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U.S. Department of Health and Human Services

Medical Devices

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Minutes From Negotiation Meeting on MDUFA III Reauthorization, November 29, 2011

FDA - Industry MDUFA III Reauthorization Meeting
November 29, 2011, 5:00 - 6:30 pm
Teleconference

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)
Kate Cook Center for Biologics Evaluation and Research (CBER)
Christy Foreman CDRH
Toby Lowe CDRH
David Miller Office of Financial Management (OFM)
Tracy Phillips CDRH
Francisco Vicenty CDRH
Ruth Watson Office of Legislation (OL)
Nicole Wolanski CDRH
Barbara Zimmerman CDRH
Industry
Susan Alpert Medtronic (representing AdvaMed)
Brian Connell Medical Imaging Technology Alliance
Faith Cristol Quest Diagnostics (representing ACLA)
John Ford Abbott Laboratories (representing AdvaMed)
Donald Horton Laboratory Corporation of America Holdings (representing ACLA)
Tamima Itani Boston Scientific (representing MDMA)
Mark Leahey Medical Device Manufacturers Association
Joseph Levitt Hogan Lovells US LLP (representing AdvaMed)
David Mongillo American Clinical Laboratories Association
Janet Trunzo Advanced Medical Technology Association

Meeting Start Time: 5:00 pm

FDA presented a counter-proposal to Industry’s* November 18, 2011 proposal. This proposal reflects FDA’s attempt to find a mutually agreeable funding level that preserves as much of the draft Commitment Letter as possible, within the framework Industry recently presented. FDA noted that further reductions in resources would require more significant modifications to the performance commitments in the draft Commitment Letter.

FDA proposed revised financial assumptions accounting for newly available, preliminary fiscal year (FY) 2011 data. Based on the preliminary FY2011 data, FDA now projects annual increases to the cost per FTE of 3%. This results in a significant reduction in the cost per FTE over the five year program. FDA also adjusted the FY2013 baseline assumption based on most recent process costs and inflation assumptions. By reducing the FY2013 baseline assumptions, FDA was able to reduce the cost of the five-year program by more than $35 million.

FDA stated their belief that Industry’s November 18 proposal fails to adequately fund the improvements reflected in the draft Commitment Letter. For example, $4 million would not cover the cost of the proposed improvements to Pre-Submissions. FDA believes that other improvements outlined in the draft Commitment Letter (i.e., substantive interactions and new quantitative goals) will benefit the program and are necessary to achieve a reduction in total time to decision; however, they will require additional FTEs. FDA also noted that some elements of the draft Commitment Letter (i.e., IT and training) will not result in less effort for FDA, but should be considered a good investment as they will save industry time and provide a more predictable, transparent review process. FDA’s proposal targets increases on the core review practices and processes as efficiently as possible. FDA reiterated its position that without the additional FTEs that FDA proposed, substantial changes to the commitments and goals in the draft Commitment Letter would be required.


FDA stated their willingness to consider an interim adjustment to fees based on an “early indication” assessment of performance, measured by objective criteria, provided that Industry agrees to an adequate funding “floor.” The funding “floor” would be set at the level needed to sustain the program planned for the end of FY2014. The check-in point would be used to verify that the assumptions underlying the improved program remain valid. If performance criteria are met, funding would increase to the full performance level to achieve the Commitment Letter. If performance criteria are not met, user fee funding would remain at the level necessary to support the end-of-year FY2014 FTEs. If that were to occur, the Agency would use the Independent Assessment to try to determine what was necessary to increase performance. The Agency’s proposal assumed that, under this scenario, the FY2014 goals would apply; however, the Agency would try to do as well as possible. FDA also proposed that the interim adjustment be used to manage other uncertainties with the program, including Pre-Submission workload, actual budget authority appropriations to support MDUFA process costs, and actual inflation.

FDA proposed an alternative set of criteria for triggering the full performance level of fees, involving performance against MDUFA II metrics for FY2012 receipt cohort, FY2013 targets for substantive interactions for 510(k)s, Original PMAs and Panel-Track Supplements, and average Total Time for 510(k) FY2013 receipt cohort with MDUFA decisions as of 3/31/14, provided that applicant average time per 510(k) does not increase. FDA’s proposal retained the timeframes suggested by Industry whereby a March 31, 2014 interim assessment would reflect the first 18 months of the program such that data would be available for analysis prior to setting FY2015 fees. In response to questions from Industry, FDA later provided data on the average total time to MDUFA decision and percent of cohort closed per month after the end of FY2009, FY2010, and FY2011.

FDA also proposed specific adjustments that might be made for Pre-Submission workload and financial assumptions (e.g., inflation and budget authority) at the interim assessment. If the number of Pre-Submissions increases to approximately 2,500 by FY2015 and levels off, a level of “full performance” would be assumed. If the Pre-Submission workload is projected to be less than 2,000 in FY2015, the “full performance” level would be adjusted to reflect a lower workload and correspondingly fewer FTEs. If budget authority appropriations to support pay and non-pay costs for the existing program are less than the actual costs, then FDA would otherwise have to absorb the reductions through staffing attrition and other cutbacks, which in FDA’s view would put performance at risk. As actual FY2013 and FY2014 appropriations should be known by the interim assessment, formulae accounting for pay and non-pay costs and actual inflation could be incorporated into the adjustment for “full performance” level of fees.

FDA presented three potential scenarios of FTE levels throughout MDUFA III. In all cases, user fees would support an additional 86 FTEs in FY2013 and 186 FTEs in FY2014. If performance criteria are not met, the program would be maintained with 225 FTEs for the last three years. This would create a 5-year base of $730 million. If performance criteria are met, there would be an increase of FTE based upon the Pre-Submission workload adjustment. FDA estimated that 275 FTEs would be needed if the quantity of Pre-Submissions remained below 2,000 in FY2015, which would correspond to a 5-year fee structure amounting to $772 million. FDA estimated that 321 FTEs would be needed if the quantity of Pre-Submissions increased to approximately 2,500 by FY2015, which would correspond to a 5-year fee structure amounting to $805 million.

Industry asked which version of the draft Commitment Letter was considered in this proposal. FDA replied that it reflects FDA’s prior draft, and did not consider Industry’s most recent set of proposed adjustments to quantitative goals, which have not been agreed to. FDA indicated their confidence in the ability of the parties to reach agreement on the outstanding items in the draft letter once they are closer to agreement on adequate funding of the program. FDA confirmed that this proposal assumed a 60-day performance goal for Pre-Submissions.

Industry asked a number of clarifying questions and indicated they would likely have additional questions regarding FDA’s proposal at the next teleconference.

Meeting End Time: 6:30 pm

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