Under the Federal Food, Drug, and Cosmetic Act (FDCA), FDA is responsible for ensuring that medical devices are reasonably safe and effective before they go to market (premarket) and that marketed device products remain safe (postmarket). Two FDA centers, CDRH and CBER, are responsible for the PMA and clearance of medical device applications. CDRH reviews applications for the majority of devices marketed, such as artificial hearts, dialysis machines, and radiological devices. CBER reviews applications for devices used in the testing and manufacture of biological products, such as diagnostic tests intended to screen blood donors (such as for the human immunodeficiency virus), as well as devices used in cell and gene therapies. Each fiscal year, FDA obligates funds for postmarket compliance activities and inspections related to medical devices and radiological products. FDA provides field staff with guidance on inspecting manufacturers’ establishments after devices have been marketed, for compliance with the good manufacturing practices (GMP) requirements, monitoring manufacturers’ corrections of problems with devices, and removing unsafe devices from the market. FDA has 21 district offices that support inspections of manufacturers’ establishments. During inspections for compliance with GMP requirements, FDA investigators examine manufacturer facilities, records of manufacturing processes, and corrective action programs. MDUFMA identified eight types of applications for medical devices and biological products that are subject to the performance goals developed by the Secretary of HHS for fiscal years 2003, 2004, and 2005: Original PMA applications are generally required when the device is new or when the risks associated with the device are considerable (as would be the case if the device is implanted in the body for life-supporting purposes). Premarket Notifications, or 510(k)s, are applications used when the intent is to market a type of device that may be considered substantially equivalent to one already on the market and therefore, does not require PMA. Premarket Reports are applications required for high-risk devices originally approved for a single use that a manufacturer has reprocessed for additional uses. Panel-Track Supplements are applications used to supplement approved PMAs or Premarket Reports. These supplements typically request approval of a significant change in the design or performance of a device, or for a new purpose for using the device. Expedited Original PMAs are used when a manufacturer seeks priority status to market a medical device that is intended to treat or diagnose a life-threatening or irreversibly debilitating disease or condition or to address an unmet medical need. The 180-day PMA Supplements are used to supplement approved PMAs or premarket reports. The application typically requests approval of a significant change in aspects of a device, such as its design, specifications, or labeling. Biologics license applications (BLAs) Resubmissions (Class 1) are used to respond to information requested by FDA on a BLA and may include matters related to product labeling or safety and other minor clarifying information. BLA Supplement Resubmissions (Class 2) are used to respond to an FDA request for information on a BLA regarding the safety and effectiveness of products or a re-inspection of the manufacturer’s device establishment. FDA primarily uses two medical device application review processes; the PMA review process and the 510(k) review process. FDA annually receives about 50 PMAs and about 4,000 510(k) applications for review through these processes. Under the PMA review process, FDA reviews applications for new devices or those for which risks associated with the device are considerable. Applications reviewed under this process include Original PMAs, Premarket Reports, Panel-Track Supplements, Expedited Original PMAs, and 180-day PMA Supplements. After an initial screening of an application and determination that the review should proceed, an FDA multidisciplinary staff conducts a scientific review of the application and determines whether it is complete, that is, if it contains sufficient information to allow the review to continue. (See fig. 1.) For complete applications, FDA may make one of five decisions. FDA may (1) issue an order approving the application, which allows the manufacturer to begin marketing the device; (2) send the manufacturer an approvable letter pending a GMP inspection, which indicates that FDA should be able to approve the device after the agency finds that the manufacturer’s device establishment is in compliance with GMP requirements; (3) send the manufacturer an approvable letter indicating that the agency should be able to approve the device if the manufacturer can make minor corrections or clarifications to the application; (4) issue a “not approvable” letter informing the manufacturer that FDA does not believe that the application can be approved because the data provided by the manufacturer do not demonstrate that the device is reasonably safe and effective; or (5) issue an order denying approval of the application, which informs the manufacturer that the agency has completed its scientific review, identified major safety and effectiveness problems, and decided not to approve the application. FDA may refer complete applications to an external advisory committee for evaluation when a device is the first of its kind or when the agency believes it would be useful to have independent expertise and technical assistance to properly evaluate the safety and effectiveness of the device. For applications referred to an advisory committee, the committee submits recommendations to FDA on the safety and effectiveness of the devices. Taking the committee’s recommendations into consideration, FDA then makes its decision. For incomplete applications, that is, applications for which FDA determines it needs significant additional information, FDA issues a “major deficiency letter” to the manufacturer identifying the information that is required to provide reasonable assurance of the safety and effectiveness of the device. This request for significant information is an action referred to as a cycle action. In general, FDA takes cycle actions when it requests additional information from the manufacturer, or when it evaluates additional information provided by the manufacturer in response to an FDA request. The manufacturer responds to FDA’s request by submitting an amendment to the original application. Cycle actions on an application can occur repeatedly until FDA determines that the manufacturer has provided what the agency calls a “complete response” to all of the agency’s concerns. Then, FDA may make a decision on the application. Manufacturers that receive approvable letters pending minor corrections or clarifications or not approvable letters can gain final approval by submitting amendments with complete responses to FDA’s concerns. For both types of decisions, if FDA, as part of a cycle action, determines that the manufacturer’s amendment is a complete response, FDA issues an order approving the application. If the amendment is not a complete response, FDA issues another approvable letter pending minor corrections or clarifications or a not approvable letter. Under the 510(k) review process, FDA decides whether the application contains sufficient information to determine whether the device is substantially equivalent to one legally on the market (see fig. 2). When a 510(k) application lacks information necessary for FDA to complete its review and make a determination as to whether the device is substantially equivalent, the agency issues a letter requesting additional information from the manufacturer. This request for additional information is a cycle action. The manufacturer may then submit additional information responding to FDA’s concerns. Once FDA has obtained complete information from the manufacturer, FDA issues a decision letter informing the manufacturer that the device is substantially equivalent and therefore may be marketed or the device is not substantially equivalent and may not be marketed. The MDUFMA performance goals specify a length of time for taking a cycle action, making a decision, or a combination of both. The goals designate a certain percentage of these actions that must occur within the specified period in order for FDA to meet the performance goals. To measure its performance against the MDUFMA performance goals, FDA tracks the time, in calendar days, the agency takes to complete a cycle action or make a decision—but not the time it takes a manufacturer to respond to a request from FDA. FDA measures its performance against a specific fiscal year’s MDUFMA performance goals using all the applications it received in that year— known as a cohort—regardless of when the final decision is made for each of the applications in that year’s cohort. The agency’s performance as measured against a fiscal year’s MDUFMA performance goals is preliminary until all applications in a cohort are completed —and this can take up to 3 or 4 fiscal years. The two MDUFMA performance goals that FDA must meet for fiscal years 2003 and 2004 are tied to the same type of cycle action for different types of applications. One performance goal applies to the cycle action taken on PMAs, Panel- Track Supplements, and Premarket Reports, and the other performance goal applies to Expedited PMAs. To meet each performance goal, FDA must review the completeness of a manufacturer’s response to an approvable letter pending minor corrections or clarifications and make a decision within 30 days of receiving the manufacturer’s amendment. FDA must meet this time frame on 90 percent of the applications for which it takes a cycle action (see table 1). In fiscal year 2005, 20 MDUFMA performance goals will become effective, including the 2 performance goals that have been effective since fiscal year 2003 (see table 2). The 20 performance goals will apply to eight types of applications identified under MDUFMA and will be tied to other cycle actions and decisions FDA makes on the applications during the review process. FDA had limited data that could be used to measure the agency’s performance against most of the MDUFMA performance goals. Thus, it is uncertain whether FDA will meet the MDUFMA performance goals for fiscal years 2003, 2004, and 2005. For fiscal year 2003, the two performance goals could be applied to 53 applications. However, as of March 31, 2004, only one application was subject to a cycle action tied to one of the two MDUFMA performance goals. In its review of that application, FDA determined that the manufacturer provided a complete response to an approvable letter pending minor corrections or clarifications and made the decision to approve the application within the goal’s time frame. For fiscal year 2004, there were no applications subject to the cycle action tied to the two fiscal year 2004 MDUFMA performance goals. In addition, the likelihood of FDA meeting the fiscal year 2005 MDUFMA performance goals is uncertain because FDA had performance data for some, but not all, of the MDUFMA performance goals that will be effective in fiscal year 2005. FDA’s performance results could change as the agency completes its actions on all applications for which the performance goals apply. Limited data exist to measure FDA’s performance against the two MDUFMA performance goals established for fiscal years 2003 and 2004. Our analysis shows that FDA received 43 PMAs, 7 Panel-Track Supplements, and 3 Expedited PMAs in the fiscal year 2003 cohort. As of March 31, 2004, one application—an Expedited PMA—had been subject to the cycle action tied to one of the two MDUFMA performance goals for fiscal year 2003. In its review of this application FDA determined that the manufacturer submitted a complete response to an approvable letter pending minor corrections or clarifications, and approved the application within 30 days. For PMAs and Panel-Track Supplements, the same MDUFMA performance goal applied for fiscal year 2003. However, FDA did not have any applications that required the issuance of an approvable letter. Similarly, none of the 15 PMAs, 1 Panel-Track Supplement, and 8 Expedited PMA applications from the fiscal year 2004 cohort required issuance of approvable letters. Many of the applications from the fiscal years 2003 and 2004 cohorts were pending within the review process for FDA review actions or manufacturers’ responses to FDA. Therefore, FDA’s performance results are preliminary. In the fiscal year 2003 cohort, 21 of the 50 PMAs and Panel- Track Supplements and 1 of the 3 Expedited PMAs FDA received were pending as of March 31, 2004. Similarly, in the fiscal year 2004 cohort, 13 of the 15 PMAs, 1 Panel-Track Supplement, and all 8 of the Expedited PMAs FDA received were pending action. Because FDA’s performance against the MDUFMA performance goals is based on the percentages of actions the agency takes on applications within required review times, FDA’s performance results could change as the agency completes actions on all applications for which the performance goals apply. Data were not readily available from FDA on the status of all pending applications within the review process. FDA anticipates having complete data by the end of fiscal year 2004. The likelihood of FDA meeting the MDUFMA performance goals for fiscal year 2005 is uncertain because data to measure the agency’s performance are limited. Specifically, FDA had data that allowed us to compare its performance against some, but not all, of the 20 MDUFMA performance goals that will be effective in fiscal year 2005. For example, from the fiscal year 2003 cohort, data were available to compare FDA’s performance against 17 of the 20 performance goals for fiscal year 2005. FDA took actions on applications tied to 14 of the 17 performance goals within the established goal time frames. For 7 of the 14 performance goals, FDA’s performance was based on one or two actions on applications. FDA did not take actions within the established goal time frames on applications tied to 3 of the 17 performance goals. Similarly, from the fiscal year 2004 cohort, FDA had data for 11 of the 20 MDUFMA performance goals. We found that FDA took actions on applications tied to each of the 11 performance goals within the established goal time frames. For 4 of the 11 performance goals, FDA’s performance was based on no more than three actions on applications. (See table 3.) As previously mentioned, many of the applications from the fiscal years 2003 and 2004 cohorts are awaiting actions by FDA or responses from manufacturers. Our analysis of the applications pending within the review process shows that of the 4,175 applications received in the fiscal year 2003 cohort, 339, or 8 percent, were pending further action by FDA as of March 31, 2004. Of the 1,781 applications received in the fiscal year 2004 cohort, 859, or 48 percent, were also pending as of March 31, 2004. The number of applications pending varied by application type. (See table 4.) For example, in the fiscal year 2003 cohort, 21—or 42 percent—of the 50 PMAs and Panel-Track Supplements were pending, while 316—or 8 percent—of the 3,914 510(k)s were pending further action by FDA. As FDA completes its actions on more applications, its performance results could change. According to FDA officials, in fiscal year 2003, FDA began implementing activities that are intended to enhance its ability to meet MDUFMA performance goals that become effective in fiscal year 2005. These activities, identified in the Secretary of HHS’s November 2002 letter establishing the MDUFMA performance goals, include hiring additional staff, consulting with experts outside the agency more frequently, and holding meetings with manufacturers to ensure high-quality applications are submitted to FDA. For example, in fiscal year 2003, CDRH hired staff for 67 new positions, such as medical officers, scientists, and engineers, to improve the timeliness of its device reviews. As of April 2004, CDRH filled 23 of the 65 positions it plans to fill in fiscal year 2004. CBER also filled each of the 11 full-time equivalent positions that it received in fiscal year 2003 and planned to fill 9 full-time equivalent positions during fiscal year 2004 to improve the timeliness of device reviews as well as other activities. In addition, to help FDA meet its performance goals, FDA held about 100 meetings with manufacturers to discuss ways to improve the quality of applications prior to their submission. In fiscal year 2002, FDA obligated about $128 million for postmarket medical device compliance activities, which include inspections of device manufacturers’ establishments. FDA obligated about $109 million for compliance activities and about $19 million for inspections. Of the approximately $109 million, FDA obligated about $99 million for postmarket compliance activities that encompass outreach coordination, applied research, and laboratory analyses. Outreach coordination included funds for guidance to field staff on matters such as the reporting of problems with medical devices, epidemiology studies, device recalls, and other activities. Obligations for applied research included funding for activities such as the development of domestic and international standards to help provide reasonable assurance that medical devices are safe and effective. Obligations for laboratory analyses included funding for activities such as FDA laboratory-based investigations and scientific training for FDA inspection staff. FDA also obligated an estimated $10 million in rental expenses for office space for FDA staff who conduct compliance activities. In fiscal year 2002, of the $19 million obligated for inspections, FDA obligated about $17 million for inspections of domestic and foreign establishments and about $2 million in estimated office space rental expenses for FDA staff who conduct inspections. These inspections included routine surveillance inspections to determine compliance with medical device regulations, inspections resulting from the reporting problems with devices or product recalls, and compliance inspections to collect evidence for pending enforcement actions. In commenting on a draft of this report, FDA generally agreed with our findings. FDA stated that it believes the agency has made a good start in its implementation of MDUFMA and FDA believes that its progress in meeting the MDUFMA performance goals is consistent with the extensive performance improvements the agency is expect to achieve each year through 2007. FDA provided technical comments primarily clarifying aspects of the medical device review process, which we incorporated as appropriate. FDA’s comments are reprinted in appendix I. We are sending copies of this report to the Secretary of HHS and the Commissioner of FDA, appropriate congressional committees, and other interested parties. We will also make copies available to others on request. In addition, the report is available at no charge on the GAO Web site at http://www.gao.gov. If you or your staffs have questions about this report, please contact me at (202) 512-7119 or James McClyde at (202) 512-7152. Darryl Joyce, Donna Bulvin, and Krister Friday also made key contributions to this report. The Government Accountability Office, the audit, evaluation and investigative arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates federal programs and policies; and provides analyses, recommendations, and other assistance to help Congress make informed oversight, policy, and funding decisions. GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability. 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Summary: FDA reviews applications from manufacturers that wish to market medical devices in the United States. To ensure prompt approval of new devices and clearance of devices that are substantially equivalent to those legally on the market, the Congress passed the Medical Device User Fee and Modernization Act of 2002 (MDUFMA). The act authorizes FDA to collect user fees and, in return, requires FDA to meet performance goals that are tied to the agency's review process. The goals set actions FDA may take on applications and specify the time that FDA should take in certain phases of the review process. MDUFMA requires GAO to report on FDA's performance against the MDUFMA performance goals established for fiscal years 2003 and 2004 and to determine whether FDA is likely to meet the fiscal year 2005 performance goals. MDUFMA also requires GAO to report on the amounts FDA obligated in fiscal year 2002 for medical device compliance activities and inspections of manufacturers after their devices are marketed. GAO analyzed data provided by FDA that are based on actions taken on applications FDA received from October 1, 2002, through March 31, 2004. GAO also analyzed data on the amounts FDA obligated for medical device compliance and inspection activities for fiscal year 2002. FDA had limited data that could be used to measure the agency's performance against most of the MDUFMA performance goals. Thus, it is uncertain whether FDA will meet the MDUFMA performance goals for fiscal years 2003, 2004, and 2005. For fiscal years 2003 and 2004, there were two performance goals in effect for each year. As of March 31, 2004, only one application was subject to the action tied to one of the two MDUFMA performance goals. On this application, FDA completed its review and made the decision to approve the application within the goal's established time frame. To determine the likelihood of meeting the 20 MDUFMA performance goals for fiscal year 2005, FDA is collecting data on its performance against these goals. GAO found that FDA had performance data for some, but not all, of the MDUFMA performance goals. From fiscal year 2003 applications, data were available to compare FDA's performance against 17 of the 20 fiscal year 2005 performance goals. FDA took actions tied to 14 of the 17 goals within the goals' established time frames. From fiscal year 2004 applications, data were available to compare FDA's performance against 11 of the 20 performance goals. FDA took actions tied to the 11 goals within the goals' established time frames. The results of FDA's performance against MDUFMA performance goals are preliminary, however, because 8 percent and 49 percent, respectively, of the applications FDA accepted in fiscal year 2003 and the first 6 months of fiscal year 2004 were awaiting action by FDA or responses from manufacturers. Because FDA's performance against the MDUFMA performance goals is based on the percentages of actions the agency takes within required review times, FDA's results could change as the agency completes its actions on all applications for which the goals apply. FDA obligated about $128 million for postmarket medical device compliance activities and inspections in fiscal year 2002. FDA obligated about $109 million for compliance activities for outreach coordination, such as guidance to field staff on reporting problems with medical devices, laboratory analyses, and research, such as the development of domestic and international standards to provide reasonable assurance that medical device products are safe and effective. FDA obligated about $19 million for inspections of device manufacturers' establishments, including routine surveillance inspections to determine compliance with medical device regulations and inspections resulting from device problem reporting or product recalls.