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FY 2007 MDUFMA Performance Report: Appendices

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  • Appendix A: Statutory Conditions for Collection and User of Fees
  • Appendix B: Number of Fee Paid Applications in FY 2006
  • 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

 


 

Appendix A

 

Statutory Conditions for Collection and Use of Fees

The FD&C Act was amended by MDUFMA, Public Law 107-250, and by MDUFSA, Public Law 109-43.  The Act specifies three statutory conditions that must be satisfied before FDA can collect and spend medical device user fees.  A summary of these conditions has been introduced on page 2.  Appendix A describes each of the conditions and explains how FDA met the conditions in FY 2007 in more detail.

In order to determine whether the statutory conditions are satisfied, FDA must calculate and apply an adjustment factor, defined in section 737(7) of the Act, in the assessments of the first and third conditions.  The Act defines the term "adjustment factor" as follows:

The term 'adjustment factor' applicable to a fiscal year is the Consumer Price Index for all urban consumers (all items; United States city average) for April of the preceding fiscal year divided by such Index for April 2002.

The April preceding FY 2007, which began on October 1, 2006, was April 2006.  The Consumer Price Index (CPI) for April 2006 was 201.5.  The CPI for April 2002 was 179.8.  Dividing the CPI of April 2006 by the CPI of April 2002 yields an adjustment factor of 1.1207 for FY 2007.

The first condition is a funding condition that affects the collection of fees in FY 2007. MDUFMA, amended by MDUFSA, specifies a minimum amount of budget authority that must be appropriated for the Device and Radiological Health line of FDA's appropriation, exclusive of user fees, for FY 2007.  That minimum amount for FY 2007 is $205,720,000 multiplied by the adjustment factor (1.1207), or $230,551,000 (rounded to the next whole thousand dollars).  In FY 2007, after rescission, the final appropriated budget authority for the Device and Radiological Health line of FDA's Appropriation, exclusive of user fees, was $230,682,000.  Since this amount is greater than $230,551,000, FDA's appropriation for FY 2007 met the first condition.

The second condition comes from section 738(h)(2)(A)(i).  It states that fees "shall be retained in each fiscal year in an amount not to exceed the amount specified in appropriation acts, or otherwise made available for obligation, for such fiscal year..."  The second condition means FDA can not collect medical device user fees without an appropriation.

On February 15, 2007, the President signed FY 2007 Appropriation Act, Public Law  110-5, which appropriated $43,726,000 from medical device user fees for FDA in FY 2007.  Therefore, FDA met the second condition.

The third condition requires a minimum spending from appropriations, exclusive of user fees, on the process for medical device review as defined in MDUFMA.  This condition in section 738(h)(2)(A)(ii), states that fees:

shall only be collected and available to defray increases in the costs of the resources allocated for the process for the review of device applications (including increases in such costs for an additional number of full-time equivalent positions in the Department of Health and Human Services to be engaged in such process) over such costs, excluding costs paid from fees collected under this section, for fiscal year 2002 multiplied by the adjustment factor.

In FY 2002, FDA's obligations for the process for the review of medical device applications totaled $119,673,026, as reported in the FY 2003 MDUFMA Financial Report.  The adjustment factor for FY 2007 is 1.1207.  Multiplying by the adjustment factor, FDA calculates the minimum spending from appropriations for the medical device review process in FY 2007 must be at least $134,117,560.

As this report documents, FDA obligated $173,130,797 from appropriations for the process for the review of medical device applications in FY 2007.  Since this amount is greater than the minimum spending from appropriation required under MDUFMA, FDA met the third condition.

The table below shows FDA obligations on the process for the review of medical device applications in FY 2006 and FY 2007.  The table separates the obligations that were funded by appropriations and user fees.

Food and Drug Administration
Obligations for the Process for the Review
of Medical Device Applications
As of September 30, 2007
 
FY 2006
FY 2007
From Appropriations
$167,425,661
$173,130,797
From Medical Device Fee Collections
$32,068,610
$35,202,700
Total Obligations
$199,494,271
$208,333,497

In addition, MDUFMA imposes a provision that FDA obligations on medical device establishment inspections must be equal to or greater than its obligations for this purpose in FY 2002, with a 5 percent increase for each fiscal year.  If FDA does not satisfy this condition for two consecutive years, FDA is prohibited from allowing accredited third-parties to conduct device establishment inspections in the future years.  This condition is cited in section 704(g)(10) of the Act. 

The table below shows the statutory minimum to be obligated for device establishment inspections (2002 level increased by 5 percent each year) and FDA obligations for medical device establishment inspections from FY 2002 to FY 2007.  Because FDA has spent more than the statutory minimum for device inspection for each of the past 2 fiscal years, FDA may continue to allow accredited third-parties to conduct certain device establishment inspections in future years.

Food and Drug Administration
Obligations for the Inspection of Medical Device Establishments
(Rounded to $000)
As of September 30, 2007
Fiscal Year
Minimum — 2002 Obligations
Increased by 5% per year
Actual Obligations
Excess or Shortfall
FY 2002 Base
$19,425,000
$19,425,000
$0
FY 2003
$20,396,000
$22,576,000
$2,180,000
FY 2004
$21,416,000
$21,430,000
$14,000
FY 2005
$22,487,000
$21,515,000
($972,000)
FY 2006
$23,611,000
$29,230,000
$5,619,000
FY 2007
$24,792,000
$31,926,000
$7,134,000

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Appendix B

 

Number of Fee Paid Applications in FY 2007


Under MDUFMA, FDA sets four fee rates for full fee applications, 180-day supplements, real-time supplements, and 510(k)s.  The full fee application rates cover PMAs, PDPs, BLAs, PMRs, panel track supplements, and efficacy supplements.  Under MDUFMA, a fee rate for each application type is a percentage of a standard fee for a PMA or a full fee application.  Of a full fee application, 180-day supplement is 21.5 percent; real-time supplement is 7.2 percent; and 510(k) is 1.42 percent in aggregate.  A small business rate for each application type, except 510(k), is 38 percent of its rate.  A small business rate for 510(k) is 80 percent of $4,158.  The table below exhibits the rates for all types in FY 2006 and FY 2007. 

Food and Drug Administration
Medical Device User Fee Rates
As of September 30, 2007
Application Type
FY 2006
FY 2007
Full Fee Applications
$259,600
$281,600
Small Business Rate
$98,648
$107,008
180-Day Supplements
$55,814
$60,544
Small Business Rate
$21,209
$23,007
Real-Time Supplements
$18,691
$20,275
Small Business Rate
$7,103
$7,705
510(k)s
$3,833
$4,158
Small Business Rate
$3,066
$3,326

The next table summarizes the number of applications received by FDA in FY 2006 and FY 2007.  These applications have been paid in full by the companies before September 30.

Food and Drug Administration
Applications Received and Paid Fees
As of September 30, 2007
Application Type
FY 2006 Actual
FY 2007 Actual
Full Fee Applications
51
24
Small Business
7
2
180-Day Supplements
76
99
Small Business
25
23
Real-Time Supplements
156
141
Small Business
16
21
510(k)s
2,988
2,849
Small Business
652
652

Please note that the numbers of fees received by FDA should not be used as a surrogate for medical device review workload.  Many applications submitted to FDA are not charged fees by FDA for the following reasons:

  • first applications submitted by small businesses;
  • applications bundled under one fee because of similarity of medical device review issues;
  • applications exempted from fees for pediatric indications; and
  • applications for investigational device exemptions (IDEs) and PMA supplements other than Real-Time and 180-Day Supplements;
  • other applications for which no fee is charged, such as 30 day notices and 513(g) submissions; and
  • annual report submissions that must be examined but that have no fees associated with them.

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Appendix C

 

Waivers, Reductions, and Exemptions

MDUFMA directs FDA to waive the first premarket application fee from a qualified small business and an application fee submitted solely for pediatric indications.  It also directs FDA to reduce premarket application and supplement fees for subsequent applications from qualified small businesses.  Beginning in FY 2004, FDA also charged a reduced rate for 510(k)s from qualified small businesses.  In addition, FDA does not collect fees for the followings types:

  • applications for Humanitarian Device Exemptions (HDE) submitted under section 520(m);
  • applications submitted under section 351 of the Public Health Service (PHS) Act for a product licensed for further manufacturing use only;
  • applications submitted by a state or federal government entity for devices that are not intended for commercial distribution; and
  • 510(k)s submitted to certified third-party reviewers, rather than to FDA.

FDA provides a summary of MDUFMA fee waivers, reductions, and exemptions granted in FY 2007 in this appendix.

FDA responded to thousands of e-mails and phone calls from companies asking for information regarding the small business waiver for MDUFMA fees.  After carefully reviewing the requests from companies, FDA granted 782 of 807 written requests for small business status in FY 2007.  FDA waived or reduced 664 applications under small business criteria in FY 2007.  This is smaller than the number of requests for waiver granted, since some of the parties to whom a request was granted did not submit the applications in FY 2007.  The following table portrays the number of small business application fees that were waived or reduced by FDA, and the value of each category in FY 2007.

Food and Drug Administration
FY 2007 Small Business Fee Waivers and Reductions Granted
As of September 30, 2007
Category
Number
Amount
Total Value
Full Fees Waived
6
$281,600
$1,689,600
Full Fees Reduced
1
$174,592
$174,592
Panel Track Supplements Reduced
0
$174,592
$0
180-Day Supplements Reduced
19
$37,537
$713,203
Real-Time Supplements Reduced
20
$12,570
$252,002
510(k)s Fees Reduced
618
$832
$523,607
Total
664
 
$3,353,004

Note: reduced fee rate = full fee rate - small business fee rate

FDA collected $29,824,954 fees or net cash in fiscal year 2007.  Had there been no small business waivers and reductions, FDA would have collected an additional $3,353,004, or an additional 11 percent of collections.  The value of the 510(k) waivers is not included in the table above because under MDUFMA the fees for 510(k)s from large firms are increased slightly to offset the reduction in 510(k) fees charged to qualifying small businesses. 

FDA received 6 HDE applications and 23 supplements in FY 2007.  None of these are subject to MDUFMA fees.  FDA does not know if any of them would have been submitted had they been subject to a fee.  Therefore, FDA does not know the extent to which this exemption resulted in any loss of revenue.

CBER received two exemption requests in FY 2007 for applications submitted under section 351 of the PHS Act for a product licensed for further manufacturing use only.  Because these were bundled with other applications, there would not have been a charge for these if they had not been exempt, so in this case there was no financial impact for these two exemptions.

FDA received and granted three requests from State or Federal government entities for exemptions for 510(k)s that were not intended for commercial distribution.  Total cost of the exemptions in FY 2007 was $12,474.

FDA granted exemptions for pediatric indications in FY 2007 to 33 510(k)s, 3 180-day supplements, and 2 real-time.  Total value of these exemptions was $359,396.

The 510(k) Third-Party Review Program decreased by 18 percent from FY 2006 to FY 2007.  FDA received 235 510(k) submissions subject to third-party review in FY 2007 compared to 287 in FY 2006.  FDA exempted fees for the 235 submissions.  The total value of these exemptions in FY 2007 was $948,010 – assuming that 15 percent of the third-party submissions would have paid the reduced small business fee.

Food and Drug Administration
Summary and Total Value of All Fee Waivers,
Reductions, and Exemptions Granted
As of September 30, 2007
Reason
FY 2006
FY 2007
Small Business
$4,274,178
$3,353,004
Govt. Sponsored Application not for Commercial Distribution
$15,332
$12,474
Pediatric Indications
$405,254
$359,396
510(k)s Reviewed by Third-Party Review
$996,411
$948,010
Total Value
$5,691,175
$4,672,884

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Appendix D

 

Allowable and Excluded Costs for the Process for the Review of Device Applications

The Act, as amended by MDUFMA, defines the process for the review of medical device applications and the costs that may be included in that process.  Using these definitions (and further refinements identified below) and the methodologies described in this report, the agency identified those activities that were applicable to the "process for the review of device applications."

In the past, over 81 percent of obligated funds in FDA are expended within 1 year, and  96 percent within 2 years.  Therefore, obligations represent an accurate measure of costs. 

MDUFMA Related Costs

Included Activities

[Section 737(5)(A)]  The activities necessary for or in anticipation of the review of premarket applications, premarket reports, supplements, and premarket notification submissions, including, but not limited to, the following:

  • 510(k)s — Traditional/Supplements/Abbreviated/Specials (third-party and non-third-party)
  • Evaluation of Automatic Class III Designations
  • Traditional and Expedited PMAs (includes amendments, supplements, and annual reports)
  • Modular PMAs (shell, modules, amendments, supplements, and annual reports)
  • PDPs (including amendments, supplements, and annual reports)
  • Premarket Reports (amendments, supplements, annual reports)
  • Reclassification Petitions
  • Class II Exemption Petitions
  • BLAs and BLA Supplements (Applications subject to 351 of the PHS Act)
  • Recruitment and use of outside experts during the review process
  • Obtaining advisory committee input (e.g., convened meetings, homework assignments)
  • Resolution of product jurisdictional issues
  • Dispute resolution/appeals
  • Information Technology (IT) support for review activities
  • Recruitment of review staff

[Section 737(5)(B)]  The issuance of action letters that allow marketing of devices or which set forth in detail the specific deficiencies in such applications, reports, supplements, or submissions and, where appropriate, the actions necessary to place them in condition for approval.  This includes activities such as the issuance of deficiency letters, meetings with applicants to discuss such letters, and review of the responses.

[Section 737(5)(C)]  The inspection of manufacturing establishments and facilities undertaken as part of the review of pending premarket applications, premarket reports, and supplements to include activities such as the review of manufacturing information submitted in premarket applications, pre-approval GMP inspections, and resolution of any identified GMP issues.

[Section 737(5)(D)] Monitoring of research conducted in connection with the review of such applications, reports, supplements, and submissions.  For the types of applications identified above, this would include monitoring activities such as:

  • conduct of bioresearch monitoring inspections (both "for cause" and pre-approval) of sponsors, institutional review boards, and clinical investigators;
  • adverse event and complaint investigations related to on-going clinical trials; and
  • Good Laboratory Practice inspections (21 CFR Part 58).

[Section 737(5)(E)]  Review of device applications subject to section 351 of the Public Health Service Act for an investigational new drug application (IND) under section 505(i) or for an investigational device exemption (IDE) under section 520(g) and activities conducted in anticipation of the submission of such applications under section 505(i) and 520(g).  This would include the review of the IDEs (original, amendments, and supplements) and INDs (amendments, supplements, and safety reports).  Also included are pre-IDEs (review of the submission and any meetings or correspondence), significant/non-significant risk determinations, and Determination/Agreement meetings.

[Section 737(5)(F)]  The development of guidance, policy documents, or regulations to improve the process for the review of premarket applications, premarket reports, supplements, and premarket notification submissions to include activities such as the development of device-specific, cross-cutting, special control, and program-related guidances as well as "Blue Book Memoranda" and Standard Operating Procedures.

[Section 737(5)(G)]  The development of voluntary test methods, consensus standards, or mandatory performance standards under section 514 in connection with the review of applications listed above.  This would include national and international standards development and coordination related to the review of premarket applications.

[Section 737(5)(H)]  The provision of technical assistance to device manufacturers in connection with the submission of such applications, reports, supplements, or submissions to include activities such as:

  • informal consultation via phone, meetings, e-mail, and facsimile;
  • meetings between FDA and applicants, such as pre-submission meetings, Determination/Agreement meetings, and meetings to discuss deficiencies in premarket applications;
  • use of outside experts in the review of premarket applications;
  • review of labeling prior to approval of a premarket application or supplement;
  • FDA sponsored conferences/workshops related to premarket submissions; and
  • staff participation at non-FDA meetings related to such applications.

[Section 737(5)(I)]  Any activity undertaken under section 513 or 515(i) in connection with the initial classification or reclassification of a device or under section 515 (b) in connection with any requirement for approval of a device to include activities such as the review of requests for information submitted under section 513(g) and the "call" for PMAs for pre-amendment devices.

[Section 737(5)(J)]  Evaluation of post-market studies required as a condition of approval of a premarket application or premarket report under section 515 or section 351 of the PHS Act.  This would include activities such as the review of:

  • protocols for the post-market studies;
  • modifications to such protocols;
  • data collected under the protocol; and
  • labeling changes (instructions for use, warnings, precautions, etc.), if needed as a result of the review of the data. 

[Section 737(5)(K)]  Compiling, developing, and reviewing information on relevant devices to identify safety and effectiveness issues for devices subject to premarket applications, premarket reports, supplements, or premarket notification submissions to include activities such as:

  • epidemiology studies; and
  • post-marketing problem identification/resolution, including reports filed under the Medical Device Report regulation.

Training related to premarket and post-market approval activities.  This would include the following types of training:

  • scientific, clinical, and statistical training;
  • managerial or other administrative training;
  • policy/regulatory training;
  • professional development (coursework, attendance at professional meetings, library resources);
  • "Vendor Days;" and
  • Site Visit Program for premarket reviewers.

User Fee Act implementation to include activities such as:

  • guidance/regulation development;
  • stakeholder outreach for educational and comment purposes;
  • training of agency staff; and
  • IT support for implementation.

*All user fee related costs represented by the above activities are collectively referred to in this report as costs for the process for the review of medical device applications.

Section 737(6) of the Act defines the "costs of resources allocated for the process for the review of medical device applications" as the expenses incurred in connection with this process for:

  1. officers and employees of the FDA, contractors of the FDA, advisory committees, and costs related to such officers, employees, committees and contracts;
  2. management of information, and the acquisition, maintenance, and repair of computer resources;
  3. leasing, maintenance, renovation, and repair of facilities and acquisition, maintenance, and repair of fixtures, furniture, scientific equipment, and other necessary materials and supplies; and
  4. collecting user fees and accounting for resources allocated for the review of premarket applications, premarket reports, supplements, and submissions.

Excluded Activities

  • Enforcement policy and regulation development
  • Third-party inspection program
  • Post-approval compliance actions and activities unrelated to PMA Conditions of Approval and investigations of safety and effectiveness issues for devices subject to FDA regulation
  • Post-approval activities relating to:
    Promotion and advertising
    International coordination/Mutual Recognition Agreement work
    International standard development
    Liaison/outreach and manufacturing assistance
    Device tracking
  • Inspections unrelated to the review of covered applications
  • Export/Import activities unrelated to the conduct of a clinical trial
  • Research related to future products
  • All activities conducted under the Mammography Quality Standards Act (MQSA), radiation safety authorities of the FD&C Act (Sections 531 et. seq.), and the Clinical Laboratories Improvement Amendments.

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Appendix E

 

Development of Costs for the Process for the Review of Device Applications


General Methodology

The costs associated with the process for the review of medical device applications are based on obligations recorded within FDA's CDRH, CBER, ORA, and OC.  These organizations correspond to the cost categories presented as follows:

Cost Category
FDA Organization
Costs for PMAs, PDPs, PMRs, Modular PMAs, supplements, and 510(k)s
CDRH
Costs for the Review of BLAs, PMAs, supplements, and 510(k)s
CBER
Costs for field inspection and investigation
ORA
Costs for Agency general and administration
OC

The costs were accumulated using a variety of methods.  Using the definitions of costs and activities included in the process for the review of device applications in the Act, as expanded in the discussion in Appendix D, the cost categories within each organization listed above were identified as parts of the medical device review process.

 

Center Costs

Costs of the medical device review program are tracked for each organizational component in CDRH and CBER, usually at the division level.  Most FDA components involved in the process perform a mixture of activities — some within the definition of the process for the review of device applications, and some not.  FDA groups its organizational components into three categories:

  • direct review and laboratory;
  • indirect review and support; and
  • center-wide costs.

The allocation of costs for each category is discussed below.

Direct Review and Laboratory

Employees in all components of CDRH and CBER other than those noted below as Center indirect review and support components reported their time in activities that could be used to differentiate between time spent on the process for the review of device applications and all other time.

Both CDRH and CBER have existing time reporting systems in place.  These time reporting systems were modified after the enactment of MDUFMA, so that time could be reported in categories that could be separated into allowable and excluded activities with respect to the process for the review of device applications, as defined in MDUFMA and as further defined in Appendix D.  This process is further explained below.

Ten years prior to the enactment of MDUFMA, CDRH's time reporting system had been used to gather information about employee time for a 2-week period one or two times each year.  After the definitions of allowable and excluded costs for the process for the review of device applications under MDUFMA were further refined, as presented in Appendix D, the time reporting categories in the CDRH time-reporting system were modified so that all data captured fit into either allowable or excluded costs.  These modifications to the system were completed in mid-June 2003. 

Once these modifications were completed, all CDRH employees other than management and administrative personnel reported all of the time they worked against these revised categories for a period of 8 consecutive weeks, from June 29 through August 23, 2003.  Whether time categories were counted as allowable or excluded was not apparent to employees as they reported their time. 

FDA Centers are very payroll-intensive organizations.  In most years over 60 percent of all FDA funds go to pay for employee salaries and benefits.  Almost all other costs directly support these employees.  Thus the percent of time reported during this 8-week period as having been expended on allowable device review process activities for each cost-center (usually an organization component at the Division level) was then applied to all costs incurred for that cost-center for the entire FY 2003.

Further, since these percentages of allowable costs had never been collected for earlier periods, the percentages of allowable costs reported in this 8-week period were likewise applied to each cost center's direct costs (obligations) incurred in FY 2002, to get the baseline FY 2002 device review process cost data required under MDUFMA.

For FY 2004 and FY 2005, all CDRH employees, other than management and administrative personnel, reported all of the time they worked against these revised categories for one 2-week period during each quarter of the fiscal year.  The results from the 8 weeks of time reporting data were then averaged and extrapolated to the entire year.  This served as the basis for measuring CDRH costs for the device review process for direct review and laboratory components, and the same pattern has been followed in subsequent years.  In addition, further modifications were made in FY 2005 to be able to break out time for various specific types of application review.

In FY 2006, CDRH modified its time reporting categories to better account for effort on training, guidance document and standards development, and outreach initiatives.  Prior to FY 2006, most of these areas were considered part of the MDUFMA process.  These changes allowed CDRH to better distinguish between premarket and postmarket efforts.

In FY 2007, CDRH continued to make minor refinements to the CDRH automated time reporting system.  Based on requests from staff, CDRH added several reporting activities to improve reporting accuracy.  New activity codes were created to further define premarket review activities, reflect organizational transformation initiatives, and differentiate between user fee and appropriated MQSA program management activity.  CDRH also added numerous "sub-activities" to the existing activities in all program areas so that staff could easily identify and report their time in the appropriate categories.  These enhancements did not have a significant effect on FDA's MDUFMA process calculations.

A similar procedure is used in CBER to measure the direct review and laboratory components costs for the device review process.  CBER was able to use the time-reporting system it has had in place for over 10 years prior to the enactment of MDUFMA, and which was validated by studies done just after PDUFA was initiated in 1993.  That system collects time reports from all employees other than management and administrative support personnel for a 2-week period during each quarter of the fiscal year. 

CBER's existing time-reporting system was also modified to assure that activities against which time was reported could be clearly divided into those activities that were either allowable or excluded in the MDUFMA-defined process for device application review.  The results from each 2-week period of time reported are extrapolated for the quarter being reported.  The extrapolated results for each quarter are averaged to estimate the full year costs. 

CBER's process for determining allowable and excluded costs for MDUFMA direct review and laboratory costs is identical to how costs for the process for the review of human drug applications was validated by Arthur Andersen under PDUFA for 1992 and 1993. 

Center Indirect Review and Support

Indirect review and support components provide the infrastructure for the review process.  In CDRH, these are the Office of the Center Director and the Office of Management and Operations.  In CBER, these components include the Office of the Center Director, Office of Management, Office of Information Technology, and the Office of Communications, Training, and Manufacturers Assistance.

In both CDRH and CBER, the allowable costs for these indirect review and support components were determined by multiplying the average percent of allowable costs for all direct review and laboratory components by the total costs of each of these indirect review and support components.

Center-wide Costs

A number of Center-wide expenses are paid for centrally from agency funds each year rather than from funds allocated to the centers.  These costs include rent, utilities, some computer equipment, facilities repair and maintenance, and some extramural and service contracts. 

Many of these costs, such as building rent, can be traced back to the specific organization component that generated the cost and were assigned the user fee related percentage calculated for the division to which the expenditure related.  For the costs that benefited the Center as a whole and could not be traced to a specific division, a weighted average user fee percentage was calculated based on the level of user fee related costs to total costs in the Center.

 

Field Inspection and Investigation Costs

All field inspection and investigation costs are incurred by FDA's ORA.  ORA costs are incurred in both district offices (the "field") and headquarters support offices.  In FY 2002, the agency began tracking accumulated ORA costs through the use of the Field Accomplishment and Compliance Tracking System (FACTS).  FACTS is a time and activity tracking system which captures time in a variety of categories, including pre-approval inspections of manufacturing facilities, investigations of clinical studies, and analytical testing of samples — which are included in the process for the review of device applications.

Total direct hours reported in FACTS are used to calculate the total number of staff-years required by ORA to perform activities in the process for the review of device applications as defined in MDUFMA.  In addition to the direct time, an allocation of support time is also included to represent the work done by the ORA administrative and management personnel.  The agency then applies the total number of staff years devoted to the process for the review of device applications to the average salary cost in ORA to arrive at the ORA salary costs for the process for the review of device applications as defined in MDUFMA.  The final step is to allocate ORA obligations for operations and rent to the device review process based upon the ratio of user fee related staff years to total ORA staff years.  The following table summarizes the calculation for the FY 2006 and FY 2007, respectively.

Food and Drug Administration
Office of Regulatory Affairs
Costs of the Process for the Review of Medical Device Applications
As of September 30, 2007
Cost Component
FY 2006
FY 2007
Staff Years Utilized
64
64
ORA Average Salary and Benefits
$99,675
$104,700
Total Salary and Benefits
$6,379,211
$6,700,800
Operating and Other Costs*
$4,120,047
$4,810,798
Total
$10,499,258
$11,511,598
*Other costs are central, GSA rent, rent-related, and Shared Services costs that are applicable to the process for the review of device applications.

The ORA costs for the process for the review of medical device applications shown in the table include costs paid from appropriations and user fee collections. 

 

Agency General and Administrative Costs

The agency general and administrative costs are incurred in the FDA's OC.  At the end of FY 2007, OC was comprised of the following offices:

  • Immediate Office of the Commissioner
  • Office of the Chief Counsel
  • Office of the Chief of Staff
  • Office of the Administrative Law Judge
  • Office of Equal Employment and Diversity Management
  • Office of International and Special Programs
  • Office of Operations
  • Office of Policy, Planning and Preparedness
  • Office of Scientific and Medical Programs

The OC costs applicable to the process for the review of medical device applications were calculated using a method prescribed in 1993 by the Division of Cost Determination Management, Office of Finance, Office of the Secretary, Department of Health and Human Services.  (Today the Office of Finance is under the Office of the Assistant Secretary for Resources and Technology.) This method uses the percentage derived by dividing total Office of the Commissioner costs by the total FDA salary expenses after subtracting the salary expenses from the Office of the Commissioner.  The percentage is then multiplied by the sum of salaries applicable to the process for the review of medical devices in CDRH, CBER, and ORA to derive the agency general and administrative costs applicable to the process for the review of medical device applications.

Using this methodology, FDA dedicated $12,313,468 and $14,545,410 in general and administrative expenses to the medical device review process in FYs 2006 and 2007, respectively.  The FY 2007 general and administrative obligations from appropriations and user fees combined accounted for about 7 percent of the total cost of the process for the review of device applications

At the beginning of FY 2004, FDA implemented a reorganization and streamlining of its administrative support activities.  Many functions and resources from FDA Centers, ORA, and components of the OC were consolidated into the Office of Shared Services under Office of Management – a component of OC.  This was done in an effort to achieve greater efficiency in the provision of these services.  For reporting comparability purposes, however, resources expended by the Office of Shared Services in FY 2007 supporting the device review process are shown as having been incurred by CDRH, CBER, ORA, or OC, in proportion to the resources allocated from each these components to the Office of Shared Services.  This makes the figures shown for FY 2007 comparable with figures prior to FY 2004.

FDA published FY 2007 medical device user fee rates in a Federal Register Notice on August 2, 2006 (pages 43784 through 43786).

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