II

103D CONGRESS

2D SESSION S. 2276

To amend the Federal Food, Drug, and Cosmetic Act to authorize a device

application fee, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JULY 12 (legislative day, JULY 11), 1994

Mr. KENNEDY introduced the following bill; which was read twice and referred

to the Committee on Labor and Human Resources

A BILL

To amend the Federal Food, Drug, and Cosmetic Act to

authorize a device application fee, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND REFERENCE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Medical Device User Fee Act of 1994’’.

6 (b) REFERENCE.—Whenever in this Act an amend7 ment or repeal is expressed in terms of an amendment

8 to, or repeal of, a section or other provision, the reference

9 shall be considered to be made to a section or other provi10 sion of the Federal Food, Drug, and Cosmetic Act.
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1 SEC. 2. FINDINGS.

2 The Congress finds that—

3 (1) prompt approval and clearance of safe and

4 effective devices is critical to the improvement of the

5 public health so that patients may enjoy the benefits

6 of devices to diagnose, treat, and prevent disease;

7 (2) the public health will be served by furnish8 ing additional funds for the review of devices so that

9 statutorily mandated deadlines may be met; and

10 (3) the fees authorized by the amendment made

11 by section 3 will be dedicated—

12 (A) toward expediting the review of device

13 applications, supplements, and substantial

14 equivalence submissions, and

15 (B) for related activities as defined in sec16 tion 741(3) of the Federal Food, Drug, and

17 Cosmetic Act,

18 as set forth in goals identified in the letter of July

19 8, 1994, from the Commissioner of Food and Drugs

20 to the Committee on Energy and Commerce of the

21 House of Representatives and the Committee on

22 Labor and Human Resources of the Senate.

23 SEC. 3. FEES RELATING TO DEVICES.

24 Chapter VII is amended by adding at the end of sub25 chapter C of the following:
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1 ‘‘PART 3—FEES RELATING TO DEVICES

2 ‘‘SEC. 741. DEFINITIONS.

3 ‘‘For purposes of this subchapter:

4 ‘‘(1) The term—

5 ‘‘(A) ‘device application’ means an applica6 tion for approval of a device submitted under

7 section 515(c) or section 351 of the Public

8 Health Service Act, a supplement to such an

9 application, or a device substantial equivalence

10 submission made under section 510(k); and

11 ‘‘(B) ‘section 351 application’ means a de12 vice application submitted under section 351 of

13 the Public Health Service Act.

14 ‘‘(2) The term ‘supplement’ means a request to

15 the Secretary to approve a change in a device appli16 cation which has been approved under section

17 515(d) or section 351 of the Public Health Service

18 Act.

19 ‘‘(3) The term ‘process for the review of device

20 applications and related activities’ means the follow21 ing activities of the Secretary with respect to the re22 view of device applications and related activities:

23 ‘‘(A) The activities necessary for the re24 view of device applications and related activi25 ties.
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1 ‘‘(B) The issuance of action letters which

2 allow marketing of devices or which set forth in

3 detail the specific deficiencies in such applica4 tions and, where appropriate, the actions nec5 essary to place such applications in condition

6 for approval.

7 ‘‘(C) The inspection of device establish8 ments and other facilities undertaken as part of

9 the Secretary’s review of pending device appli10 cations.

11 ‘‘(D) Activities necessary for the review of

12 applications for licensure of devices subject to

13 section 351 of the Public Health Service Act,

14 for the licensure of establishments where such

15 devices are manufactured, and for the release of

16 lots of such devices.

17 ‘‘(E) Review of device applications for an

18 investigational new drug exemption under sec19 tion 505(i) and for an investigational device ex20 emption under section 520(g) and activities

21 conducted in anticipation of the submission of

22 an application under sections 505(i) and

23 520(g).
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1 ‘‘(F) The development of guidance and pol2 icy documents to improve the process for the

3 review of device applications.

4 ‘‘(G) The development of test methods and

5 standards in connection with the review of de6 vice applications and related activities.

7 ‘‘(H) The provision of technical assistance

8 to device manufacturers in connection with the

9 submission of a device application.

10 ‘‘(I) Activities undertaken in connection

11 with the export of a device.

12 ‘‘(J) Activities undertaken under sections

13 513 and 515(i) in connection with the initial

14 classification and reclassification of a device

15 and under section 515(b) in connection with

16 any requirement for premarket approval of a

17 device.

18 ‘‘(K) Monitoring of research.

19 ‘‘(L) Activities undertaken under sections

20 519(a) and 519(b).

21 ‘‘(M) Postmarket studies required as a

22 condition of an approval of a device application

23 under section 515(d) or section 351 of the Pub24 lic Health Service Act.
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1 ‘‘(N) Postmarket surveillance required

2 under section 522.

3 ‘‘(4) The term ‘costs of resources allocated for

4 the process for the review of device applications and

5 related activities’ means the expenses incurred in

6 connection with the process for the review of device

7 applications and related activities for—

8 ‘‘(A) officers and employees of the Food

9 and Drug Administration, employees under con10 tract with the Food and Drug Administration,

11 advisory committees, and costs related to such

12 officers, employees, and committees,

13 ‘‘(B) management of information, and the

14 acquisition, maintenance, and repair of com15 puter resources,

16 ‘‘(C) leasing, maintenance, renovation, and

17 repair of facilities and acquisition, maintenance,

18 and repair of fixtures, furniture, scientific

19 equipment, and other necessary materials, serv20 ices, and supplies, and

21 ‘‘(D) collecting fees under section 742 and

22 accounting for resources allocated for the re23 view of device applications and related activi24 ties, including activities related to the review of
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1 applications for fee exceptions, waivers, and re2 ductions.

3 ‘‘(5) The term ‘adjustment factor’ applicable to

4 a fiscal year is the lower of—

5 ‘‘(A) the Consumer Price Index for all

6 urban consumers (all items; United States city

7 average) for August of the preceding fiscal year

8 divided by such Index for August 1994, or

9 ‘‘(B) the total budget authority provided

10 for discretionary programs for the immediately

11 preceding fiscal year (as reported in the Office

12 of Management and Budget sequestration pre13 view report, if available, required under section

14 254(d) of the Balanced Budget and Emergency

15 Deficit Control Act of 1985) divided by such

16 budget authority for fiscal year 1994 (as re17 ported in the Office of Management and Budget

18 final sequestration report submitted after the

19 end of the 103d Congress, 2d Session).

20 The term ‘budget authority’ in subparagraph (B) is

21 as defined in the Balanced Budget and Emergency

22 Deficit Control Act of 1985, as in effect as of Janu23 ary 1, 1994.
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1 ‘‘SEC. 742. AUTHORITY TO ASSESS AND USE DEVICE USER

2 FEES.

3 ‘‘(a) FEES.—Beginning in fiscal year 1995, the Sec4 retary shall assess and collect fees as follows:

5 ‘‘(1) GENERAL RULE.—Except as provided in

6 paragraph (2), each person that submits, on or after

7 90 days before—

8 ‘‘(A) the date of the enactment of the Med9 ical Device User Fee Act of 1994, or

10 ‘‘(B) the date of the enactment of the first

11 appropriation under subsection (g)(4) for fees

12 under this section,

13 whichever occurs later, a device application shall be

14 subject to the fee prescribed by subsection (b).

15 ‘‘(2) EXCEPTION.—

16 ‘‘(A) FURTHER MANUFACTURING USE.—

17 No fee shall be required for the submission of

18 a section 351 application for a product licensed

19 for further manufacturing use only.

20 ‘‘(B) EXCEPTION FOR PREVIOUSLY FILED

21 APPLICATIONS OR SUPPLEMENT.—If a device

22 application was—

23 ‘‘(i) submitted by a person that paid

24 the fee for such application,

25 ‘‘(ii) accepted for filing, and
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1 ‘‘(iii) not approved or withdrawn

2 (without a waiver under subsection (d)),

3 the submission of a device application for the

4 identical device by the same person (or the per5 son’s licensee, assignee, or successor) shall not

6 be subject to a fee under paragraph (1).

7 ‘‘(3) PAYMENT SCHEDULE.—

8 ‘‘(A) GENERAL RULE.—Except as provided

9 in subparagraph (B), the fee prescribed by sub10 section (b) shall be due upon the submission of

11 the application.

12 ‘‘(B) EXCEPTIONS.—

13 ‘‘(i) PENDING.—In the case of a de14 vice application for which fees are required

15 under paragraph (1) and which is pending

16 on the later of—

17 ‘‘(I) the date of the enactment of

18 the Medical Device User Fee Act of

19 1994, or

20 ‘‘(II) the date of the enactment

21 of the first appropriation under sub22 section (g)(4) for fees under this sec23 tion,
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1 the fee required by paragraph (1) shall be

2 due 90 days after such later date of enact3 ment.

4 ‘‘(ii) EXCESS OF AUTHORIZATION.—A

5 fee which is due after an amount of fees

6 equal to the authorization of appropria7 tions under subsection (g)(4) for the fiscal

8 year in which the fee is imposed has been

9 collected shall be due on November 1 in

10 the following fiscal year.

11 ‘‘(4) REFUND IF APPLICATION OR SUPPLEMENT

12 NOT ACCEPTED FOR FILING.—

13 ‘‘(A) 515(c) AND 351.—The Secretary shall

14 refund 85 percent of the fee paid under para15 graph (3) for any application submitted under

16 section 515(c) or section 351 of the Public

17 Health Service Act which is not accepted for fil18 ing.

19 ‘‘(B) SUPPLEMENTS.—The Secretary shall

20 refund 85 percent of the fee paid under para21 graph (3) for any supplement with required

22 clinical data which is not accepted for filing and

23 shall refund the fee paid under such paragraph

24 for any supplement without required clinical

25 data which is not accepted for filing.
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1 ‘‘(C) 510(k).—The Secretary shall refund

2 the fee paid under paragraph (3) for any sub3 stantial equivalence submission under section

4 510(k) which is not accepted for filing.

5 ‘‘(b) FEE AMOUNTS.—

6 ‘‘(1) AMOUNT.—Except as provided in para7 graph (2) and subsections (c), (d), (f), and (g), the

8 fees required under subsection (a) are as follows:

9 ‘‘(A) $52,000 for applications submitted

10 under section 515(c) and applications for de11 vices submitted under section 351 of the Public

12 Health Service Act,

13 ‘‘(B) $7,100 for a supplement with re14 quired clinical data,

15 ‘‘(C) $4,500 for a supplement without re16 quired clinical data, and

17 ‘‘(D) $3,200 for a submission under sec18 tion 510(k).

19 ‘‘(2) SMALL BUSINESS EXCEPTION.—

20 ‘‘(A) APPLICATIONS AND SUBMISSION.—

21 Any person employing fewer than 20 employees,

22 including employees of affiliates, and which

23 does not have a device introduced or delivered

24 for introduction into interstate commerce under

25 a device application—
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1 ‘‘(i) shall pay one-half the amount of

2 the fee prescribed by paragraph (1)(A) one

3 year after the date of final action by the

4 Secretary on an application of such person

5 which is subject to such fee, and

6 ‘‘(ii) shall pay the fee prescribed by

7 paragraph (1)(D) for a submission made

8 by such person under section 510(k) one

9 year after the date of final action by the

10 Secretary on such submission.

11 ‘‘(B) CERTIFICATION.—The Secretary

12 shall require any person who applies to pay a

13 fee in accordance with subparagraph (A) to cer14 tify such person’s qualification under such sub15 paragraph. The Secretary shall periodically

16 publish in the Federal Register of list of per17 sons making such certification.

18 ‘‘(C) DEFINITION.—For purposes of this

19 paragraph, a person is an affiliate of another

20 person when—

21 ‘‘(i) directly or indirectly, one person

22 controls, or has the power to control, the

23 other person,
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1 ‘‘(ii) directly or indirectly, a third

2 party controls, or has the power to control,

3 both persons, or

4 ‘‘(iii) an identity of interest between

5 or among such person exist such that af6 filiation may be found.

7 ‘‘(c) ADJUSTMENTS.—

8 ‘‘(1) FEE ADJUSTMENT.—Subject to the

9 amount appropriated for a fiscal year under sub10 section (g), the Secretary shall, in a fiscal year be11 ginning after fiscal year 1995, adjust the fees due

12 in the fiscal year following the fiscal year in which

13 the adjustment is made to reflect the greater of—

14 ‘‘(A) the total percentage increase that oc15 curred during he preceding fiscal year in the

16 Consumer Price Index for all urban consumers

17 (all items; U.S. city average) that exceeds 3.5

18 percent, or

19 ‘‘(B) the total percentage increase for such

20 preceding fiscal year in basic pay under the

21 General Schedule in accordance with section

22 5332 of title 5, United States Code, as adjusted

23 by any locality-based comparability payment

24 pursuant to section 5304 of such title for Fed-
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1 eral employees stationed in the District of Co2 lumbia that exceeds 3.5 percent.

3 The Secretary shall, by notice published in the Fed4 eral Register, make an adjustment under this para5 graph within the first 60 days of a fiscal year.

6 ‘‘(2) LIMIT.—The total amount of fees charged,

7 as adjusted under paragraph (1), for a fiscal year

8 may not exceed the total costs for such fiscal year

9 for the resources allocated for the process for the re10 view of device applications and related activities.

11 ‘‘(d) FEE WAIVER OR REDUCTION.—The Secretary

12 shall grant a waiver from or a reduction of a fee for a

13 person under subsection (a) if the person has submitted

14 an application under section 515(c) or section 351 of the

15 Public Health Service Act and if the Secretary finds—

16 ‘‘(1) that such application is a device applica17 tion for a device which has a humanitarian device

18 exemption under section 520(m), or

19 ‘‘(2)(A) such waiver or reduction is necessary to

20 protect the public health, and

21 ‘‘(B) the assessment of the fee would present a

22 significant barrier to innovation because of limited

23 resources available to such person or other cir24 cumstances.
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1 ‘‘(e) EFFECT OF FAILURE TO PAY FEES.—A device

2 application or supplement submitted by a person subject

3 to fees under subsection (a) shall be considered incomplete

4 and shall not be accepted for review by the Secretary until

5 all fees owed by such person under subsection (a) have

6 been paid. The Secretary may discontinue review of any

7 device application submitted by a person if such person

8 has not paid all fees owed by such person under subsection

9 (a).

10 ‘‘(f) ASSESSMENT OF FEES.—

11 ‘‘(1) LIMITATION.—Fees may not be assessed

12 under subsection (a) for a fiscal year beginning after

13 fiscal year 1995 unless appropriations for salaries

14 and expenses of the Food and Drug Administration

15 for such fiscal year (excluding the amount of fees

16 appropriated under chapter 7, chapter 97 of title 31,

17 United States Code, or other authority of such fiscal

18 year) are equal to or greater than the amount of ap19 propriations for the salaries and expenses of the

20 Food and Drug Administration for fiscal year 1994

21 (excluding the amount of fees appropriated under

22 chapter 7, chapter 97 of title 31, United States

23 Code, or other authority for such fiscal year) multi24 plied by the adjustment factor applicable to the fis25 cal year involved.
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1 ‘‘(2) AUTHORITY.—If the Secretary does not

2 assess fees under subsection (a) during any portion

3 of a fiscal year because of paragraph (1) and if at

4 a later date in such fiscal year the Secretary is au5 thorized to assess such fees, the Secretary may as6 sess and collect such fees, without any modification

7 in the rate to account for the time in which the Sec8 retary could not collect such fees.

9 ‘‘(g) CREDITING AND AVAILABILITY OF FEES.—

10 ‘‘(1) IN GENERAL.—Fees collected for a fiscal

11 year pursuant to subsection (a) shall be credited to

12 the appropriation account for salaries and expenses

13 of the Food and Drug Administration and shall be

14 available in accordance with appropriation Acts until

15 expended, without fiscal year limitation.

16 ‘‘(2) AVAILABILITY.—Not more than 5 percent

17 of the projected fee receipts in any fiscal year may

18 be used for activities described in subparagraphs (L)

19 and (N) of section 741(3), except that up to 15 per20 cent of the projected fee receipts in any fiscal year

21 may be used for such activities after the Commis22 sioner of the Food and Drug Administration issues

23 a public notice that the Food and Drug Administra24 tion has met the applicable goals referenced in sec25 tion 2(3) of the Medical Device User Fee Act of
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1 1994. If subsequent to such notice the Food and

2 Drug Administration is not meeting such goals—

3 ‘‘(A) the Commissioner shall issue a public

4 notice of the Food and Drug Administration’s

5 actual performance level, and

6 ‘‘(B) not more than 5 percent of projected

7 fee receipts may be used for such activities until

8 the Commissioner issues a subsequent notice

9 that the Food and Drug Administration is

10 again meeting such goals.

11 ‘‘(3) COLLECTIONS AND APPROPRIATION

12 ACTS.—The fees authorized by this section—

13 ‘‘(A) shall be collected in each fiscal year

14 in an amount equal to the amount specified in

15 appropriation Acts for such fiscal year, and

16 ‘‘(B) shall only be collected and available

17 to defray increases in the costs of the resources

18 allocated for the process for the review of device

19 applications and related activities (including in20 creases in such costs for an additional number

21 of full-time equivalent employees in the Depart22 ment of Health and Human Services to be en23 gaged in such process) over such costs of fiscal

24 year 1994 multiplied by the adjustment factor.
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1 ‘‘(4) AUTHORIZATION OF APPROPRIATIONS.—

2 There are authorized to be appropriated for fees

3 under this section—

4 ‘‘(A) $23,000,000 for fiscal year 1995,

5 ‘‘(B) $21,300,000 for fiscal year 1996,

6 ‘‘(C) $23,000,000 for fiscal year 1997,

7 ‘‘(D) $24,000,000 for fiscal year 1998,

8 and

9 ‘‘(E) $24,000,000 for fiscal year 1999,

10 as adjusted to reflect the percentage adjustment of

11 fees authorized under subsection (c)(1).

12 ‘‘(h) COLLECTION OF UNPAID FEES.—In any case

13 where the Secretary does not receive payment of a fee for

14 a pending application assessed under subsection (a) within

15 30 days after it is due, such fee shall be treated as a claim

16 of the United States Government subject to subchapter

17 II of chapter 37 of title 31, United States Code.

18 ‘‘(i) POSITIONS.—

19 ‘‘(1) GENERAL RULE.—The number of full-time

20 equivalent employees in the Department of Health

21 and Human Services not engaged in the process of

22 the review of device applications and related activi23 ties, may not be reduced by the Secretary to offset

24 the number of officers, employees, and advisory com25 mittees so engaged.
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1 ‘‘(2) EXECUTIVE ORDER AND OTHER LIMITS.—

2 The number of full-time equivalent employees en3 gaged in the process of the review of device applica4 tions and related activities are not subject to count5 ing or inclusion in the limits on hiring Civilian Per6 sonnel set out in Executive Order 12839 of Feb7 ruary 10, 1993, and other current limit, or any limit

8 that may be implemented through September 30,

9 1999. The full-time equivalent employees not so en10 gaged may not be reduced by the Secretary to offset

11 the number of full-time equivalent employees exempt

12 from such limit.’’.

13 SEC. 4. ANNUAL REPORTS.

14 (a) FIRST REPORT.—Within 90 days after the end

15 of each fiscal year during which fees are collected under

16 part 3 of subchapter C of chapter VII of the Federal Food,

17 Drug, and Cosmetic Act, the Secretary of Health and

18 Human Services shall submit a report stating the Food

19 and Drug Administration’s progress in achieving the goals

20 identified in section 2(3) of this Act during such fiscal

21 year and that agency’s future plans for meeting such

22 goals. There shall be included in such report—

23 (1) a specific statement from the Secretary con24 cerning the Food and Drug Administration’s actions

25 to reduce the backlog in the review of device applica-
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1 tions and meeting statutory review times applicable

2 to submissions for devices, and

3 (2) the following data from the Center for De4 vices and Radiological Health and the Center for

5 Biologics Evaluation and Research:

6 (A) The number of device submissions

7 found not fileable.

8 (B) Total elapsed time for review of device

9 submissions.

10 (C) Total time for review of device submis11 sions as calculated by such Center.

12 (D) Number of negative decisions for de13 vice submissions.

14 (E) Number of non-approvable letters for

15 device submissions.

16 (F) Number of deficiency letters for device

17 submissions.

18 (G) Information for subparagraphs (A)

19 through (F) for fiscal year 1994.

20 (b) SECOND REPORT.—Within 120 days after the

21 end of each fiscal year during which such fees are col22 lected, the Secretary of Health and Human Services shall

23 submit a report on the implementation of the authority

24 for such fees during such fiscal year and on the use the
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1 Food and Drug Administration made of the fees collected

2 during such fiscal year for which the report is made.

3 (c) COMMITTEES.—The reports described in sub4 sections (a) and (b) shall be submitted to the Committee

5 on Energy and Commerce of the House of Representatives

6 and the Committee on Labor and Human Resources of

7 the Senate.

8 SEC. 5. REGULATIONS.

9 (a) GENERAL RULE.—This Act and the amendment

10 made by section 3 shall not be in effect after June 30,

11 1995, unless the Secretary of Health and Human Services,

12 through the Commissioner of Food and Drugs, approves—

13 (1) regulations described in subsection (b), and

14 (2) regulations which identify devices in class II

15 of the device classes in section 513 of the Federal

16 Food, Drug, and Cosmetic Act which are appro17 priate for exemption from the requirement of section

18 510(k) of such Act and exempts such devices from

19 such requirement following their reclassification into

20 class I.

21 (b) REGULATIONS.—

22 (1) PROPOSED.—Not later than 30 days after

23 the date of enactment of this Act, the Secretary

24 shall issue proposed regulations that—
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1 (A) identify all devices in class I of the de2 vice classes in section 513 of the Federal Food,

3 Drug, and Cosmetic Act which are exempt from

4 the requirement of section 510(k) of such Act,

5 and

6 (B) identify the criteria for selecting de7 vices for such exemption.

8 The Secretary shall provide an opportunity to com9 ment on such proposed regulations for 60 days after

10 their publication.

11 (2) FINAL.—Not later than 30 days after the

12 close of the comment period provided under para13 graph (1), the Secretary shall issue final regulations

14 which grant an exemption to the devices identified in

15 the proposed regulations which clearly meet the cri16 teria for exemption from the requirement of such

17 section 510(k) of the Federal Food, Drug, and Cos18 metic Act.

19 (c) OTHER REGULATIONS.—Not later than June 30,

20 1995, the Secretary shall issue final regulations for the

21 remainder of the devices from the list published in the pro22 posed regulations which exempts such devices from such

23 requirement or which continues the applicability of such

24 requirement.
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1 (d) FEES.—An applicant under a substantial equiva2 lence submission under section 510(k) of the Federal

3 Food, Drug, and Cosmetic Act which the Secretary pro4 posed to exempt from the requirement of such section

5 under subsection (b)(1) shall not be required to pay a fee

6 for such submission unless the Secretary issues a final

7 regulation requiring such submission. An applicant under

8 a substantial equivalence submission under such section

9 510(k) which the Secretary exempts from the requirement

10 of such section under subsection (b) shall not be required

11 to pay a fee for such submission.

12 SEC. 6. SUNSET.

13 This Act and the amendment made by section 3 shall

14 not be in effect after September 30, 1999.

Æ

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