minor change to the design of the device, 
        software, manufacturing, sterilization, or labeling, 
        and for which the applicant has requested and the 
        agency has granted a meeting or similar forum to 
        jointly review and determine the status of the 
        supplement.
          (E) The term ``efficacy supplement'' means a 
        supplement to an approved premarket application under 
        section 351 of the Public Health Service Act that 
        requires substantive clinical data.
          (5) The term ``process for the review of device 
        applications'' means the following activities of the 
        Secretary with respect to the review of premarket 
        applications, premarket reports, supplements, and 
        premarket notification submissions:
                  (A) The activities necessary for the review 
                of premarket applications, premarket reports, 
                supplements, and premarket notification 
                submissions.
                  (B) The issuance of action letters that allow 
                the marketing of devices or which set forth in 
                detail the specific deficiencies in such 
                applications, reports, supplements, or 
                submissions and, where appropriate, the actions 
                necessary to place them in condition for 
                approval.
                  (C) The inspection of manufacturing 
                establishments and other facilities undertaken 
                as part of the Secretary's review of pending 
                premarket applications, premarket reports, and 
                supplements.
                  (D) Monitoring of research conducted in 
                connection with the review of such 
                applications, reports, supplements, and 
                submissions.
                  (E) Review of device applications subject to 
                section 351 of the Public Health Service Act 
                for an investigational new drug application 
                under section 505(i) or for an investigational 
                device exemption under section 520(g) and 
                activities conducted in anticipation of the 
                submission of such applications under section 
                505(i) or 520(g).
                  (F) The development of guidance, policy 
                documents, or regulations to improve the 
                process for the review of premarket 
                applications, premarket reports, supplements, 
                and premarket notification submissions.
                  (G) The development of voluntary test 
                methods, consensus standards, or mandatory 
                performance standards under section 514 in 
                connection with the review of such 
                applications, reports, supplements, or 
                submissions and related activities.
                  (H) The provision of technical assistance to 
                device manufacturers in connection with the 
                submission of such applications, reports, 
                supplements, or submissions.
                  (I) Any activity undertaken under section 513 
                or 515(i) in connection with the initial 
                classification or reclassification of a device 
                or under section 515(b) in connection with any 
                requirement for approval of a device.
                  (J) Evaluation of postmarket studies required 
                as a condition of an approval of a premarket 
                application under section 515 or section 351 of 
                the Public Health Service Act.
                  (K) Compiling, developing, and reviewing 
                information on relevant devices to identify 
                safety and effectiveness issues for devices 
                subject to premarket applications, premarket 
                reports, supplements, or premarket notification 
                submissions.
          (6) The term ``costs of resources allocated for the 
        process for the review of device applications'' means 
        the expenses incurred in connection with the process 
        for the review of device applications for--
                  (A) officers and employees of the Food and 
                Drug Administration, contractors of the Food 
                and Drug Administration, advisory committees, 
                and costs related to such officers, employees, 
                and committees and to contracts with such 
                contractors;
                  (B) management of information, and the 
                acquisition, maintenance, and repair of 
                computer resources;
                  (C) leasing, maintenance, renovation, and 
                repair of facilities and acquisition, 
                maintenance, and repair of fixtures, furniture, 
                scientific equipment, and other necessary 
                materials and supplies; and
                  (D) collecting fees and accounting for 
                resources allocated for the review of premarket 
                applications, premarket reports, supplements, 
                and submissions.
          (7) The term ``adjustment factor'' applicable to a 
        fiscal year is the Consumer Price Index for all urban 
        consumers (all items; United States city average) for 
        April of the preceding fiscal year divided by such 
        Index for April 2002.
          (8) The term ``affiliate'' means a business entity 
        that has a relationship with a second business entity 
        if, directly or indirectly--
                  (A) one business entity controls, or has the 
                power to control, the other business entity; or
                  (B) a third party controls, or has power to 
                control, both of the business entities.

SEC. 738. AUTHORITY TO ASSESS AND USE DEVICE FEES.

  (a) Types of Fees.--Beginning on the date of the enactment of 
the Medical Device User Fee and Modernization Act of 2002, the 
Secretary shall assess and collect fees in accordance with this 
section as follows:
          (1) Premarket application, premarket report, 
        supplement, and submission fee.--
                  (A) In general.--Except as provided in 
                subparagraph (B) and subsection (d), each 
                person who submits any of the following, on or 
                after October 1, 2002, shall be subject to a 
                fee established under subsection (c)(5) for the 
                fiscal year involved in accordance with the 
                following:
                          (i) A premarket application.
                          (ii) For a premarket report, a fee 
                        equal to the fee that applies under 
                        clause (i).
                          (iii) For a panel track supplement, a 
                        fee equal to the fee that applies under 
                        clause (i).
                          (iv) For a 180-day supplement, a fee 
                        equal to 21.5 percent of the fee that 
                        applies under clause (i), subject to 
                        any adjustment under subsection (c)(3).
                          (v) For a real-time supplement, a fee 
                        equal to 7.2 percent of the fee that 
                        applies under clause (i).
                          (vi) For an efficacy supplement, a 
                        fee equal to the fee that applies under 
                        clause (i).
                          (vii) For a premarket notification 
                        submission, a fee equal to 1.75 percent 
                        of the fee that applies under clause 
                        (i), subject to any adjustment under 
                        subsection (c)(3).
                  (B) Exceptions.--
                          (i) Humanitarian device exemption.--A 
                        device for which a humanitarian device 
                        exemption has been granted is not 
                        subject to the fees established in 
                        subparagraph (A).
                          (ii) Further manufacturing use.--No 
                        fee shall be required under 
                        subparagraph (A) for the submission of 
                        a premarket application under section 
                        351 of the Public Health Service Act 
                        for a product licensed for further 
                        manufacturing use only.
                          (iii) State or federal government 
                        sponsors.--No fee shall be required 
                        under subparagraph (A) for a premarket 
                        application, premarket report, 
                        supplement, or premarket notification 
                        submission submitted by a State or 
                        Federal Government entity unless the 
                        device involved is to be distributed 
                        commercially.
                          (iv) Premarket notifications by third 
                        parties.--No fee shall be required 
                        under subparagraph (A) for a premarket 
                        notification submission reviewed by an 
                        accredited person pursuant to section 
                        523.
                          (v) Pediatric conditions of use.--
                                  (I) In general.--No fee shall 
                                be required under subparagraph 
                                (A) for a premarket application 
                                or premarket notification 
                                submission if the proposed 
                                conditions of use for the 
                                device involved are solely for 
                                a pediatric population. No fee 
                                shall be required under such 
                                subparagraph for a supplement 
                                if the sole purpose of the 
                                supplement is to propose 
                                conditions of use for a 
                                pediatric population.
                                  (II) Subsequent proposal of 
                                adult conditions of use.--In 
                                the case of a person who 
                                submits a premarket application 
                                for which, under subclause (I), 
                                a fee under subparagraph (A) is 
                                not required, any supplement to 
                                such application that proposes 
                                conditions of use for any adult 
                                population is subject to the 
                                fee that applies under such 
                                subparagraph for a premarket 
                                application.
                  (C) Payment.--The fee required by 
                subparagraph (A) shall be due upon submission 
                of the premarket application, premarket report, 
                supplement, or premarket notification 
                submission except that invoices for 
                applications submitted between October 1, 2002, 
                and the date of the enactment of the Medical 
                Device User Fee and Modernization Act of 2002 
                shall be payable on October 30, 2002. 
                Applicants submitting portions of applications 
                pursuant to section 515(c)(3) shall pay such 
                fees upon submission of the first portion of 
                such applications. The fees credited to fiscal 
                year 2003 under this section shall include all 
                fees payable from October 1, 2002, through 
                September 30, 2003.
                  (D) Refunds.--
                          (i) Application refused for filing.--
                        The Secretary shall refund 75 percent 
                        of the fee paid under subparagraph (A) 
                        for any application or supplement that 
                        is refused for filing.
                          (ii) Application withdrawn before 
                        filing.--The Secretary shall refund 75 
                        percent of the fee paid under 
                        subparagraph (A) for any application or 
                        supplement that is withdrawn prior to 
                        the filing decision of the Secretary.
                          (iii) Application withdrawn before 
                        first action.--After receipt of a 
                        request for a refund of the fee paid 
                        under subparagraph (A) for a premarket 
                        application, premarket report, or 
                        supplement that is withdrawn after 
                        filing but before a first action, the 
                        Secretary may return some or all of the 
                        fee. The amount of refund, if any, 
                        shall be based on the level of effort 
                        already expended on the review of such 
                        application, report, or supplement. The 
                        Secretary shall have sole discretion to 
                        refund a fee or portion of the fee 
                        under this subparagraph. A 
                        determination by the Secretary 
                        concerning a refund under this 
                        paragraph shall not be reviewable.
  (b) Fee Revenue Amounts.--Except as provided in subsections 
(c), (d), (f), and (g), the fees under subsection (a) shall be 
established to generate the following revenue amounts: 
$25,125,000 in fiscal year 2003; $27,255,000 in fiscal year 
2004; $29,785,000 in fiscal year 2005; $32,615,000 in fiscal 
year 2006, and $35,000,000 in fiscal year 2007. If legislation 
is enacted after the date of the enactment of this Act 
requiring the Secretary to fund additional costs of the 
retirement of Federal personnel, fee revenue amounts under this 
subsection shall be increased in each year by the amount 
necessary to fully fund the portion of such additional costs 
that are attributable to the process for the review of device 
applications.
  (c) Adjustments.--
          (1) Inflation adjustment.--The revenues established 
        in subsection (b) shall be adjusted by the Secretary by 
        notice, published in the Federal Register, for a fiscal 
        year to reflect the greater of--
                  (A) the total percentage change that occurred 
                in the Consumer Price Index for all urban 
                consumers (all items; U.S. city average) for 
                the 12 month period ending June 30 preceding 
                the fiscal year for which fees are being 
                established, or
                  (B) the total percentage change for the 
                previous fiscal year in basic pay under the 
                General Schedule in accordance with section 
                5332 of title 5, United States Code, as 
                adjusted by any locality-based comparability 
                payment pursuant to section 5304 of such title 
                for Federal employees stationed in the District 
                of Columbia.
        The adjustment made each fiscal year by this subsection 
        shall be added on a compounded basis to the sum of all 
        adjustments made each fiscal year after fiscal year 
        2003 under this subsection.
          (2) Workload adjustment.--After the fee revenues 
        established in subsection (b) are adjusted for a fiscal 
        year for inflation in accordance with paragraph (1), 
        the fee revenues shall, beginning with fiscal year 
        2004, be adjusted further each fiscal year to reflect 
        changes in the workload of the Secretary for the 
        process for the review of device applications. With 
        respect to such adjustment:
                  (A) The adjustment shall be determined by the 
                Secretary based on a weighted average of the 
                change in the total number of premarket 
                applications, investigational new device 
                applications, premarket reports, supplements, 
                and premarket notification submissions 
                submitted to the Secretary. The Secretary shall 
                publish in the Federal Register the fee 
                revenues and fees resulting from the adjustment 
                and the supporting methodologies.
                  (B) Under no circumstances shall the 
                adjustment result in fee revenues for a fiscal 
                year that are less than the fee revenues for 
                the fiscal year established in subsection (b), 
                as adjusted for inflation under paragraph (1).
          (3) Compensating adjustment.--After the fee revenues 
        established in subsection (b) are adjusted for a fiscal 
        year for inflation in accordance with paragraph (1), 
        and for workload in accordance with paragraph (2), the 
        fee revenues shall, beginning with fiscal year 2004, be 
        adjusted further each fiscal year, if necessary, to 
        reflect the cumulative amount by which collections for 
        previous fiscal years, beginning with fiscal year 2003, 
        fell below the cumulative revenue amounts for such 
        fiscal years specified in subsection (b), adjusted for 
        such fiscal years for inflation in accordance with 
        paragraph (1), and for workload in accordance with 
        paragraph (2). Only fees for 180 day supplements and 
        premarket notification submissions shall be increased 
        to generate compensating adjustment revenues.
          (4) Final year adjustment.--For fiscal year 2007, the 
        Secretary may, in addition to adjustments under 
        paragraphs (1) and (2), further increase the fees and 
        fee revenues established in subsection (b) if such 
        adjustment is necessary to provide for not more than 
        three months of operating reserves of carryover user 
        fees for the process for the review of device 
        applications for the first three months of fiscal year 
        2008. If such an adjustment is necessary, the rationale 
        for the amount of the increase shall be contained in 
        the annual notice establishing fee revenues and fees 
        for fiscal year 2007. If the Secretary has carryover 
        user fee balances for such process in excess of three 
        months of such operating reserves, the adjustment under 
        this paragraph shall not be made.
          (5) Annual fee setting.--The Secretary shall, 60 days 
        before the start of each fiscal year after September 
        30, 2002, establish, for the next fiscal year, and 
        publish in the Federal Register, fees under subsection 
        (a), based on the revenue amounts established under 
        subsection (b) and the adjustment provided under this 
        subsection, except that the fees established for fiscal 
        year 2003 shall be based on a premarket application fee 
        of $139,000.
          (6) Limit.--The total amount of fees charged, as 
        adjusted under this subsection, for a fiscal year may 
        not exceed the total costs for such fiscal year for the 
        resources allocated for the process for the review of 
        device applications.
  (d) Small Business Fee Waiver and Fee Reduction.--
          (1) In general.--The Secretary shall grant a waiver 
        of the fee required under subsection (a) for one 
        premarket application, or one premarket report, where 
        the Secretary finds that the applicant involved is a 
        small business submitting its first premarket 
        application to the Secretary, or its first premarket 
        report, respectively, for review. In addition, for 
        subsequent premarket applications, premarket reports, 
        and supplements where the Secretary finds that the 
        applicant involved is a small business, the fees 
        specified in clauses (i) through (vi) of subsection 
        (a)(1)(A) may be paid at a reduced rate in accordance 
        with paragraph (2)(C).
          (2) Rules relating to small businesses.--
                  (A) Definition.--
                          (i) For purposes of this subsection, 
                        the term ``small business'' means an 
                        entity that reported $10,000,000 or 
                        less of gross receipts or sales in its 
                        most recent Federal income tax return 
                        for a taxable year, including such 
                        returns of all of its affiliates, 
                        partners, or parent firms.
                          (ii) The Secretary may adjust the 
                        $10,000,000 threshold established in 
                        clause (i) if the Secretary has 
                        evidence from actual experience that 
                        this threshold results in a reduction 
                        in revenues from premarket 
                        applications, premarket reports, and 
                        supplements that is 13 percent or more 
                        than would occur without small business 
                        exemptions and lower fee rates. To 
                        adjust this threshold, the Secretary 
                        shall publish a notice in the Federal 
                        Register setting out the rationale for 
                        the adjustment, and the new threshold.
                  (B) Evidence of qualification.--An applicant 
                shall pay the higher fees established by the 
                Secretary each year unless the applicant 
                submits evidence that it qualifies for a waiver 
                of the fee or the lower fee rate. The applicant 
                shall support its claim that it meets the 
                definition under subparagraph (A) by submission 
                of a copy of its most recent Federal income tax 
                return for a taxable year, which shows an 
                amount of gross sales or receipts that is less 
                than the maximum established in subparagraph 
                (A). The applicant shall certify that the 
                information provided is a true and accurate 
                copy of the applicant's actual tax forms as 
                submitted to the Internal Revenue Service.
                  (C) Reduced fees.--Where the Secretary finds 
                that the applicant involved meets the 
                definition under subparagraph (A), the fees 
                established under subsection (c)(5) may be paid 
                at reduced rates as follows:
                          (i) 38 percent of the fee established 
                        under subsection (c)(5) for a premarket 
                        application, a premarket report, a 
                        panel-track supplement, or an efficacy 
                        supplement.
                          (ii) 44 percent of the fee 
                        established under subsection (c)(5) for 
                        a 180-day supplement to a medical 
                        device application.
                          (iii) 25 percent of the fee 
                        established under subsection (c)(5) for 
                        a real-time supplement to a premarket 
                        application.
                This subsection may not be construed as 
                authorizing any reduction in the fee 
                established under subsection (c)(5) for a 
                premarket notification submission.
                  (D) Request for fee waiver or reduction.--An 
                applicant seeking a fee waiver or reduction 
                under this subsection shall submit supporting 
                information to the Secretary at least 60 days 
                before the fee is required pursuant to 
                subsection (a).
  (e) Effect of Failure to Pay Fees.--A premarket application, 
premarket report, supplement, or premarket notification 
submission submitted by a person subject to fees under 
subsection (a) shall be considered incomplete and shall not be 
accepted for filing by the Secretary until all fees owed by 
such person have been paid.
  (f) Conditions.--
          (1) Performance goals through fiscal year 2005; 
        termination of program after fiscal year 2005.--With 
        respect to the amount that, under the salaries and 
        expenses account of the Food and Drug Administration, 
        is appropriated for a fiscal year for devices and 
        radiological products:
                  (A)(i) For each of the fiscal years 2003 and 
                2004, the Secretary is expected to meet all of 
                the goals identified for the fiscal year 
                involved in any letter referred to in section 
                101(3) of the Medical Device User Fee and 
                Modernization Act of 2002 (referred to in this 
                paragraph as ``performance goals'') if the 
                amount so appropriated for such fiscal year, 
                excluding the amount of fees appropriated for 
                such fiscal year, is equal to or greater than 
                $205,720,000 multiplied by the adjustment 
                factor applicable to the fiscal year.
                  (ii) For each of the fiscal years 2003 and 
                2004, if the amount so appropriated for the 
                fiscal year involved, excluding the amount of 
                fees appropriated for such fiscal year, is less 
                than the amount that applies under clause (i) 
                for such fiscal year, the following applies:
                          (I) The Secretary is expected to meet 
                        such goals to the extent practicable, 
                        taking into account the amounts that 
                        are available to the Secretary for such 
                        purpose, whether from fees under 
                        subsection (a) or otherwise.
                          (II) The Comptroller General of the 
                        United States shall submit to the 
                        Congress a report describing whether 
                        and to what extent the Secretary is 
                        meeting the performance goals 
                        identified for such fiscal year, and 
                        whether the Secretary will be able to 
                        meet all performance goals identified 
                        for fiscal year 2005. A report under 
                        the preceding sentence shall be 
                        submitted to the Congress not later 
                        than July 1 of the fiscal year with 
                        which the report is concerned.
                  (B)(i) For fiscal year 2005, the Secretary is 
                expected to meet all of the goals identified 
                for the fiscal year if the total of the amounts 
                so appropriated for fiscal years 2003 through 
                2005, excluding the amount of fees appropriated 
                for such fiscal years, is equal to or greater 
                than the sum of--
                          (I) $205,720,000 multiplied by the 
                        adjustment factor applicable to fiscal 
                        year 2003;
                          (II) $205,720,000 multiplied by the 
                        adjustment factor applicable to fiscal 
                        year 2004; and
                          (III) $205,720,000 multiplied by the 
                        adjustment factor applicable to fiscal 
                        year 2005.
                  (ii) For fiscal year 2005, if the total of 
                the amounts so appropriated for fiscal years 
                2003 through 2005, excluding the amount of fees 
                appropriated for such fiscal years, is less 
                than the sum that applies under clause (i) for 
                fiscal year 2005, the following applies:
                          (I) The Secretary is expected to meet 
                        such goals to the extent practicable, 
                        taking into account the amounts that 
                        are available to the Secretary for such 
                        purpose, whether from fees under 
                        subsection (a) or otherwise.
                          (II) The Comptroller General of the 
                        United States shall submit to the 
                        Congress a report describing whether 
                        and to what extent the Secretary is 
                        meeting the performance goals 
                        identified for such fiscal year, and 
                        whether the Secretary will be able to 
                        meet all performance goals identified 
                        for fiscal year 2006. The report under 
                        the preceding sentence shall be 
                        submitted to the Congress not later 
                        than July 1, 2005.
                  (C) For fiscal year 2006, fees may not be 
                assessed under subsection (a) for the fiscal 
                year, and the Secretary is not expected to meet 
                any performance goals identified for the fiscal 
                year, if the total of the amounts so 
                appropriated for fiscal years 2003 through 
                2006, excluding the amount of fees appropriated 
                for such fiscal years, is less than the sum 
                of--
                          (i) $205,720,000 multiplied by the 
                        adjustment factor applicable to fiscal 
                        year 2006; and
                          (ii) an amount equal to the sum that 
                        applies for purposes of subparagraph 
                        (B)(i).
                  (D) For fiscal year 2007, fees may not be 
                assessed under subsection (a) for the fiscal 
                year, and the Secretary is not expected to meet 
                any performance goals identified for the fiscal 
                year, if--
                          (i) the amount so appropriated for 
                        the fiscal year, excluding the amount 
                        of fees appropriated for the fiscal 
                        year, is less than $205,720,000 
                        multiplied by the adjustment factor 
                        applicable to fiscal year 2007; or
                          (ii) pursuant to subparagraph (C), 
                        fees were not assessed under subsection 
                        (a) for fiscal year 2006.
          (2) Authority.--If the Secretary does not assess fees 
        under subsection (a) during any portion of a fiscal 
        year because of subparagraph (C) or (D) of paragraph 
        (1) and if at a later date in such fiscal year the 
        Secretary may assess such fees, the Secretary may 
        assess and collect such fees, without any modification 
        in the rate for premarket applications, supplements, 
        premarket reports, and premarket notification 
        submissions, and at any time in such fiscal year, 
        notwithstanding the provisions of subsection (a) 
        relating to the date fees are to be paid.
  (g) Crediting and Availability of Fees.--
          (1) In general.--Fees authorized under subsection (a) 
        shall be collected and available for obligation only to 
        the extent and in the amount provided in advance in 
        appropriation Acts. Such fees are authorized to be 
        appropriated to remain available until expended. Such 
        sums as may be necessary may be transferred from the 
        Food and Drug Administration salaries and expenses 
        appropriation account without fiscal year limitation to 
        such appropriation account for salaries and expenses 
        with such fiscal year limitation. The sums transferred 
        shall be available solely for the process for the 
        review of device applications.
          (2) Collections and appropriation acts.--
                  (A) In general.--The fees authorized by this 
                section--
                          (i) shall be retained in each fiscal 
                        year in an amount not to exceed the 
                        amount specified in appropriation Acts, 
                        or otherwise made available for 
                        obligation, for such fiscal year, and
                          (ii) shall only be collected and 
                        available to defray increases in the 
                        costs of the resources allocated for 
                        the process for the review of device 
                        applications (including increases in 
                        such costs for an additional number of 
                        full-time equivalent positions in the 
                        Department of Health and Human Services 
                        to be engaged in such process) over 
                        such costs, excluding costs paid from 
                        fees collected under this section, for 
                        fiscal year 2002 multiplied by the 
                        adjustment factor.
                  (B) Compliance.--The Secretary shall be 
                considered to have met the requirements of 
                subparagraph (A)(ii) in any fiscal year if the 
                costs funded by appropriations and allocated 
                for the process for the review of device 
                applications--
                          (i) are not more than 3 percent below 
                        the level specified in subparagraph 
                        (A)(ii); or
                          (ii)(I) are more than 3 percent below 
                        the level specified in subparagraph 
                        (A)(ii), and fees assessed for a 
                        subsequent fiscal year are decreased by 
                        the amount in excess of 3 percent by 
                        which such costs fell below the level 
                        specified in such subparagraph; and
                          (II) such costs are not more than 5 
                        percent below the level specified in 
                        such subparagraph.
          (3) Authorization of appropriations.--There are 
        authorized to be appropriated for fees under this 
        section--
                  (A) $25,125,000 for fiscal year 2003;
                  (B) $27,255,000 for fiscal year 2004;
                  (C) $29,785,000 for fiscal year 2005;
                  (D) $32,615,000 for fiscal year 2006; and
                  (E) $35,000,000 for fiscal year 2007,
        as adjusted to reflect adjustments in the total fee 
        revenues made under this section and changes in the 
        total amounts collected by application fees.
          (4) Offset.--Any amount of fees collected for a 
        fiscal year under this section that exceeds the amount 
        of fees specified in appropriation Acts for such fiscal 
        year shall be credited to the appropriation account of 
        the Food and Drug Administration as provided in 
        paragraph (1), and shall be subtracted from the amount 
        of fees that would otherwise be authorized to be 
        collected under this section pursuant to appropriation 
        Acts for a subsequent fiscal year.
  (h) Collection of Unpaid Fees.--In any case where the 
Secretary does not receive payment of a fee assessed under 
subsection (a) within 30 days after it is due, such fee shall 
be treated as a claim of the United States Government subject 
to subchapter II of chapter 37 of title 31, United States Code.
  (i) Written Requests for Refunds.--To qualify for 
consideration for a refund under subsection (a)(1)(D), a person 
shall submit to the Secretary a written request for such refund 
not later than 180 days after such fee is due.
  (j) Construction.--This section may not be construed to 
require that the number of full-time equivalent positions in 
the Department of Health and Human Services, for officers, 
employees, and advisory committees not engaged in the process 
of the review of device applications, be reduced to offset the 
number of officers, employees, and advisory committees so 
engaged.

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             SECTION 498C OF THE PUBLIC HEALTH SERVICE ACT


SEC. 498C. BREAST IMPLANT RESEARCH.

  (a) In General.--The Director of NIH shall conduct or support 
prospective or retrospective research to examine the long-term 
health implications of both saline and silicone breast 
implants. If scientifically appropriate, such research studies 
may include the following:
          (1) A multidisciplinary study of women who have 
        received silicone and saline implants and have had an 
        implant for a sufficient amount of time to allow for 
        appropriate comparison as to the long-term health 
        consequences.
          (2) A comparison of women receiving implants for 
        reconstruction after mastectomy to breast cancer 
        patients who have not had reconstruction, including 
        subsets of women with saline implants and women with 
        silicone implants.
  (b) Definition.--For purposes of this section, the term 
``breast implant'' means a breast prosthesis that is implanted 
to augment or reconstruct the female breast.

                                  
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