REQUIRED BY THE
MEDICAL DEVICE USER FEE
AND MODERNIZATION ACT OF 2002
FOOD AND DRUG ADMINISTRATION
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Table of Contents
April 8, 2006
The Honorable Richard Cheney
President of the Senate
United States Senate
Washington, D.C. 20510
Dear Mr. President:
Enclosed is the third annual financial report to Congress required by the Medical Device User Fee and Modernization Act of 2002 (MDUFMA). This report covers fiscal year (FY) 2005, documenting how the conditions specified in MDUFMA for the continued collection of medical device user fees were met.
The report also presents the user fee revenues and related expenses for FY 2005, and details the amount carried over at the end of the year that remains available. For FY 2005, net MDUFMA user fee collections totaled $31.1 million, and fees obligated totaled $27.2 million. In addition, FDA received a significant increase in appropriations for its device program in FY 2005. Over 65 percent of the funds spent for device review went for staff salaries and benefits, and the remainder went toward increased support and infrastructure for the device review program.
Michael O. Leavitt
Identical letters to:
The Medical Device User Fee and Modernization Act of 2002 (MDUFMA) requires the Food and Drug Administration (FDA) to report annually on the financial aspects of its implementation. This is FDA’s report for fiscal year (FY) 2005.
MDUFMA, as amended by the Medical Device User Fee Stabilization Act of 2005 (MDUFSA), specifies that three conditions must be satisfied in order for FDA to collect and spend MDUFMA fees:
- Within FDA’s salaries and expenses appropriation, the amount appropriated for devices and radiological health after FY 2004 must be at least $205,720,000 (excluding fees and adjusted for inflation).
- Fee revenues collected must be specified in Appropriation Acts.
- FDA must spend at least as much from appropriated funds for the review of medical device applications as it spent in FY 2002, adjusted for inflation.
This report describes how these specific statutory conditions or "triggers" were met in FY 2005. The report also provides information on the user fee revenues and expenditures in FY 2005, and on the carryover balance.
In FY 2005, FDA net collections totaled $31.1 million in fees—including $3.4 million of fees paid in advance for applications that had not been received. Cumulative collections since the beginning of the program were $6.1 million less than the adjusted revenue amounts set in statute through FY 2005. The shortfall is due to fewer applications that paid the highest fees, fewer supplements that paid the higher supplement fee, and to a larger number of applications than expected that qualified for exemption from fees.
In FY 2005, FDA obligated $27.2 million from MDUFMA revenues to support FDA’s medical device review program, and carried forward into FY 2006 a balance of $13.9 million (including $3.4 million in fees for applications not yet submitted). Over 65 percent of the total amount spent for the device review program in FY 2005 went for personnel salary and benefit costs. The balance was primarily operating costs and infrastructure necessary to support the staff. The MDUFMA fees, and significantly increased appropriations for the medical device program, enabled FDA to dedicate 205 more staff years to device review in FY 2005 than it did in FY 2002, before MDUFMA was enacted. An additional 70 contract years were also dedicated to device review in FY 2005, compared with FY 2002 before MDUFMA was enacted. These resources have enabled FDA to achieve almost all of the performance goals associated with the enactment of MDUFMA, and to substantially strengthen FDA’s medical device review program.
The Agency looks forward to continued strengthening of the device program over the two remaining years that MDUFMA is authorized.