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Medical Devices

Minutes From Negotiation Meeting on MDUFA III Reauthorization, November 18, 2011

FDA - Industry MDUFA III Reauthorization Meeting
November 18, 2011, 10:00 am - 1:00 pm
FDA White Oak Building 1, Silver Spring, MD
Room 2102

Purpose

To discuss MDUFA III reauthorization.

Participants

FDA
Malcolm BertoniOffice of the Commissioner (OC)
Ashley BoamCenter for Devices and Radiological Health (CDRH)
Nathan BrownOffice of Chief Counsel (OCC)
Frank ClauntsFDA Consultant
Kate CookCenter for Biologics Evaluation and Research (CBER)
Elizabeth HillebrennerCDRH
Toby LoweCDRH
David MillerOffice of Financial Management (OFM)
Thinh NguyenOC
Don St. PierreCDRH
Francisco VicentyCDRH
Ruth WatsonOffice of Legislation (OL)
Nicole WolanskiCDRH
Barbara ZimmermanCDRH
Industry
Hans BeinkeSiemens (representing MITA)
David FisherMedical Imaging Technology Alliance
John FordAbbott Laboratories (representing AdvaMed)
Elisabeth GeorgePhillips (representing (MITA)
Donald HortonLaboratory Corporation of America Holdings (representing ACLA)
Tamima ItaniBoston Scientific (representing MDMA)
Mark LeaheyMedical Device Manufacturers Association
Joseph LevittHogan Lovells US LLP (representing AdvaMed)
John MantheiLatham and Watkins (representing MDMA)
David MongilloAmerican Clinical Laboratories Association
James RugerQuest Diagnostics (representing ACLA)
Janet TrunzoAdvanced Medical Technology Association

Meeting Start Time: 10:00 am

Industry Counter-Proposal

Industry* was satisfied with the draft Commitment Letter developed over the past year and does not want funding discussions to impinge on the performance outlined in the letter. More specifically, Industry did not accept the changes to performance goals or commitments regarding involvement of patient groups and related issues proposed by FDA on November 10, 2011. Rather, Industry noted that their funding proposal is based on their October 31, 2011 Commitment Letter proposal.

Industry also indicated that, although FDA’s November 11, 2011 proposal represented a reduction in the resource request, the sides remain far apart in terms of funding. Industry expects continuous improvement and efficiencies at the FDA, independent of resources. While Industry agrees with what FDA has proposed to do to improve the process, Industry believes FDA’s current budget should be sufficient to support these improvements. Industry presented a funding proposal with three basic elements: base fees to maintain Industry’s portion of the 1064 MDUFA process FTEs, targeted increases for specific purposes, and a potential funding enhancement for accelerated performance targets.

Industry referred to FDA’s previous presentation of the MDUFA II user fee collection and spending plans, which included lower spending versus collections in early years and higher spending versus collections in later years. Industry proposed using the FY2012 collections prior to offset ($67 million) rather then planned spending ($75 million) as a baseline. Industry suggested this is justified by the recent low inflation rates. Industry also proposed assuming a 2.4% annual inflation rate throughout MDUFA III based on the five year average from FY2008 to FY2012. FDA noted that the average includes two years with a salary freeze, and that it is unrealistic to expect the freeze to continue for the subsequent five years. Industry asserted that the “new normal” will likely provide much slower growth.

Industry stated they do not agree to cover budget shortfalls for the part of the program supported by budget authority appropriations. Industry stated that user fees are intended to be additive and that FDA will need to find money within its base to account for reductions. FDA noted that Congress provided appropriated funding amounting to 160 additional FTEs during MDUFA II to accomplish specific activities that fell within the MDUFA statutory process for the review of device applications, but that did not directly support submission review. Industry suggested that if Congress does not maintain support for these FTEs, FDA should not have to continue the targeted work they directed. FDA asked if Industry was suggesting they reallocate FTEs currently working on post-market safety issues and other parts of the program to the pre-market review program. Industry did not accept that characterization and replied that the 1064 base FTEs agreed upon in MDUFA II for the device review program should be protected and that they believe FDA can do this under their proposal. FDA explained that regardless of Industry’s intention, the net impact of their proposed treatment of budget shortfalls would be reallocation of FTEs from post-market safety work to pre-market review.

Industry proposed specific user fee amounts for Pre-Submissions, the independent assessment, supervisors/managers, and improvement to the Third Party review program. Industry assumed a fee of $2000 per Pre-Submission. When asked for their rationale for the amounts provided for Pre-Submissions, Industry explained that it is lower than a 510(k) fee, fair to companies who want to use it, and substantial enough that companies who are not serious will not waste FDA’s time. Industry affirmed that it is not based on amount of work associated with Pre-Submission review; it is based on a pricing rather than a costing analysis. Given the uncertainties regarding Pre-Submission workload, FDA revisited the option of a general workload adjuster. FDA suggested a framework which differs from that used previously in that it does not involve changes to application fees.

Industry also stated their belief that the performance goals and shared outcome goals they proposed on October 31, 2011 should be paid for out of continued MDUFA II funding, with no added resources under MDUFA III. FDA noted that although increased Interactive Review was envisioned under MDUFA II, MDUFA II did not include quantitative goals associated with Interactive Review or substantive interactions. Industry acknowledged this but stated that the same principles were applicable. FDA asked why Industry did not provide resources for improved quantitative goals for FDA review days. Industry replied that they were comfortable keeping MDUFA II goals; they agreed to restructuring the quantitative goals at FDA’s request and do not believe they should pay more for FDA’s preferred goal structure. FDA expressed its view that there is a disconnect between Industry’s willingness to maintain MDUFA II goals and their dissatisfaction with how the program is being run under MDUFA II. Industry restated their belief that FDA should be able to achieve program improvements through internal management steps and added efficiencies and without additional resources. FDA explained that current gaps in areas of technical expertise cannot be filled merely through internal management improvements. Industry commented that capacity is not only associated with additional FTEs, but also through increased productivity. FDA commented that Industry’s proposal appears to assume that the magnitude of the effect of increased productivity is far greater than any experience or estimation developed by FDA in their analysis of the program. The consequence of error in judgement is that this program will not improve the way all parties would like. For this reason, FDA estimated their resource needs using a workload model.

FDA asked if Industry desired additional training, including the new reviewer certification program, managerial training, and training of all staff on MDUFA III. Industry replied that their proposal includes no additional funds for training beyond what was provided in MDUFA II. Industry suggested that the training budget in place from MDUFA II should be sufficient. FDA also asked if Industry agreed to support improvements in IT; Industry replied that their proposal includes no additional funds for IT.

Industry pointed to the following significant changes that Industry believes will improve productivity, most of which were made at FDA’s request: combining expedited PMAs with the original PMA cohort, splitting the PMA cohort into those with panel and those without, extending FDA day review goals to 320 days for PMAs with panel meetings (from the current 295 Day goal), eliminating the “two-tier” goals for 510(k)s and PMAs, implementing refuse to accept/refuse to file procedures, requiring e-copies for all submissions, implementing goals for Pre-Submissions, and improving the manager/reviewer ratio. Industry stated that, while they agree to the above efficiencies, they do not believe they should require the level of user fee funding FDA requested. Industry further stated that they do not believe they should be paying for enhancements already under way as part of FDA’s internal reform efforts. Industry pointed to the list of initiatives identified in Dr. Shuren’s November 15, 2011 testimony to the Senate Committee on Health, Education, Labor, and Pensions and asserted that FDA made no mention that the changes underway are conditioned on additional resources. In addition, Industry asserted that Dr. Shuren stated that these changes will be complete in 2012, before the commencement of MDUFA III. Industry stated that, therefore, these changes should be accomplished within the Agency’s current budget.

Industry proposed a user fee package of $401 million over five years for the performance outlined in their October 31, 2011 proposal. This would account for 24% of the medical device review budget in FY2017 if budget authority appropriations increase by 1.5% annually throughout MDUFA III. If specific criteria are met during FY2012 and FY2013 based on an analysis of performance through March 31, 2014, an additional $11 million would be provided over the last three years of MDUFA III. The specific criteria which must be met for this additional funding are: FDA must meet or be on track to meet MDUFA II goals for the FY2012 receipt cohort, the average total time to decision for 510(k)s must show a trend of improvement in both decision and receipt cohorts, and the Pre-Submission and substantive interactions goals for FY2015 must be met beginning in FY2013. FDA pointed out that the criteria include performance on submissions received during MDUFA II. In response to FDA’s questions, Industry clarified that the criteria are meant to be objective and the additional funding automatic. FDA indicated their concern that the agency could improve their performance but, if Industry times increase, FDA would not meet the criteria for increased funding based on average total time to decision. Industry stated that applicants have every incentive to act as quickly as possible and shared their expectation that publishing average total time to decisions will provide enormous private sector incentives to beat the average and improve total time.

FDA noted that Industry’s proposal requires improved performance compared to MDUFA II, with less funding than FDA projects is needed to maintain current performance. Industry again pointed to the list of improvements cited in Dr. Shuren’s November 15, 2011 testimony and stated their understanding that these are already being accomplished during MDUFA II with current resources.

FDA Response to Industry’s Counter-Proposal

FDA stated that they do not view Industry’s counter-proposal as viable and cannot agree to it.

FDA pointed out that they are not a private business and do not necessarily choose what activities to pursue and at what levels. Moreover, as a public health organization, the consequences of cutting back certain activities are significant. Ultimately, FDA believes there is a limit to how far efficiencies alone can advance the program, and the agency does not want to commit to performance that they will lack the resources to achieve.

Industry asserted that the proposed commitment letter amounts to fine-tuning of the program; the two biggest changes from MDUFA II are substantive interactions and Pre-Submission meetings by day 60. FDA indicated that the commitment letter represented significant changes that are needed to fix the program and address concerns that Industry has raised throughout these negotiations. FDA believes that the behavior of the program and increasing backlog of submissions over time reflect a system under strain which cannot be fixed by management changes alone. FDA also asserted that average total time to decision goals should not be characterized as fine-tuning of the program.

Meeting End Time: 1:00 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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