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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4864 Reported in House (RH)]

                                                 Union Calendar No. 413

103d CONGRESS

  2d Session

                               H. R. 4864

                          [Report No. 103-751]

_______________________________________________________________________

                                 A BILL

To amend the Federal Food, Drug, and Cosmetic Act to authorize a device 
                application fee, and for other purposes.

_______________________________________________________________________

                           September 26, 1994

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed

                                                 Union Calendar No. 413
103d CONGRESS
  2d Session
                                H. R. 4864

                          [Report No. 103-751]

To amend the Federal Food, Drug, and Cosmetic Act to authorize a device 
                application fee, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             August 1, 1994

Mr. Waxman (for himself and Mr. Dingell) introduced the following bill; 
       which was referred to the Committee on Energy and Commerce

                           September 26, 1994

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on August 
                                1, 1994]

_______________________________________________________________________

                                 A BILL

 
To amend the Federal Food, Drug, and Cosmetic Act to authorize a device 
                application fee, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND REFERENCE.

    (a) Short Title.--This Act may be cited as the ``Medical Device 
User Fee Act of 1994''.
    (b) Reference.--Whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of the Federal Food, Drug, and Cosmetic Act.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) prompt approval and clearance of safe and effective 
        devices is critical to the improvement of the public health so 
        that patients may enjoy the benefits of devices to diagnose, 
        treat, and prevent disease;
            (2) the public health will be served by furnishing 
        additional funds for the review of devices so that statutorily 
        mandated deadlines may be met, and
            (3) the fees authorized by the amendment made by section 3 
        will be dedicated--
                    (A) toward expediting the review of device 
                applications, supplements, and substantial equivalence 
                submissions, and
                    (B) for related activities as defined in the 
                amendment,
        as set forth in goals identified in the letter of July 8, 1994, 
        from the Commissioner of Food and Drugs to the Committee on 
        Energy and Commerce of the House of Representatives.

SEC. 3. FEES RELATING TO DEVICES.

    Chapter VII is amended by adding at the end of subchapter C the 
following:

                   ``PART 3--FEES RELATING TO DEVICES

``SEC. 741. DEFINITIONS.

    ``For purposes of this subchapter:
            ``(1) The term--
                    ``(A) `device application' means an application for 
                approval of a device submitted under section 515(c) or 
                section 351 of the Public Health Service Act, a 
                supplement to such an application, or a submission for 
                a device made under section 510(k) claiming the devise 
                is substantially equivalent as described in section 
                513(f)(1)(A) (in this part referred to as a `device 
                substantial equivalence submission'); and
                    ``(B) `section 351 application' means a device 
                application submitted under section 351 of the Public 
                Health Service Act.
            ``(2) The term `supplement' means a request to the 
        Secretary to approve a change in a device application which has 
        been approved under section 515(d) or section 351 of the Public 
        Health Service Act.
            ``(3) The term `process for the review of device 
        applications and related activities' means the following 
        activities of the Secretary with respect to the review of 
        device applications and related activities:
                    ``(A) The activities necessary for the review of 
                device applications and related activities.
                    ``(B) The issuance of action letters which allow 
                marketing of devices or which set forth in detail the 
                specific deficiencies in such applications and, where 
                appropriate, the actions necessary to place such 
                applications in condition for approval.
                    ``(C) The inspection of device establishments and 
                other facilities undertaken as part of the Secretary's 
                review of pending device applications.
                    ``(D) Any activity necessary for the review of 
                applications for licensure of devices subject to 
                section 351 of the Public Health Service Act, for the 
                licensure of establishments where such devices are 
                manufactured, and for the release of lots of such 
                devices.
                    ``(E) Review of device applications for an 
                investigational new drug exemption under section 505(i) 
                and for an investigational device exemption under 
                section 520(g) and activities conducted in anticipation 
                of the submission of an application under sections 
                505(i) and 520(g).
                    ``(F) The development of guidance and policy 
                documents to improve the process for the review of 
                device applications.
                    ``(G) The development of test methods and standards 
                in connection with the review of device applications 
                and related activities.
                    ``(H) The provision of technical assistance to 
                device manufacturers in connection with the submission 
                of a device application.
                    ``(I) Any activity undertaken in connection with 
                the export of a device.
                    ``(J) Any activity undertaken under sections 513 
                and 515(i) in connection with the initial 
                classification and reclassification of a device and 
                under section 515(b) in connection with any requirement 
                for premarket approval of a device.
                    ``(K) Monitoring of research on devices.
                    ``(L) Any activities undertaken under sections 
                519(a) and 519(b).
                    ``(M) Postmarket studies required as a condition of 
                an approval of a device application under section 
                515(d) or section 351 of the Public Health Service Act.
                    ``(N) Postmarket surveillance required under 
                section 522.
            ``(4) The term `costs of resources allocated for the 
        process for the review of device applications and related 
        activities' means the expenses incurred in connection with the 
        process for the review of device applications and related 
        activities for--
                    ``(A) officers and employees of the Food and Drug 
                Administration, employees under contract with the Food 
                and Drug Administration, advisory committees, and costs 
                related to such officers, employees, and committees,
                    ``(B) management of information, and the 
                acquisition, maintenance, and repair of computer 
                resources,
                    ``(C) leasing, maintenance, renovation, and repair 
                of facilities and acquisition, maintenance, and repair 
                of fixtures, furniture, scientific equipment, and other 
                necessary materials, services, and supplies, and
                    ``(D) collection fees under section 742 and 
                accounting for resources allocated for the review of 
                device applications and related activities, including 
                activities related to the review of applications for 
                fee exceptions, waivers, and reductions.
            ``(5) The term `adjustment factor' applicable to a fiscal 
        year is the lower of--
                    ``(A) the Consumer Price Index for all urban 
                consumers (all items; United States city average) for 
                August of the preceding fiscal year divided by such 
                Index for August 1994, or
                    ``(B) the total budget authority provided for 
                discretionary programs for the immediately preceding 
                fiscal year (as reported in the Office of Management 
                and Budget sequestration preview report, if available, 
                required under section 254(d) of the Balanced Budget 
                and Emergency Deficit Control Act of 1985) divided by 
                such budget authority for fiscal year 1994 (as reported 
                in the Office of Management and Budget final 
                sequestration report submitted after the end of the 
                103d Congress, 2d Session).
        The term `budget authority' in subparagraph (B) is as defined 
        in section 3(2)(A) of the Balanced Budget and Emergency Deficit 
        Control Act of 1985 (2 U.S.C. 622(2)(A)), as in effect as of 
        January 1, 1994.

``SEC. 742. AUTHORITY TO ASSESS AND USE DEVICE USER FEES.

    ``(a) Fees.--Beginning in fiscal year 1995, the Secretary shall 
assess and collect fees as follows:
            ``(1) General rule.--Except as provided in paragraph (2), 
        each person that submits, on or after 90 days before the date 
        of the enactment of the first appropriation under subsection 
        (g)(4) for fees under this section, a device application shall 
        be subject, in accordance with paragraph (3), to the fee 
        prescribed by subsection (b). Before April 30, 1995, the 
        Secretary shall establish guidelines for the combination of 
        multiple device applications in those situations where it is 
        appropriate to combine the applications and assess a single 
        fee. A single fee shall be assessed upon an application which 
        is such a combination.
            ``(2) Exception.--
                    ``(A) Further manufacturing use.--No fee shall be 
                required for the submission of a section 351 
                application for a product licensed for further 
                manufacturing use only.
                    ``(B) Previously filed application or supplement.--
                If a device application was--
                            ``(i) submitted by a person that paid the 
                        fee for such application,
                            ``(ii) accepted for filing, and
                            ``(iii) not approved or withdrawn (without 
                        a waiver under subsection (d)),
                the submission of a device application for the 
                identical device by the same person (or the person's 
                licensee, assignee, or successor) shall not be subject 
                to a fee under paragraph (1).
            ``(3) Payment schedule.--
                    ``(A) General rule.--Except as provided in 
                subparagraph (B)--
                            ``(i) in the case of an application 
                        submitted under section 515(c), an application 
                        for a device submitted under section 351 of the 
                        Public Health Service Act, or a supplement 
                        submitted with required clinical data, 15 
                        percent of the fee prescribed by subsection (b) 
                        shall be due upon submission of such 
                        application or supplement and the remainder 
                        within 30 days of receipt of notice from the 
                        Secretary of acceptance of such application or 
                        supplement for filing or review, and
                            ``(ii) in the case of the submission of a 
                        supplement for which clinical data are not 
                        required or a submission under section 510(k), 
                        the fee prescribed under subsection (b) shall 
                        be due within 30 days of receipt of notice from 
                        the Secretary of acceptance of such supplement 
                        or submission for filing or review.
                    ``(B) Exceptions.--
                            ``(i) Pending applications.--In the case of 
                        a device application for which fees are 
                        required under paragraph (1) and which is 
                        pending on the date of the enactment of the 
                        first appropriation under subsection (g)(4) for 
                        fees under this section, the fee required by 
                        paragraph (1) shall be due 90 days after such 
                        date of enactment.
                            ``(ii) Excess of authorization.--A fee 
                        which is due after an amount of fees equal to 
                        the authorization of appropriations under 
                        subsection (g)(4) for the fiscal year in which 
                        the fee is imposed has been collected shall be 
                        due on November 1 in the following fiscal year.
    ``(b) Fee Amounts.--
            ``(1) Amount.--Except as provided in paragraph (2) and 
        subject to subsections (c), (d), (f), and (g)(3)(A), the fees 
        required under subsection (a) are as follows:
                    ``(A) $52,000 for an application for a device 
                submitted under section 515(c) or under section 351 of 
                the Public Health Service Act.
                    ``(B) $7,100 for a supplement for which clinical 
                data are required.
                    ``(C) $4,500 for a supplement for which clinical 
                data are not required.
                    ``(D) $3,200 for a device substantial equivalence 
                submission under section 510(k).
            ``(2) Small business exception.--
                    ``(A) Applications and submissions.--Any person 
                employing fewer than 20 employees, including employees 
                of affiliates, which does not have a device introduced 
                or delivered for introduction into interstate commerce 
                under a device application--
                            ``(i) shall pay one-half the amount of the 
                        fee prescribed by paragraph (1)(A) one year 
                        after the date of final action by the Secretary 
                        on an application of such person which is 
                        subject to such fee, and
                            ``(ii) shall pay the fee prescribed by 
                        paragraph (1)(D) for a submission made by such 
                        person under section 510(k) one year after the 
                        date of final action by the Secretary on such 
                        submission.
                    ``(B) Certification.--The Secretary shall require 
                any person who applies to pay a fee in accordance with 
                subparagraph (A) to certify such person's qualification 
                under such subparagraph. The Secretary shall 
                periodically publish in the Federal Register a list of 
                persons making such certification.
                    ``(C) Definition.--For purposes of this paragraph, 
                a person is an affiliate of another person when--
                            ``(i) one person controls, or has the power 
                        to control, directly or indirectly, the other 
                        person,
                            ``(ii) a third party controls, or has the 
                        power to control, directly or indirectly, both 
                        persons, or
                            ``(iii) an identity of interest between or 
                        among such persons exists such that affiliation 
                        may be found.
    ``(c) Adjustments.--
            ``(1) Fee adjustment.--Subject to the amount appropriated 
        for a fiscal year under subsection (g)(4), the Secretary shall, 
        in each fiscal year beginning after fiscal year 1995, adjust 
        the fees due in the fiscal year following the fiscal in which 
        the adjustment is made to reflect the greater of--
                    ``(A) the total percentage increase that occurred 
                during the preceding fiscal year in the Consumer Price 
                Index for all urban consumers (all items; United States 
                city average) that exceeds 3.5 percent, or
                    ``(B) the total percentage increase for such 
                preceding fiscal year in basic pay under the General 
                Schedule in accordance with section 5332 of title 5, 
                United States Code, as adjusted by any locality-based 
                comparability payment pursuant to section 5304 of such 
                title for Federal employees stationed in the District 
                of Columbia that exceeds 3.5 percent.
        The Secretary shall, by notice published in the Federal 
        Register, make an adjustment under this paragraph before 
        December 1 of each year.
            ``(2) Limit.--The total amount of fees charged, as adjusted 
        under paragraph (1), for a fiscal year may not exceed the total 
        costs for such fiscal year for the resources allocated for the 
        process for the review of device applications and related 
        activities.
    ``(d) Fee Waiver or Reduction.--The Secretary shall grant a waiver 
from or a reduction of a fee for a person under subsection (a) if the 
person has submitted an application under section 515(c) or section 351 
of the Public Health Service Act and if the Secretary finds--
            ``(1) that such application is a device application for a 
        device which has a humanitarian device exemption under section 
        520(m), or
            ``(2)(A) such waiver or reduction is necessary to protect 
        the public health, and
            ``(B) the assessment of the fee would present a significant 
        barrier to innovation because of limited resources available to 
        such person or other circumstances.
    ``(e) Effect of Failure To Pay Fees.--A device application or 
supplement submitted by a person subject to fees under subsection (a) 
shall be considered incomplete and shall not be accepted for review by 
the Secretary until all fees owed by such person under subsection (a) 
have been paid. The Secretary may discontinue review of any device 
application submitted by a person if such person has not paid all fees 
owed under subsection (a).
    ``(f) Assessment of Fees.--
            ``(1) Limitation.--Fees may not be assessed under 
        subsection (a) for a fiscal year beginning after fiscal year 
        1995 unless--
                    ``(A) appropriations for salaries and expenses of 
                the Food and Drug Administration for such fiscal year 
                (excluding the amount of fees appropriated under 
                chapter 7 of this Act, chapter 97 of title 31, United 
                States Code, or other authority for such fiscal year) 
                are equal to or greater than the amount of 
                appropriations for the salaries and expenses of the 
                Food and Drug Administration for fiscal year 1994 
                (excluding the amount of fees appropriated under 
                chapter 7 of this Act, chapter 97 of title 31, United 
                States Code, or other authority for such fiscal year) 
                multiplied by the adjustment factor applicable to the 
                fiscal year involved, and
                    ``(B) the number of full-time equivalent positions 
                at the Food and Drug Administration for such year, 
                whose salary is not paid for by fees authorized under 
                this section, is equal to or greater than the number of 
                full-time equivalent positions during fiscal year 1994 
                multiplied by the employee adjustment factor. For 
                purposes of this paragraph, the term `employee 
                adjustment factor' applicable to a fiscal year is the 
                number of full-time equivalent positions for such 
                fiscal year permitted under section 5(b) of the Federal 
                Workforce Restructuring Act of 1994 (5 U.S.C. 3101 
                note) divided by the number of such positions for 
                fiscal year 1994.
            ``(2) Authority.--If the Secretary does not assess fees 
        under subsection (a) during any portion of a fiscal year 
        because of paragraph (1) and if at a later date in such fiscal 
        year the Secretary is authorized to assess such fees, the 
        Secretary may assess and collect such fees, without any 
        modification in the rate to account for the time during which 
        the Secretary could not collect such fees.
    ``(g) Crediting and Availability of Fees.--
            ``(1) In general.--Fees collected for a fiscal year 
        pursuant to subsection (a) shall be deposited in an escrow 
        account established by the Secretary of Health and Human 
        Services and shall be available and credited to the 
        appropriation account for salaries and expenses of the Food and 
        Drug Administration as provided in paragraph (2)(A), and shall 
        be available in accordance with appropriation Acts until 
        expended, without fiscal year limitation.
            ``(2) Use of funds.--
                    ``(A) Escrow.--
                            ``(i) 15 percent.--15 percent of the fee 
                        assessed for the submission of an application 
                        under section 515(c), an application for a 
                        device under section 351 of the Public Health 
                        Service Act, or a supplement with required 
                        clinical data shall be immediately available 
                        upon receipt by the Secretary.
                            ``(ii) 35 percent.--35 percent of the fee 
                        assessed on an application or supplement 
                        described in clause (i) shall be available upon 
                        receipt of the fee after acceptance of such 
                        application or supplement for filing.
                            ``(iii) 50 percent.--50 percent of the fee 
                        assessed on an application or supplement 
                        described in clause (i) shall be available upon 
                        completion of a comprehensive substantive 
                        review of such application or supplement.
                            ``(iv) Other supplements and submissions.--
                        50 percent of the fee assessed for the 
                        submission of a supplement for which clinical 
                        data are not required or a submission under 
                        section 510(k) shall be immediately available 
                        upon receipt by the Secretary and the remainder 
                        of such fee shall be available upon completion 
                        of a comprehensive, substantive review of the 
                        supplement or submission.
                            ``(v) Interest on escrow.--The amount of 
                        interest which may accrue on fees in the escrow 
                        account established under paragraph (1) shall 
                        be paid into the General Fund of the Treasury.
                    ``(B) Limit on availability.--Not more than 5 
                percent of the projected fee receipts in any fiscal 
                year may be used for activities described in 
                subparagraphs (L) and (N) of section 741(3), except 
                that up to 15 percent of the projected fee receipts in 
                any fiscal year may be used for such activities after 
                the Commissioner of the Food and Drug Administration 
                issues a public notice that the Food and Drug 
                Administration has met the applicable goals referenced 
                in section 2(3) of the Medical Device User Fee Act of 
                1994. If subsequent to such public notice the Food and 
                Drug Administration is not meeting such goals--
                            ``(i) the Commissioner shall issue a public 
                        notice of the Food and Drug Administration's 
                        actual performance level, and
                            ``(ii) not more than 5 percent of projected 
                        fee receipts may be used for such activities 
                        until the Commissioner issues a subsequent 
                        notice that the Food and Drug Administration is 
                        again meeting such goals.
            ``(3) Collections and appropriation acts.--The fees 
        authorized by this section--
                    ``(A) shall be collected in each fiscal year in an 
                amount equal to the amount specified in appropriation 
                Acts for such fiscal year, and
                    ``(B) shall only be collected and available to 
                defray increases in the costs of the resources 
                allocated for the process for the review of device 
                applications and related activities (including 
                increases in such costs for an additional number of 
                full-time equivalent employees in the Department of 
                Health and Human Services to be engaged in such 
                process) over such costs for fiscal year 1994 
                multiplied by the adjustment factor.
            ``(4) Authorization of appropriations.--There are 
        authorized to be appropriated for fees under this section--
                    ``(A) $23,000,000 for fiscal year 1995,
                    ``(B) $21,300,000 for fiscal year 1996,
                    ``(C) $23,000,000 for fiscal year 1997,
                    ``(D) $24,000,000 for fiscal year 1998, and
                    ``(E) $24,000,000 for fiscal year 1999,
        as adjusted to reflect the percentage adjustment of fees 
        authorized under subsection (c)(1).
    ``(h) Collection of Unpaid Fees.--In any case where the Secretary 
does not receive payment of a fee for a pending application assessed 
under subsection (a) within 30 days after it is due, such fee shall be 
treated as a claim of the United States Government subject to 
subchapter II of chapter 37 of title 31, United States Code.
    ``(i) Positions.--Any employee whose salary is paid for by fees 
authorized under this section shall not be included in calculating any 
limit on full-time equivalent positions or the grade levels for such 
positions.''.

SEC. 4. ANNUAL REPORTS.

    (a) First Report.--Within 90 days after the end of each fiscal year 
during which fees are collected under part 3 of subchapter C of chapter 
VII of the Federal Food, Drug, and Cosmetic Act, the Secretary of 
Health and Human Services shall submit a report stating the Food and 
Drug Administration's progress in achieving the goals identified in 
section 2(3) of this Act during such fiscal year and the Food and Drug 
Administration's future plans for meeting such goals. There shall be 
included in such report--
            (1) a specific statement from the Secretary concerning the 
        Food and Drug Administration's actions to reduce the backlog in 
        the review of device applications and meeting statutory review 
        times applicable to submissions for devices, and
            (2) the following data from the Center for Devices and 
        Radiological Health and the Center for Biologics Evaluation and 
        Research:
                    (A) The number of device submissions found not 
                fileable.
                    (B) Total elapsed time for review of device 
                submissions.
                    (C) Total time for review of device submissions as 
                calculated by such Center.
                    (D) The number of negative decisions for device 
                submissions.
                    (E) The number of non-approveable letters for 
                device submissions.
                    (F) The number of deficiency letters for device 
                submissions.
                    (G) The total number of device applications by type 
                of application.
                    (H) The number of device applications withdrawn by 
                the sponsor.
                    (I) The number of major amendments to device 
                applications and the number of device applications 
                subject to post-market requirements established as a 
                condition of approval of a device application.
                    (J) The number of devices with post-approval 
                problems which resulted in one or more of the following 
                actions: Withdrawal of approval or temporary suspension 
                of an approved application under section 515 of the 
                Federal Food, Drug, and Cosmetic Act, mandatory product 
                recall under section 518 of such Act, seizure under 
                section 304 of such Act, or criminal prosecution under 
                section 303 of such Act.
                    (K) Information for subparagraphs (A) through (J) 
                for fiscal year 1994.
    (b) Second Report.--Within 120 days after the end of each fiscal 
year during which such fees are collected, the Secretary of Health and 
Human Services shall submit a report on the implementation of the 
authority for such fees during such fiscal year and on the use of the 
Food and Drug Administration made of the fees collected during such 
fiscal year.
    (c) Escrow Account Report.--The Secretary of Health and Human 
Services shall report to the Congress annually--
            (1) the closing monthly balance of the escrow account 
        established under section 742(g)(2) of the Federal Food, Drug, 
        and Cosmetic Act,
            (2) the monthly receipt of fees insuch account reported for 
        each fee established under section 742(b) of such Act, and
            (3) the monthly accrual of interest in such account
    (d) Committees.--The reports described in subsections (a), (b), and 
(c) shall be submitted to the Committee on Energy and Commerce of the 
House of Representatives and the Committee on Labor and Human Resources 
of the Senate.

SEC. 5. REGULATIONS.

    (a) General Rule.--This Act and the amendment made by section 3 
shall not be in effect after June 30, 1995, unless the Secretary of 
Health and Human Services, through the Commissioner of Food and Drugs, 
approves--
            (1) regulations described in subsection (b), and
            (2) regulations which identify devices in class II of the 
        device classes in section 513 of the Federal Food, Drug, and 
        Cosmetic Act that are appropriate for exemption from the 
        requirement of section 510(k) of such Act and which exempts 
        such devices from such requirement following their 
        reclassification into class I.
    (b) Regulations.--
            (1) Proposed.--Not later than November 30, 1994, the 
        Secretary shall issue proposed regulations that--
                    (A) identify all devices in class I of the device 
                classes in section 513 of the Federal Food, Drug, and 
                Cosmetic Act which are exempt from the requirement of 
                section 510(k) of such Act, and
                    (B) identify the criteria for selecting devices for 
                such exemption.
        The Secretary shall provide an opportunity to comment on such 
        proposed regulations for 60 days after publication.
            (2) Final.--Not later than February 28, 1995, the Secretary 
        shall issue final regulations which grant an exemption to the 
        devices identified in the proposed regulations which clearly 
        meet the criteria for exemption from the requirement of such 
        section 510(k) of the Federal Food, Drug, and Cosmetic Act.
            (3) Other regulations.-- Not later than June 30, 1995, the 
        Secretary shall issue final regulations for the remainder of 
        the devices from the list published in the proposed regulations 
        which exempts such devices from such requirement or which 
        continues the applicability of such requirement.
    (c) Fees.--An applicant under a device substantial equivalence 
submission under section 510(k) of the Federal Food, Drug, and Cosmetic 
Act which the Secretary proposed to exempt from the requirement of such 
section under subsection (b)(1) shall not be required to pay a fee for 
such submission unless the Secretary issues a final regulation 
requiring such submission. An applicant under a substantial equivalence 
submission under such section 510(k) which the Secretary exempts from 
the requirement of such section under subsection (a) shall not be 
required to pay a fee for such submission.

SEC. 6. SUNSET.

    This Act and the amendment made by section 3 shall not be in effect 
after September 30, 1999.
HR 4864 RH----2
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