II 
107TH CONGRESS 
2D SESSION 
H. R. 5651
IN THE SENATE OF THE UNITED STATES 
OCTOBER 16, 2002
Received 
AN ACT 
To amend the Federal Food, Drug, and Cosmetic Act to 
make improvements in the regulation of medical devices, 
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Medical Device User Fee and Modernization Act of 
2002’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows:
Sec. 1. Short title; table of contents. 
TITLE I—FEES RELATED TO MEDICAL DEVICES 
Sec. 101. Findings. 
Sec. 102. Establishment of program. 
Sec. 103. Annual reports. 
Sec. 104. Postmarket surveillance. 
Sec. 105. Consultation. 
Sec. 106. Effective date. 
Sec. 107. Sunset clause. 
TITLE II—AMENDMENTS REGARDING REGULATION OF MEDICAL 
DEVICES 
Sec. 201. Inspections by accredited persons. 
Sec. 202. Third party review of premarket notification. 
Sec. 203. Debarment of accredited persons. 
Sec. 204. Designation and regulation of combination products. 
Sec. 205. Report on certain devices. 
Sec. 206. Electronic labeling. 
Sec. 207. Electronic registration. 
Sec. 208. Intended use. 
Sec. 209. Modular review. 
Sec. 210. Pediatric expertise regarding classification-panel review of premarket 
applications. 
Sec. 211. Internet list of class II devices exempted from requirement of pre-
market notification. 
Sec. 212. Study by Institute of Medicine of postmarket surveillance regarding 
pediatric populations. 
Sec. 213. Guidance regarding pediatric devices. 
Sec. 214. Breast implants; study by Comptroller General. 
Sec. 215. Breast implants; research through National Institutes of Health. 
TITLE III—ADDITIONAL AMENDMENTS 
Sec. 301. Identification of manufacturer of medical devices. 
Sec. 302. Single-use medical devices. 
Sec. 303. MedWatch.
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TITLE I—FEES RELATED TO 
MEDICAL DEVICES 
SEC. 101. 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 making 
additional funds available for the purpose of aug-
menting the resources of the Food and Drug Admin-
istration that are devoted to the process for the re-
view of devices and the assurance of device safety 
and effectiveness so that statutorily mandated dead-
lines may be met; and 
(3) the fees authorized by this title will be dedi-
cated to meeting the goals identified in the letters 
from the Secretary of Health and Human Services 
to the Committee on Energy and Commerce of the 
House of Representatives and the Committee on 
Health, Education, Labor, and Pensions of the Sen-
ate, as set forth in the Congressional Record. 
SEC. 102. ESTABLISHMENT OF PROGRAM. 
(a) IN GENERAL.—Subchapter C of chapter VII of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
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379F et seq.) is amended by adding at the end the fol-
lowing part: 
‘‘PART 3—FEES RELATING TO DEVICES 
‘‘SEC. 737. DEFINITIONS. 
‘‘For purposes of this subchapter: 
‘‘(1) The term ‘premarket application’ means—
‘‘(A) an application for approval of a de-
vice submitted under section 515(c) or section 
351 of the Public Health Service Act; or 
‘‘(B) a product development protocol de-
scribed in section 515(f). 
Such term does not include a supplement, a pre-
market report, or a premarket notification submis-
sion. 
‘‘(2) The term ‘premarket report’ means a re-
port submitted under section 515(c)(2). 
‘‘(3) The term ‘premarket notification submis-
sion’ means a report submitted under section 
510(k). 
‘‘(4)(A) The term ‘supplement’, with respect to 
a panel-track supplement, a 180-day supplement, a 
real-time supplement, or an efficacy supplement, 
means a request to the Secretary to approve a 
change in a device for which—
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‘‘(i) an application or report has been ap-
proved under section 515(d), or an application 
has been approved under section 351 of the 
Public Health Service Act; or 
‘‘(ii) a notice of completion has become ef-
fective under section 515(f). 
‘‘(B) The term ‘panel-track supplement’ means 
a supplement to an approved premarket application 
or premarket report under section 515 that requests 
a significant change in design or performance of the 
device, or a new indication for use of the device, and 
for which clinical data are generally necessary to 
provide a reasonable assurance of safety and effec-
tiveness. 
‘‘(C) The term ‘180-day supplement’ means a 
supplement to an approved premarket application or 
premarket report under section 515 that is not a 
panel-track supplement and requests a significant 
change in components, materials, design, specifica-
tion, software, color additives, or labeling. 
‘‘(D) The term ‘real-time supplement’ means a 
supplement to an approved premarket application or 
premarket report under section 515 that requests a 
minor change to the device, such as a minor change 
to the design of the device, software, manufacturing,
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sterilization, or labeling, and for which the applicant 
has requested and the agency has granted a meeting 
or similar forum to jointly review and determine the 
status of the supplement. 
‘‘(E) The term ‘efficacy supplement’ means a 
supplement to an approved premarket application 
under section 351 of the Public Health Service Act 
that requires substantive clinical data. 
‘‘(5) The term ‘process for the review of device 
applications’ means the following activities of the 
Secretary with respect to the review of premarket 
applications, premarket reports, supplements, and 
premarket notification submissions: 
‘‘(A) The activities necessary for the re-
view of premarket applications, premarket re-
ports, supplements, and premarket notification 
submissions. 
‘‘(B) The issuance of action letters that 
allow the marketing of devices or which set 
forth in detail the specific deficiencies in such 
applications, reports, supplements, or submis-
sions and, where appropriate, the actions nec-
essary to place them in condition for approval. 
‘‘(C) The inspection of manufacturing es-
tablishments and other facilities undertaken as
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part of the Secretary’s review of pending pre-
market applications, premarket reports, and 
supplements. 
‘‘(D) Monitoring of research conducted in 
connection with the review of such applications, 
reports, supplements, and submissions. 
‘‘(E) Review of device applications subject 
to section 351 of the Public Health Service Act 
for an investigational new drug application 
under section 505(i) or for an investigational 
device exemption under section 520(g) and ac-
tivities conducted in anticipation of the submis-
sion of such applications under section 505(i) 
or 520(g). 
‘‘(F) The development of guidance, policy 
documents, or regulations to improve the proc-
ess for the review of premarket applications, 
premarket reports, supplements, and premarket 
notification submissions. 
‘‘(G) The development of voluntary test 
methods, consensus standards, or mandatory 
performance standards under section 514 in 
connection with the review of such applications, 
reports, supplements, or submissions and re-
lated activities.
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‘‘(H) The provision of technical assistance 
to device manufacturers in connection with the 
submission of such applications, reports, supple-
ments, or submissions. 
‘‘(I) Any activity undertaken under section 
513 or 515(i) in connection with the initial clas-
sification or reclassification of a device or under 
section 515(b) in connection with any require-
ment for approval of a device. 
‘‘(J) Evaluation of postmarket studies re-
quired as a condition of an approval of a pre-
market application under section 515 or section 
351 of the Public Health Service Act. 
‘‘(K) Compiling, developing, and reviewing 
information on relevant devices to identify safe-
ty and effectiveness issues for devices subject to 
premarket applications, premarket reports, sup-
plements, or premarket notification submis-
sions. 
‘‘(6) The term ‘costs of resources allocated for 
the process for the review of device applications’ 
means the expenses incurred in connection with the 
process for the review of device applications for—
‘‘(A) officers and employees of the Food 
and Drug Administration, contractors of the
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Food and Drug Administration, advisory com-
mittees, and costs related to such officers, em-
ployees, and committees and to contracts with 
such contractors; 
‘‘(B) management of information, and the 
acquisition, maintenance, and repair of com-
puter resources; 
‘‘(C) leasing, maintenance, renovation, and 
repair of facilities and acquisition, maintenance, 
and repair of fixtures, furniture, scientific 
equipment, and other necessary materials and 
supplies; and 
‘‘(D) collecting fees and accounting for re-
sources allocated for the review of premarket 
applications, premarket reports, supplements, 
and submissions. 
‘‘(7) The term ‘adjustment factor’ applicable to 
a fiscal year is the Consumer Price Index for all 
urban consumers (all items; United States city aver-
age) for April of the preceding fiscal year divided by 
such Index for April 2002. 
‘‘(8) The term ‘affiliate’ means a business enti-
ty that has a relationship with a second business en-
tity if, directly or indirectly—
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‘‘(A) one business entity controls, or has 
the power to control, the other business entity; 
or 
‘‘(B) a third party controls, or has power 
to control, both of the business entities. 
‘‘SEC. 738. AUTHORITY TO ASSESS AND USE DEVICE FEES. 
‘‘(a) TYPES OF FEES.—Beginning on the date of the 
enactment of the Medical Device User Fee and Moderniza-
tion Act of 2002, the Secretary shall assess and collect 
fees in accordance with this section as follows: 
‘‘(1) PREMARKET
APPLICATION, PREMARKET 
REPORT, SUPPLEMENT, AND SUBMISSION FEE.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B) and subsection (d), each per-
son who submits any of the following, on or 
after October 1, 2002, shall be subject to a fee 
established under subsection (c)(5) for the fis-
cal year involved in accordance with the fol-
lowing: 
‘‘(i) A premarket application. 
‘‘(ii) For a premarket report, a fee 
equal to the fee that applies under clause 
(i).
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‘‘(iii) For a panel track supplement, a 
fee equal to the fee that applies under 
clause (i). 
‘‘(iv) For a 180-day supplement, a fee 
equal to 21.5 percent of the fee that ap-
plies under clause (i), subject to any ad-
justment under subsection (c)(3). 
‘‘(v) For a real-time supplement, a fee 
equal to 7.2 percent of the fee that applies 
under clause (i). 
‘‘(vi) For an efficacy supplement, a 
fee equal to the fee that applies under 
clause (i). 
‘‘(vii) For a premarket notification 
submission, a fee equal to 1.42 percent of 
the fee that applies under clause (i), sub-
ject to any adjustment under subsection 
(c)(3) and any adjustment under sub-
section (e)(2)(C)(ii). 
‘‘(B) EXCEPTIONS.—
‘‘(i) HUMANITARIAN DEVICE EXEMP-
TION.—An 
application 
under 
section 
520(m) is not subject to any fee under 
subparagraph (A).
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‘‘(ii) 
FURTHER
MANUFACTURING 
USE.—No fee shall be required under sub-
paragraph (A) for the submission of a pre-
market application under section 351 of 
the Public Health Service Act for a prod-
uct licensed for further manufacturing use 
only. 
‘‘(iii) STATE
OR
FEDERAL
GOVERN-
MENT
SPONSORS.—No fee shall be re-
quired under subparagraph (A) for a pre-
market application, premarket report, sup-
plement, or premarket notification submis-
sion submitted by a State or Federal Gov-
ernment entity unless the device involved is 
to be distributed commercially. 
‘‘(iv) PREMARKET NOTIFICATIONS BY 
THIRD PARTIES.—No fee shall be required 
under subparagraph (A) for a premarket 
notification submission reviewed by an ac-
credited person pursuant to section 523. 
‘‘(v) 
PEDIATRIC
CONDITIONS
OF 
USE.—
‘‘(I) IN GENERAL.—No fee shall 
be required under subparagraph (A) 
for a premarket application, pre-
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market report, or premarket notifica-
tion submission if the proposed condi-
tions of use for the device involved are 
solely for a pediatric population. No 
fee shall be required under such sub-
paragraph for a supplement if the sole 
purpose of the supplement is to pro-
pose conditions of use for a pediatric 
population. 
‘‘(II) SUBSEQUENT PROPOSAL OF 
ADULT CONDITIONS OF USE.—In the 
case of a person who submits a pre-
market application or premarket re-
port for which, under subclause (I), a 
fee under subparagraph (A) is not re-
quired, any supplement to such appli-
cation that proposes conditions of use 
for any adult population is subject to 
the fee that applies under such sub-
paragraph for a premarket applica-
tion. 
‘‘(C) PAYMENT.—The fee required by sub-
paragraph (A) shall be due upon submission of 
the premarket application, premarket report, 
supplement, or premarket notification submis-
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sion except that invoices for applications sub-
mitted between October 1, 2002, and the date 
of the enactment of the Medical Device User 
Fee and Modernization Act of 2002 shall be 
payable on October 30, 2002. Applicants sub-
mitting portions of applications pursuant to 
section 515(c)(3) shall pay such fees upon sub-
mission of the first portion of such applications. 
The fees credited to fiscal year 2003 under this 
section shall include all fees payable from Octo-
ber 1, 2002, through September 30, 2003. 
‘‘(D) REFUNDS.—
‘‘(i) APPLICATION REFUSED FOR FIL-
ING.—The Secretary shall refund 75 per-
cent of the fee paid under subparagraph 
(A) for any application or supplement that 
is refused for filing. 
‘‘(ii) APPLICATION
WITHDRAWN
BE-
FORE FILING.—The Secretary shall refund 
75 percent of the fee paid under subpara-
graph (A) for any application or supple-
ment that is withdrawn prior to the filing 
decision of the Secretary. 
‘‘(iii) APPLICATION WITHDRAWN BE-
FORE FIRST ACTION.—After receipt of a
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request for a refund of the fee paid under 
subparagraph (A) for a premarket applica-
tion, premarket report, or supplement that 
is withdrawn after filing but before a first 
action, the Secretary may return some or 
all of the fee. The amount of refund, if 
any, shall be based on the level of effort al-
ready expended on the review of such ap-
plication, report, or supplement. The Sec-
retary shall have sole discretion to refund 
a fee or portion of the fee under this sub-
paragraph. A determination by the Sec-
retary concerning a refund under this 
paragraph shall not be reviewable. 
‘‘(b) FEE REVENUE AMOUNTS.—Except as provided 
in subsections (c), (d), (e), (g), and (h), the fees under 
subsection (a) shall be established to generate the fol-
lowing revenue amounts: $25,125,000 in fiscal year 2003; 
$27,255,000 in fiscal year 2004; $29,785,000 in fiscal 
year 2005; $32,615,000 in fiscal year 2006, and 
$35,000,000 in fiscal year 2007. If legislation is enacted 
after the date of the enactment of the Medical Device User 
Fee and Modernization Act of 2002 requiring the Sec-
retary to fund additional costs of the retirement of Federal 
personnel, fee revenue amounts under this subsection shall
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be increased in each year by the amount necessary to fully 
fund the portion of such additional costs that are attrib-
utable to the process for the review of device applications. 
‘‘(c) ADJUSTMENTS.—
‘‘(1) INFLATION ADJUSTMENT.—The revenues 
established in subsection (b) shall be adjusted by the 
Secretary by notice, published in the Federal Reg-
ister, for a fiscal year to reflect the greater of—
‘‘(A) the total percentage change that oc-
curred in the Consumer Price Index for all 
urban consumers (all items; U.S. city average) 
for the 12 month period ending June 30 pre-
ceding the fiscal year for which fees are being 
established, or 
‘‘(B) the total percentage change for the 
previous fiscal year in basic pay under the Gen-
eral Schedule in accordance with section 5332 
of title 5, United States Code, as adjusted by 
any locality-based comparability payment pur-
suant to section 5304 of such title for Federal 
employees stationed in the District of Columbia. 
The adjustment made each fiscal year by this sub-
section shall be added on a compounded basis to the 
sum of all adjustments made each fiscal year after 
fiscal year 2003 under this subsection.
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‘‘(2) WORKLOAD ADJUSTMENT.—After the fee 
revenues established in subsection (b) are adjusted 
for a fiscal year for inflation in accordance with 
paragraph (1), the fee revenues shall, beginning with 
fiscal year 2004, be adjusted further each fiscal year 
to reflect changes in the workload of the Secretary 
for the process for the review of device applications. 
With respect to such adjustment: 
‘‘(A) The adjustment shall be determined 
by the Secretary based on a weighted average 
of the change in the total number of premarket 
applications, investigational new device applica-
tions, premarket reports, supplements, and pre-
market notification submissions submitted to 
the Secretary. The Secretary shall publish in 
the Federal Register the fee revenues and fees 
resulting from the adjustment and the sup-
porting methodologies. 
‘‘(B) Under no circumstances shall the ad-
justment result in fee revenues for a fiscal year 
that are less than the fee revenues for the fiscal 
year established in subsection (b), as adjusted 
for inflation under paragraph (1). 
‘‘(3) COMPENSATING ADJUSTMENT.—After the 
fee revenues established in subsection (b) are ad-
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justed for a fiscal year for inflation in accordance 
with paragraph (1), and for workload in accordance 
with paragraph (2), the fee revenues shall, beginning 
with fiscal year 2004, be adjusted further each fiscal 
year, if necessary, to reflect the cumulative amount 
by which collections for previous fiscal years, begin-
ning with fiscal year 2003, fell below the cumulative 
revenue amounts for such fiscal years specified in 
subsection (b), adjusted for such fiscal years for in-
flation in accordance with paragraph (1), and for 
workload in accordance with paragraph (2). 
‘‘(4) FINAL
YEAR
ADJUSTMENT.—For fiscal 
year 2007, the Secretary may, in addition to adjust-
ments under paragraphs (1) and (2), further in-
crease the fees and fee revenues established in sub-
section (b) if such adjustment is necessary to pro-
vide for not more than three months of operating re-
serves of carryover user fees for the process for the 
review of device applications for the first three 
months of fiscal year 2008. If such an adjustment 
is necessary, the rationale for the amount of the in-
crease shall be contained in the annual notice estab-
lishing fee revenues and fees for fiscal year 2007. If 
the Secretary has carryover user fee balances for 
such process in excess of three months of such oper-
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ating reserves, the adjustment under this paragraph 
shall not be made. 
‘‘(5) ANNUAL
FEE
SETTING.—The Secretary 
shall, 60 days before the start of each fiscal year 
after September 30, 2002, establish, for the next fis-
cal year, and publish in the Federal Register, fees 
under subsection (a), based on the revenue amounts 
established under subsection (b) and the adjustment 
provided under this subsection and subsection 
(e)(2)(C)(ii), except that the fees established for fis-
cal year 2003 shall be based on a premarket applica-
tion fee of $154,000. 
‘‘(6) LIMIT.—The total amount of fees charged, 
as adjusted under this subsection, for a fiscal year 
may not exceed the total costs for such fiscal year 
for the resources allocated for the process for the re-
view of device applications. 
‘‘(d) SMALL BUSINESSES; FEE WAIVER AND FEE 
REDUCTION
REGARDING
PREMARKET
APPROVAL 
FEES.—
‘‘(1) IN GENERAL.—The Secretary shall grant a 
waiver of the fee required under subsection (a) for 
one premarket application, or one premarket report, 
where the Secretary finds that the applicant involved 
is a small business submitting its first premarket
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application to the Secretary, or its first premarket 
report, respectively, for review. In addition, for sub-
sequent premarket applications, premarket reports, 
and supplements where the Secretary finds that the 
applicant involved is a small business, the fees speci-
fied in clauses (i) through (vi) of subsection 
(a)(1)(A) may be paid at a reduced rate in accord-
ance with paragraph (2)(C). 
‘‘(2) RULES
RELATING
TO
PREMARKET
AP-
PROVAL FEES.—
‘‘(A) DEFINITION.—
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘small business’ 
means an entity that reported $30,000,000 
or less of gross receipts or sales in its most 
recent Federal income tax return for a tax-
able year, including such returns of all of 
its affiliates, partners, and parent firms. 
‘‘(ii) ADJUSTMENT.—The Secretary 
may adjust the $30,000,000 threshold es-
tablished in clause (i) if the Secretary has 
evidence from actual experience that this 
threshold results in a reduction in revenues 
from premarket applications, premarket re-
ports, and supplements that is 16 percent
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or more than would occur without small 
business exemptions and lower fee rates. 
To adjust this threshold, the Secretary 
shall publish a notice in the Federal Reg-
ister setting out the rationale for the ad-
justment, and the new threshold. 
‘‘(B) EVIDENCE OF QUALIFICATION.—An 
applicant shall pay the higher fees established 
by the Secretary each year unless the applicant 
submits evidence that it qualifies for a waiver 
of the fee or the lower fee rate. The applicant 
shall support its claim that it meets the defini-
tion under subparagraph (A) by submission of 
a copy of its most recent Federal income tax re-
turn for a taxable year, and a copy of such re-
turns of its affiliates, partners, and parent 
firms. which show an amount of gross sales or 
receipts that is less than the maximum estab-
lished in subparagraph (A). The applicant, and 
each of such affiliates, partners, and parent 
firms, shall certify that the information pro-
vided is a true and accurate copy of the actual 
tax forms they submitted to the Internal Rev-
enue Service. If no tax forms are submitted for 
affiliates, partners, or parent firms, the appli-
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cant shall certify that the applicant has no af-
filiates, partners, or parent firms, respectively. 
‘‘(C) REDUCED
FEES.—Where the Sec-
retary finds that the applicant involved meets 
the definition under subparagraph (A), the fees 
established under subsection (c)(5) may be paid 
at a reduced rate of 38 percent of the fee estab-
lished under such subsection for a premarket 
application, a premarket report, or a supple-
ment. 
‘‘(D) REQUEST FOR FEE WAIVER OR RE-
DUCTION.—An applicant seeking a fee waiver 
or reduction under this subsection shall submit 
supporting information to the Secretary at least 
60 days before the fee is required pursuant to 
subsection (a). The decision of the Secretary re-
garding whether an entity qualifies for such a 
waiver or reduction is not reviewable. 
‘‘(e) SMALL BUSINESSES; FEE REDUCTION REGARD-
ING PREMARKET NOTIFICATION SUBMISSIONS.—
‘‘(1) IN GENERAL.—Where the Secretary finds 
that the applicant involved is a small business, the 
fee specified in subsection (a)(1)(A)(vii) may be paid 
at a reduced rate in accordance with paragraph 
(2)(C).
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‘‘(2) RULES RELATING TO PREMARKET NOTIFI-
CATION SUBMISSIONS.—
‘‘(A) DEFINITION.—For purposes of this 
subsection, the term ‘small business’ means an 
entity that reported $30,000,000 or less of 
gross receipts or sales in its most recent Fed-
eral income tax return for a taxable year, in-
cluding such returns of all of its affiliates, part-
ners, and parent firms. 
‘‘(B) EVIDENCE OF QUALIFICATION.—An 
applicant shall pay the higher fees established 
by the Secretary each year unless the applicant 
submits evidence that it qualifies for the lower 
fee rate. The applicant shall support its claim 
that it meets the definition under subparagraph 
(A) by submission of a copy of its most recent 
Federal income tax return for a taxable year, 
and a copy of such returns of its affiliates, 
partners, and parent firms. which show an 
amount of gross sales or receipts that is less 
than the maximum established in subparagraph 
(A). The applicant, and each of such affiliates, 
partners, and parent firms, shall certify that 
the information provided is a true and accurate 
copy of the actual tax forms they submitted to
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the Internal Revenue Service. If no tax forms 
are submitted for affiliates, partners, or parent 
firms, the applicant shall certify that the appli-
cant has no affiliates, partners, or parent firms, 
respectively. 
‘‘(C) REDUCED FEES.—
‘‘(i) IN
GENERAL.—Where the Sec-
retary finds that the applicant involved 
meets the definition under subparagraph 
(A), the fee for a premarket notification 
submission may be paid at 80 percent of 
the fee that applies under subsection 
(a)(1)(A)(vii), as adjusted under clause (ii) 
and as established under subsection (c)(5). 
‘‘(ii) ADJUSTMENT PER FEE REVENUE 
AMOUNT.—For fiscal year 2004 and each 
subsequent fiscal year, the Secretary, in 
setting the revenue amount under sub-
section (c)(5) for premarket notification 
submissions, shall determine the revenue 
amount that would apply if all such sub-
missions for the fiscal year involved paid a 
fee equal to 1.42 percent of the amount 
that applies under subsection (a)(1)(A)(i) 
for premarket applications, and shall ad-
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just the fee under subsection (a)(1)(A)(vii) 
for premarket notification submissions 
such that the reduced fees collected under 
clause (i) of this subparagraph, when 
added to fees for such submissions that are 
not paid at the reduced rate, will equal 
such revenue amount for the fiscal year. 
‘‘(D) REQUEST FOR REDUCTION.—An ap-
plicant seeking a fee reduction under this sub-
section shall submit supporting information to 
the Secretary at least 60 days before the fee is 
required pursuant to subsection (a). The deci-
sion of the Secretary regarding whether an enti-
ty qualifies for such a reduction is not review-
able. 
‘‘(f) EFFECT OF FAILURE TO PAY FEES.—A pre-
market application, premarket report, supplement, or pre-
market notification submission submitted by a person sub-
ject to fees under subsection (a) shall be considered incom-
plete and shall not be accepted for filing by the Secretary 
until all fees owed by such person have been paid. 
‘‘(g) CONDITIONS.—
‘‘(1) PERFORMANCE GOALS THROUGH FISCAL 
YEAR 2005; TERMINATION OF PROGRAM AFTER FIS-
CAL YEAR 2005.—With respect to the amount that,
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under the salaries and expenses account of the Food 
and Drug Administration, is appropriated for a fis-
cal year for devices and radiological products: 
‘‘(A)(i) For each of the fiscal years 2003 
and 2004, the Secretary is expected to meet all 
of the goals identified for the fiscal year in-
volved in any letter referred to in section 
101(3) of the Medical Device User Fee and 
Modernization Act of 2002 (referred to in this 
paragraph as ‘performance goals’) if the 
amount so appropriated for such fiscal year, ex-
cluding the amount of fees appropriated for 
such fiscal year, is equal to or greater than 
$205,720,000 multiplied by the adjustment fac-
tor applicable to the fiscal year. 
‘‘(ii) For each of the fiscal years 2003 and 
2004, if the amount so appropriated for the fis-
cal year involved, excluding the amount of fees 
appropriated for such fiscal year, is less than 
the amount that applies under clause (i) for 
such fiscal year, the following applies: 
‘‘(I) The Secretary is expected to meet 
such goals to the extent practicable, taking 
into account the amounts that are avail-
able to the Secretary for such purpose,
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whether from fees under subsection (a) or 
otherwise. 
‘‘(II) The Comptroller General of the 
United States shall submit to the Congress 
a report describing whether and to what 
extent the Secretary is meeting the per-
formance goals identified for such fiscal 
year, and whether the Secretary will be 
able to meet all performance goals identi-
fied for fiscal year 2005. A report under 
the preceding sentence shall be submitted 
to the Congress not later than July 1 of 
the fiscal year with which the report is 
concerned. 
‘‘(B)(i) For fiscal year 2005, the Secretary 
is expected to meet all of the performance goals 
identified for the fiscal year if the total of the 
amounts so appropriated for fiscal years 2003 
through 2005, excluding the amount of fees ap-
propriated for such fiscal years, is equal to or 
greater than the sum of—
‘‘(I) $205,720,000 multiplied by the 
adjustment factor applicable to fiscal year 
2003;
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‘‘(II) $205,720,000 multiplied by the 
adjustment factor applicable to fiscal year 
2004; and 
‘‘(III) $205,720,000 multiplied by the 
adjustment factor applicable to fiscal year 
2005. 
‘‘(ii) For fiscal year 2005, if the total of 
the amounts so appropriated for fiscal years 
2003 through 2005, excluding the amount of 
fees appropriated for such fiscal years, is less 
than the sum that applies under clause (i) for 
fiscal year 2005, the following applies: 
‘‘(I) The Secretary is expected to meet 
such goals to the extent practicable, taking 
into account the amounts that are avail-
able to the Secretary for such purpose, 
whether from fees under subsection (a) or 
otherwise. 
‘‘(II) The Comptroller General of the 
United States shall submit to the Congress 
a report describing whether and to what 
extent the Secretary is meeting the per-
formance goals identified for such fiscal 
year, and whether the Secretary will be 
able to meet all performance goals identi-
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fied for fiscal year 2006. The report under 
the preceding sentence shall be submitted 
to the Congress not later than July 1, 
2005. 
‘‘(C) For fiscal year 2006, fees may not be 
assessed under subsection (a) for the fiscal 
year, and the Secretary is not expected to meet 
any performance goals identified for the fiscal 
year, if the total of the amounts so appro-
priated for fiscal years 2003 through 2006, ex-
cluding the amount of fees appropriated for 
such fiscal years, is less than the sum of—
‘‘(i) $205,720,000 multiplied by the 
adjustment factor applicable to fiscal year 
2006; and 
‘‘(ii) an amount equal to the sum that 
applies for purposes of subparagraph 
(B)(i). 
‘‘(D) For fiscal year 2007, fees may not be 
assessed under subsection (a) for the fiscal 
year, and the Secretary is not expected to meet 
any performance goals identified for the fiscal 
year, if—
‘‘(i) the amount so appropriated for 
the fiscal year, excluding the amount of
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fees appropriated for the fiscal year, is less 
than $205,720,000 multiplied by the ad-
justment factor applicable to fiscal year 
2007; or 
‘‘(ii) pursuant to subparagraph (C), 
fees were not assessed under subsection (a) 
for fiscal year 2006. 
‘‘(2) AUTHORITY.—If the Secretary does not 
assess fees under subsection (a) during any portion 
of a fiscal year because of subparagraph (C) or (D) 
of paragraph (1) and if at a later date in such fiscal 
year the Secretary may assess such fees, the Sec-
retary may assess and collect such fees, without any 
modification in the rate for premarket applications, 
supplements, premarket reports, and premarket no-
tification submissions, and at any time in such fiscal 
year, notwithstanding the provisions of subsection 
(a) relating to the date fees are to be paid. 
‘‘(h) CREDITING AND AVAILABILITY OF FEES.—
‘‘(1) IN GENERAL.—Fees authorized under sub-
section (a) shall be collected and available for obliga-
tion only to the extent and in the amount provided 
in advance in appropriation Acts. Such fees are au-
thorized to be appropriated to remain available until 
expended. Such sums as may be necessary may be
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transferred from the Food and Drug Administration 
salaries and expenses appropriation account without 
fiscal year limitation to such appropriation account 
for salaries and expenses with such fiscal year limi-
tation. The sums transferred shall be available solely 
for the process for the review of device applications. 
‘‘(2) 
COLLECTIONS
AND
APPROPRIATION 
ACTS.—
‘‘(A) IN
GENERAL.—The fees authorized 
by this section—
‘‘(i) shall be retained in each fiscal 
year in an amount not to exceed the 
amount specified in appropriation Acts, or 
otherwise made available for obligation, for 
such fiscal year, and 
‘‘(ii) shall only be collected and avail-
able to defray increases in the costs of the 
resources allocated for the process for the 
review of device applications (including in-
creases in such costs for an additional 
number of full-time equivalent positions in 
the Department of Health and Human 
Services to be engaged in such process) 
over such costs, excluding costs paid from 
fees collected under this section, for fiscal
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year 2002 multiplied by the adjustment 
factor. 
‘‘(B) COMPLIANCE.—The Secretary shall 
be considered to have met the requirements of 
subparagraph (A)(ii) in any fiscal year if the 
costs funded by appropriations and allocated for 
the process for the review of device applica-
tions—
‘‘(i) are not more than 3 percent 
below the level specified in subparagraph 
(A)(ii); or 
‘‘(ii)(I) are more than 3 percent below 
the level specified in subparagraph (A)(ii), 
and fees assessed for a subsequent fiscal 
year are decreased by the amount in excess 
of 3 percent by which such costs fell below 
the level specified in such subparagraph; 
and 
‘‘(II) such costs are not more than 5 
percent below the level specified in such 
subparagraph. 
‘‘(3) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated for fees 
under this section—
‘‘(A) $25,125,000 for fiscal year 2003;
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‘‘(j) WRITTEN REQUESTS FOR REFUNDS.—To qual-
ify for consideration for a refund under subsection 
(a)(1)(D), a person shall submit to the Secretary a written 
request for such refund not later than 180 days after such 
fee is due. 
‘‘(k) CONSTRUCTION.—This section may not be con-
strued to require that the number of full-time equivalent 
positions in the Department of Health and Human Serv-
ices, for officers, employees, and advisory committees not 
engaged in the process of the review of device applications, 
be reduced to offset the number of officers, employees, and 
advisory committees so engaged.’’. 
(b) FEE EXEMPTION FOR CERTAIN ENTITIES SUB-
MITTING PREMARKET REPORTS.—
(1) IN GENERAL.—A person submitting a pre-
market report to the Secretary of Health and 
Human Services is exempt from the fee under sec-
tion 738(a)(1)(A)(ii) of the Federal Food, Drug, and 
Cosmetic Act (as added by subsection (a) of this sec-
tion) if—
(A) the premarket report is the first such 
report submitted to the Secretary by the per-
son; and 
(B) before October 1, 2002, the person 
submitted a premarket application to the Sec-
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retary for the same device as the device for 
which the person is submitting the premarket 
report. 
(2) DEFINITIONS.—For purposes of paragraph 
(1), the terms ‘‘device’’, ‘‘premarket application’’, 
and ‘‘premarket report’’ have the same meanings as 
apply to such terms for purposes of section 738 of 
the Federal Food, Drug, and Cosmetic Act (as 
added by subsection (a) of this section). 
SEC. 103. ANNUAL REPORTS. 
Beginning with fiscal year 2003, the Secretary shall 
prepare and submit to the Committee on Energy and 
Commerce of the House of Representatives and the Com-
mittee on Health, Education, Labor and Pensions of the 
Senate a report concerning—
(1) the progress of the Food and Drug Admin-
istration in achieving the goals identified in the let-
ters described in section 101(3) during such fiscal 
year and the future plans of the Food and Drug Ad-
ministration for meeting the goals, not later than 60 
days after the end of each fiscal year during which 
fees are collected under this part; and 
(2) the implementation of the authority for 
such fees during such fiscal year, and the use, by 
the Food and Drug Administration, of the fees col-
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lected during such fiscal year, not later than 120 
days after the end of each fiscal year during which 
fees are collected under the medical device user-fee 
program established under the amendment made by 
section 102. 
SEC. 104. POSTMARKET SURVEILLANCE. 
(a) ADDITIONAL AUTHORIZATION
OF APPROPRIA-
TIONS.—For the purpose of carrying out postmarket sur-
veillance of medical devices, there are authorized to be ap-
propriated to the Food and Drug Administration the fol-
lowing amounts, stated as increases above the amount ob-
ligated for such purpose by such Administration for fiscal 
year 2002: 
(1) For fiscal year 2003, an increase of 
$3,000,000. 
(2) For fiscal year 2004, an increase of 
$6,000,000. 
(3) For fiscal year 2005 and each subsequent 
fiscal year, an increase of such sums as may be nec-
essary. 
(b) STUDY.—
(1) IN GENERAL.—The Secretary of Health and 
Human Services (referred to in this section as the 
‘‘Secretary’’) shall conduct a study for the purpose 
of determining the following with respect to the
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medical device user-fee program established under 
the amendment made by section 102: 
(A) The impact of such program on the 
ability of the Food and Drug Administration to 
conduct postmarket surveillance on medical de-
vices. 
(B) The programmatic improvements, if 
any, needed for adequate postmarket surveil-
lance of medical devices. 
(C) The amount of funds needed to con-
duct adequate postmarket surveillance of med-
ical devices. 
(D) The extent to which device companies 
comply with the postmarket surveillance re-
quirements, including postmarket study com-
mitments. 
(E) The recommendations of the Secretary 
as to whether, and in what amounts, user fees 
collected under such user-fee program should be 
dedicated to postmarket surveillance if the pro-
gram is extended beyond fiscal year 2007. 
(2) REPORT.—Not later than January 10, 
2007, the Secretary shall submit to the Committee 
on Energy and Commerce of the House of Rep-
resentatives, and the Committee on Health, Edu-
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cation, Labor, and Pensions of the Senate, a report 
that describes the findings of the study under para-
graph (1). 
SEC. 105. CONSULTATION. 
(a) IN GENERAL.—In developing recommendations to 
the Congress for the goals and plans for meeting the goals 
for the process for the review of medical device applica-
tions for fiscal years after fiscal year 2007, and for the 
reauthorization of sections 737 and 738 of the Federal 
Food, Drug, and Cosmetic Act, the Secretary of Health 
and Human Services (referred to in this section as the 
‘‘Secretary’’) shall consult with the Committee on Energy 
and Commerce of the House of Representatives, the Com-
mittee on Health, Education, Labor, and Pensions of the 
Senate, appropriate scientific and academic experts, 
health care professionals, representatives of patient and 
consumer advocacy groups, and the regulated industry. 
(b) RECOMMENDATIONS.—The Secretary shall pub-
lish in the Federal Register recommendations under sub-
section (a), after negotiations with the regulated industry; 
shall present such recommendations to the congressional 
committees specified in such paragraph; shall hold a meet-
ing at which the public may present its views on such rec-
ommendations; and shall provide for a period of 30 days
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for the public to provide written comments on such rec-
ommendations. 
SEC. 106. EFFECTIVE DATE. 
The amendments made by this title shall take effect 
on the date of the enactment of this Act, except that fees 
shall be assessed for all premarket applications, premarket 
reports, supplements, and premarket notification submis-
sions received on or after October 1, 2002, regardless of 
the date of enactment. 
SEC. 107. SUNSET CLAUSE. 
The amendments made by this title cease to be effec-
tive October 1, 2007, except that section 103 with respect 
to annual reports ceases to be effective January 31, 2008. 
TITLE 
II—AMENDMENTS 
RE-
GARDING 
REGULATION 
OF 
MEDICAL DEVICES 
SEC. 201. INSPECTIONS BY ACCREDITED PERSONS. 
(a) IN GENERAL.—Section 704 of the Federal Food, 
Drug, and Cosmetic Act (21 U.S.C. 374) is amended by 
adding at the end the following subsection: 
‘‘(g)(1) Not later than one year after the date of the 
enactment of this subsection, the Secretary shall, subject 
to the provisions of this subsection, accredit persons for 
the purpose of conducting inspections of establishments 
that manufacture, prepare, propagate, compound, or proc-
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ess class II or class III devices that are required in section 
510(h), or inspections of such establishments required to 
register pursuant to section 510(i). The owner or operator 
of such an establishment that is eligible under paragraph 
(6) may, from the list published under paragraph (4), se-
lect an accredited person to conduct such inspections. 
‘‘(2) Not later than 180 days after the date of enact-
ment of this subsection, the Secretary shall publish in the 
Federal Register criteria to accredit or deny accreditation 
to persons who request to perform the duties specified in 
paragraph (1). Thereafter, the Secretary shall inform 
those requesting accreditation, within 60 days after the 
receipt of such request, whether the request for accredita-
tion is adequate for review, and the Secretary shall 
promptly act on the request for accreditation. Any result-
ing accreditation shall state that such person is accredited 
to conduct inspections at device establishments identified 
in paragraph (1). The accreditation of such person shall 
specify the particular activities under this subsection for 
which such person is accredited. In the first year following 
the publication in the Federal Register of criteria to ac-
credit or deny accreditation to persons who request to per-
form the duties specified in paragraph (1), the Secretary 
shall accredit no more than 15 persons who request to per-
form duties specified in paragraph (1).
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‘‘(3) An accredited person shall, at a minimum, meet 
the following requirements: 
‘‘(A) Such person may not be an employee of 
the Federal Government. 
‘‘(B) Such person shall be an independent orga-
nization which is not owned or controlled by a man-
ufacturer, supplier, or vendor of articles regulated 
under this Act and which has no organizational, ma-
terial, or financial affiliation (including a consult-
ative affiliation) with such a manufacturer, supplier, 
or vendor. 
‘‘(C) Such person shall be a legally constituted 
entity permitted to conduct the activities for which 
it seeks accreditation. 
‘‘(D) Such person shall not engage in the de-
sign, manufacture, promotion, or sale of articles reg-
ulated under this Act. 
‘‘(E) The operations of such person shall be in 
accordance with generally accepted professional and 
ethical business practices, and such person shall 
agree in writing that at a minimum the person 
will—
‘‘(i) certify that reported information accu-
rately reflects data reviewed, inspection obser-
vations made, other matters that relate to or
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may influence compliance with this Act, and 
recommendations made during an inspection or 
at an inspection’s closing meeting; 
‘‘(ii) limit work to that for which com-
petence and capacity are available; 
‘‘(iii) treat information received, records, 
reports, and recommendations as confidential 
commercial or financial information or trade se-
cret information, except such information may 
be made available to the Secretary; 
‘‘(iv) promptly respond and attempt to re-
solve complaints regarding its activities for 
which it is accredited; and 
‘‘(v) protect against the use, in carrying 
out paragraph (1), of any officer or employee of 
the accredited person who has a financial con-
flict of interest regarding any product regulated 
under this Act, and annually make available to 
the public disclosures of the extent to which the 
accredited person, and the officers and employ-
ees of the person, have maintained compliance 
with requirements under this clause relating to 
financial conflicts of interest. 
‘‘(4) The Secretary shall publish on the Internet site 
of the Food and Drug Administration a list of persons
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who are accredited under paragraph (2). Such list shall 
be updated to ensure that the identity of each accredited 
person, and the particular activities for which the person 
is accredited, is known to the public. The updating of such 
list shall be no later than one month after the accredita-
tion of a person under this subsection or the suspension 
or withdrawal of accreditation, or the modification of the 
particular activities for which the person is accredited. 
‘‘(5)(A) To ensure that persons accredited under this 
subsection continue to meet the standards of accredita-
tion, the Secretary shall (i) audit the performance of such 
persons on a periodic basis through the review of inspec-
tion reports and inspections by persons designated by the 
Secretary to evaluate the compliance status of a device es-
tablishment and the performance of accredited persons, 
and (ii) take such additional measures as the Secretary 
determines to be appropriate. 
‘‘(B) The Secretary may withdraw accreditation of 
any person accredited under paragraph (2), after pro-
viding notice and an opportunity for an informal hearing, 
when such person is substantially not in compliance with 
the standards of accreditation, or poses a threat to public 
health or fails to act in a manner that is consistent with 
the purposes of this subsection. The Secretary may sus-
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pend the accreditation of such person during the pendency 
of the process under the preceding sentence. 
‘‘(6)(A) Subject to subparagraphs (B) and (C), a de-
vice establishment is eligible for inspections by persons ac-
credited under paragraph (2) if the following conditions 
are met: 
‘‘(i) The Secretary classified the results of the 
most recent inspection of the establishment pursuant 
to subsection (h) or (i) of section 510 as ‘no action 
indicated’ or ‘voluntary action indicated’. 
‘‘(ii) With respect to each inspection to be con-
ducted by an accredited person—
‘‘(I) the owner or operator of the establish-
ment submits to the Secretary a notice request-
ing clearance to use such a person to conduct 
the inspection, and the Secretary provides such 
clearance; and 
‘‘(II) such notice identifies the accredited 
person whom the establishment has selected to 
conduct the inspection, and the Secretary 
agrees to the selected accredited person. 
‘‘(iii) With respect to the devices that are man-
ufactured, prepared, propagated, compounded, or 
processed by the establishment, at least one of such
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devices is marketed in the United States, and the 
following additional conditions are met: 
‘‘(I) At least one of such devices is mar-
keted, or is intended to be marketed, in one or 
more foreign countries, one of which countries 
certifies, accredits, or otherwise recognizes the 
person accredited under paragraph (2) and 
identified under subclause (II) of this clause. 
‘‘(II) The owner or operator of the estab-
lishment submits to the Secretary a statement 
that the law of a country in which such a device 
is marketed, or is intended to be marketed, rec-
ognizes an inspection of the establishment by 
the Secretary, and not later than 30 days after 
receiving such statement, the Secretary informs 
the owner or operator of the establishment that 
the owner or operator may submit a notice re-
questing clearance under clause (ii). 
‘‘(iv)(I) In the case of an inspection to be con-
ducted pursuant to 510(h), persons accredited under 
paragraph (2) did not conduct the two immediately 
preceding inspections of the establishment, except 
that the establishment may petition the Secretary 
for a waiver of such condition. Such a waiver may 
be granted only if the petition states a commercial
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reason for the waiver; the Secretary determines that 
the public health would be served by granting the 
waiver; and the Secretary has conducted an inspec-
tion of the establishment during the four-year period 
preceding the date on which the notice under clause 
(ii) is submitted to the Secretary. Such a waiver is 
deemed to be granted only if the petition states a 
commercial reason for the waiver; the Secretary has 
not determined that the public health would be 
served by granting the waiver; and the owner or op-
erator of the device establishment has requested in 
writing, not later than 18 months following the most 
recent inspection of such establishment by a person 
accredited under paragraph (2), that the Secretary 
inspect the establishment and the Secretary has not 
conducted an inspection within 30 months after the 
most recent inspection. With respect to such a waiv-
er that is granted or deemed to be granted, no addi-
tional such waiver may be granted until after the 
Secretary has conducted an inspection of the estab-
lishment. 
‘‘(II) In the case of an inspection to be con-
ducted pursuant to 510(i), the Secretary periodically 
conducts inspections of the establishment.
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‘‘(B)(i) The Secretary shall respond to a notice under 
subparagraph (A) from a device establishment not later 
than 30 days after the Secretary receives the notice. 
Through such response, the Secretary shall (I) provide 
clearance under such subparagraph, and agree to the se-
lection of an accredited person, or (II) make a request 
under clause (ii). If the Secretary fails to respond to the 
notice within such 30-day period, the establishment is 
deemed to have such clearance, and to have the agreement 
of the Secretary for such selection. 
‘‘(ii) The request referred to in clause (i)(II) is—
‘‘(I) a request to the device establishment in-
volved to submit to the Secretary compliance data in 
accordance with clause (iii); or 
‘‘(II) a request to the establishment, or to the 
accredited person identified in the notice under sub-
paragraph (A), for information concerning the rela-
tionship between the establishment and such accred-
ited person, including information about the number 
of inspections of the establishment, or other estab-
lishments owned or operated by the owner or oper-
ator of the establishment, that have been conducted 
by the accredited person. 
The Secretary may make both such requests.
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‘‘(iii) The compliance data to be submitted by a de-
vice establishment under clause (ii) are data describing 
whether the quality controls of the establishment have 
been sufficient for ensuring consistent compliance with 
current good manufacturing practice within the meaning 
of section 501(h), and data otherwise describing whether 
the establishment has consistently been in compliance with 
sections 501 and 502 and other applicable provisions of 
this Act. Such data shall include complete reports of in-
spections regarding good manufacturing practice or other 
quality control audits that, during the preceding two-year 
period, were conducted at the establishment by persons 
other than the owner or operator of the establishment, to-
gether with all other compliance data the Secretary deems 
necessary. Data under the preceding sentence shall dem-
onstrate to the Secretary whether the establishment has 
facilitated consistent compliance by promptly correcting 
any compliance problems identified in such inspections. 
‘‘(iv) Not later than 60 days after receiving compli-
ance data under clause (iii) from a device establishment, 
the Secretary shall provide or deny clearance under sub-
paragraph (A). The Secretary may deny clearance if the 
Secretary determines that the establishment has failed to 
demonstrate consistent compliance for purposes of clause 
(iii). The Secretary shall provide to the establishment a
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statement of such reasons for such determination. If the 
Secretary fails to provide such statement to the establish-
ment within such 60-day period, the establishment is 
deemed to have such clearance. 
‘‘(v)(I) A request to an accredited person under 
clause (ii)(II) may not seek any information that is not 
required to be maintained by such person in records under 
subsection (f)(1). Not later than 60 days after receiving 
the information sought by the request, the Secretary shall 
agree to, or reject, the selection of such person by the de-
vice establishment involved. The Secretary may reject the 
selection if the Secretary provides to the establishment a 
statement of the reasons for such rejection. Reasons for 
the rejection may include that the establishment or the 
accredited person, as the case may be, has failed to fully 
respond to the request, or that the Secretary has concerns 
regarding the relationship between the establishment and 
such accredited person. If within such 60-day period the 
Secretary fails to agree to or reject the selection in accord-
ance with this subclause, the Secretary is deemed to have 
agreed to the selection. 
‘‘(II) If the Secretary rejects the selection of an ac-
credited person by a device establishment, the establish-
ment may make an additional selection of an accredited 
person by submitting to the Secretary a notice that identi-
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fies the additional selection. Clauses (i) and (ii), and sub-
clause (I) of this clause, apply to the selection of an ac-
credited person through a notice under the preceding sen-
tence in the same manner and to the same extent as such 
provisions apply to a selection of an accredited person 
through a notice under subparagraph (A). 
‘‘(vi) In the case of a device establishment that under 
clause (iv) is denied clearance under subparagraph (A), 
or whose selection of an accredited person is rejected 
under clause (v), the Secretary shall designate a person 
to review the findings of the Secretary under such clause 
if, during the 30-day period beginning on the date on 
which the establishment receives the findings, the estab-
lishment requests the review. The review shall commence 
not later than 30 days after the establishment requests 
the review, unless the Secretary and the establishment 
otherwise agree. 
‘‘(C)(i) In the case of a device establishment for 
which the Secretary classified the results of the most re-
cent inspection of the establishment by a person accredited 
under paragraph (2) as ‘official action indicated’, the es-
tablishment, if otherwise eligible under subparagraph (A), 
is eligible for further inspections by persons accredited 
under such paragraph if (I) the Secretary issues a written 
statement to the owner or operator of the establishment
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that the violations leading to such classification have been 
resolved, and (II) the Secretary, either upon the Sec-
retary’s own initiative or a petition of the owner or oper-
ator of the establishment, notifies the establishment that 
it has clearance to use an accredited person for the inspec-
tions. The Secretary shall respond to such petition within 
30 days after the receipt of the petition. 
‘‘(ii) If the Secretary denies a petition under clause 
(i), the device establishment involved may, after the expi-
ration of one year after such denial, again petition the Sec-
retary for a determination of eligibility for inspection by 
persons accredited by the Secretary under paragraph (2). 
If the Secretary denies such petition, the Secretary shall 
provide the establishment with such reasons for such de-
nial within 60 days after the denial. If, as of the expiration 
of 48 months after the receipt of the first petition, the 
establishment has not been inspected by the Secretary in 
accordance with section 510(h), or has not during such 
period been inspected pursuant to section 510(i), as appli-
cable, the establishment is eligible for further inspections 
by accredited persons. 
‘‘(7)(A) Persons accredited under paragraph (2) to 
conduct inspections shall record in writing their inspection 
observations and shall present the observations to the de-
vice establishment’s designated representative and de-
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scribe each observation. Additionally, such accredited per-
son shall prepare an inspection report (including for in-
spections classified as ‘no action indicated’) in a form and 
manner consistent with such reports prepared by employ-
ees and officials designated by the Secretary to conduct 
inspections. 
‘‘(B) At a minimum, an inspection report under sub-
paragraph (A) shall identify the persons responsible for 
good manufacturing practice compliance at the inspected 
device establishment, the dates of the inspection, the scope 
of the inspection, and shall describe in detail each observa-
tion identified by the accredited person, identify other 
matters that relate to or may influence compliance with 
this Act, and describe any recommendations during the 
inspection or at the inspection’s closing meeting. 
‘‘(C) An inspection report under subparagraph (A) 
shall be sent to the Secretary and to the designated rep-
resentative of the inspected device establishment at the 
same time, but under no circumstances later than three 
weeks after the last day of the inspection. The report to 
the Secretary shall be accompanied by all written inspec-
tion observations previously provided to the designated 
representative of the establishment. 
‘‘(D) Any statement or representation made by an 
employee or agent of a device establishment to a person
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accredited under paragraph (2) to conduct inspections 
shall be subject to section 1001 of title 18, United States 
Code. 
‘‘(E) If at any time during an inspection by an ac-
credited person the accredited person discovers a condition 
that could cause or contribute to an unreasonable risk to 
the public health, the accredited person shall immediately 
notify the Secretary of the identification of the device es-
tablishment subject to inspection and such condition. 
‘‘(8) Compensation for an accredited person shall be 
determined by agreement between the accredited person 
and the person who engages the services of the accredited 
person, and shall be paid by the person who engages such 
services. 
‘‘(9) Nothing in this subsection affects the authority 
of the Secretary to inspect any device establishment pur-
suant to this Act. 
‘‘(10)(A) For fiscal year 2005 and each subsequent 
fiscal year, no device establishment may be inspected dur-
ing the fiscal year involved by a person accredited under 
paragraph (2) if—
‘‘(i) of the amounts appropriated for salaries 
and expenses of the Food and Drug Administration 
for the preceding fiscal year (referred to in this sub-
paragraph as the ‘first prior fiscal year’), the
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amount obligated by the Secretary for inspections of 
device establishments by the Secretary was less than 
the adjusted base amount applicable to such first 
prior fiscal year; and 
‘‘(ii) of the amounts appropriated for salaries 
and expenses of the Food and Drug Administration 
for the fiscal year preceding the first prior fiscal 
year (referred to in this subparagraph as the ‘second 
prior fiscal year’), the amount obligated by the Sec-
retary for inspections of device establishments by the 
Secretary was less than the adjusted base amount 
applicable to such second prior fiscal year. 
‘‘(B)(i) Subject to clause (ii), the Comptroller Gen-
eral of the United States shall determine the amount that 
was obligated by the Secretary for fiscal year 2002 for 
compliance activities of the Food and Drug Administra-
tion with respect to devices (referred to in this subpara-
graph as the ‘compliance budget’), and of such amount, 
the amount that was obligated for inspections by the Sec-
retary of device establishments (referred to in this sub-
paragraph as the ‘inspection budget’). 
‘‘(ii) For purposes of determinations under clause (i), 
the Comptroller General shall not include in the compli-
ance budget or the inspection budget any amounts obli-
gated for inspections of device establishments conducted
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as part of the process of reviewing applications under sec-
tion 515. 
‘‘(iii) Not later than March 31, 2003, the Comptroller 
General shall complete the determinations required in this 
subparagraph and submit to the Secretary and the Con-
gress a reporting describing the findings made through 
such determinations. 
‘‘(C) For purposes of this paragraph: 
‘‘(i) The term ‘base amount’ means the inspec-
tion budget determined under subparagraph (B) for 
fiscal year 2002. 
‘‘(ii) The term ‘adjusted base amount’, in the 
case of applicability to fiscal year 2003, means an 
amount equal to the base amount increased by 5 
percent. 
‘‘(iii) The term ‘adjusted base amount’, with re-
spect to applicability to fiscal year 2004 or any sub-
sequent fiscal year, means the adjusted based 
amount applicable to the preceding year increased by 
5 percent. 
‘‘(11) The authority provided by this subsection ter-
minates on October 1, 2012. 
‘‘(12) No later than four years after the enactment 
of this subsection the Comptroller General shall report to 
the Committee on Energy and Commerce of the House
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of Representatives and the Committee on Health, Edu-
cation, Labor and Pensions of the Senate—
‘‘(A) the number of inspections pursuant to 
subsections (h) and (i) of section 510 conducted by 
accredited persons and the number of inspections 
pursuant to such subsections conducted by Federal 
employees; 
‘‘(B) the number of persons who sought accred-
itation under this subsection, as well as the number 
of persons who were accredited under this sub-
section; 
‘‘(C) the reasons why persons who sought ac-
creditation, but were denied accreditation, were de-
nied; 
‘‘(D) the number of audits conducted by the 
Secretary of accredited persons, the quality of in-
spections conducted by accredited persons, whether 
accredited persons are meeting their obligations 
under this Act, and whether the number of audits 
conducted is sufficient to permit these assessments; 
‘‘(E) whether this subsection is achieving the 
goal of ensuring more information about device es-
tablishment compliance is being presented to the 
Secretary, and whether that information is of a 
quality consistent with information obtained by the
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Secretary pursuant to subsection (h) or (i) of section 
510; 
‘‘(F) whether this subsection is advancing ef-
forts to allow device establishments to rely upon 
third-party inspections for purposes of compliance 
with the laws of foreign governments; and 
‘‘(G) whether the Congress should continue, 
modify, or terminate the program under this sub-
section. 
‘‘(13) The Secretary shall include in the annual re-
port required under section 903(g) the names of all ac-
credited persons and the particular activities under this 
subsection for which each such person is accredited and 
the name of each accredited person whose accreditation 
has been withdrawn during the year. 
‘‘(14) Notwithstanding any provision of this sub-
section, this subsection does not have any legal effect on 
any agreement described in section 803(b) between the 
Secretary and a foreign country.’’. 
(b) MAINTENANCE OF RECORDS.—Section 704(f) of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
374(f)) is amended—
(1) in paragraph (1), in the first sentence, by 
striking ‘‘A person accredited’’ and all that follows 
through ‘‘shall maintain records’’ and inserting the
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following: ‘‘An accredited person described in para-
graph (3) shall maintain records’’; 
(2) in paragraph (2), by striking ‘‘a person ac-
credited under section 523’’ and inserting ‘‘an ac-
credited person described in paragraph (3)’’; and 
(3) by adding at the end the following para-
graph: 
‘‘(3) For purposes of paragraphs (1) and (2), an ac-
credited person described in this paragraph is a person 
who—
‘‘(A) is accredited under subsection (g); or 
‘‘(B) is accredited under section 523.’’. 
(c) CIVIL MONEY PENALTY.—Section 303(g)(1)(A) 
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
333(g)(1)(A)) is amended by adding at the end the fol-
lowing: ‘‘For purposes of the preceding sentence, a person 
accredited under paragraph (2) of section 704(g) who is 
substantially not in compliance with the standards of ac-
creditation under such section, or who poses a threat to 
public health or fails to act in a manner that is consistent 
with the purposes of such section, shall be considered to 
have violated a requirement of this Act that relates to de-
vices.’’.
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(d) PROHIBITED ACTS.—Section 301 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 331) is amend-
ed by adding at the end the following: 
‘‘(gg) The knowing failure of a person accredited 
under paragraph (2) of section 704(g) to comply with 
paragraph (7)(E) of such section; the knowing inclusion 
by such a person of false information in an inspection re-
port under paragraph (7)(A) of such section; or the know-
ing failure of such a person to include material facts in 
such a report.’’. 
(e) CONFORMING AMENDMENT.—Section 510(h) of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
360(h)) is amended by inserting after ‘‘duly designated 
by the Secretary’’ the following: ‘‘, or by persons accred-
ited to conduct inspections under section 704(g),’’. 
SEC. 202. THIRD PARTY REVIEW OF PREMARKET NOTIFICA-
TION. 
Section 523 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 360m) is amended—
(1) in subsection (c), by striking ‘‘The author-
ity’’ and all that follows and inserting the following: 
‘‘The authority provided by this section terminates 
October 1, 2007.’’; and 
(2) by adding at the end the following sub-
section:
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‘‘(d) REPORT.—Not later than January 10, 2007, the 
Secretary shall conduct a study based on the experience 
under the program under this section and submit to the 
Committee on Energy and Commerce of the House of 
Representatives, and the Committee on Health, Edu-
cation, Labor, and Pensions of the Senate, a report de-
scribing the findings of the study. The objectives of the 
study shall include determining—
‘‘(1) the number of devices reviewed under this 
section; 
‘‘(2) the number of devices reviewed under this 
section that were ultimately cleared by the Sec-
retary; 
‘‘(3) the number of devices reviewed under this 
section that were ultimately not cleared by the Sec-
retary; 
‘‘(4) the average time period for a review under 
this section (including the time it takes for the Sec-
retary to review a recommendation of an accredited 
person under subsection (a) and determine the ini-
tial device classification); 
‘‘(5) the average time period identified in para-
graph (4) compared to the average time period for 
review of devices solely by the Secretary pursuant to 
section 510(k);