FDA's primary goals, under the Devices and Radiological Health program, are to develop and implement national programs and regulations to promote and protect the public health in the fields of medical devices and radiological health. These programs are intended to ensure the safety, effectiveness and proper labeling of medical and radiation-emitting devices, and safe and effective mammography services. In addition, the Devices and Radiological Health program provides technical, nonfinancial assistance to industry and the medical and health professional communities in complying with the laws and regulations mandated by the Congress.

INCREASES:

PUBLIC HEALTH INFRASTRUCTURE -- + $ 26 MILLION, + 124 FTE

The FDA has conducted a comprehensive assessment to identify the gap between current performance and what would be required to meet statutory mandates and public expectations of effective product safety systems. Consistent with principles underlying the FDAMA, the Agency listened carefully to its stakeholders to determine priority needs and to develop collaborative, cost effective solutions to public health problems. Based on this assessment, the FDA has developed strategic initiatives to narrow the gap between stakeholder expectations and reality as follows.

Injury Reporting -- ( $ 3.2 million, 2 FTE)

FDA estimates that there may be as many as 300,000 injuries and deaths annually associated with device use. FDA requests $ 3.2 million and 2 FTE to implement phase one of a National Sentinel Reporting Network which will provide an alternative to universal mandatory reporting by the medical device user facilities. This new network will ensure that FDA clinicians and analysts are kept informed about device problems, particularly those involving device misuse or operator error. In addition, through a study, FDA will evaluate the level of integration feasible, and to test and build common analytic platforms for the current medical device adverse event reporting system (MAUDE) and the Agency-wide Adverse Event Reporting System (AERS). The requested funds will also be used to improve medical device adverse event coding capabilities.

The FDA Modernization Act, (FDAMA) addressed several postmarket changes. User reporting, under section 213, is amended to phase out universal reporting and replace it with a national sentinel network. The network will use a nationally representative sample of user facilities to track postmarket adverse events, saving the industry approximately $19 million in reporting costs. In the first year, the sample will consist of approximately 75 - 90 hospital sites; in the second year, the nursing home community will be incorporated into the representative sample.

Outcomes:

• With access to more timely and better quality postmarket data, FDA will improve its ability to detect and analyze medical device-related problems.
• FDA will also have ready access to a network of clinical facilities that could potentially offer clinical insight into problem investigation and participate in specific research and educational efforts.
• Improved data quality and reporting will enhance FDA's role in the international harmonization of medical device reporting.
• The study will assess the public health benefits associated with central electronic and paper data entry and the use of common analytic tools for evaluating medical products injury reports.
• To the extent that the medical device and drug programs can use common systems and analytic techniques, we will see increased efficiency and improved signal detection for injury evaluation.
• FDA will use the enhanced coding structure to augment its international efforts to harmonize nomenclature systems with device adverse event coding and to assist in problem identification and analysis.

Goal: Develop Sentinel Surveillance System for injury reporting based on approximately 75 to 90 representative user facilities.

Product Safety Assurance -- ($ 15.8 million, 77 FTE)

Improved Domestic Inspection Coverage -- ($ 6.8 million, 14 FTE). Devices have become more medically and technologically complex and the device industry is growing domestically and internationally. The current violative inspection rate is 13 percent. FDA's current device inspection coverage impairs product quality assurance and also impairs FDA's ability to enforce new standards for various products, including those involving patient leads and cables, medical device software, and latex materials.

In 1998, contracts with the States to perform x-ray inspections were reduced. FDA requests $ 6.0 million to increase funds for state contracts and related activities. These funds will:

• Reinstate this highly successful program and expand the use of state contracts to assist the Agency in meeting its statutory biennial inspection obligation;
• Increase the use of State contracts for the performance of device manufacturer inspections;
• Increase the number of inspections and enable FDA to continue a risk-based strategy within this program;
• Study the Medical Device presence available within other states and explore the possibilities of partnerships with these additional states. As many states have no organization to deal with medical devices, it is expected that some training for these states will be required. Some inspections will be done by Federal inspectors during startup.
• Strengthen domestic device quality assurance and implement quality systems, which will support 510(k) conformance. The additional funds will allow FDA to keep pace with the projected increase in device manufacturers.
• Improve domestic device coverage for Class II & III manufacturers from 33 percent in FY 1998 to 39 percent in FY 2000, and 40 percent in FY 2002.

These efforts will not fully meet the statutory requirement of 50 percent, but will improve product safety and quality systems conformance. FDA will inspect Class II & III manufacturers only. There will be no inspections of Class I manufacturers.

Improved Foreign Inspection Coverage/MRA Implementation/Other Compliance Activities--($ 9 million, 63 FTE). In FY 1997, 18 percent of all foreign firms FDA inspected had violations. Foreign inspection coverage for Class II & III manufacturers was 23 percent in FY 1997. This decreased to 14 percent in FY 1998 and is projected to be 12 percent in FY 1999. With increased resources, FDA will:

• Strengthen international product quality assurance by increasing foreign inspection coverage and implement the Mutual Recognition Agreement (MRA) requirements that were mandated by the FDA Modernization Act through training European Economic Union (EEU) assessment bodies. MRA implementation will require expanded foreign inspections and extensive training with the EEU by FDA.
• Increase foreign inspection coverage of Class II & III manufacturers to 19 percent in FY 2000 and to 35 percent in FY 2002. Inspection coverage needs to be increased as more Class II & III manufacturers enter the foreign markets.
• Complete training for 50 percent of the conformance assessment bodies participating in the MRA with the EEU.

FDA's goal is to provide science-based product quality assurance to the public. With increased funding, FDA will:

• Update test methods, product standards, quality assurance techniques and other scientific tools needed for science-based product quality testing and regulation of marketed devices.
• Conduct laboratory work on the correlation of device failures with accelerated aging of polymeric biomaterials and the quality assurance techniques for device software for small manufacturers.

FDA will use additional resources for field product quality assurance activities. This increase will:

• Permit import regulatory resources to keep pace with the growth of device import entries.
• Fund the mandatory link between the electronic import data system and the U.S. International Trade Data System now being established in the Department of Commerce.
• Improve the electronic entry review system that FDA uses to triage import entries by public health risk as they are offered for import.
• Expand support for the Office of Criminal Investigations.
• Provide for maintenance of essential field laboratory equipment.
• Provide the resources needed to meet statutory inspectional responsibilities.

Medical devices and scientific laboratory equipment may experience problems with "Year 2000 compliance" beginning January 1, 2000 if the computer systems, software applications, or embedded chips used in these devices and equipment contain two-digit fields for year representation. This can potentially lead to the product failing to function as expected, and the risks for these types of medical device products could be high. The FDA has a web site (http://www.fda.gov/cdrh/yr2000/year2000.html) that provides one comprehensive resource for information about the "Year 2000 compliance" of biomedical equipment. The requested resources will enable FDA to provide training, travel support, develop educational materials, and provide expert consultation services required to inspect and assist manufacturers with noncompliant devices and ensure that they take corrective action in a timely manner. These activities are expected to peak at the beginning of FY 2000, but inspection compliance will need to continue throughout the year.

Goals: Improve inspection coverage for Class II & Class III domestic medical device manufacturers from 26 percent in FY 1999 to 39 percent in FY 2000. There will be no routine coverage for Class I manufacturers.

Improve inspection coverage for Class II & Class III foreign medical device manufacturers from 12 percent in FY 1999 to 19 percent in FY 2000. There will be no routine coverage for Class I manufacturers.

Implement the mutual recognition agreement (MRA) with the European Union (EU).

AUTHORIZED USER FEES -- + $ 0.4 MILLION

Mammography Quality Standards Act (MQSA) -- ($ 0.4 million)

An increase of $ 432,000 is requested for FY 2000, for a total level of $ 14.8 million and 50 FTE in the Devices and Radiological Health program. MQSA required that mammography facilities be certified by October 1, 1994, to remain in operation and inspected annually to ensure compliance with national quality and safety standards. In FY 2000, Federal and state personnel will continue to conduct annual inspections, as well as provide training for new inspectors. The fees collected will pay for the costs of the inspections.

Proposed Law:

Medical Device User Fees -- Premarket Application Review ($ 7 million, 45 FTE)

FDA is requesting a total of $ 7 million to be derived from medical device user fees which will be used to improve the quality and timeliness of its medical device review process. The medical device user fee initiative is a multi-year enhancement effort that is expected to begin in FY 2000. The additional user fee funding anticipated during the next several years will support and build upon the Food and Drug Modernization Act (FDAMA) implementation activities and reengineering efforts already underway. These activities already underway include the 510(k) Reengineering Efforts, Humanitarian Device Exemptions(HDEs), Sentinel Reporting, HAACP for Medical Devices, Recognition and use of standards, MRA, Product Development Protocol (PDP) process, Early Meetings with Manufacturers, and Modular Review.

FDA is focusing on the user fee initiative on three application types: PMAs, PMA supplements, and complex 510(k) applications. Complex 510(k)s include Class III 510(k)s, de novo classifications, and new technologies requiring clinical investigations to determine substantial equivalence to already marketed products. These applications may involve potentially high-risk devices that have the highest likelihood of significantly improving the treatment of patients. It is essential that FDA complete the review process for these products quickly and thoroughly. With additional resources from the user fees FDA will be able to:

• Work closely with industry to reduce total product development time;
• Expedite the reviews of devices representing new technologies;
• Maintain high quality interactive reviews; and
• Update guidance documents, and conduct timely preapproval and data audit inspections.

Growth in the size of the device industry and in the complexity of new medical devices will continue to challenge FDA to stay up to date with breakthrough medical devices and maintain high quality timely reviews, required interactions with industry, and current review guidance. The value of shipments of the device industry has more than doubled from 1990 to $ 65.2 billion in 1997. The current growth rate projects an additional $ 12 billion increase in production by 2000. This increase in production will be paralleled by R&D expenditures of more than $5 billion per year. These research expenditures have also more than doubled during the past decade. 1998 Dun and Bradstreet data show the U.S. device industry has grown to just under 10,000 firms. A growing device industry is also producing increasingly complex products. Quantum leaps in device miniaturization, microprocessor software control, artificial intelligence decision support, remote operation, and drug/ biologics/tissue combinations are already revolutionizing medical care. More rapid technological change is expected. The user fee funding will enable FDA to substantially improve review timeliness for these applications in FY 2000 and to meet statutory timeliness requirements in FY 2002.

Achievement of this performance goal target level is dependent upon passage of User Fee legislation and establishment of management systems to implement user fees by the beginning of FY 2000.

Physicians' Pay - - $ 0.325 million

The FY 2000 request includes a physician compensation growth guideline to limit the escalation of HHS physicians payroll (base salaries and special pay). The Devices and Radiological Health portion of this reduction is $ 0.325 million.

JUSTIFICATION OF BASE:

FDA has continued to make significant strides in enhancing performance in the medical device program. FDA's ongoing priority initiative, to reengineer the Device program, has resulted in streamlining existing processes and identifying ways to more effectively meet essential program priorities. More resources are now being focused on high-risk, high-impact products and less emphasis is being put on those areas posing lower risk to the public, where FDA's direct involvement adds less value.

Given the magnitude of the FDAMA requirements, FDA is implementing the various provisions in stages. Most of the high priority provisions of the medical devices program are in the product review area and involve improvements to the PMA and 510(k) processes. FDA has developed a roll out plan that categorizes the various high priority activities into 30, 60, 90, 120, and 150-day increments for completion. In addition, FDA has established an internal process to monitor the progress of this plan.

Postmarket Surveillance Program. Postmarket surveillance activities provide increased consumer protection from risks associated with device usage, particularly those that are neither apparent nor foreseen during the premarket notification and premarket review processes. In FY 1998, FDA received over 62,000 postmarket reports from manufacturers, medical facilities, and health professionals, and issued safety alerts on real or potential problems that may result in death and/or serious injury. For example, in FY 1998, FDA issued safety alerts on an Isocam II, dual-headed nuclear medicine gamma camera and on the AbTox Plazlyte Sterilization System for ophthalmic instruments. FDA is currently managing large number of adverse experience reports in three phases:

• Reports are triaged, scanned for completeness, and entered into the data management system;
• Reports are analyzed for similar events, while judging severity and searching for trends.
• FDA uses mechanisms such as safety alerts to notify health professionals and patients about device risks. FDA is challenged by the large number of reports to process and the lack of denominator date that can put the reporting events in context.

Compliance Program. The Compliance program enforces many regulations to protect the public from unsafe or ineffective medical devices or radiological products. FDA takes various actions to rectify problems that occur and to serve as a deterrent against future violations of the Federal Food, Drug, and Cosmetic Act.

During FY 2000, FDA expects to continue redirecting resources to high-risk devices. However, FDA is challenged by domestic inspection coverage that averages one GMP inspection every seven years. In addition, 510(k) exemptions of Class I products increase the need for Class I inspections to verify that firms have quality systems in place. Mutual Recognition Agreement (MRA) implementation will involve more foreign inspections.

Focus: To maximize FDA's device coverage for both domestic and foreign medical device firms.

MQSA Program. The Mammography Quality Standards Act of 1992 (MQSA) was signed into law on October 27, 1992, to address the public health needs for safe and reliable mammography. The Act requires all mammography facilities to be certified by the Secretary of Health and Human Services as meeting quality standards for mammography in the areas of equipment, personnel, quality assurance, record keeping, and reporting. FDA has issued final MQSA regulations that will become effective on April 28, 1999. The final regulations will replace the interim standards that have been in effect since October 1994. FDA believes that approximately 10,000 mammography facilities are covered by the MQSA legislation.

Focus: To ensure that mammography facilities remain in compliance with established quality standards and to improve the quality of mammography in the United States.

Science Technology and Standards Activities Program. Science, technology, and standard activities are pivotal to the Device program and provide independent and direct scientific support for FDA's device approval process. In addition to the scientific support, FDA would like to increase the use of consensus standards developed by such national and international organizations as the American National Standards Institute (ANSI) and the International Standards Organization (ISO) to improve premarket approval times.

Focus: To provide direct scientific support to the device approval process and to increase acceptance of consensus standards in support of FDA product review and evaluation activities. In accomplishing this, FDA is challenged by resource limitations and rapid growth in medical technology.

Radiation Control and Health and Safety Act Program. Under the Radiation Control for Health and Safety Act, FDA conducts an electronic radiation control program to assess the biological effects of all types of radiation exposure. To accomplish this responsibility, FDA evaluates emissions from electronic products, conducts research to minimize exposure, and sets and enforces radiation performance standards. As new radiation producing electronic products are developed, FDA evaluates them to ensure that they are safe. In addition, FDA participates in specialized programs designed to promote improved procedures and practices among health professionals and the development of better x-ray techniques.

FDA's radiation control program involves risk-based, pre- and postmarket activities and science. This approach has resulted in a minimal level of regulation by FDA, which has produced the following results:

• Since FY 1993, no inspections have been conducted to assess whether manufacturers are meeting Quality Control and Product Testing requirements.
• Since FY 1991, the states have conducted about 80 percent of the approximately 2,000 field test of medical x-ray systems. Planned phase out of FDA support for these state contracts in FY 1999 will seriously erode the testing program and may also adversely impact other state radiation safety programs.

Focus: To reduce patient exposure during diagnostic x-ray procedures by encouraging improved practice among health professionals and by developing new x-ray techniques. Also, to evaluate new radiation-producing electronic products to ensure that they are safe.

Program Activity Data -- FY 2000

¹ Average elapsed time includes all FDA time from receipt to approval for PMAs, PMA supplements, and IDEs; and from receipt to decision for 510(k)s.
² Includes Product Development Protocols (PDPs) and Humanitarian Device Exemptions (HDEs).
³ New type of 510(k) application that addresses modifications to existing devices. FY 1998 data is from 3/20/98 through 9/30/98.

^4/ FY 1998 and 1999 estimates apply to the 100 percent mandatory user facility reporting requirements. FY 2000 estimate reflects workload received under the National Sentinel Reporting Network that relies on a nationally representative sample of user facilities.

The National Center for Toxicological Research (NCTR) conducts peer-reviewed scientific research that provides the basis for FDA to make science based regulatory decisions. This involves fundamental and applied research specifically designed to define biological mechanisms of action underlying the toxicity of products regulated by the FDA. This research is aimed at understanding critical biological events in the expression of toxicity and at developing methods to improve assessment of human exposure, susceptibility, and risk in the future and to apply these findings to FDA pre-market application review and product safety assurance efforts.

INCREASES:

PUBLIC HEALTH INFRASTRUCTURE -- + $ 1.6 MILLION, + 2 FTE

The FDA has conducted a comprehensive assessment to identify the gap between current performance and what would be required to meet statutory mandates and public expectations of effective product safety systems. Consistent with principles underlying the FDAMA, the Agency listened carefully to its stakeholders to determine priority needs and to develop collaborative, cost effective solutions to public health problems. Based on this assessment, the FDA has developed strategic initiatives to narrow the gap between stakeholder expectations and reality as follows.

Premarket Application Review -- (+ $ 1.6 million, + 2 FTE)

FDA is requesting $ 1.6 million to focus relevant high-priority research on developing scientific principles and technologies to improve data integrity and reliability, thus reducing uncertainty and speeding availability of new biotechnology, drug products, and device technologies to the public. One of the FDA's and the NCTR's highest priorities is strengthening the science base of the Agency. To achieve this end, the NCTR will develop and make available predictive systems and methods that speed safety and efficacy assessment by optimizing resource use across the agency. The following are new performance goals for FY 2000:

Goal: Develop a new biological assay to measure genetic change and validate two existing models that predict human genetic damage.

Goal: Validate a model computer-based predictive system to support and expedite product review of estrogenic or estrogen-like compounds.

Goal: Conduct molecular epidemiology studies to identify biomarkers of the most frequently occurring cancers in highly susceptible subpopulations.

PRESIDENTIAL INITIATIVES -- + $ 0.5 MILLION, + 2 FTE

Food Safety Initiative -- ($ 0.5 million, 2 FTE)

An increase of $ 0.5 million will enable the FDA to expand its research support for the multi-agency Food Safety Initiative. The NCTR's performance goals are to:

• Develop partnerships with government, industry, and academic scientists to conduct studies that demonstrate cross-species comparability and eliminate assumptions necessary for extrapolating laboratory toxicity data to human disease;
• Develop methods of predicting, more quickly and accurately, the risk associated with foodborne pathogens;

NCTR microbiologists will develop techniques to verify that competitive exclusion products do not contain antibiotic resistant and potentially pathogenic bacteria. The benefit is that FDA will be able to approve competitive exclusion products for reduction of pathogens like Salmonella and Campylobacter in poultry without risking incorporation of other hazardous bacteria into the food supply.

JUSTIFICATION OF BASE:

The Commissioner of the FDA has established the strengthening of the Agency's science base as an Agency priority. The Agency's Senior Science Council has identified several research areas for the Agency which address high-priority, under-funded research needs critical to a strong FDA science base:

• Development of more predictive animal and non-animal models for safety and efficacy evaluation;
• Development of improved methods for post-market surveillance;
• Detection and assessment of infectious agents and toxins in FDA regulated products; and
• Identification of mechanisms of pathogenicity in evaluating new and long-term therapies.

The NCTR has active research projects in three of these areas. Scientists at the NCTR are developing new approaches for use in predicting risk associated with human toxicity; developing computer-based systems to aid in the assessment of human toxicity; and, conducting research on specific agents, concepts, or methods that can be applied to questions of human health and safety. In partnership with other federal agencies, industry, and academia, the NCTR continues to develop methods for improving human risk assessment by applying a multi-disciplinary scientific approach to assess toxicity of compounds of interest to the Agency.

New predictive systems under development will lead the Agency in utilizing the latest technology in solving difficult regulatory questions. Strategies include new test systems that are based on understanding the mode of action, refinements to existing tests and new preliminary screens, and studies that help reduce the uncertainty of extrapolating laboratory animal data to humans. Predictive systems will support decisions about toxicity and will help guide the design and priority of subsequent toxicity studies.

In collaboration with industry and other federal agencies, the NCTR scientists are developing computer-based predictive systems that will provide regulators desktop systems to predict adverse health effects. The value of such a computer-based system is its ability to predict relevant toxicity based on the proposed structure of a drug or a chemical, thus reducing analysis time for compounds under study within the FDA.

The FDA research conducted at the NCTR is a collaborative effort among scientists from product centers, the NCTR, and the Office of Regulatory Affairs, and provides interpretive data on specific agents such as anti-estrogens, neurotoxins, food contaminants, and cosmetic therapies. This method-, agent-, and concept-driven research will continue to support the expanding public health role of the FDA.

The Tobacco Program seeks to promote and protect the health of our nation's youth by reducing the number of young people who begin to use and become addicted to tobacco products each year. FDA's long-term goal is a 50 percent decline in young people's use of tobacco within seven years of program implementation. To help reach this goal, FDA works with other organizations within the Department of Health and Human Services (DHHS) such as the Substance Abuse & Mental Health Services Administration (SAMHSA), Centers for Disease Control (CDC), and the National Cancer Institute (NCI).

FDA's role is threefold: enforcement and evaluation, compliance outreach, and product regulation. FDA's overall goals are to reduce the access and appeal of tobacco products to young people, to enlist retailers' and other stakeholders' assistance in these efforts, and to develop regulatory procedures for cigarettes and smokeless tobacco products. FDA's efforts are supported by and coordinated with activities in other agencies within DHHS. For example, SAMHSA uses its authority to withhold substance abuse grants to states that do not achieve required access compliance rates by retailers and also conducts surveys to gather information about tobacco use. CDC's Office of Smoking and Health is primarily involved with public education, research, and surveys. Finally, NCI is also involved in research and education programs. FDA utilizes data gathered by these agencies to both carry out and evaluate its tobacco program. FDA also works closely with state governments, especially in its enforcement role. The ultimate goal of these combined and coordinated efforts will be a significant reduction of tobacco use by young people.

INCREASES:

PRESIDENTIAL INITIATIVES - + $ 34.0 million, + 15 FTE

On April 25, 1997, the Federal District Court in Greensboro, North Carolina, ruled that FDA has jurisdiction under the Federal, Food, Drug and Cosmetic Act to regulate nicotine-containing cigarettes and smokeless tobacco as drug delivery devices. The Court upheld all restrictions involving youth access and labeling and struck down, as unsupported by statutory authority, the Agency's advertising restrictions. The Court stayed implementation of all provisions, except those involving age and identification, pending appeal. Appeal was taken and oral argument was held in August 1997 and reargued on June 9, 1998 in the Fourth Circuit Court of Appeals. On August 13, 1998, the Fourth Circuit issued its decision finding the FDA's assertion of jurisdiction and issuance of regulations invalid. The government is seeking review of this decision by the Supreme Court. Pending the Supreme Court's review, or decision not to hear the case, the Court of Appeal's mandate is stayed and the Agency is continuing to enforce the age and identification provisions.

Reducing young people's use of tobacco is an enormous undertaking with potential for great public health outcomes. FDA recognizes that close coordination with the Secretary's office, and other agencies within the Department, such as the Substance Abuse and Mental Health Services Administration (SAMHSA), the Centers for Disease Control (CDC), and the National Cancer Institute (NCI), is essential. These coordination efforts are underway and working effectively.

The Presidential initiative to reduce tobacco use among children is an ongoing effort. The increase of $34.0 million, for a total of $68.0 million will enable FDA to expand its efforts toward accomplishment of this goal.

• FDA will increase the number of compliance checks performed at retail outlets to ensure compliance with the rule, and create targeted demonstration-enforcement areas. These areas will be subject to intense outreach and enforcement efforts to measure the effectiveness of different mixes of interventions and effort on sales of tobacco products to minors.
• Full implementation of FDA's rule will eliminate certain forms of advertising that are especially appealing to young people, including banning billboards within 1,000 feet of schools and playgrounds, banning all non-tobacco items identified with a tobacco brand and banning sponsorship of events by tobacco companies.
• Outreach efforts will increase the number of retailers receiving information to enhance their understanding of their responsibilities under FDA's tobacco rule and the requirement to prohibit sales of tobacco products to children and teenagers.
• FDA also will, to the fullest extent permitted under any court order, establish the scientific and regulatory framework to address the challenges posed by new and novel nicotine containing tobacco products as well as issues raised by current products and replacement therapies.

Compliance Outreach

FDA will build a strong outreach program on the current foundation. A strong outreach program is one of the most effective ways to increase compliance with this rule. Compliance outreach will ensure that those directly affected by this rule understand what their responsibilities are, why such measures are needed, and consequences of failure to comply. FDA outreach efforts will make it easier for retailers to comply with the rule by giving them useful and eye-catching materials that will remind clerks not to sell to minors and will encourage smokers, ages 18 to 27 to cooperate by showing their photo identification.

Goal: Inform and enlist the support of our stakeholders (for example, retailers) and the public to assist in reducing young people's use of and demand for tobacco products.

FDA uses a multitude of media and approaches to ensure the greatest reach and utility of its messages. In FY 2000, FDA will enhance its outreach activities to achieve greater and more frequent coverage.

• Maintain a toll free hot line and an Internet site, which permit easy access to answers for frequently asked questions, brochures, and materials.
• Distribute retailer kits, which include explanations of the requirements, and posters and materials which help explain the rules to customers and assist in defusing customer anger or anxiety.
• Advertise on radio, in newspapers and on billboards reminding retailers of their responsibility. Update these materials regularly and mail to new retailers or retailers who request the information.

In FY 2000, FDA will augment its national advertising campaign to raise retailer's awareness of the regulation and motivate them to comply to achieve greater nationwide coverage and frequency. FDA will:

• Conduct intensive media campaigns in targeted areas to evaluate the effectiveness of the ongoing campaign in reducing illegal sales.
• Create new retailer materials specifically designed for different types of retail outlets such as grocery stores, pharmacies and gas stations.

Goal: Maintain the percentage of known retailers of cigarettes and smokeless tobacco products who are aware of the FDA tobacco rule at no less than 90 percent and increase the percentage of retailers who understand the age and identification provisions of the rule to 50 percent.

Promote availability of free FDA retailer information kits, used to remind customers and young people about the requirements of the FDA tobacco rule, to at least 400,000 retailers of cigarettes and smokeless tobacco products and provide kits to those who request them.

Enforcement and Evaluation

In FY 2000, FDA will expand enforcement efforts by having commissioned agents inspect every identified retail outlet at least once every other year (assuming there are 500,000 retailers) and reinspect each violative retailer within 3 months of notifying the retailer of the violation or of adjudication of civil money penalty. FDA also will establish an enforcement program in those states that are unable or unwilling to contract with the Agency. If all provisions of the rule are in effect, the agents will also check retailer compliance with the prohibitions against self-service displays, vending machines and certain types of advertising. In FY 2000, the Agency will expand its enforcement program by inspecting 400,000 retailers, double the annual inspections of FYs 1998 and 1999.

• FDA will create targeted demonstration-enforcement areas. Although the vast majority of inspections will be random, the targeted demonstration areas will be subject to more intense outreach and enforcement to measure the effectiveness of different mixes of interventions and efforts on sales of tobacco products to minors. These projects will allow for more effective enforcement.
• Assuming other parts of the tobacco regulation are in effect, the Agency will increase investigators' responsibilities during each visit to include checking on the removal of vending machines and self-service displays and illegal advertising.

Goal: Reduce the easy access to tobacco products and eliminate the strong appeal of these products to children.

Inquiries and Reporting Systems

The Agency has established a toll-free number and WEB site to respond to retailers with questions about compliance and receive complaints of violations from individuals. FDA plans to enhance its inquiries and reporting systems through:

• Correspondence. The Agency receives letters and faxes reporting violations and asking questions. A system is being established to respond rapidly to these inquiries and to forward relevant information to FDA field staff, and to state and local enforcement agencies.
• Database Maintenance. FDA will maintain a database of all retailers who sell tobacco and designate retailers to be inspected and reinspected to each commissioned state. The reports of the inspection are faxed to FDA, who mails a letter to the retailer and a copy to the state and/or locality. The database is augmented by reports of suspected retailer violations made by citizens using the FDA's toll free hotline and FDA's Internet WEB site. This comprehensive database records all information concerning violations reported to the Agency and linked (as appropriate) with states and localities to permit useful and timely analysis of violative information.

Evaluation

Additionally, FDA will work closely and cooperatively with CDC's Office on Smoking and Health and SAMHSA to conduct surveys to measure compliance with the rule, to monitor buy rates, and to measure success in reducing initiation and use of tobacco by young people. These surveys will be primarily two types:

• National survey of young people to determine initiation, prevalence, buy rates, and actual or attempted buys among other things
• National field inspection survey in which a random sample of different types of retail establishments will be surveyed for illegal sales.

The findings of these surveys would be widely reported and used to determine whether additional measures are needed, and to motivate directed efforts to address documented high-violation-rate segments of the tobacco-distribution system.

Goal: Conduct 400,000 compliance checks and select certain sites to target for intensified enforcement efforts to determine the effectiveness of different levels of effort.

Conduct follow-up compliance checks of 100 percent of retailers found to be in violation of the rule.

Ensure the elimination of certain forms of advertising, especially outdoor advertising within 1000 feet of schools and playgrounds (including transit advertising) and specialty item distribution such as hats and tee shirts with tobacco logos.

FDA is regulating cigarettes and smokeless tobacco products under the medical device provisions of the Food, Drug and Cosmetic Act (FD&C Act). The FD&C Act requires that all medical devices be classified according to the level of controls necessary to provide reasonable assurance that the product will be safe and effective (see Section 513 of the FD&C Act). Depending upon the classification adopted for tobacco products, it may be appropriate for the Agency to develop performance standards which could include provisions regarding the construction, components and ingredients, and properties of the device and provisions for the testing of the device. All devices are also subject to the requirement that they conform to quality system regulations pursuant to 21 CFR, Part 820. The application of the Act's requirements to tobacco is essential to ensure that the health consequences of products or their ingredients, additives or constituents are made less harmful in order to reduce the death and disease caused by tobacco use.

Goal: Utilize FDA's regulatory framework to establish and implement a procedure for reviewing existing and new tobacco products to determine the health consequences of specific products or their ingredients, additives or constituents.

In FY 2000, the Agency will begin to establish the regulatory framework necessary to properly analyze the issues related to current and new products. Specifically, it will

• Consider convening an interdisciplinary panel from sister agencies within DHHS including, but not limited to, the National Cancer Institute, the National Heart, Lung and Blood Institute, the Office on Smoking and Health and the National Institute on Drug Abuse to consider and propose appropriate performance standards.
• Conduct systematic reviews and evaluations of new and established products that state or imply that they are less harmful.
• Begin to examine the inspection process by reviewing the practices of the tobacco companies and will continue to assist them in coming into compliance with quality system regulations.
• Use internal and outside experts including personnel from sister agencies within DHHS to begin a review and analysis of ingredients, constituents and additives.

Goal: To the fullest extent permitted under any court order, establish the scientific and regulatory framework to address the challenges posed by new and novel nicotine containing tobacco products as well as issues raised by current products and replacement therapies.

JUSTIFICATION OF BASE:

The FY 1999 budget included $34,000,000 for full implementation of the age and photo identification aspect of this regulation, as well as the implementation of other provisions of the rule as they become effective. During FY 1999, FDA will primarily engage in three activities: outreach, enforcement and product regulation.

The FY 1999 goals for the tobacco program are to build on the progress made toward enforcing the tobacco rule. Implementation and enforcement of FDA's tobacco regulation is a central component of the President's Initiative on tobacco. FDA plans to ensure fundamental progress in all states -- in partnerships with state and local authorities -- to reduce young people's use of tobacco products.

Compliance Outreach

• A strong outreach program is one of the most effective ways to increase compliance with this rule. It will ensure that those directly affected by this rule understand what are their responsibilities, why such measures are needed, and consequences associated with noncompliance.
• Make it easier for retailers to comply with the rule by giving them useful and eye-catching materials that will remind clerks not to sell to minors and will encourage smokers ages 18 to 27 to cooperate by showing their photo identification.

Enforcement and Evaluation

A key influence on a retailer's decision to comply with a new legal requirement is the extent to which the individual perceives he or she is likely to found in violation. The actual number of tobacco retailers is estimated to be somewhere between 500,000 to 1 million. The Agency has developed a general enforcement strategy aimed at conducting compliance checks in a each retail outlet that sell tobacco products. Under the current enforcement plan, those retailers who do not make a sale will receive a letter informing them that they are in compliance with the rule. To enforce the rule:

• FDA inspects retail facilities and takes enforcement actions against those establishments found to have violated the age and identification restrictions.

• Enforcement training is needed for those state and local officials who will be commissioned to enforce FDA's rule. The FDA regional staff train the designated state and local officials as each new state contract is signed, with subsequent training to be conducted by the state and local officials, as the need arises. Headquarter staff are available to answer questions from the field or from states as need arises.
• The process for training and commissioning selected state and local officials is in place. The Florida FDA District Office was the first to complete the training of that state's commissioned inspectors in June 1997. The first commissionings took place starting in July 1997. Additional state and local agents will be commissioned in FY 1999.
• In FY 1998, the Agency contracted with 41 states, the District of Columbia and the Virgin Islands. FDA's goal is to enter into contracts with all 50 states, depending on their willingness to do so, and to field federal investigators in those states without contracts.

Product Regulation

• FDA will design and, to the fullest extent permitted under any court orders addressing such activities, begin to implement a regulatory program for cigarettes and smokeless tobacco products under the Food, Drug and Cosmetic Act.

This activity provides central program direction and administrative services for Agency programs to ensure that FDA's consumer protection efforts are effectively managed and that available resources are put to the most efficient use. Functions include providing agency-wide policy development in medical affairs, scientific coordination, regulatory requirements, legislation, planning and evaluation, consumer communications and public information, and management expertise and coordination in financial management, personnel, contracts and grants administration, procurement/property/space control, and communications systems. Other specific programs include Freedom of Information activities, administration of internal controls required under the Federal Managers' Financial Integrity Act, and the Small Business Program, to assist small businesses in carrying out regulatory requirements and in participating in FDA's regulatory decision-making process.

Review of Other Activities: No increases are included for Other Activities in the FY2000 request. The Offices included in this section will absorb the pay raise and other inflation, so that all of the increases requested for FDA can go directly to the operating Centers of the agency and the Field organization. However, it should be noted that the Commissioner has initiated a review of the structure and functions of these Offices to see if additional reductions can be identified, or whether resources can be transferred from these Offices to the Centers and/or the Field. This review is still under way, and the Committees will be notified of any needed reprogrammings before any such transfers are made.

Physicians' Pay - - $ 0.09 million

The FY 2000 request includes a physician compensation growth guidline to limit the escalation of HHS physicians' payroll (base salaries and special pays). The Other Activities portion of this reduction is $ 0.09 million.

JUSTIFICATION OF BASE

FDA's Other Activities category is comprised of the Office of the Commissioner, the Office of Policy, the Office of External Affairs, the Office of Operations/Orphan Grants Administration, the Office of Management and Systems, and the Central Services.

The Office of the Commissioner (OC):

• provides some of the critical leadership and expertise needed to secure and manage the entire Agency, including:
• A full range of legal services in the enforcement of the Federal Food, Drug and Cosmetic Act, and legal advice and policy guidance for all programs administered by FDA.
• Advice and assistance on equal employment opportunity and Civil Rights activities which impact on policy development and execution of program goals.
• Advice on policy and other agency-level activities and decisions that affect FDA programs, projects, strategies, and initiatives including issues that are sensitive and controversial which impact Agency relations with other Federal agencies and foreign governments.

The Office of Policy (OP):

• Coordinates rulemaking and regulation development activities; reviews proposed regulations, final regulations, and other Agency documents to be published in the Federal Register, and ensures that these documents are appropriately responsive to public participation requirements and applicable executive orders.
• Advises on information that may affect current or proposed FDA policies.
• Advises on the formulation of broad Agency regulatory policy.
• Proposes and researches policy alternatives.

The Office of External Affairs (OEA):

• Provides critical Agency information to consumers, health professionals, United States Congressional members and staff, international communities, and small businessmen.
• OEA plans, coordinates, and directs all media relations for the Agency. It solicits views and input from health professional organizations as it relates to policy and regulation development at FDA to ensure their views are considered in these matters.
• The Office initiates and provides in-depth analyses of agency legislative needs and develops position papers for Agency, Congress, and OMB officials. It is responsible for all liaison activities with foreign governments and international entities.
• OEA serves the public as a resource for information and guidance on policy initiatives and other issues related to serious and life threatening diseases as well as provides focus on and raises awareness of women's health issues.
• OEA also coordinates the Agency's interactions with external audiences through public participation and outreach activities in an effort to provide the FDA's constituencies an opportunity to contribute to the Agency's decision-making process.
• OEA serves at the Agency focal point for receiving and responding to Freedom of Information Act (FOIA) requests.

The Office of Operations:

• Provides oversight and coordination for the product reviews processes and regulatory enforcement within FDA. The Office of Operations also serves as a liaison with the Department of Health and Human Services and other government agencies.
• Within this Office, the Office of Orphan Products Development promotes the development of safe and effective products for the diagnosis or treatment of rare diseases or conditions, and implements the provisions of the Orphan Drug Act.

The Office of Management and Systems (OMS):

• Is an integral part of the top FDA management team, providing leadership, guidance, and solutions to Agency management regarding a wide and varied number of management and resource issues.
• OMS is a customer focused organization, promoting the management of the Agency's resources in a collaborative, coordinated, and cost effective fashion to support FDA employees and programs.
• OMS works to provide a comprehensive program of services concerning facilities; supplies; property management; environmental protection; occupational safety and health; physical security; budget; finance; human resource management; organizational development; information resources; and planning and evaluation.
• OMS coordinates Agency use of resources, develops program and planning responsibilities, and ensures implementation of policy directives set forth by government-wide initiatives including: Government Performance and Results Act (GPRA), the Regulatory Flexibility Act, Federal Acquisition Reform Act, Information Technology Management Reform Act, and Executive Orders.

The Central Services Account:

• Established to provide cost-effective services common to all centers and offices. It is a combination of many subaccounts which support and enhance the Agency as a whole. The function of the Central Services Account can be described as "one-stop" shopping, wherein many charges are handled from one place for efficiency.
• Services include the Service and Supply Fund, established to provide common administrative services for the Parklawn complex such as procurement and contract administration; central management of telecommunications services which includes data and voice service; voice lease and purchase and commercial telephones; agency supported training; mail delivery services; centralized payroll services; Department of Labor work-related injury and death benefit compensation; and agency health units and employee assistance programs which provide clinical and counseling services.
• Services provided through the Central Services Account benefit the Agency through economies of scale, the avoidance of duplication of effort, and increased operational efficiency. The amount indicated for "Other Activities" represents the non-Center Headquarters share of the total central service account.

FDA is requesting a total of $ 126.0 million for FY 2000 to cover the costs contained in FDA's Salaries and Expense account for the Rental Payments to GSA and the Other Rent and Rent Related programs under this section. Below is a description of each line item, requested increases and a justification of the base.

Rental Payments to GSA. FDA occupies over 4.1 million net square feet of GSA space, including parking, which is under the Agency's Salaries and Expenses appropriation. By FY 2000, FDA will occupy over 4.3 million net square feet of GSA space, including parking. The GSA rent charges are billed directly to FDA and indirectly through other agencies, and include the charges for all of FDA's GSA space, both government owned and GSA leased. About 50 percent of the GSA rent charges are for government owned or GSA leased space in the Washington, D.C. area. The largest individual rent charges are for the Parklawn Building complex, Federal Building 8, and Module II in Beltsville. The balance of the charges are for the Agency's field Regional Offices, District Office/Laboratory complexes, and over 130 leased offices which serve as resident posts for strategically placed field investigators.

Other Rent and Rent Related Activities. FDA incurs rent and rent-related costs for facilities within the Salaries and Expenses (S&E) appropriation that are not part of the GSA Rent. These costs are identified in three sub-accounts: Commercial Rent & Related Services, GSA Rent-Related Services and GSA Building Delegation Services. The FY 2000 budget includes $25.9 million for these activities. The Other Rent & Rent-Related activities includes funds for recurring services only except for the buildings within FDA's Building Delegation program which includes funds for both recurring services and one-time repairs which are not covered by the funds provided by GSA under P.L. 104-208. The FY 2000 budget includes $ 25.9 million for these activities. Below is a description of each of the sub-accounts within Other Rent and Rent-related Activities:

The Commercial Rent and Related Services consists of recurring activities that FDA pays directly to non-Federal sources under the delegation of direct lease and service authority. (Note: This also includes recurring services for FDA-owned facilities.) Services include rental of space, and all recurring services for building operation; i.e., utilities; and services such as janitorial, guard, grounds maintenance; and operation and maintenance of heating, ventilation, and air-conditioning (HVAC) systems.

The GSA Rent-Related Services includes recurring reimbursable services provided by GSA that are over and above the normal eight hours that GSA covers in its rent charges. Services include security systems, guard services, and HVAC beyond the standard level funded by GSA.

The GSA Building Delegation Services provides recurring services and one-time repairs to operate and maintain buildings delegated to FDA by GSA for management of day-to-day operations above GSA's standard level. Services include utilities and all recurring services for building operation, such as janitorial, guard, grounds maintenance, and operation and maintenance of HVAC systems.

INCREASES:

Rental Payments to GSA -- + $ 11.9 million

Increased GSA estimate -- ($ 11.7 million.) The FDA estimate of costs for GSA rent is $ 100.2 million for FY 2000. This estimate is based on the FDA FY 1999 base of $ 88.3 million with approximately a 3 percent escalation, per DHHS, and projected changes that include an estimated increase of $ 9.2 million in the FDA property portfolio. Property portfolio changes include opening a new Regional Laboratory in Jamaica Queens, New York and relocating the Detroit District Office. The New York laboratory rent is estimated at $ 9.1 million and the new Detroit District rent is estimated at $ 0.6 million. In both instances, there will be rental reductions for the vacated space in FY 2001 at the completion of required decommissioning activities at the old laboratories (the Detroit District's current location includes a laboratory which is closing). There will also be a rental reduction of $ 0.5 million with the release of the decommissioned laboratory in Cincinnati, Ohio.

In the past, there was a widening gap between the amount of payments paid to GSA and the amount estimated and billed by GSA. However, Congress approved the full estimate for FDA's GSA Rent in FDA's FY 1999 Appropriation, and moved GSA Rent to FDA's Salaries and Expenses Account. The budget requests an additional $11.7 million to fully finance FDA's rent for its facilities in 49 states, Puerto Rico, and the District of Columbia.

Prescription Drug User Fees -- $ 0.2 million. For FY 2000, FDA is including an additional $ 0.2 million in user fees to cover inflation . This will bring the total up to $ 5.6 million in user fees to defray increased in costs for GSA space utilized in support of the user fee portion of the process for the review of human drug applications.