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The Medical Device User Fee and Modernization Act of 2002 - "FAQs"

The Medical Device User Fee and Modernization Act of 2002, amending the Federal Food, Drug, and Cosmetic Act, was signed by President Bush on October 26, 2002, and is now law.

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Background

• What is the Medical Device User Fee and Modernization Act of 2002?
• How do I obtain additional information on the requirements of the new law?

User Fees

• What are the MDUFMA Fee Payment Instructions?
• Why has Congress authorized user fees?
• What are the fees for FY 2003 and FY 2004?
• When must I pay a fee?
• Will FDA consider electronic payments?
• Will there be fee waivers, exemptions, or reductions?
• How can a small business qualify for reduced fees?
• What can happen if I do not pay a fee that is due?
• Under what circumstances will FDA refund part of a fee that has been paid for a premarket application, premarket report, or supplement?
• How will FDA show that medical device review performance is improving?
• How soon will FDA show improvement in medical device reviews?

Third-Party Inspections

• Why has Congress authorized third-party establishment inspections?
• How much does a third-party inspection cost, and who pays for it?
• Who can be accredited to conduct third-party inspections?
• Which establishments are eligible for inspection by a third-party?
• Are there effective controls to prevent possible conflicts of interest in the third-party inspection program?
• How soon will I be able to obtain a third-party inspection?

Reprocessed Single-Use Devices

• How will reprocessed single-use devices be regulated under the new law?
• If my reprocessed single-use device was 510(k) exempt before the new law, is it still exempt?
• When will FDA require validation data for reprocessed single-use devices that already require 510(k) clearance (i.e., devices that are not 510(k) exempt)?
• When will FDA require premarket reports for class III reprocessed single-use devices?
• What labeling changes are required for reprocessed single-use devices and when must the new labeling be used?

Postmarket Surveillance

• Does the new law do anything to strengthen postmarket surveillance?

Background

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What is the Medical Device User Fee and Modernization Act of 2002?

The Medical Device User Fee and Modernization Act of 2002 (MDUFMA), P.L. 107-250, amends the Federal Food, Drug, and Cosmetic Act to provide FDA important new responsibilities, resources, and challenges. MDUFMA was signed into law October 26, 2002. MDUFMA has three particularly significant provisions:

• User fees for premarket reviews. PMAs, PDPs, BLAs, certain supplements, and 510(k)s are now subject to fees. The revenues from these fees, and from additional appropriations for infrastructure, will allow FDA to pursue a set of ambitious performance goals that will provide patients earlier access to safe and effective technology, and will provide more interactive and rapid review to the medical device industry. A small business (sales and receipts of $30 million or less) may pay a reduced fee. The payment of a premarket review fee is not related in any way to FDA’s final decision on a submission.

• Establishment inspections may be conducted by accredited persons (third-parties), under carefully prescribed conditions.

• New regulatory requirements for reprocessed single-use devices, including provisions requiring the submission of additional data on devices now being reprocessed, and a new category of premarket submission, the premarket report.

MDUFMA makes several other significant changes that are less complex or have a narrower scope than the major changes discussed above. FDA will provide additional information on these provisions in the near future:

• Additional appropriations for postmarket surveillance are authorized. The act authorizes significant additional appropriations to strengthen FDA’s postmarket surveillance of medical devices marketed in the United States. For FDA to actually receive these resources, Congress must pass appropriations acts providing these additional funds to FDA.

• The existing third-party 510(k) review program is continued through FY 2006.

• The review of combination products (products that combine elements of devices, drugs, or biologics) will be coordinated by a new office in the Office of the Commissioner.

• Electronic labeling is authorized for prescription devices intended to be used in health care facilities.

• FDA may require electronic registration of device establishments, when feasible.

• The sunset provision applicable to section 513(i)(1)(E) (intended use based upon labeling) is revoked.

• The law now explicitly provides for modular review of PMAs.

• New provisions are added concerning devices intended for pediatric use.

• GAO and NIH are directed to prepare reports concerning breast implants.

• The manufacturer of a device must be identified on the device itself, with certain exceptions.

• Safe and effective medical treatments will reach patients more rapidly.
• Greater certainty that manufacturers will receive timely, high quality reviews;.
• Resources to ensure that devices marketed in the United States continue to meet high standards for safety and effectiveness.

What are the fees?

For fiscal year 2003 (October 1, 2002 through September 30, 2003), the following fees will apply:

* For FY 2003, all 510(k)s are subject to the standard fee of $2,187. The law provides for a reduced 510(k) fee for a small business in FY 2004 and later years.

Remember:  If FDA receives your application on or after October 1, you must pay the fee that applies for the new fiscal year.  The date you mail or send your application does not matter; the only date that matters is the date FDA actually receives your application.  For example, if you mail your application on September 29, 2003 (towards the end of FY 2003) , and FDA receives it on October 1, 2003 (the first day of FY 2004), you must pay the fee that applies for FY 2004.  FDA is not responsible for delays in the delivery of your application.

For fiscal year 2004 (October 1, 2003 through September 30, 2004), the following fees will apply:

FDA will adjust these fees each year to account for inflation, changes in workloads, and other factors. FDA will announce the new fees for the next fiscal year in a Federal Register notice by August 1 of each year.

FDA Questions and Answers on Medical Device User Fee Billing Issues

When must I pay a fee?

You must pay a fee for each premarket application, premarket report, supplement, or 510(k) you submit, unless your are eligible for a waiver or exception. If you do not pay the appropriate fee, FDA will not file or review your application and you will not be able to market your device.

Will FDA accept an electronic payments?

FDA accepts wire transfers. See our MDUFMA Fee Payment Instructions to learn how to pay by wire transfer.  Your bank or financial institution may assess a fee for sending a wire transfer.  You are responsible for paying all wire transfer fees.

Are there any fee waivers, exemptions, or reductions?

Fee waivers and exemptions. Under the new law, a fee will not be charged for certain submissions:

Reduced fees are available to protect small businesses. An applicant that qualifies as a small business is eligible for reduced fees. Small business fees are significantly less than the fees that would otherwise be assessed; see Table 1.

How can a small business qualify for reduced fees?

For FY 2003 and for FY 2004, a small business is one with gross sales or receipts of no more than $30 million, including sales and receipts of all affiliates, partners, and parent firms; FDA may adjust this threshold in future years. An applicant who must pay a fee must pay the standard fee unless it qualifies as a small business. To qualify for reduced fees, a small business must submit Federal income tax forms (for itself, and all affiliates, partners, and parent firms), showing that its sales and receipts do not exceed $30 million. If the $30 million small business threshold is shown to reduce user fee revenues by more than 16%, FDA may adjust the threshold to a lower level.

Your status as a small business expires at the end of the fiscal year.  You must requalify as a small business to be eligible for reduced or waived fees for applications you submit during a later fiscal year.

You must qualify as a small business at least 60 days before your first submission in any fiscal year you want to pay the reduced small business fees.

Each year, as fees are adjusted, small business fees will be set at the following levels:

What can happen if I do not pay a fee that is due?

If a fee is not paid, the submission “shall be considered incomplete and shall not be accepted for filing” until the fee is paid in full. FDA will not begin its review of a submission until the fee for that submission is paid and all fees for previous submissions have been paid. If a fee is not paid within 30 days after it is due, the fee may be treated as a claim of the U.S. Government.

Under what circumstances will FDA refund part of a fee that has been paid for a premarket application, premarket report, or supplement?

If you make a written request within 180 days after the fee was due (see § 738(j)), FDA will refund 75% of a paid fee if we refuse to file a submission, or if the applicant withdrew a submission prior to our filing decision. § 738(a)(1)(D)(i) and (ii). If an applicant withdraws a premarket application, premarket report, or supplement after filing, but before a first action¹ , FDA may, but is not required to, refund any portion of the fee, based on the level of effort already expended. FDA’s decision to make or refuse a refund after filing, and our determination of the amount of any refund, is not reviewable. § 738(a)(1)(D)(iii). FDA will not refund any portion of a fee following a first action. If an applicant resubmits an application that FDA refused to file, or which the applicant withdrew, a new fee (full amount) must be paid.

How will FDA show that medical device review performance is improving?

The performance goals that FDA will pursue as part of the user fee program include specific year-by-year goals for improvement in device review times, as well as other important goals, such as maintaining performance in areas where specific goals have not been identified, using fee revenues for reviewer training and expanded use of outside consultants and contractors, modular reviews, and improving the timeliness of premarket inspections. The law provides for annual reports by FDA and studies by GAO.

How soon will FDA show improvement in medical device reviews?

FDA’s performance under the act is to be measured against goals set forth in the commitment letters from Secretary Thompson. These goals recognize that FDA needs to build infrastructure, hire and train new staff, and take other steps to lay the groundwork for success. The goals require significant, measurable improvements by FY 2005, but FDA will strive to show real improvement more quickly.

FDA’s authority to collect fees under MDUFMA expires October 1, 2007.

In addition, for fiscal years 2006 and 2007, if Congressional appropriations for the device program for that year do not meet certain levels, FDA may not assess medical device user fees for that year and FDA will not be required to meet performance goals for that year.

Third-Party Inspections

Why has Congress authorized third-party establishment inspections?

MDUFMA amends section 704 of the Federal Food, Drug, and Cosmetic Act to authorize FDA-accredited persons to inspect qualified manufacturers of class II and class III devices. These provisions are intended to help FDA focus its limited inspection resources on higher-risk inspections and give medical device firms that operate in global markets an opportunity to more efficiently schedule multiple inspections.

How much does a third party inspection cost, and who pays for it?

FDA does not set the fees that an accredited person may charge for an inspection, and FDA does not pay for such inspections. The establishment that wishes to use a particular third-party must negotiate the cost with the accredited person and is responsible for paying the negotiated fee.

Who can be accredited to conduct third-party inspections?

A person who wishes to be accredited by FDA to conduct establishment inspections:

• may not be an employee of the Federal Government;
• may not be owned by, or have an “affiliation (including a consultative affiliation)” with a device manufacturer, supplier, or vendor;
• cannot be engaged in the design, manufacture, promotion, or sale of FDA-regulated products;
• must operate “in accordance with generally accepted professional and ethical business practices” and must agree in writing to certain fundamental operating principles;
• may not have a financial conflict of interest regarding any FDA-regulated product.

Which establishments are eligible for inspection by a third-party?

To employ an accredited person in lieu of an FDA inspection, an establishment must meet certain conditions:

• the most recent inspection must have been classified as “no action indicated” or “voluntary action indicated.”
• the establishment must notify FDA of the person it intends to use, and FDA must agree to the selection.
• the establishment must market a device in the United States and must market a device “in one or more foreign countries.”
• the accredited person must be certified, accredited, or otherwise recognized by one of the countries in which the device is to be marketed
• the establishment must submit a statement that one of the countries in which the device is to be marketed “recognizes an inspection of the establishment by [FDA].”

Are there effective controls to prevent possible conflicts of interest in the third-party inspection program?

MDUFMA includes very stringent provisions designed to avoid conflict of interests. As described above, an accredited person may not be owned by, or have an affiliation with a device manufacturer, supplier, or vendor; cannot serve as a consultant; cannot be engaged in the design, manufacture, promotion, or sale of FDA-regulated products; and cannot have a financial interest in any FDA-regulated product. The new law requires FDA to audit the performance of third-party inspectors and to review the compliance history of each establishment whenever it requests a third-party inspection. There are also severe penalties if an accredited person violates the law, including permanent debarment, civil money penalties, and criminal prosecution.

The law requires FDA to clear an establishment’s choice of an accredited person whenever it wishes to obtain a third-party inspection. The law permits FDA to ask for additional information concerning the establishment’s relationship with the third-party. And the law generally prohibits the use of third-parties for more than two consecutive inspections; this ensures that FDA will have the opportunity to continue to periodically inspect all establishments.

How soon will I be able to obtain a third party inspection?

On April 28, 2003, FDA announced the criteria it will use to accredit persons for the purpose of conducting inspections of eligible device manufacturers under § 704(g)..  See Implementation of the Inspection by Accredited Persons Program Under The Medical Device User Fee and Modernization Act of 2002; Accreditation Criteria: Guidance for Industry, FDA Staff, and Third Parties on our MDUFMA Guidance page for additional information.

FDA must accredit third-parties by October 26, 2003; an eligible establishment would then be permitted to select any accredited person to conduct an inspection in lieu of an FDA inspection.

Sunset date.

The authority for third-party establishment inspections expires October 1, 2012.

Reprocessed Single-Use Devices

How will reprocessed single-use devices be regulated under the new law?

Before enactment of the new law, the regulatory requirements for manufacturers of reprocessed single-use devices (the persons who are reprocessing the device) basically depended upon the class of the device. Manufacturers of reprocessed class I and II single-use devices were required to have a 510(k), unless the device was exempt from 510(k). Reprocessors of class III devices were required to obtain premarket approval. Under the new law, reprocessors of some previously-exempt devices will no longer be exempt from the 510(k) submission requirements and will need to submit 510(k)s that include validation data. Validation data will also be required for many reprocessors of single-use devices that are currently the subject of cleared 510(k)s. Finally, reprocessors of class III devices will need to submit a premarket report (a new type of premarket application). More detail is provided below.

If my reprocessed single-use device was 510(k) exempt before the new law, is it still exempt?

Not necessarily.  FDA reviewed the types of reprocessed single-use devices that were previously exempt from 510(k), and determined which of these exemptions should be terminated. On April 30, 2003, FDA published a Federal Register notice that included a list of critical² reprocessed single-use devices whose exemption from 510(k) is being terminated and for which validation data is now required in 510(k)s.  For a previously-exempt critical reprocessed single-use device to  remain on the market after July 30, 2004, a 510(k) must be submitted, including “validation data . . . regarding cleaning and sterilization, and functional performance” to show that the reprocessed device “will remain substantially equivalent . . . after the maximum number of times the device is reprocessed as intended”, and FDA clearance must be obtained.  If a 510(k) is not submitted, or if FDA finds the device to be “not substantially equivalent,” marketing of the device must cease.

On June 26, 2003, FDA published a Federal Register notice adding nonelectric biopsy forceps to the list of reprocessed single-use devices whose exemption from premarket notification has been terminated and for which validation data is required.

A reprocessed single-use device not included on this list may continue to be marketed without submission of a 510(k).

By April 26, 2004, FDA is to review the types of semi-critical³ reprocessed single-use devices that are currently exempt from 510(k), and determine which of these exemptions is to be terminated.  FDA must publish a Federal Register notice listing these devices.  510(k)s submitted for these devices must include validation data, and must be submitted within 15 months of publication of the list.  See § 510(o)(2).

²A “critical reprocessed single-use device” is a reprocessed single-use device that is intended to contact normally sterile tissue or body spaces during use.
³A “semi-critical reprocessed single-use device” is reprocessed single-use device that is intended to contact intact mucous membranes and not penetrate normally sterile areas of the body.

When will FDA require validation data for reprocessed single-use devices that already require 510(k) clearance (i.e., devices that are not 510(k) exempt)?

On April 30, 2003, FDA published a Federal Register notice that included a list of critical² reprocessed single-use devices that are already subject to 510(k), but for which the manufacturer must now submit “validation data . . . regarding cleaning and sterilization, and functional performance” to show that the reprocessed device “will remain substantially equivalent . . . after the maximum number of times the device is reprocessed as intended” by the person who submits the 510(k).   For a reprocessed single-use device that obtained 510(k) clearance prior to April 30, 2003, the manufacturer must submit validation data to FDA by January 30, 2004 if the device is to remain on the market.  Any new 510(k) (any 510(k) submitted after April 30, 2003) for a device on this list must include validation data. 

When will FDA require premarket reports for class III reprocessed single-use devices?

The requirement for submission of premarket reports for class III reprocessed single-use devices went into effect on the act’s effective date, October 26, 2002. Previously, PMAs were required for these devices.

What labeling changes are required for reprocessed single-use devices and when must the new labeling be used?

Any reprocessed single-use device (i.e., devices exempt from 510(k) requirements, subject to 510(k) requirements, or subject to a premarket report) introduced into interstate commerce after January 25, 2004 must “prominently and conspicuously” bear the statement:

Reprocessed device for single use. Reprocessed by [name of manufacturer that reprocessed the device] .

This provision will make it easier for patients and health care professionals to know when they are using a reprocessed device.

Postmarket Surveillance

Does the new law do anything to strengthen postmarket surveillance?

MDUFMA authorizes additional appropriations for postmarket surveillance — $3 million for FY 2003, $6 million for FY 2004, and “such sums as may be necessary” in subsequent years. An authorization for additional appropriations does itself not provide FDA any additional resources. For FDA to receive these resources, Congress would have to pass appropriations acts providing these additional funds to the agency.

In addition, MDUFMA requires FDA to conduct, and submit to Congress by January 10, 2007, a study of:

• the effect of medical device user fees on FDA’s ability to conduct postmarket surveillance.
• the extent to which device companies comply with postmarket surveillance requirements.
• any improvements needed for adequate postmarket surveillance, and the amount of funds needed to do so.
• recommendations as to whether, and in what amount, user fees should be used for postmarket surveillance, if extended beyond FY 2007.

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