[Federal Register Volume 68, Number 148 (Friday, August 1, 2003)]
[Notices]
[Pages 45246-45249]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19655]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration


Establishment of Medical Device User Fee Rates for Fiscal Year 
2004

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the fee 
rates and payment procedures for medical device user fees for fiscal 
year (FY) 2004. The Federal Food, Drug, and Cosmetic Act (the act), as 
amended by the Medical Device User Fee and Modernization Act of 2002 
(MDUFMA) authorizes FDA to collect user fees for certain medical device 
applications. The FY 2004 fee rates are provided in this notice. For 
all applications submitted on or after October 1, 2003, and through 
September 30, 2004, fees must be paid at the FY 2004 rates at the time 
that applications are submitted to FDA. It is the date that the 
application is received by FDA, not the date that the check is 
received, that governs the fee that must be paid. This notice provides 
details on how fees for FY 2004 were determined and payment procedures 
for those submitting medical device applications subject to user fees.

FOR FURTHER INFORMATION CONTACT:
     For further information on MDUFMA: Visit the FDA Web site at 
http://www.fda.gov/oc/mdufma.
    For questions relating to this notice: Frank Claunts, Office of 
Management and Systems (HFA-20), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-827-4427.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 738 of the act (21 U.S.C. 379j), establishes fees for 
different kinds of medical device applications. Fees are assessed on 
certain types of medical device applications and supplements. When 
certain conditions are met, FDA may waive or reduce fees (21 U.S.C. 
379j(d) and (e)).
    For FY 2003 through FY 2007, MDUFMA (Public Law 107-250) 
establishes revenue amounts for the aggregate of all application fee 
revenues. Revenue amounts established for years after FY 2003 are 
subject to adjustment for inflation, workload, and compensation for 
revenue shortfalls from previous years. Fees for applications are to be 
established each year by FDA so that revenues will approximate the 
levels established in the statute, after those amounts have been first 
adjusted for inflation, workload, and, if required, revenue shortfalls 
from previous years.
    This notice establishes fee rates for FY 2004. These fees are 
effective on October 1, 2003, and will remain in effect through 
September 30, 2004.

II. Revenue Amount for FY 2004, and Adjustments for Inflation, 
Workload, and Compensation for Revenue Shortfalls from Previous Fiscal 
Years

A. Statutory Fee Revenue Amount

    MDUFMA specifies that the fee revenue amount for FY 2004 is 
$27,255,000, before any adjustments are made (21 U.S.C. 379j(b)).

B. Inflation Adjustment to Fee Revenue Amount

    MDUFMA provides that fee revenue amounts for each FY after 2003 
shall be adjusted for inflation. The adjustment must reflect the 
greater of: (1) The total percentage change that occurred in the 
Consumer Price Index (CPI) (all items; U.S. city average) during the 
12-month period ending June 30 preceding the FY for which fees are 
being set, or (2) the total percentage pay change for the previous FY 
for Federal employees stationed in the Washington, DC metropolitan 
area. MDUFMA provides for this annual adjustment to be cumulative and 
compounded annually after 2003 (see 21 U.S.C. 379j(c)(1)).
    The inflation adjustment for FY 2004 is 4.27 percent. This is the 
greater of the CPI increase during the 12-month period ending June 30 
preceding the FY for which fees are being set (June 30, 2003--which was 
2.11 percent) or the increase in pay for the previous FY (2003) for 
Federal employees stationed in the Washington, DC metropolitan area 
(4.27 percent). No compounding is applied to this amount because there 
was no inflation increase applied in FY 2003.
    The inflation-adjusted revenue amount for FY 2004 is the statutory 
fee

[[Page 45247]]

amount ($27,255,000) increased by 4.27 percent, the inflation adjuster 
for FY 2004. The FY 2004 inflation-adjusted revenue amount is 
$28,418,789.

C. Workload Adjustment to Inflation Adjusted Fee Revenue Amount

    For each FY beginning in FY 2004, MDUFMA provides that fee revenue 
amounts, after they have been adjusted for inflation, shall be further 
adjusted to reflect increases in workload for the process for the 
review of medical device applications (see 21 U.S.C. 379j(c)(2)). FDA's 
current assessment reflects that the change in total review workload as 
defined in MDUFMA has changed by less than 1 percent. Based on this 
assessment, FDA is not applying a workload adjustment to the FY 2004 
inflation-adjusted revenue amount of $28,418,789. The need for workload 
adjustment will be assessed anew next year when FY 2005 fees are 
established.

D. Compensating Adjustment to Fee Revenue Amount Once Adjustments for 
Inflation and Workload Have Been Made

    For each FY beginning in FY 2004, MDUFMA provides that fee revenue 
amounts, after they have been adjusted for inflation and workload, 
shall be further adjusted, if necessary, to compensate for the 
cumulative shortfall in fee revenue from previous years (see 21 U.S.C. 
379j(c)(3)). In FY 2003, FDA had expected to collect a total of 
$25,125,000 in MDUFMA fees, the fee revenue amount stated in the 
statute (see 21 U.S.C. 379j(b)). As of June 30, 2003, for 9 months of 
the fiscal year, total fee collections were $14,360,304. If fee 
collections in the last 3 months are proportional to collections in the 
first 9 months, FDA will collect another $4,786,768 million--for a 
total of about $19,147,000 million for the year. In addition FDA 
expects to collect about $500,000 of outstanding accounts receivable, 
for a FY 2003 estimated total fee collection of $19,647,000. This is 
$5,478,000 million less than the statutory revenue amount for FY 2003.
    In implementing the compensating adjustment provision, FDA will 
increase the FY 2004 revenue amount by the amount of the revenue 
shortfall in FY 2003, $5,478,000. Accordingly, adding $5,478,000 to the 
inflation-adjusted revenue amount of $28,418,789 derived above (see 
section II.B of this document), provides a final adjusted revenue 
amount for FY 2004 of $33,896,789. Fees for FY 2004 are being set to 
generate this amount of revenue.

III. Fee Calculations for FY 2004

A. Estimating Numbers of Applications That Will Pay Fees

    Under MDUFMA, the amount of fee revenue collected is a function of 
two factors--the fee rate for the application and the number of 
applications that will pay each type of fee.
    To set fees for FY 2004, FDA must first estimate the number of 
applications that will pay each type of fee. For FY 2003, before MDUFMA 
was enacted, FDA estimated the number of applications that would pay 
each type of fee. That estimate was based on the average number of each 
category of applications over the 5-year period before MDUFMA was 
enacted, FY 1997 through FY 2001. These estimates took into account 
FDA's estimates of the number of applications that would qualify for a 
small business reduction or exemption. (It should be noted that the 
two-tier fee structure for 510(k)'s is to begin in FY 2004.) The 
original FY 2003 estimates are shown in Table 1 of this document.

   Table 1.--Original Estimates of Numbers of Fee-Paying Applications
------------------------------------------------------------------------
                           Full Year Numbers Based on Original Estimates
   Type of Fee-Paying    -----------------------------------------------
       Application           Full Fee       Reduced Fee       Waived
------------------------------------------------------------------------
Original Premarket                    58              10              10
 Applications (PMAs)/
 Product Development
 Protocols (PDPs)/
 Premarket Reports
 (PMRs)/Biologics
 License Applications
 (BLAs) and Full Fee
 Supplements
------------------------------------------------------------------------
180-Day PMA/PDP                      171              24  ..............
 Supplements to PMAs
------------------------------------------------------------------------
Real Time Supplements to              86              14  ..............
 PMAs
------------------------------------------------------------------------
Premarket Notifications              880           3,120  ..............
 (510(k)s)
------------------------------------------------------------------------

    The reason that MDUFMA fee revenues are projected to fall 
approximately $5,478,000 short of the revenue target in FY 2003 is that 
FDA collected fewer full fees than projected for Original PMAs and BLAs 
and their full-fee supplements, and fewer fees for 180-day supplements. 
The major reasons for this are twofold. A number of the applications 
were ``bundled,'' using guidance developed after MDUFMA was enacted, 
and did not have to pay separate fees. In addition, the agency received 
fewer full PMAs, BLAs and 180-day supplements in the first 9 months of 
FY 2003 than the 5-year averages estimated. Because of this, FDA 
considered basing fees for FY 2004 on lower estimates of the number of 
full PMA/BLA fees and 180-day supplement fees. This would have resulted 
in even higher fees for FY 2004.
    The agency decided against revising estimated numbers of fee-paying 
applications in setting the FY 2004 fees, however, because such a 
revision would have been based on data from too brief a period--the 3 
months from April 1 through June 30, 2003, during which applications 
were not accepted for filing unless the fee was paid. Instead, the 
agency will continue to use its original estimate of the numbers of 
fee-paying applications (see Table 1 of this document) again in setting 
fees for FY 2004.
    FDA will reassess whether or not it needs to adjust its original 
estimates of the number of each type of fee-paying application a year 
from now when it sets fees for FY 2005. At that time the agency will 
have 15 months of data to use to determine whether its original 
estimates for annual numbers of applications were too high.

B. Determining The Fee Rates

    Under MDUFMA, all fees are set as a percent of the full fee for a 
PMA (see 21 U.S.C. 379j(a)(1)(A)). In order to generate $33,896,789 in 
FY 2004, using the above estimates of the numbers of each type of 
application that will pay a fee at each rate (see Table 1 of this 
document), the rate for a full PMA will be $206,811 for FY 2004. For 
all applications other than premarket notification submissions, the 
small business rate is 38 percent of the full fee rate (see 21 U.S.C. 
379j(d)(2)(C)). For premarket notification submissions (510(k)'s), the 
small business rate is 80

[[Page 45248]]

percent of the full rate for premarket notification submissions (see 21 
U.S.C. 379j(e)(2)(C)(i)). The FY 2004 fee rates for all application 
categories are set out in Table 2 of this document.

     Table 2.--Fee Types, Percent of PMA Fee, and FY 2004 Fee Rates
------------------------------------------------------------------------
                                                               FY 2004
                        Full Fee Amount as a      FY 2004       Small
Application Fee Type     Percent of PMA Fee       Full Fee     Business
                                                                 Fee
------------------------------------------------------------------------
PMA (submitted under  ........................     $206,811      $78,588
 section 515(c)(1)
 or 515(f) of the
 act or section 351
 of the Public
 Health Service (PHS
 Act)
------------------------------------------------------------------------
PMR (submitted under                     100%      $206,811      $78,588
 section 515(c)(2)
 of the act)
------------------------------------------------------------------------
Panel Track                              100%      $206,811      $78,588
 Supplement (to an
 approved PMA or PMR
 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 reasonable
 assurance of safety
 and effectiveness)
------------------------------------------------------------------------
Efficacy Supplement                      100%      $206,811      $78,588
 (to an approved
 premarket
 application under
 section 351 of the
 PHS Act)
------------------------------------------------------------------------
180-Day Supplement                      21.5%       $44,464      $16,896
 (to an approved PMA
 or PMR that is not
 a panel track
 supplement and
 requests a
 significant change
 in components,
 materials, design,
 specification,
 software, color
 additives, or
 labeling)
------------------------------------------------------------------------
Real Time Supplement                     7.2%       $14,890       $5,658
 (to an approved PMA
 or PMR that is not
 a panel track
 supplement and
 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)
------------------------------------------------------------------------
Premarket                  1.42% in aggregate        $3,480       $2,784
 Notification
 (submitted under
 section 510(k) of
 the act)
------------------------------------------------------------------------

IV. Adjustment for Excess Collections in Previous Years

    Under the provisions of MDUFMA, if the agency collects more fees 
than were provided for in appropriations in any year, FDA is required 
to reduce its anticipated fee collections in a subsequent year by that 
amount (21 U.S.C. 379j(h)(4)). No adjustments under this provision are 
required for fees assessed in FY 2004. If fees assessed in FY 2004 
should inadvertently result in excess collections in FY 2004, then when 
fees are set for FY 2005 a reduction in fee rates for FY 2005 will be 
made for any excess collections that may have occurred in FY 2004.

V. Small Business Qualification for Purposes of MDUFMA Fees

    Firms with annual gross sales and revenues of $30 million or less, 
including gross sales and revenues of all affiliates, partners, and 
parent firms, may qualify for a fee waiver for their first PMA, and for 
lower rates for subsequent PMA's, premarket reports, supplements, and 
premarket notification submissions.
    Even if a firm qualified under MDUFMA as a small business in FY 
2003, it must obtain a new small business certification and decision 
number for FY 2004 and for each subsequent fiscal year. This can be 
initiated any time after the publication of this notice. For FY 2004, 
firms that have not received a FY 2004 small business qualification 
decision number from FDA will not be permitted to submit the reduced 
small business fees. FDA urges firms to apply for this qualification 60 
days before they intend to submit their application and fee.
    To qualify, you are required to submit the following:
    [sbull] Certified copies of your Federal Income Tax Return for the 
most recent taxable year (2002 or later), including certified copies of 
the income tax returns of your affiliates, partners, and parent firms.
    [sbull] A certified list of all parents, partners, and affiliate 
firms since October 1, 2002.
    You can find information for determining if an applicant qualifies 
for a small business first-time PMA waiver and lower rates for 
subsequent applications on the FDA Web site at http://www.fda.gov/oc/mdufma. At that Web site, under the heading ``Guidance Documents,'' 
click on the link ``Qualifying as a Small Business.'' This Web site 
provides detailed instructions and the address for mailing 
documentation to support qualification as a small business under 
MDUFMA.

VI. Procedures for Paying Application Fees

    Any application or supplement subject to fees under MDUFMA that is 
received on or after October 1, 2003, through September 30, 2004, is 
subject to the FY 2004 fee rate. It is the date that the application is 
received in the reviewing center's document room that determines 
whether the fee rates for FY 2003 or FY 2004 apply--not the date that 
FDA receives the payment. FDA must receive the correct fee at the time 
that an application is submitted, or the application will not be 
accepted for filing or review.
    FDA requests that you follow the steps below before submitting a 
medical device application subject to a fee. Please pay close attention 
to these procedures to ensure that FDA links the fee with the correct 
application. (Note: In no case should the check for the fee be 
submitted to FDA with the application.)

[[Page 45249]]

A. Step One--Secure a Payment Identification Number and Medical Device 
User Fee Cover Sheet From FDA Before Submitting Either the Application 
or the Payment. Note: FY 2004 Fee Rates Will be Available on the Cover 
Sheet Beginning on August 25, 2003.

    Log onto the MDUFMA Web site at http://www.fda.gov/oc/mdufma and, 
under the forms heading, click on the link ``User Fee Cover Sheet.'' 
Complete the Medical Device User Fee Cover Sheet. Be sure you choose 
the correct application submission date range. (Two choices will be 
offered from August 25, 2003, until the middle of October 2003. One 
choice is for applications that will be received on or before September 
30, 2003, which will be subject to FY 2003 fee rates. A second choice 
is for applications that will be received on or after October 1, 2003, 
which will be subject to FY 2004 fee rates.) After completing data 
entry, print a copy of the Medical Device User Fee Cover Sheet and note 
the unique Payment Identification Number located in the upper right-
hand corner of the printed cover sheet.

B. Step Two--Electronically Transmit a Copy of the Printed Cover Sheet 
with the Payment Identification Number to FDA's Office of Financial 
Management

    Once you are satisfied that the data on the cover sheet is 
accurate, electronically transmit that data to FDA according to the 
instructions on the screen. Since electronic transmission is possible 
beginning on August 25, 2003, it will no longer be necessary to fax a 
copy of the sheet to FDA. After August 25, 2003, applicants will be 
required to set up a user account and use passwords to assure data 
security in the creation and electronic submission of Cover Sheets.

C. Step Three--Mail Payment and a Copy of the Completed Medical Device 
User Fee Cover Sheet to the Saint Louis Address Specified Below

    [sbull] Make the payment in U. S. currency by check, bank draft, or 
U.S. Postal money order payable to the Food and Drug Administration. 
(The tax identification number of the Food and Drug Administration is 
53-0196965, should your accounting department need this information.)
    [sbull] Please write your application's unique Payment 
Identification Number, from the upper right-hand corner of your 
completed Medical Device User Fee Cover Sheet, on your check, bank 
draft, or U.S. Postal money order.
    [sbull] Mail the payment and a copy of the completed Medical Device 
User Fee Cover Sheet to: Food and Drug Administration, P.O. Box 956733, 
Saint Louis, MO, 63195-6733.
    If you prefer to send a check by a courier such as FEDEX or UPS, 
the courier may deliver the checks to: US Bank, Attn: Government 
Lockbox 956733, 1005 Convention Plaza, St. Louis, Missouri 63101.
    (Note: This address is for courier delivery only. Contact the US 
Bank at 314-418-4821 if you have any questions concerning courier 
delivery.)
    It is helpful if the fee arrives at the bank at least 1 day before 
the application arrives at FDA. FDA records the official application 
receipt date as the later of the following:
    [sbull] The date the application was received by FDA.
    [sbull] The date US Bank notifies FDA that payment has been 
received. US Bank is required to notify FDA within 1-working day, using 
the Payment Identification Number described previously.

D. Step Four--Submit your Application to FDA With a Copy of the 
Completed Medical Device User Fee Cover Sheet

    Please submit your application and a copy of the completed Medical 
Device User Fee Cover Sheet to one of the following addresses:
    [sbull] Medical device applications should be submitted to: Food 
and Drug Administration, Center for Devices and Radiological Health, 
Document Mail Center (HFZ-401), 9200 Corporate Blvd., Rockville, MD 
20850.
    [sbull] Biologic applications should be sent to: Food and Drug 
Administration, Center for Biologics Evaluation and Research, Document 
Control Center (HFM-99), suite 200N, 1401 Rockville Pike, Rockville, MD 
20852-1448.

    Dated: July 29, 2003.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 03-19655 Filed 7-31-03; 8:45 am]
BILLING CODE 4160-01-S