In 2002, the Medical Device User Fee and Modernization Act (MDUFMA, also called MDUFA I) gave the Food and Drug Administration (FDA) the authority to collect fees from the medical device industry. User fees and direct appropriations from Congress fund the review of medical devices by the FDA. Medical devices are a wide range of products that are used to diagnose, treat, monitor, or prevent a disease or condition in a patient. The Federal Food, Drug, and Cosmetic Act (FFDCA) defines a medical device as an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is (1) recognized in the official National Formulary, or the United States Pharmacopeia, or any supplement to them, (2) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or (3) intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes. (FFDCA §201(h), 21 U.S.C. 301 §201(h)) According to FDA, examples of medical devices "range from simple tongue depressors and bedpans to complex programmable pacemakers with micro-chip technology and laser surgical devices." Medical devices also include in vitro diagnostic products, reagents, test kits, and certain electronic radiation-emitting products with medical applications, such as diagnostic ultrasound products, x-ray machines, and medical lasers. Manufacturers of certain kinds of medical devices must obtain FDA approval or clearance before marketing in the United States. The Center for Devices and Radiological Health (CDRH) has primary responsibility within FDA for medical device premarket review. The purpose of user fees is to support the FDA's medical device premarket review program and to help reduce the time it takes the agency to review and make decisions on marketing applications. Between 1983 and 2002, multiple government reports indicated that FDA had insufficient resources for its medical devices premarket review program. Lengthy review times affect the industry, which waits to market its products, and patients, who wait to use these products. The user fee law provides revenue for FDA; in conjunction, the agency negotiates with industry to set performance goals for the premarket review of medical devices. The medical device user fee program was modeled after the Prescription Drug User Fee Act (PDUFA). Like the prescription drug and animal drug user fee programs, the medical device user fee program has been authorized in five-year increments. Just before expiration, FDA's medical device user fee authorities were reauthorized through September 30, 2012, by the Medical Device User Fee Amendments of 2007 (MDUFA II). For MDUFA III, FDA announced in February 2012 that it had reached agreement with the medical device industry on proposed recommendations for the reauthorization of the medical device user fee program. The draft MDUFA III package—composed of statutory language and the FDA-industry agreement on performance goals and procedures—was posted on the FDA website in March 2012 and a public meeting on the draft was held later that month. Following a 30-day comment period, a final recommendation was submitted to Congress. On July 9, 2012, the FDA Safety and Innovation Act (FDASIA, P.L. 112-144 ) became law. FDA's authority to collect medical device user fees was reauthorized for FY2013 through FY2017 via Title II of FDASIA. However, under the FY2013 continuing resolution (Continuing Appropriations Resolution, 2013, P.L. 112-175 ), although FDA is collecting the new user fees allowed by MDUFA III/FDASIA, it can only spend fees up to the FY2012 level. This report describes current law regarding medical device user fees and the impact of MDUFA on FDA review time of various medical device applications and the agency's medical device program budget. Appendix E provides a list of acronyms used in this report. The Medical Device Amendments of 1976 ( P.L. 94-295 ) was the first major legislation passed to address the premarket review of medical devices. User fees to support the FDA's medical device premarket review program were first authorized by Congress in 2002, 10 years after Congress had provided the authority for prescription drug user fees via PDUFA. For prescription drugs, the manufacturer must pay a fee for each new drug application (NDA) that is submitted to FDA for premarket review. In contrast, most medical devices are exempt from premarket review and do not pay a user fee. Premarket review and payment of the associated fee is required for about a third of the medical devices listed with FDA (see Figure 1 ). FDA classifies devices based on their risk to the patient: low-risk devices are Class I, medium-risk are Class II, and high-risk are Class III. Low-risk medical devices (Class I) and a very small number of moderate-risk (Class II) medical devices are exempt from premarket review. In general, for moderate-risk and high-risk medical devices, there are two pathways that manufacturers can use to bring such devices to market with FDA's permission. One pathway consists of conducting clinical studies, then submitting a premarket approval (PMA) application with evidence providing reasonable assurance that the device is safe and effective. The PMA process is generally used for novel and high-risk devices and is typically lengthy and expensive. It results in a type of FDA permission called approval . Another pathway involves submitting a premarket notification—also known as a 510(k), after the section in the FFDCA that authorized this type of notification. With the 510(k), the manufacturer demonstrates that the device is substantially equivalent to a device already on the market (a predicate device) that does not require a PMA. The 510(k) process is unique to medical devices and results in FDA clearance . Substantial equivalence is determined by comparing the performance characteristics of a new device with those of a predicate device. Premarket review by FDA—both PMA and 510(k)—requires the payment of a user fee. FDA typically evaluates more than 4,000 510(k) notifications and about 40 original PMA applications each year. Since MDUFA II reauthorization in 2007, FDA cleared over 13,000 510(k) devices and approved 106 PMAs. According to CDRH Director Jeffrey Shuren, for FY2010, user fees collected under MDUFA "fund only about 20% of the device review program;" in contrast, user fees collected under the PDUFA account for over 60% of the drug review program's budget. Fees collected under MDUFA III would fund about a third of the medical device premarket review process. There are also fees for when a manufacturer requests approval of a significant change in the design or performance of a device approved via the PMA pathway. This is called a Panel-Track Supplement when it is necessary for FDA to evaluate significant clinical data in order to make a decision on approval of the supplement. If a manufacturer requests approval of a change in aspects of an approved device, such as its design, specifications, or labeling, this is called a 180-Day PMA Supplement . In this case, FDA either does not require new clinical data or requires only limited clinical data. When a manufacturer requests approval for a minor change to an approved device, such as a minor change in the design or labeling, this is called a Real-Time PMA Supplement . With a Premarket Report , a manufacturer requests the approval of a high-risk device, originally approved for single use (one patient, one procedure), for reprocessing to allow additional use. The original 2002 user fee law had only authorized FDA to collect fees for premarket review, such as for PMA applications or 510(k) notifications. The 2007 reauthorization—MDUFA II—added two new types of annual fees in order to generate a more stable revenue stream for the agency. According to FDA, there were fluctuations in the numbers submitted from year to year, and fee revenues repeatedly fell short of expectations. MDUFA II added establishment registration fees , paid annually by most device establishments registered with FDA, and product fees , paid annually for high-risk (Class III) devices for which periodic reporting is required. MDUFA II also added two new application fees—the 30-Day Notice and 513(g) application—and substantially lowered all the existing application fee amounts (see Table C -1 ). A 30-Day Notice is used by a manufacturer to request modifications in manufacturing procedures or methods of manufacture affecting the safety and effectiveness of the device. A 513(g) application is used by a manufacturer to request information on the classification of a device. Other than the establishment fee, the amount of each type of user fee is set as a percentage of the PMA fee, also called the base fee . The law sets both the base fee amount for each fiscal year, and the percentage of the base fee that constitutes most other fees. Under MDUFA III, the 510(k) fee was changed from 1.84% of the PMA fee to 2% of the PMA fee. MDUFA III changed the PMA fee amount to $248,000 in FY2013 rising to $268,443 in FY2017 (see Table C -1 ). The amount of the establishment registration fee was changed under MDUFA III to $2,575 in FY2013 rising to $3,872 in FY2016 and FY2017 (see Table C -1 ). MDUFA III also changed the definition of "establishment subject to a registration fee;" according to FDA, this would increase the number of establishments paying the fee from 16,000 to 22,000. Certain types of medical devices, sponsors of medical device PMA applications or 510(k) notifications, and medical device manufacturers are exempt from paying fees, and small businesses pay a reduced rate. Humanitarian Device Exemption (HDE) applications are exempt from user fees, other than establishment fees. An HDE exempts devices that meet certain criteria from the effectiveness requirements of premarket approval. Devices intended solely for pediatric use are exempt from fees other than establishment fees. If an applicant obtains an exemption under this provision, and later submits a supplement for adult use, that supplement is subject to the fee then in effect for an original PMA. State and federal government entities are exempt from fees for a PMA, premarket report, supplement, 510(k), and establishment registration unless the device is to be distributed commercially. Indian tribes are exempt from having to pay establishment registration fees, unless the device is to be distributed commercially. Other than an establishment fee, the FDA cannot charge a fee for premarket applications for biologics licenses and licenses for biosimilar or interchangeable products if products are licensed exclusively for further manufacturing use. Under a program authorized by Congress, FDA accredits third parties, allowing them to conduct the initial review of 510(k)s for the purpose of classification of certain devices. The purpose is to improve the efficiency and timeliness of FDA's 510(k) process. No FDA fee is assessed for 510(k) submissions reviewed by accredited third parties, although the third parties charge manufacturers a fee for their services. In MDUFA II, Congress amended the process of qualifying for small business user fee discounts in response to frustrations expressed by domestic and foreign companies that had difficulties with the requirements. Small businesses—those with gross receipts below a certain amount—pay reduced user fees and have some fees waived altogether. These fee reductions and exemptions are of interest because many device companies are small businesses. Whether a device company is considered a small business eligible for fee reductions or waivers depends on the particular fee. Small businesses reporting under $30 million in gross receipts or sales are exempt from fees for their first PMA. Proof of receipts may consist of IRS tax documents or qualifying documentation from a foreign government. Companies with annual gross sales or receipts of $100 million or less pay at a rate of 50% of the 510(k) user fee, 30-day notice, request for classification information, and 25% of most other user fees. Small businesses must pay the full amount of the establishment fees. A key element of FDA user fee laws—MDUFA and PDUFA—is that the user fees are to supplement congressional appropriations, not replace them. The law includes a condition, sometimes called a trigger, to enforce that goal. FDA may collect and use MDUFA fees only if the direct appropriations for the activities involved in the premarket review of medical devices and for FDA activities overall remain at a level at least equal (adjusted for inflation) to an amount specified in the law. Over time, Congress has changed PDUFA to allow user fee revenue to be used for FDA activities related to not only premarket review but also the review of postmarket safety information associated with a drug. In contrast, MDUFA revenue can be used only for activities associated with FDA review of PMAs, 510(k)s, supplements, and reports. The law states that fees "shall only be collected and available to defray increases in the costs of resources allocated for the process for the review of device applications ." MDUFA II added a new FFDCA Section 738A regarding required reports and outlining the reauthorization process. This section, updated by MDUFA III, requires the Secretary to submit annual fiscal and performance reports for the next five fiscal years (FY2013 thru FY2017) to the Senate Committee on Health, Education, Labor, and Pensions, and the House Committee on Energy and Commerce. Fiscal reports address the implementation of FDA's authority to collect medical device user fees, as well as FDA's use of the fees. Performance reports address FDA's progress toward and future plans for achieving the fee-related performance goals identified in the agreement. Section 738A also directs the FDA to develop a reauthorization proposal for the following five fiscal years in consultation with specified congressional committees, scientific and academic experts, health care professionals, patient and consumer advocacy groups, and the regulated industry. Prior to negotiations with industry, FDA is required to request public input, hold a public meeting, and publish public comments on the agency's website. During negotiations with industry, FDA must hold monthly discussions with patient and consumer advocacy groups to receive their suggestions and discuss their views on the reauthorization. After negotiations with industry are completed, FDA is required to present the recommendations to certain congressional committees, publish the recommendations in the Federal Register , provide a 30-day public comment period, hold another public meeting to receive views from stakeholders, and revise the recommendations as necessary. Minutes of all negotiation meetings between FDA and industry are required to be posted on the FDA website. The amount of time it takes FDA to reach a review decision to clear a 510(k) notification or approve a PMA application is a measure of how well the agency is meeting the goals defined in the MDUFA agreement between FDA and the medical device industry. The time it takes to review a medical device—total review time—is composed of the time FDA handles the application—FDA time—plus the amount of time the device sponsor or submitter takes to respond to requests by FDA for additional information about the device. According to CDRH Director Shuren, "FDA has been meeting or exceeding goals agreed to by FDA and industry under MDUFA II for approximately 95% of the submissions we review each year. For example, FDA completes at least 90% of 510(k) reviews within 90 days or less." However, Dr. Shuren noted that these "metrics reflect FDA time only; they do not reflect the time taken by device sponsors to respond to requests for additional information. Overall time to decision—the time that FDA has the application, plus the time the manufacturer spends answering any questions FDA may have—has increased steadily since 2001." Figure 2 shows that while the amount of time FDA spends reviewing a 510(k) has decreased, the average total days for the review of 510(k)s has been increasing. FDA and GAO have both studied this issue of increasing review time. A 2011 FDA analysis of the reasons behind the increased average total days for the review of 510(k)s found that FDA reviewers frequently needed to ask for additional information—called an AI Letter—from the 510(k) device manufacturer or sponsor due to the poor quality of the original submission. According to FDA, these quality issues involved "the device description, meaning the sponsor either did not provide sufficient information about the device to determine what it was developed to do, or the device description was inconsistent throughout the submission." Furthermore, FDA concluded that "sponsors' failure to address deficiencies identified in first-round AI Letters are major contributors to the increase in total review times. For example, 65% of the time FDA sent a second-round AI Letter because the sponsor failed to submit information requested in the first AI Letter." The 2011 FDA analysis also found "in some cases, the FDA sent AI Letters for inappropriate reasons, such as asking for additional testing that was outside the scope of what would be required for a 510(k) submission, or asking for supporting documentation that was already covered by a standard government form." GAO also performed an analysis of FDA performance goals regarding 510(k) device review times and requests for additional information from sponsors. GAO found that although FDA met all medical device performance goals for 510(k)s, the total review time—from submission to final decision—has increased substantially in recent years. Regarding the agency's use of AI Letters, the GAO report notes that "the only alternative to requesting additional information is for FDA to reject the submission." Use of the AI Letter allows the sponsors the opportunity to respond, and although the time to final decision is longer, the submission has the opportunity to be approved. Figure 3 provides information on the amount of time FDA spends reviewing non-expedited PMA applications and Panel-Track Supplements. A device may receive expedited review if it is intended to treat or diagnose a life-threatening condition or irreversibly debilitating disease or condition, and it addresses an unmet need. CDRH Director Shuren notes that although FDA is spending less time reviewing PMA applications, the average total days for the review of PMA applications has been increasing since 2004. The February 2012 GAO report found that for FY2003 through FY2010, FDA met most of the goals for PMAs but fell short on most of the goals for expedited PMAs. The February 2012 GAO report found that FDA review time and time to final decision for both types of PMAs were highly variable but generally increased during this period. The February 2012 GAO report also commented on communication problems between industry and FDA based on interviews with three industry groups about the medical device review process. These industry representatives noted that FDA "guidance documents are often unclear, out of date, and not comprehensive." They also stated that "after sponsors submit their applications to FDA, insufficient communication from FDA prevents sponsors from learning about deficiencies in their submissions early in FDA's review. According to one of these stakeholders, if FDA communicated these deficiencies earlier in the process, sponsors would be able to correct them and would be less likely to receive a request for additional information." Two industry representatives noted that "review criteria sometimes change after a sponsor submits an application," and one industry representative stated that "criteria sometimes change when the FDA reviewer assigned to the submission changes during the review." The February 2012 GAO report points out that FDA has taken a number of actions to address the issues of the industry representatives. For example, FDA has issued new guidance documents, improved the guidance development process, initiated a reviewer certification program for new FDA reviewers, and enhanced its interactive review process for medical devices. For FY2012, 35% of FDA's total budget comes from user fees. Medical device user fee revenue provides about 10% of the FDA medical device and radiological health program budget. Figure 4 presents the total program level for FDA's device and radiological health program for FY2002 through FY2013 with dollars adjusted for inflation (based on 2005 dollars). Figure 4 also shows the contribution of medical device user fees, which began in FY2003, to the device and radiological health program budget, as well as fees collected for the inspection of mammography facilities under the Mammography Quality Standards Act (MQSA), which began fee collection in FY1996. For FY2010, user fees collected under MDUFA funded about 20% of the device review program, while user fees collected under PDUFA funded over 60% of the drug review program. User fees are an increasing proportion of FDA's device-related budget, as shown in Table 1 . User fees were 7.1% of FDA's devices and radiological health program level budget in FY2002 when MQSA was the sole user fee, and 14.2% of FDA's devices and radiological health program level budget in FY2012, with both MQSA and medical device user fees being collected by the agency. Table 1 shows that over the period of FY2003 to FY2012, the amount of user fees more than doubled, while the amount of direct appropriations (budget authority) increased at a slower rate. An initial public meeting on the reauthorization of the medical device user fees was held by FDA on September 14, 2010, after which the negotiation process between FDA and industry began, as well as monthly meetings with other stakeholders, such as health care professional associations and patient and consumer advocacy groups. Minutes of the 35 negotiation meetings between FDA and the medical device industry are posted on the agency's website, as are minutes of the 14 monthly meetings with the other stakeholders. On February 1, 2012, FDA announced that it had reached "an agreement in principle on proposed recommendations for the third reauthorization of a medical device user fee program." The recommendations would authorize $595 million in user fees collected by the agency from the medical device industry over a five-year period, allowing FDA to hire more than 200 full-time-equivalent workers with this additional funding. According to the minutes for the January 31, 2012, negotiation meeting, industry noted that although "MDUFA III represents a sizeable increase of 240 FTEs from current levels, FDA should not expect this type of significant resource increase under MDUFA IV." In response, the agency stated that it had "some concerns about how solid a financial footing this agreement establishes, given that there are a lot of uncertainties about how much effort will be required to meet the goals, and that in order to bring the proposal to a level that Industry could agree to, FDA had to take away any margin of error." On March 14, 2012, the agency posted on its website the draft negotiated package—composed of statutory language and the FDA-industry agreement on performance goals and procedures—referred to as MDUFA III. A public meeting describing the draft was held on March 28, 2012. The 30-day comment period on the draft ended April 16, 2012. After review of the comments, the final package was submitted to Congress. Tables in the appendixes provide additional details on the MDUFA III package beyond the narrative discussion found below. The tables in Appendix A relate to the legislative language and the table in Appendix B relates to the FDA-industry agreement on performance goals and procedures. MDUFA III legislative language changes the definition of "establishment subject to a registration fee," increasing the number of establishments paying the fee from 16,000 to about 22,000. It sets the fee amount for a PMA in FY2013 at $248,000. The fee amount for a PMA gradually rises to $268,443 for FY2017. The establishment fee is $2,575 in FY2013 and rises to $3,872 for FY2016 and FY2017. Other than the establishment fee, the amount of each type of user fee is set as a percentage of the PMA fee, also called the base fee. MDUFA III keeps the percentages the same as in MDUFA II except for the 510(k) fee, which is changed from 1.84% of the PMA fee to 2% of the PMA fee. Total fee revenue is set at $97,722,301 for FY2013 and rises to $130,184,348 for FY2017. The total fees authorized to be collected over the five-year period FY2013 through FY2017 is $595 million. MDUFA III adjusts the total revenue amounts by a specified inflation adjustment, similar to the adjustment made under PDUFA, and the base fee amount is adjusted as needed on a uniform proportional basis to generate the inflation-adjusted total revenue amount. After the base fee amounts are adjusted for inflation, the establishment fee amount is further adjusted as necessary so that the total fee collections for the fiscal year generates the total adjusted revenue amount. The new adjusted fee amounts are published in the Federal Register 60 days before the start of each fiscal year along with the rationale for adjusting the fee amounts. MDUFA III includes a provision that allows FDA to grant a waiver or reduce fees for a PMA or establishment fee "if the waiver is in the interest of public health." According to the FDA presentation at the March 28, 2012, public meeting, the fee waiver is intended for laboratory developed test (LDT) manufacturers. This provision sunsets at the end of MDUFA III. MDUFA III includes a requirement that sponsors submit an electronic copy of a PMA, 510(k), and other specified submissions and any supplements to such submissions. The requirement begins after the issuance of final guidance. MDUFA III also includes a provision for streamlined hiring of FDA employees who would support the review of medical devices. The authority for streamlined hiring terminates three years after enactment. The agreement begins by stating, "FDA and the industry are committed to protecting and promoting public health by providing timely access to safe and effective medical devices. Nothing in this letter precludes the Agency from protecting the public health by exercising its authority to provide a reasonable assurance of the safety and effectiveness of medical devices." The agreement subsequently describes a number of process improvements that aim to improve FDA's medical device review process, provides revised performance goals and new shared outcome goals, describes infrastructure improvements, and provides for an independent assessment of the device review process. Process Improvements. In comparison to MDUFA II, the discussion of these topics is greatly expanded and consolidated into one new section of the agreement. FDA will put in place a structured process for managing pre-submissions, providing feedback to applicants via e-mail and a one-hour meeting or teleconference. It will publish guidance on electronic submissions and will clarify submission acceptance criteria. The agency will continue to use interactive review to encourage informal communication with the applicant to facilitate timely completion of the review process. FDA will continue to apply user fees to the guidance document development process, and may apply user fees to delete outdated guidance, note which are under review, and provide a list of prioritized device guidance documents intended to be published within a year. It will work with interested parties to improve the current third-party review program. FDA will implement final guidance on factors to consider when making benefit-risk determinations in device premarket review, including patient tolerance for risk and magnitude of benefit. The agency will propose additional low-risk medical devices to exempt from the 510(k) process. FDA will work with industry to develop a transitional in vitro diagnostics (IVD) approach for the regulation of emerging diagnostics. Review Performance Goals. The main focus of the agreement is FDA's commitment to completing the review of the various medical device submissions—such as PMA reviews and 510(k) notifications—within specified timeframes in exchange for an industry fee to support the review activity. Performance goals are specified for each type of submission for FY2013 through FY2017; each goal specifies the percentage of applications FDA will complete within a given time period. See Table B -1 and Table D -1 for further details. Shared Outcome Goals. This new section was not part of the MDUFA II agreement. The purpose of the programs and initiatives outlined in the agreement is to reduce the average total time to decision for PMAs and 510(k)s. FDA and applicants share the responsibility for achieving this goal. For PMA submissions received beginning in FY2013, the average total time-to-decision goal for FDA and industry is 395 calendar days; in FY2015, 390 calendar days; and in FY2017, 385 calendar days. For 510(k) submissions received in FY2013, the average total time to decision goal for FDA and industry is 135 calendar days; in FY2015, 130 calendar days; and in FY2017, 124 calendar days. Infrastructure. User fees will be used to "reduce the ratio of review staff to front line supervisors in the pre-market review program." FDA will enhance and supplement scientific review capacity by hiring reviewers and using external experts to assist with device application review. FDA will obtain streamlined hiring authority and work with industry to benchmark best practices for employee retention via financial and non-financial means. User fees will supplement (1) management training; (2) MDUFA III training for all staff; (3) Reviewer Certification Program for new CDRH reviewers; and (4) specialized training to provide continuous learning for all staff. FDA will improve its IT system to allow real-time status information on submissions. Independent Assessment of Review Process Management. By the end of the second quarter of FY2013, FDA will hire a consultant to assess the device application review process. Within six months of award of the contract, a report on recommendations likely to have a significant impact on review time will be published. The final report will be published within one year of contract award date. FDA will publish a corrective action and implementation plan within six months of receipt of each report. The consultant will evaluate FDA's implementation and publish a report no later than February 1, 2016. Performance Reports. As was the case in MDUFA II, FDA will meet with industry on a quarterly basis to present data and discuss progress in meeting goals. The agreement requires more detailed information to be covered in quarterly reports by CDRH and CBER; specifically, elements to be included are listed for 510(k)s, PMAs, Pre-Submissions, and Investigational Device Exemptions (IDEs). CDRH reports quarterly and CBER reports annually on 11 additional data points. FDA reports annually on nine other topics. Discretionary Waiver. FDA will grant discretionary fee waivers or reduced fees "in the interest of public health." Authority for the waiver and reduced fees expires at the end of MDUFA III. According to the FDA presentation at the March 28, 2012, public meeting, the fee waiver is intended for laboratory developed test (LDT) manufacturers. In addition to MDUFA III, Congress, in FDASIA, also reauthorized PDUFA and included new authorities for a Generic Drug User Fee Act and a Biosimilars User Fee Act. These three provisions were included with MDUFA III along with a variety of related and unrelated issues in the final legislative package, the FDA Safety and Innovation Act (FDASIA, P.L. 112-144 ), which became law on July 9, 2012. Because of the importance of user fees to FDA's budget, PDUFA and MDUFA are considered to be "must pass" legislation, and Congress has often in the past included language to address a range of other concerns. For example, MDUFA II included provisions about the extent to which FDA can delegate activities to third parties (inspections and the review of premarket notifications); establishment registration requirements (timing and electronic submission); a unique device identification system; and reporting requirements for devices linked to serious injuries or deaths. For a complete listing of provisions that were included in FDASIA, please see CRS Report R42680, The Food and Drug Administration Safety and Innovation Act (FDASIA, P.L. 112-144) , coordinated by [author name scrubbed]. Appendix A. Provisions in FFDCA §737 and §738 Appendix B. MDUFA III Agreement: Performance Goals and Procedures Appendix C. MDUFMA and MDUFA: Fees and Performance Goals Appendix D. MDUFA III Performance Goals Appendix E. Acronyms Used in This Report

Summary: The Food and Drug Administration (FDA) is the agency responsible for the regulation of medical devices. These are a wide range of products that are used to diagnose, treat, monitor, or prevent a disease or condition in a patient. A medical device company must obtain FDA's prior approval or clearance before marketing many medical devices in the United States. The Center for Devices and Radiological Health (CDRH) within FDA is primarily responsible for medical device review and regulation. CDRH activities are funded through a combination of public money (i.e., direct FDA appropriations from Congress) and private money (i.e., user fees collected from device manufacturers), which together comprises FDA's total. Congress first gave FDA the authority to collect user fees from medical device companies in the Medical Device User Fee and Modernization Act of 2002 (P.L. 107-250). Five years later, the user fees were reauthorized through September 30, 2012, by the Medical Device User Fee Amendments of 2007 (MDUFA II; Title II of the Food and Drug Administration Amendments Act of 2007, FDAAA; P.L. 110-85). Over the years, concerns raised about medical device user fees have prompted Congress to carefully consider issues such as which agency activities could use fees, how user fees can be kept from supplanting federal funding, and which companies should qualify as small businesses and pay a reduced fee. The purpose of the user fee program is to help reduce the time in which FDA can review and make decisions on marketing applications. Lengthy review times affect the industry, which waits to market its products, and patients, who wait to use these products. The user fee law provides a revenue stream for FDA; in conjunction, the agency negotiates with industry to set performance goals for the premarket review of medical devices. In February 2012, FDA reached agreement with the medical device industry on proposed recommendations for the second user fee reauthorization—referred to as MDUFA III. The draft MDUFA III package—composed of statutory language and the FDA-industry agreement on performance goals and procedures—was posted on the FDA website in March 2012. Following a public meeting and a 30-day comment period on the draft, a final MDUFA III recommendation was submitted to Congress. On July 9, 2012, the FDA Safety and Innovation Act (FDASIA, P.L. 112-144) became law. MDUFA III was included in FDASIA as Title II. FDA's authority to collect medical device user fees was reauthorized for another five years, FY2013 through FY2017. FDASIA also reauthorized the prescription drug user fee program, created new user fee programs for generic and biosimilar drug approvals, and modified FDA authority to regulate medical products. However, under the current FY2013 continuing resolution (P.L. 112-175), although FDA is collecting the new user fees allowed by MDUFA III/FDASIA, it can only spend fees up to the FY2012 level. Since medical device user fees were first collected in FY2003, they have comprised an increasing proportion of FDA's device budget. All user fees (as enacted) accounted for 35% of FDA's total FY2012 program level, and device user fees accounted for 14% of the device and radiological health program level, which was $376 million in FY2012, including $53 million in user fees.