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~ ~Stavicr1 `', t '~ DEPARTMENT OF HEALTH & HUMAN SERVICES Public Health Service / c STATEMENT BY DAVID A. KESSLER, M.D. COMMISSIONER OF FOOD AND DRUGS "I BEFORE THE COMMITTEE ON ENERGY AND COMMERCE • Food and Drug Administration Rockville MD 20857 , SUBCOMMITTEE ON HEALTH AND THE ENVIRONMENT U.S. HOUSE OF REPRESENTATIVES JULY 14, 1994 ~ TO BE RELEASED ONLY UPON DELIVERY ~ C~J ~ z"D 00

• • • Mr. Chairman, my name is David Kessler, Commissioner of Food and Drugs. I am pleased to testify on H.R. 4728, the Medical Device Fee Act of 1994. This legislation builds on the successful cooperative effort that led to the historic enactment cpf the Prescription Drug User Fee Act of 1992 (PDUFA). User THE MEDICAL DEVICE APPROVAL PROCESS Before discussing the bill, I would like to provide the Committee a brief overview of the medical device approval process and where stand today. This should help set the stage for our discussion user fee funding for this rather complex regulatory program. we of Medical devices include several thousand health products, from simple articles such as thermometers, tongue depressors, and heating pads, to sensitive and complex devices such as pacemakers, intrauterine devices, and kidney dialysis machines. Prior to 1976, no specific Federal statutory program existed to regulate medical devices. The increasing sophistication and complexity of medical devices coupled with a growing number of safety concerns helped forge a consensus that these products should be regulated by the Federal Government. This led to enactment of the Medical Device Amendments of 1976, which amended the Federal Food, Drug, and, Cosmetic Act to give the Food and Drug Administration (FDA) specific authority to regulate the safety and effectiveness of medical devices. o ~ 1 ~ C.~.~ ~ . CD ZZ rD

The 1976 law provided several mechanisms to achieve this goal, including classification of medical devices, device listing, establishment registration, adherence to Good Manufacturing Practices (GMPs), and extensive control over market introduction.of medical devices. The Safe Medical Devices Act of 1990 (SMDA) abd the Medical Device Amendments of 1992 revised and expanded the 1976 Act. Thus, any person engaged in the manufacture, preparation, propagation, compounding, assembly, or-processing of a medical device intended for human use is subject to a regulatory scheme enforced by the FDA. • A cornerstone of the 1976 device law is the concept of regulation based on risk. Devices on the market at the time the original law was passed were assigned to one of three "classes." Those presenting the least risk, such as elastic bandages, are placed in Class I under the law and are subject to "general controls." Class II devices, presenting greater concern, are subject to additional "special controls" such as premarket notification, postmarket surveillance studies, and performance standards. Class III devices, which include many implanted and life-supporting or life-sustaining devices, are subject to more stringent controls and requirements, including a comprehensive premarket review. In general, the Medical Device Amendments of 1976 created two pathways a manufacturer can follow to market a medical device legally: NOD O ~ ~ Cs~ r 2 W s c3a ~ W O

1) through a premarket notification, known as a"510(k);" and 2) through a premarket approval application (PMA). Additionally, for purposes of marketing approval, the 1976 law distinguished two categories of devices: 1) pre-amendment devices - thos-s in commercial distribution before May 28, 1976; and 2) post-amendment devices - those first commercially distributed after May 28, 1976. All post- amendment devices require pre-approval or clearance from the FDA before they may be marketed. Pre-amendment devices may continue to be marketed lawfully, but FDA is expected, over time, to require PMA's for all pre-amendment Class III devices. • Under the 510(k) process, a determination is required as to whether a device is "substantially equivalent" to a legally marketed device. At least 90 days before a firm intends to market a device for the first time, the firm must submit an application with information that will enable the Agency to make that determination. If the new device is found substantially equivalent, the product sponsor can then market the product. Prior to November 1990, if the Agency did not act within the 90 days, the firm could go to market. The SMDA, however, required an affirmative order of substantial equivalence before marketing clearance is granted. Each year, the Agency receives several thousand 510(k) submissions.

In general, new devices in Class III that are not substantially equivalent to a pre-1976 device require the submission of a PMA. A PMA must provide reasonable assurance of safety and effectiveness for the device's intended use. PMA's typically are very complex and include extensive clinical data. Relatively few, 40-60>, are submitted each year. Any change in an approved PMA'd device that affects the device's safety and effectiveness, such as new indications, labeling revisions, or changes in.manufacturing, also must be approved by FDA through the submission of a PMA supplement. • There are two other types of medical device applications: an Investigational Device Exemption (IDE) application and IDE Supplements. An IDE is necessary to permit a firm to introduce an investigational device into interstate commerce for the purpose of testing the device in human clinical studies. The IDE applies to investigational studies gathering safety and effectiveness data for a medical device that presents a significant risk to humans. Clinical studies that pose a non-significant risk are subject to abbreviated requirements that include approval by the local institutional review board, but no review by FDA. An IDE Supplement is required for any changes in the investigation plan contained in an IDE. Most medical devices are reviewed by the FDA's Center for Devices and Radiological Health (CDRH). FDA's Center for Biologics Evaluation and ~ O Research (CBER), however, reviews those devices that are determined to ~ ~ 4 W ~ ~ i`:

• • • be biologics under the Public Health Service Act or that are used in conjunction with such a biologic. The corresponding application equivalents to PMA's and IDE's for approval of devices that also are biologics is the Product License Application (PLA), and Investigational New Drug application, respectively. The number of applications (PMA, PMA Supplement, 510(k), IDE, and IDE Supplement) submitted annually to FDA has increased steadily since enactment of the Medical Device Amendments in 1976. only 6,000 applications were submitted in 1982. FDA expects close to 12,000 to be submitted in 1994. This number is projected to reach more than 14,000 by 1999. In addition, the number of registered device establishments has tripled since 1980 from approximately 6,000 to over 18,000. In the last decade, businesses registering with FDA have averaged 100-150 each month. These increases in applications and establishment registrations, combined with the increasing complexity of new technologies, have contributed to an increase in medical device applications now pending review. As of June 30, 1994, pending applications at CDRH numbered 4,433 510(k)'s, 143 PMA's, and 424 PMA supplements. While the statutory timeframes for review of 510(k)'s and PMA's are 90 days and 180 days, respectively, the average review times as of that same date, were 173 days for 510(k)'s and 437 days for PMA's. ~ O 5 ~ ~ C,O W ~ W

• • In 1992, increasing public concern about product injuries and deaths from marketed products, including Shiley heart valves, temporo mandibular joint (TMJ) implants, and breast implants, and other circumstances led the Subcommittee on Oversight and Investigations (O&I) to conduct a thorough investigation of the medical device review process. In May 1993, the Subcommittee issued a report entitled, Less than the Sum of Its Parts: Reforms Needed Management, and Resources of the Food for Devices in the Organization, and Drug Administration's and Radiological Health. The Subcommittee's assessment on the state of process and made numerous recommendations management and process reforms. the Subcommittee had "no doubt" CDRH. report offered the Center the medical device review for improvement, including The report also noted, however, that about the need for more resources at The Agency took this report and its findings and recommendations very seriously. Indeed, I want to assure all Members of Congress that the delays in processing of applications and concerns about management are of significant concern to FDA. The Agency is well aware of the important contributions the medical device industry makes to both our nation's health and economic well-being. We want to do our part to bring beneficial products into the marketplace in a sound, expeditious manner. At the same time, however, we must not forget that FDA is a~ C public health agency responsible for consumer protection; we have a ~ clear statutory responsibility to ensure that dangerous devices do not~p

enter the marketplace and that approved devices are marketed appropriately. Thus, the product evaluation process must be sufficiently rigorous and dependable, as well as prompt. The protections afforded the American consumer, and the benefits provided the medical device industry, through this review process cannot be underestimated. • FDA MANAGEMENT INITIATIVES Improvements have been made at CDRH before and after the issuance of the O&I Subcommittee Report and are continuing today. Dr. Bruce Burlington, who assumed his position of Center Director in February 1993, has made improving the device review process his top priority. The Agency's long-term goals in this area include the implementation of a comprehensive management plan for CDRH. This plan was developed with the aim of improving the decision-making processes and the day- to-day operations of CDRH, while assuring a high standard of scientific evaluation upon which premarket decisions will be efficiently and effectively made. Several initiatives have been undertaken to reduce the backlog and to regain predictability and consistency in premarket review, reduce delays, improve CDRH's ability to evaluate applications, and improve communications with regulated industry. These include: ~ © MP ~ C,D ~ 7 C,O ~ ~

• • Implementing a "fast track" review system for life saving devices and for those that offer decidedly greater clinical benefits or lower risk than existing devices. We need to assure that medical devices representing major advancements in medical care reach the market without delay. Devices granted expedited review status will be placed at the beginning of the appropriate review queue and not handled under the usual "first-in, first-reviewed" policy. • Providing strong support to the Division of Small Manufacturers Assistance, whose job is to counsel device companies on the regulatory "rules of the road." The division also serves as a clearinghouse for over 1,000 publications that offer information on a wide range of topics, including development of premarket applications and compliance with GMP requirements. • Disseminating new guidance on application development to help industry understand what constitutes quality clinical studies in terms of statistical design, methodology, etc. To augment this effort, Center experts are working with advisory panels to develop guidelines for specific product types, in addition to training device companies on proper study design through live and satellite conferencing. In addition, public and electronic dockets now provide wide scale access to Center policy documents, guidance, and other essential materials. • Implementing a new risk-based approach to premarket review. The O&I subcommittee report recommended we reduce the burden of ZZd O 510(k)'s for products that present a low health risk. Under the ~ ~ W CO ~ 8 C, ~

• • • new three-tiered review system adopted by CDRH, the most complex devices and those with the highest degree of inherent risk are assigned to "Tier III" and are subject to an intensive scientific and labeling review. Advisory panel input will be sought for the majority of devices in Tier III. The lowest risk Class I devices and some Class II devices are placed in Tier I, and receive only an administrative "labeling review" for intended use and not a full "scientific review." Tier II devices receive an intermediate level of review. • Establishing a "refusal-to-file" policy for device applications. This will eliminate unproductive time spent by both the Agency and the manufacturer when an application lacks necessary information or data is poorly presented. This policy specifies the minimum criteria for accepting an application. If these criteria are not met, the application is not accepted for review. • Integrating more of Center research staff into the review process. Also, the Center is hiring additional clinicians and arranging with expert scientists from other FDA components to contribute to the reviews of certain applications. • Forming a staff college to train newly-hired staff and provide education to in-service staff. • Developing a computerized system through which manufacturers can obtain a status report on their 510(k)'s by fax. The system will ~ O provide the 510(k)'s relative position in the review queue and theWp 9 ~ Cs7 W ~2

average review time for the 510(k)'s assigned to that Branch. The sponsor may request updates at 30-day intervals. To date, over assist manufacturers in deciding submissions for modified products are necessary. 7,000 requests for the processed. • Finalizing guidance to status of over 10,000 510(k)'s have been when 510(k) • In addition, significant.-help for devices came from the Administration and Congress through the FY 1994 appropriation. The Agency was provided $20 million in additional appropriated for funds the medical device program, enabling the Agency to hire 99 new FTE's. These additional employees were added to the review process and other key activities. Their presence greatly enhanced the Center's ability to make improvements in the review process and to develop and implement necessary management reforms. The impact of all these actions is being felt today. In the last year, the Center has begun to reduce the application backlog and the number application reviews completed has increased significantly. Management improvements alone, however, will not get the device review process where the Agency, Congress, and industry want it to be. OBJECTIVES OF MEDICAL DEVICE USER FEES Additional resources funded from user fees could still be used Z1Z O effectively to eliminate the application backlog and, for the future,~ _ C7 • 10 ~ C,O 00

• • • maintain aggressive review timeframes. Building upon the successful effort which led to enactment of prescription drug user fees, the Agency and industry representatives were encouraged to meet to explore the feasibility of a medical device user fee program. 'Industry agreed that a user fee program was worth pursuing if fees would be: 1) additive to FDA's base and dedicated to specific functions; 2) tied to and based on-Agency goals; 3) fair throughout industry; and 4) simple to administer. In February of this year, the merits of an additive user fee approach for medical devices were reflected in the President's FY 1995 budget. As I testified in 1992 regarding prescription drug user fees, there is sound economic rationale for user fees. User fees are based on equity: an identifiable beneficiary of a government service should pay the cost to the Federal Government of providing that service. The pharmaceutical, biotechnology, and medical device industries derive enormous private benefit from FDA's review and approval. FDA approval. helps assure consumers that marketed products are safe and effective and provides companies access to lucrative markets. Most important, a system of fees will improve FDA's approval processes. With additional funds, FDA will be able to interact more closely with industry to ~ 9 produce guidance and product data that have high scientific quality. ~ ~ 11 W C,O W

• • This will help the Agency to review applications more quickly and consistent with the public health standards that the law demands. This is a proposal under which everyone benefits: industry will be able to move devices to market more quickly, consumers will have the benefit of new, safe technologies sooner, and the regulatory review process will be enhanced and improved. ' SUMMARY OF H.R. 4728 The Administration strongly supports authorization of medical device user fees to provide FDA additional resources for the medical device review program. The President's FY 1995 Budget included a $24 million increase for the medical device program to be derived from specifically authorized user fees. We agree that such fees should provide additional resources for the Agency's medical device review program, these additional resources should be dedicated to premarket review functions and tied to specific, agency-wide performance o s, and the program should include accommodation for small business and a public health waiver. FDA has agreed to performance goals, in terms of timeframes for taking action on device applications, and to implementing further enhancements to the device review process. These goals and other activities are s ecified in the letter dated July 8, ~-f- - 1994, I have provided to Chairmen Dingell and Waxman, and to Ranking Members Moorhead and Bliley.> An identical letter was provided to lll Member Kassebaum. The Administration Chairman Kennedy and Ranking strongly supports these elements of H.R. 4728. 0 ~ ~ ~ 12 ~ ~ ~ 0

• • Two aspects of the legislation have raised special concerns. First, the legislation exempts personnel engaged in medical device review from any personnel reductions, including those from the Federal Workforce Restructuring Act of 1994 (P.L. 103-226). Earlier this year, the Congress passed and the President signed the Workforce Restructuring Act, which limits the number of full-time equivalent personnel the Federal Government may employ. The Act requires the Federal Government to reduce Federal employment by 272,900 by the end of 1999. The Administration has consistently opposed FTE exemptions in appropriations and authorizations bills because such provisions are incompatible with the Act. We want to work with the Congress to ensure that the FDA has adequate personnel to perform its mission and to meet the objectives of the proposed medical device legislation. Secondly, the Administration is seriously concerned that, through this legislation, general user fees would be excluded from FDA base appropriations. We urge the Committee to revise this section to be consistent with the Prescription Drug User Fee Act. Let me briefly discuss some of the components of the Medical Device User Fee Act of 1994: 1. Assessment of Fees Fees will be assessed by application type: ~ O ~ ~ CU 13 ~ CC ~ ~

• PMA submissions under section 515(c) of the Food, Drug, and Cosmetic Act and PLA's under section 351 of the Public Health Service Act would require a fee of $52,000; • Supplements to the above applications that require clinical data would have a fee of $7,100; ' • Supplements without required data would be assessed $4,500; and • Submissions under section 510(k) would require a fee of $3,200. • • If the Agency refuses to file an application based on the inadequacy of the submission, 510(k) applicants would receive a full refund while PMA/PLA applicants would receive an 85 percent refund. 2. Small Business and Public Health Exceptions to Fees To address the concern that user fees should not, in certain circumstances, stand as an impediment to small businesses or desirable public health innovation, the bill would provide both a small business and public health exception to payment of fees. • Small businesses with fewer than 20 employees that do not already have a device marketed in the United States would pay only 50 percent of the PMA fee, and the fee would be due one year from the date of final action by the Agency. If the submission is a 510(k), a small business would have one year after final agency action to pay the full fee. • A public health waiver or reduction would be provided for PMA's if ~ the submission qualifies for a humanitarian device exemption under ~ ~ C,O 14 W CD ~ tz

• section 520(m) or if the Secretary finds a waiver is necessary to protect public health and the fee presents a barrier to innovation. • • 3. Activities Funded By User Fees 3 User fees would be dedicated exclusively to support review activities of CDRH and CBER, including the costs of administering the program. For the Office of Regulatory Affairs, it could provide additional investigators to ensure timely preapproval inspections of manufacturing facilities. The activities that may be funded are specified in the bill and include: • All activities related to review and approval of device applications • Development of guidance and policy documents • Development of test methods and standards • Technical assistance connected with the submission of an application • Classification and reclassification activities under sections 513 and 515(i) and premarket requirements under section 515(b) • Designated post-market activities that support premarket review activities--specifically, SMDA-mandated postmarket surveillance and review of adverse medical device reports. ~ ~ ~ Cs~ 15 ~ ~ ~ to:

• • • 4. Performance Goals In developing the program's performance goals, we were guided by the principles that such goals should: 1) be aggressive, but achievable; 2) be tied to the level of resources derived from feesp and 3) include eliminating the current backlog of 510(k) and PMA/PLA applications. The Agency has agreed to--goals as set forth in my July 8, 1994 letters. They are as follows: • 95 percent of the current backlog in 510(k)'s and 90 percent of PMA's/PLA's should be eliminated within 24 months of the program's ef f ective date. • After 24 months: - final action on 95 percent of 510(k)'s should be completed within 90 days - comprehensive, substantive review on 90 percent of PMA's and PLA's should be completed within 180 days - review and action on PMA/PLA supplements containing required clinical data should be completed within 180 days - review and action on PMA/PLA supplements without required ~ O clinical data should be completed within 120 days ~ W C] Because the goals are tied closely to the number of anticipated C~ W" submissions and paying submissions, any increase or decrease greateroi~,~ than 10 percent in the anticipated number of submissions would require 16

• • • that the goals be adjusted. This will be done in consultation with industry. In addition, the effective date for meeting the goals is the date FDA has received the authority to collect the fees, and an appropriation to begin collecting and spending fees, and the authority to add personnel. 5. User Fees are to be Additive Like PDUFA, H.R. 4728 would require that new revenues derived from the medical device industry do not offset the current base of direct appropriations, and that FDA cannot use fees to offset current base allocations to CDRH and CBER. The user fee system would be subject to the Chief Financial Officers Act of 1990, which requires annual audited financial statements in order to evaluate the use of user fee proceeds and accomplishment of performance goals. 6. Reports to Congress H.R. 4728 would require the Secretary to submit two annual reports to Congress. The first would outline the progress made in achieving the goals described and provide additional information regarding review times and the number and nature of Agency decisions concerning device applications. The second would concern the implementation of user fee authority, including an income and expense statement demonstrating the amount of fees collected and how the fees were used. O 17 O~ CD W Cn to $P •LP

a > • • These reports will enable Congress to hold the Agency accountable, through the annual appropriations process, for its progress toward meeting the performance goals set forth in my July 8, 1994, letters. Further accountability is provided for in H.R. 4728 through the sunset provision, under which the authority to collect user fees would expire at the end of five years, unless reauthorized by Congress. SUMMARY Let me close, Mr. Chairman, with a final view of why this legislation is so important to the public health mission of the FDA. We are on the verge of tremendous new medical breakthroughs. Mr. Chairman, the Congress and the Administration have been particularly concerned about encouraging the growth of medical device technology in the United States. New medical devices coming into FDA for review show great potential for the treatment of afflictions for which there are no or only inadequate treatments. Moreover, through the 510(k) process, we see numerous new products improving upon the effectiveness of their predicate devices, and this translates into more efficient use of scarce health resources. FDA must be prepared to ensure that these products are safe and effective and to get them approved for use in patients as rapidly as possible. Mr. Chairman and members of the Subcommittee, I appreciate the opportunity to appear before you today and again appreciate your O ~ 18 ~ . ~ . CO ~ ~ ,

• concern regarding the funding needs of FDA. I would be happy to answer your questions at this time. • O ~ ~ 19 ~ C~9 . 07 ~ •.~