49862 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations 

(3) The sponsor’s recommendation as 

to which agency component should 

have primary jurisdiction based on the 

mode of action that provides the most 

important therapeutic action of the 

combination product. If the sponsor 

cannot determine with reasonable 

certainty which mode of action provides 

the most important therapeutic action of 

the combination product, the sponsor’s 

recommendation must be based on the 

assignment algorithm set forth in 

§ 3.4(b) and an assessment of the 

assignment of other combination 

products the sponsor wishes FDA to 

consider during the assignment of its 

combination product.

* * * * *

Dated: August 9, 2005.

Jeffrey Shuren,

Assistant Commissioner for Policy.

[FR Doc. 05–16527 Filed 8–24–05; 8:45 am]

BILLING CODE 4160–01–S

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 866

[Docket No. 2005N–0263]

Medical Devices; Immunology and 

Microbiology Devices; Classification of 

Ribonucleic Acid Preanalytical 

Systems

AGENCY: Food and Drug Administration, 

HHS.

ACTION: Final rule.

SUMMARY: The Food and Drug 

Administration (FDA) is classifying 

ribonucleic acid (RNA) preanalytical 

systems into class II (special controls). 

The special control that will apply to 

the device is the guidance document 

entitled ‘‘Class II Special Controls 

Guidance Document: RNA Preanalytical 

Systems (RNA Collection, Stabilization, 

and Purification Systems for RT–PCR 

Used in Molecular Diagnostic Testing).’’ 

The agency is classifying the device into 

class II (special controls) in order to 

provide a reasonable assurance of safety 

and effectiveness of the device. 

Elsewhere in this issue of the Federal 

Register, FDA is announcing the 

availability of a guidance document that 

will serve as the special control for the 

device.

DATES: This rule is effective September 

26, 2005. The classification was 

effective April 18, 2005.

FOR FURTHER INFORMATION CONTACT: Uwe 

Scherf, Center for Devices and 

Radiological Health (HFZ–440), Food 

and Drug Administration, 2098 Gaither 

Rd., Rockville, MD 20850, 240–276–

0496.

SUPPLEMENTARY INFORMATION:

I. What is the Background of this 

Rulemaking?

In accordance with section 513(f)(1) of 

the Federal Food, Drug, and Cosmetic 

Act (the act) (21 U.S.C. 360c(f)(1)), 

devices that were not in commercial 

distribution before May 28, 1976, the 

date of enactment of the Medical Device 

Amendments of 1976 (the amendments), 

generally referred to as postamendments 

devices, are classified automatically by 

statute into class III without any FDA 

rulemaking process. These devices 

remain in class III and require 

premarket approval, unless and until 

the device is classified or reclassified 

into class I or II, or FDA issues an order 

finding the device to be substantially 

equivalent, in accordance with section 

513(i) of the act, to a predicate device 

that does not require premarket 

approval.

The agency determines whether new 

devices are substantially equivalent to 

previous marketed devices by means of 

premarket notification procedures in 

section 510(k) of the act (21 U.S.C. 

360(k)) and 21 CFR part 807 of FDA’s 

regulations.

Section 513(f)(2) of the act provides 

that any person who submits a 

premarket notification under section 

510(k) of the act for a device that has not 

previously been classified may, within 

30 days after receiving an order 

classifying the device in class III under 

section 513(f)(1) of the act, request FDA 

to classify the device under the criteria 

set forth in section 513(a)(1) of the act. 

FDA shall, within 60 days of receiving 

such a request, classify the device by 

written order. This classification shall 

be the initial classification of the device. 

Within 30 days after the issuance of an 

order classifying the device, FDA must 

publish a notice in the Federal Register

announcing such classification (section 

513(f)(2) of the act).

In accordance with section 513(f)(1) of 

the act, FDA issued an order on 

February 18, 2005, classifying the 

PAXgeneTM Blood RNA System into 

class III, because it was not substantially 

equivalent to a device that was 

introduced or delivered for introduction 

into interstate commerce for commercial 

distribution before May 28, 1976, or a 

device which was subsequently 

reclassified into class I or class II. On 

February 28, 2005, PreAnalytiX GmbH, 

c/o Becton, Dickinson and Co., 

submitted a petition requesting 

classification of the PAXgeneTM Blood 

RNA System under section 513(f)(2) of 

the act. The manufacturer recommended 

that the device be classified into class II.

In accordance with 513(f)(2) of the 

act, FDA reviewed the petition in order 

to classify the device under the criteria 

for classification set forth in 513(a)(1) of 

the act. Devices are to be classified into 

class II if general controls, by 

themselves, are insufficient to provide 

reasonable assurance of safety and 

effectiveness, but there is sufficient 

information to establish special controls 

to provide reasonable assurance of the 

safety and effectiveness of the device for 

its intended use. After review of the 

information submitted in the petition, 

FDA determined that the PAXgeneTM

Blood RNA System can be classified 

into class II with the establishment of 

special controls. FDA believes these 

special controls will provide reasonable 

assurance of the safety and effectiveness 

of the device.

The device is assigned the generic 

name RNA Preanalytical Systems and it 

is identified as a device intended to 

collect, store, and transport patient 

specimens, and stabilize intracellular 

RNA from the specimens, for 

subsequent isolation and purification of 

the intracellular RNA for reverse 

transcriptase polymerase chain reaction 

(RT–PCR) used in in vitro molecular 

diagnostic testing. The device may 

consist of sample collection devices, 

nucleic acid isolation and purification 

reagents, and processing reagents/

equipment (tubes, columns, etc.). It also 

may contain instruments for automation 

of the nucleic acid isolation and 

purification steps.

FDA has identified the following risks 

to health associated specifically with 

this type of device: (1) Inaccurate results 

and improper patient management, (2) 

delay in diagnosis, and (3) a need for 

patient specimen recollection.

Failure of the system during specimen 

collection, or during RNA stabilization 

or purification could yield an RNA 

sample of low quality and quantity. Low 

quality RNA, when tested, could result 

in falsely low or falsely high RNA 

transcript signal levels leading to 

inaccurate diagnosis and/or improper 

patient management. Low quantity of 

RNA could render the samples unusable 

for downstream RT–PCR applications; 

specimens would need to be recollected, 

causing possible delay in diagnosis. In 

addition, depending on specimen type, 

recollection could pose additional 

patient risk (e.g., tissue biopsy). The 

degree of risk varies depending on the 

disease or condition/stage being 

diagnosed or managed. Results of RNA 

testing should always be considered in 

conjunction with other clinical factors.

Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations 49863

FDA believes that the class II special 

controls guidance document aids in 

mitigating the potential risks to health 

by providing recommendations on 

validation of performance 

characteristics, including RNA stability, 

purity, integrity, yield, repeatability, 

reproducibility, and suitability for use 

in RT–PCR assays. The guidance 

document also provides information on 

how to meet premarket (510(k)) 

submission requirements for the device. 

FDA believes that the special controls 

guidance document, in addition to 

general controls, addresses the risks to 

health identified previously and 

provides reasonable assurance of the 

safety and effectiveness of the device. 

Therefore, on April 18, 2005, FDA 

issued an order to the petitioner 

classifying the device into class II. FDA 

is codifying this device by adding 

§ 866.4070.

Following the effective date of this 

final classification rule, any firm 

submitting a 510(k) premarket 

notification for an RNA preanalytical 

system will need to address the issues 

covered in the special controls 

guidance. However, the firm need only 

show that its device meets the 

recommendations of the guidance, or in 

some other way provides equivalent 

assurance of safety and effectiveness.

Section 510(m) of the act provides 

that FDA may exempt a class II device 

from the premarket notification 

requirements under 510(k) of the act, if 

FDA determines that premarket 

notification is not necessary to provide 

reasonable assurance of the safety and 

effectiveness of the device. For this type 

of device, FDA has determined that 

premarket notification is necessary to 

provide reasonable assurance of the 

safety and effectiveness of the device 

and, therefore, the type of device is not 

exempt from premarket notification 

requirements. Persons who intend to 

market this type of device must submit 

to FDA a premarket notification, prior to 

marketing the device, which contains 

information about the RNA 

Preanalytical Systems they intend to 

market.

II. What is the Environmental Impact of 

This Rule?

The agency has determined under 21 

CFR 25.34(b) that this action is of type 

that does not individually or 

cumulatively have a significant effect on 

the human environment. Therefore, 

neither an environmental assessment 

nor an environmental impact statement 

is required.

III. What is the Economic Impact of 

This Rule?

FDA has examined the impacts of the 

final rule under Executive Order 12866 

and the Regulatory Flexibility Act (5 

U.S.C. 601–612), and the Unfunded 

Mandates Reform Act of 1995 (Public 

Law 104–4). Executive Order 12866 

directs agencies to assess all costs and 

benefits of available regulatory 

alternatives and, when regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety, 

and other advantages; distributive 

impacts; and equity). The agency 

believes that this final rule is not a 

significant regulatory action under the 

Executive order.

The Regulatory Flexibility Act 

requires agencies to analyze regulatory 

options that would minimize any 

significant impact of a rule on small 

entities. Because classification of this 

device into class II will relieve 

manufacturers of the device of the cost 

of complying with the premarket 

approval requirements of section 515 of 

the act (21 U.S.C. 360e), and may permit 

small potential competitors to enter the 

marketplace by lowering their costs, the 

agency certifies that the final rule will 

not have a significant economic impact 

on a substantial number of small 

entities.

Section 202(a) of the Unfunded 

Mandates Reform Act of 1995 requires 

that agencies prepare a written 

statement, which includes an 

assessment of anticipated costs and 

benefits, before proposing ‘‘any rule that 

includes any Federal mandate that may 

result in the expenditure by State, local, 

and tribal governments, in the aggregate, 

or by the private sector, of $100,000,000 

or more (adjusted annually for inflation) 

in any one year.’’ The current threshold 

after adjustment for inflation is $115 

million, using the most current (2003) 

Implicit Price Deflator for the Gross 

Domestic Product. FDA does not expect 

this final rule to result in any 1-year 

expenditure that would meet or exceed 

this amount.

IV. Federalism

FDA has analyzed this final rule in 

accordance with the principles set forth 

in Executive Order 13132. FDA has 

determined that the rule does not 

contain policies that have substantial 

direct effects on the States, on the 

relationship between the National 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government. Accordingly, the 

agency has concluded that the rule does 

not contain policies that have 

federalism implications as defined in 

the Executive order and, consequently, 

a federalism summary impact statement 

is not required.

V. How Does This Rule Comply With 

the Paperwork Reduction Act of 1995?

This final rule contains no collections 

of information. Therefore, clearance by 

the Office of Management and Budget 

under the Paperwork Reduction Act of 

1995 is not required.

VI. What References Are on Display?

The following reference has been 

placed on display in the Division of 

Dockets Management (HFA–305), Food 

and Drug Administration, 5630 Fishers 

Lane, rm. 1061, Rockville, MD 20852, 

and may be seen by interested persons 

between 9 a.m. and 4 p.m., Monday 

through Friday.

1. Petition from PreAnalytiX GmbH, 

c/o Becton, Dickinson and Co., dated 

February 28, 2005.

List of Subjects in 21 CFR Part 866

Medical devices.

n Therefore, under the Federal Food, 

Drug, and Cosmetic Act and under 

authority delegated to the Commissioner 

of Food and Drugs, 21 CFR part 866 is 

amended as follows:

PART 866—IMMUNOLOGY AND 

MICROBIOLOGY DEVICES

n 1. The authority citation for 21 CFR 

part 866 continues to read as follows:

Authority: 21 U.S.C. 351, 360, 360c, 360e, 

360j, 371.

n 2. Section 866.4070 is added to subpart 

E to read as follows:

§866.4070 RNA Preanalytical Systems.

(a) Identification. RNA Preanalytical 

Systems are devices intended to collect, 

store, and transport patient specimens, 

and stabilize intracellular RNA from the 

specimens, for subsequent isolation and 

purification of the intracellular RNA for 

RT–PCR used in in vitro molecular 

diagnostic testing.

(b) Classification. Class II (special 

controls). The special control is FDA’s 

guidance document entitled ‘‘Class II 

Special Controls Guidance Document: 

RNA Preanalytical Systems (RNA 

Collection, Stabilization and 

Purification System for RT–PCR Used in 

Molecular Diagnostic Testing).’’ See 

§ 866.1(e) for the availability of this 

guidance document.

49864 Federal Register / Vol. 70, No. 164 / Thursday, August 25, 2005 / Rules and Regulations 

Dated: August 9, 2005.

Linda S. Kahan,

Deputy Director, Center for Devices and 

Radiological Health.

[FR Doc. 05–16914 Filed 8–24–05; 8:45 am]

BILLING CODE 4160–01–S

DEPARTMENT OF THE TREASURY

Internal Revenue Service 

26 CFR Part 1 

[TD 9222] 

RIN 1545–BD49 

Guidance Under Section 951 for 

Determining Pro Rata Share

AGENCY: Internal Revenue Service (IRS), 

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final 

regulations under section 951(a) of the 

Internal Revenue Code (Code) that 

provide guidance for determining a 

United States shareholder’s pro rata 

share of a controlled foreign 

corporation’s (CFC’s) subpart F income, 

previously excluded subpart F income 

withdrawn from investment in less 

developed countries, and previously 

excluded subpart F income withdrawn 

from foreign base company shipping 

operations.

DATES: Effective Date: These regulations 

are effective August 25, 2005. 

Applicability Date: For dates of 

applicability, see § 1.951–1(e)(7).

FOR FURTHER INFORMATION CONTACT:

Jeffrey L. Vinnik, (202) 622–3840 (not a 

toll-free number).

SUPPLEMENTARY INFORMATION: 

Background 

On August 6, 2004, the IRS published 

in the Federal Register a notice of 

proposed rulemaking (REG–129771–04, 

2004–36 I.R.B. 453) under section 951 of 

the Code. Written comments were 

received in response to the notice of 

proposed rulemaking. No public hearing 

was requested or held on the notice of 

proposed rulemaking. After 

consideration of the comments received, 

the proposed regulations are adopted as 

final regulations with the modifications 

discussed below. This issue of the 

Federal Register also includes a notice 

of proposed rulemaking (REG–129782–

05) setting forth special pro rata share 

rules that apply to (1) a CFC with more 

than one class of stock which has 

earnings and profits and subpart F 

income for the taxable year that are 

attributable to one or more deemed 

dividends arising from one or more 

transactions described in section 304 

that are part of a plan a principal 

purpose of which is the avoidance of 

Federal income taxation, and (2) a CFC 

with certain cumulative preferred stock 

outstanding that is held by one or more 

persons who are not U.S. taxpayers. 

Summary of Public Comments and 

Explanation of Changes 

A. Amounts Determined Under Section 

956 of the Code 

Section 951(a)(1) requires a United 

States shareholder of a CFC to include 

in income the amount determined under 

section 956 with respect to such 

shareholder. The proposed regulations 

include a conforming change to replace 

increase in earnings invested in United 

States property with amount 

determined under section 956 to reflect 

statutory changes made to section 956 of 

the Code by the Omnibus Budget 

Reconciliation Act of 1993, Public Law 

103–66 (107 Stat. 312). Commentators 

recommended that the pro rata rules for 

section 956 be addressed in a separate 

regulatory project because, after the 

statutory change to section 956, the 

section 951 pro rata rules are no longer 

relevant to a United States shareholder’s 

inclusion of the amount determined 

under section 956. 

The IRS and Treasury Department 

agree with this recommendation and 

accordingly have deleted all references 

to section 956 under § 1.951–(1)(e). 

Provisions of § 1.951–1(a) and (d) that 

concerned a United States shareholder’s 

pro rata share of the CFC’s increase in 

earnings invested in United States 

property have been revised and 

removed, respectively, to conform the 

regulations to the relevant post-1993 

Code provisions. The IRS and Treasury 

Department are considering a separate 

regulations project regarding the amount 

determined under section 956. 

B. One Class of Stock—Proposed 

§ 1.951–1(e)(2) 

The proposed regulations state that if 

a CFC for a taxable year has only one 

class of stock outstanding, each United 

States shareholder’s pro rata share of 

such corporation’s subpart F income for 

the taxable year is determined by 

allocating the CFC’s earnings and profits 

for such year on a per-share basis. A 

commentator asked that this rule be 

modified to clarify that the relevant 

earnings and profits are earnings and 

profits for such year unreduced by 

distributions during the year. 

The IRS and Treasury Department 

agree with the comment and have 

clarified § 1.951–1(e)(2) accordingly.

C. More Than One Class of Stock—

Proposed § 1.951–1(e)(3)(i) 

In general, the proposed regulations 

allocate subpart F income among 

multiple classes of stock by reference to 

the distributions that would be made 

with respect to each class if the CFC’s 

earnings and profits for the year were 

distributed on the last day of the CFC’s 

taxable year (the hypothetical 

distribution). A commentator expressed 

concern that the hypotheticaldistribution rule under the proposed 

regulations could allocate earnings and 

profits to preferred stock (including, 

e.g., preferred stock with a 

noncumulative dividend preference) 

without regard to whether or when 

dividends are or will be paid. The 

commentator recommended that the 

proposed regulations be amended to 

provide that dividend rights should not 

be taken into account if, as of an 

appropriate date, the dividends have not 

been paid. 

The IRS and Treasury Department 

have considered this comment and have 

concluded that, if the terms of a class of 

preferred stock are such that an 

obligation to pay a dividend with 

respect to the stock may or may not 

arise during the CFC’s taxable year, 

depending on an exercise of discretion 

by the CFC’s board of directors or a 

similar governing body, then the stock 

should be considered to have 

discretionary distribution rights. In such 

case, the rule of § 1.951–1(e)(3)(ii) 

would apply. Therefore, the suggested 

amendment was not adopted. 

A commentator recommended that, in 

the case of mandatorily redeemable 

preferred stock with cumulative 

dividend rights, the regulation should 

include an anti-abuse rule to be applied 

where the amount of earnings and 

profits required to be allocated to such 

stock differs substantially on a presentvalue basis from the amount expected to 

be distributed on such stock. 

Additionally, a commentator 

recommended that an anti-abuse rule 

could target shareholder-level 

agreements that are inconsistent with 

the economic terms of the underlying 

stock. 

The IRS and Treasury Department 

agree that it is appropriate to provide a 

special rule for the allocation of 

earnings and profits to certain 

mandatorily redeemable cumulative 

preferred stock held by persons who are 

not U.S. taxpayers. This special rule is 

set forth in a notice of proposed 

rulemaking published in this issue of 

the Federal Register (REG–129782–05). 

With respect to the comments 

regarding shareholder-level agreements,