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Medical Devices

Minutes From Negotiation Meeting on MDUFA III Reauthorization, October 31, 2011

FDA - Industry MDUFA III Reauthorization Meeting
October 31, 2011, 9:20 - 1:30 pm
FDA White Oak Building 1, Silver Spring, MD
Room 2101

Purpose

To discuss MDUFA III reauthorization.

Participants

FDA
Malcolm Bertoni Office of the Commissioner (OC)
Ashley Boam Center for Devices and Radiological Health (CDRH)
Nathan Brown Office of Chief Counsel (OCC)
Frank Claunts Consultant
Kate Cook Center for Biologics Evaluation and Research (CBER)
Elizabeth Hillebrenner CDRH
Toby Lowe CDRH
David Miller Office of Financial Management (OFM)
Thinh Nguyen OC
Tracy Phillips CDRH
Don St. Pierre CDRH
Francisco Vicenty CDRH
Ruth Watson Office of Legislation (OL)
Nicole Wolanski CDRH
Barbara Zimmerman CDRH
Industry
Susan Alpert Medtronic (representing AdvaMed)
Hans Beinke Siemens (representing MITA)
Faith Cristol Quest Diagnostics (representing ACLA)
David Fisher Medical Imaging Technology Alliance
John Ford Abbott Laboratories (representing AdvaMed)
Tamima Itani Boston Scientific (representing MDMA)
Mark Leahey Medical Device Manufacturers Association
Joseph Levitt Hogan Lovells US LLP (representing AdvaMed)
John Manthei Latham and Watkins (representing MDMA)
David Mongillo American Clinical Laboratories Association
Patricia Shrader Medtronic (representing AdvaMed)
Janet Trunzo Advanced Medical Technology Association

Meeting Start Time: 9:20 am

Industry Counter-Proposal

Industry* provided a counter-proposal to that offered by FDA on October 21, 2011.

Industry stated that they are in agreement with all process improvements in FDA’s October 21, 2011 proposal, such as those for pre-submissions, submission acceptance criteria, and substantive interactions.

Industry agreed with the ultimate targets for FDA day goals; however, they proposed tightening the interim FDA day goals for original PMAs (with and without Advisory Committee review) and 510(k)s during the first two years of MDUFA III.

FDA previously proposed updating their website with deletion of guidance documents no longer representing their policy on a regulatory issue and annotation of guidance documents under review. Industry proposed that FDA conduct such review and updates on an ongoing basis to ensure guidance documents are up to date throughout the five year program.

Industry proposed tightening all shared outcome goals for PMAs and 510(k)s while maintaining the goal progression framework proposed by FDA. The changes proposed by Industry reflect an expectation for better performance at the beginning of MDUFA III, followed by a degree of progression similar to that suggested by FDA. Industry believes that such performance improvement will naturally follow implementation of the process improvements agreed upon.

Industry stated they are supportive of the draft Commitment Letter, as they believe the initiatives within it will improve the review process, ultimately moving devices to market more quickly. Industry also believes it will make the Agency more efficient.

FDA Presentation of Resource Needs

FDA summarized the proposed approach to MDUFA III reauthorization as a responsible path to program improvement. FDA has engaged all stakeholders in a transparent manner and listened to their concerns. FDA acknowledged that there are areas where the Agency needs to improve and identified several root causes of these problems, such as high reviewer and manager turnover at CDRH, insufficient training for staff and industry, extremely high ratios of front-line supervisors to employees, insufficient oversight by managers, CDRH’s growing workload caused by the increasing complexity of devices as well as quantity of submissions, unnecessary and/or inconsistent data requirements imposed on device sponsors, and insufficient guidance for industry. FDA also identified the need to work with industry to improve the quality of information supporting their pre-market submissions. The draft Commitment Letter reflects a shared responsibility to work together toward a more transparent, consistent, predictable, and efficient program.

FDA pointed to initial signs of progress such as recent downward trends in 510(k) review times and the percent of 510(k)s requiring additional information, an increase in the percent of 510(k)s with an SE decision, a decrease in the queue of pending 510(k)s for the first time since 2005, progress with the new Reviewer Certification program, and meeting milestones outlined in the Action Plan for 510(k) and Science. FDA believes it is taking affirmative steps to improve the program, both within the scope of MDUFA, as well as across the broader program. FDA is committed to making continued progress regardless of the outcome of these negotiations; however, FDA believes that long-term sustained improvement will require investment in greater review capacity and management systems. Industry requested data to support some examples of recent progress cited by FDA.

FDA estimated that 491 FTEs and some additional supporting resources would be needed to achieve the program enhancements outlined in their October 21, 2011 proposal. FDA’s estimates did not account for changes in the Commitment Letter proposed by Industry earlier in the October 31, 2011 meeting, which included more ambitious goals. As FDA noted previously, the resources needed for this proposal exceed the resource needs presented on May 4, 2011 for the Agency’s original proposal.

To arrive at this estimate, FDA employed a resource estimation model developed for the Agency by Booz Allen Hamilton that uses the quantities of submissions, labor effort, current level of goal achievement, and target level of goal achievement to calculate the amount of effort needed to attain the target performance levels. FDA employed only the portion of the model that focussed on the device review process; assumed low growth rates on IDEs, Modular PMAs, Original PMAs, Panel-Track PMA Supplements, 30/135 Day PMA Supplements, and 180 Day PMA Supplements; assumed that Pre-Submissions will start at 1,800 per year and increase 10% annually; and assumed that all other submission volumes would be flat or slightly decline. These assumptions were based on historical submission trends and also factored in professional judgment and consideration of a robust Pre-Submission program.

To arrive at the overall resources needed, FDA used the standard cost estimate for a fully loaded FTE used by the Agency in all user fee programs, planning for the gradual addition of FTEs; these total FTEs include the approximately 281 FTEs currently supported by user fees. FDA also estimated supporting costs for items outlined in the proposal which are not reflected in the estimate for a fully loaded FTE, such as the independent assessment, additional training, IT enhancements, and improvements to the Third Party review program. FDA’s proposed resource needs accounted for expected shortfalls in budget authority appropriations that would undercut the current baseline FTEs supporting the device review process.

FDA explained their plan to focus resources where they are needed to meet the program goals. Specifically, 91% of new FTEs would be assigned to ODE and OIVD.

FDA also offered ideas for potential fee structures to achieve the resource needs. One approach would be to adjust the application fees. For example, the proportion of fees paid for by 510(k)s could be increased given that that is an area of particular focus for improvement, the fee is currently low in relation to effort, and the quantity of submissions is high. Another approach could be to increase the amount and/or base of registration fees. A third approach could be to establish a product fee, particularly for those “non-exempt” devices that are the subjects of premarket reviews. Using these concepts, FDA provided examples of specific fee structures that could be employed.

FDA indicated willingness to consider workload and inflation adjusters as an alternative to making five-year assumptions regarding inflation rates, submission quantities, and budget authority appropriations, and expressed interest in addressing the offset provision, which is not working as intended.

FDA commented that implementing average total time to decision goals could have an important, positive impact on both public health and on industry’s finances. While it is difficult to measure the impact on public health, FDA noted that the benefits to Industry of reduced total time to decision can be estimated. FDA noted that the proposed shared outcome goal calls for an 18 day reduction in average total time to decision for 510(k)s by 2017. Using cost data from a recent industry report by Makower et al, FDA calculated that the overall savings to device manufacturers throughout the five year program could be over $3.5 billion. FDA also noted that a similar calculation could be performed for PMAs.

By incorporating shared outcome goals, the Agency is committing to working with Industry to transform the program. FDA believes that heightened investment through user fees is needed to bring the program to a higher level of performance. FDA suggested that this type of investment would send a signal to staff that Industry and the Agency are working together to improve the program, which could improve retention of reviewers.

Industry Response to FDA’s Estimate for Resource Needs

Industry offered a preliminary response to FDA’s resource estimates. Industry stated that FDA’s estimate of resource needs of $1.15B, a 400% increase in the current user fees paid by industry, is not acceptable. Industry noted that it is greater than the $770M estimate presented on May 4, 2011 for FDA’s initial proposal, which Industry did not support. Industry believes that the current proposed goals letter includes efficiencies that should not require the level of resources estimated by FDA. Industry requested additional details regarding the basis for cost increases, including modeling methodology and FDA’s plan for where new FTEs will go and the activities they will work on. Industry also noted concerns with the use of user fees to cover potential shortfalls in budget authority appropriations and with the methodology used by the Agency to determine the cost of a fully loaded FTE. The Agency stated that the MDUFA II agreement included the use of user fees to compensate for anticipated shortfalls in budget authority appropriations; Industry stated this was not their understanding. The Agency also indicated that the methodology used for calculating the cost of a fully loaded FTE has been used in all user fee programs across the Agency, including previous MDUFA programs.

Industry questioned FDA’s citation of the Makower study to project potential return on investment in the program given that FDA has criticized the study. FDA acknowledged that they have criticized parts of the study, but assumed that the Price Waterhouse Coopers audit validated the estimates of industry costs. Industry expressed its support for the study and believes the study reflects an accurate assessment of industry costs. FDA stated that the program is currently under-resourced, and noted that many of the problems identified have been in existence since MDUFMA I. FDA also noted the importance of looking at the program as a whole when considering historical performance. For instance, data show that peak performance on 510(k)s coincided with poor performance on PMAs.

Industry questioned how FDA considered program efficiencies in FDA’s estimate of resource needs. Specifically, Industry stated their belief that the program improvements (e.g., Pre-Submissions, submission acceptance criteria, and substantive interaction goals) will make the Agency more efficient and therefore able to achieve more with fewer resources. FDA acknowledged that many of these initiatives would likely produce efficiencies, but these potential efficiencies are difficult to quantify, and FDA anticipates some level of countervailing inefficiencies during the early years as they recruit and train new reviewers. FDA also noted that the proposed independent assessment is intended to evaluate efficiency and productivity. FDA agreed to address Industry’s question of efficiencies in greater detail on November 3, 2011.

Industry asked how FDA plans to fund any initiatives outside the scope of MDUFA commitments, such as those outlined in the Action Plan for 510(k) and science. FDA indicated that most of these initiatives are underway and confirmed that none were factored in to the estimate of resource needs. Industry further questioned whether FDA considered the impact of these initiatives (i.e., beyond the actual guidance and SOP development.) For example, Industry anticipates that the 510(k) modifications guidance document will result in a significant increase in 510(k) submissions. FDA noted their disagreement with this assessment and pointed out that the Agency is considering comments and that the guidance is not final. FDA’s intent for the modifications guidance is not to increase the number of 510(k) submissions substantially. FDA recognizes that some applicants have not been adhering to the existing regulations and this guidance, when final, may therefore result in submission of additional 510(k)s; however, FDA is also implementing down-classifications that will reduce the number of 510(k) submission, such that the net workload should remain relatively constant.

Next Steps
FDA will present additional details supporting their estimate for resource needs, and will analyze the proposal for additional opportunities for efficiencies.

Next Meeting

The next meeting will take place November 3, 2011.

Meeting End Time: 1:30 pm

* For purposes of these minutes only, the term industry means AdvaMed, MITA, and MDMA and does not include ACLA unless specifically noted.

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