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Appendix A: Statutory Conditions for Collection and Use of Fees

Back to Table of Contents:  FY 2009 MDUFMA Financial Report

 

The FD&C Act was amended by MDUFMA (Public Law 107-250), by the Medical Device User Fee and Stabilization Act (MDUFSA, Public Law 109-43), and by MDUFMA II (Public Law 110-85).  It specifies three statutory conditions that must be satisfied before FDA can collect and spend medical device user fees.  A summary of these conditions is introduced on page 2.  Appendix A describes each of the conditions and explains how FDA met the conditions in FY 2009 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(10) of the Act, as amended, in the assessments of the first and third conditions.  The FD&C 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 October of the preceding fiscal year divided by such Index for October 2001.

The October preceding FY 2009, which began on October 1, 2008, was October 2007.  The Consumer Price Index (CPI) for October 2007 was 208.9.  The CPI for October 2001 was 177.7.  Dividing the CPI of October 2007 by the CPI of October 2001 yields an adjustment factor of 1.175779 (rounded to 6 decimal places) for FY 2009.

The first condition is a funding condition that affects the collection of fees in FY 2009 and is found in section 738(g)(1) of the Act.

This provision specifies a minimum amount of budget authority that must be appropriated each year for the Device and Radiological Health line of FDA’s appropriation, exclusive of user fees.  That minimum amount for FY 2009 is $205,720,000 multiplied by the adjustment factor (1.175779), or $241,881,000 (rounded to the next thousand dollars).  In FY 2009, the final appropriated budget authority for the Device and Radiological Health line of FDA’s Appropriation, exclusive of user fees, was $280,587,000.  This is the combined amounts of appropriations from PL 110-161 and PL 110-252, exclusive of user fees.  Since this amount is greater than $241,881,000, FDA’s appropriation for FY 2009 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 cannot collect medical device user fees without an appropriation.

On March 11, 2007, the President signed FY 2009 Omnibus Appropriation Act, Public Law 110-161, which appropriated $52,547,000 from medical device user fees for FDA in FY 2009.  Therefore, the second condition was met.

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 2009 is 1.175779.  Multiplying by the adjustment factor, FDA calculates the minimum spending from appropriations for the medical device review process in FY 2009 must be at least $140,709,031.

As this report documents, FDA obligated $223,545,693 from appropriations for the process for the review of medical device applications in FY 2009.  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 2008 and FY 2009.  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, 2009

 

 FY 2008FY 2009
From Appropriations$198,776,699$223,545,693
From Medical Device Fee Collections$36,422,900$47,302,744
Total Obligations$235,199,599$270,848,437

 

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 2 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 FD&C Act. 

The table below shows the statutory minimum to be obligated for device establishment inspections (2002 level increased by 5 percent each year, rounded to the nearest thousand dollars) and FDA obligations for medical device establishment inspections from FY 2002 to FY 2009.  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, 2009

Fiscal YearMinimum--2002 Obligations
Increased by 5% Per Year
 
Actual ObligationsExcess 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
FY 2008$26,031,000$32,989,000$6,958,000
FY 2009$27,332,926$35,927,125$8,594,199

 

Next Section:  Appendix B - Number of Fees Paid Applications in FY 2009