FY 2007 MDUFMA Financial Report

REQUIRED BY THE

MEDICAL DEVICE USER FEE
AND MODERNIZATION ACT OF 2002

amended by the

MEDICAL DEVICE USER FEE
STABILIZATION ACT OF 2005

FOOD AND DRUG ADMINISTRATION
DEPARTMENT OF HEALTH AND HUMAN SERVICES

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Contents

Main Report

Letter to the Secretary Department of Health and Human Services

Executive Summary

Background

Meeting the Statutory Conditions for User Fees in FY 2007

User Fee Collections

Obligation of User Fee Collections

Carryover Balances

Total Costs of the Process for the Review of Medication Device Applications

Management Challenges for FY 2008

Appendices

Appendix A: Statutory Conditions for Collection and Use of Fees

Appendix B: Number of Fee Paid Applications in FY 2007

Appendix C: Waivers, Reductions, and Exemptions

Appendix D: Allowable and Excluded Costs for the Process for the Review of Medical Device Applications

Appendix E: Development of Costs for the Process for the Review of Medical Device Applications

Letter to the Secretary Department of Health and Human Services

August 15, 2008

The Honorable Richard Cheney
President of the Senate
United States Senate
Washington, D.C.  20510

Dear Mr. President:

The Medical Device User Fee and Modernization Act of 2002 (MDUFMA), as amended, requires an annual financial report to Congress.  I have enclosed the fifth annual financial report to Congress which documents how the Food and Drug Administration (FDA) met each of the necessary conditions specified in MDUFMA for continued collection of medical device user fees.  Availability of these fees makes the FDA better able to strengthen its medical device review process and meet the performance goals established for this program.

I appreciate the timely action of Congress in reauthorizing MDUFMA for an additional five years in the Food and Drug Administration Amendments Act of 2007.

Sincerely,

Michael O. Leavitt

Enclosure
 

Executive Summary

The Medical Device User Fee and Modernization Act (MDUFMA) of 2002 requires the Food and Drug Administration (FDA) to report annually on the financial aspects of its implementation of MDUFMA. This is the annual financial report to Congress that covers activities for fiscal year (FY) 2007.

MDUFMA, amended by the Medical Device User Fee Stabilization Act (MDUFSA) of 2005, specifies that three conditions must be satisfied in order for FDA to collect and spend MDUFMA fees:

1. Within FDA's salaries and expenses appropriation, the amount appropriated for devices and radiological health after FY 2004 must be at least $205,720,000, excluding fees, adjusted for inflation.
2. The fee amounts that FDA can collect must be specified in the Appropriation Acts.
3. FDA must spend at least as much from appropriated funds, exclusive of user fees, for the review of medical device applications as it spent in FY 2002, adjusted for inflation.

MDUFMA also contains a provision that FDA must spend at least as much on medical device inspections as it spent in FY 2002, increased by 5 percent in each fiscal year.

This report explains how FDA met the four statutory conditions in FY 2007. The report also provides information on user fee collections, expenditures, and carryover balances. In FY 2007, FDA net collections totaled $30 million from fees. FDA obligated $35 million from MDUFMA collections to support FDA's medical device review program. FDA carried forward into FY 2008 a balance of $11 million — about $5.4 million less than the carryover balance at the end of FY 2006. About 66 percent of the total expenses for the medical device review program in FY 2007 went for personnel salary and benefit costs. The remaining 34 percent was spent on operating and the infrastructure costs necessary to support the medical device review program.

MDUFMA fees, along with the increased appropriations from Congress, enabled FDA to dedicate 242 more full-time equivalents (FTEs) to the medical device review program in FY 2007 than in FY 2002 — the year before MDUFMA was enacted. An additional 76 contractor staff-years were also dedicated to the device review in FY 2007 compared with FY 2002. These resources have enabled FDA to achieve the performance goals associated with the enactment of MDUFMA and strengthen FDA's medical device review program. FDA looks forward to continued strengthening of the medical device review program in FY 2008.