I

N

S

I

G

H

T

Insight Report Vol. 6 No.1

“Maybe you should be careful about what you wish for?”

by: Alan P. Schwartz

Just a few months back, we reported in an FDA update, that our Congress passed a bill, HR-5651 which provided for the FDA to charge for Premarket Approvals and Notifications (PMAA and 510(k)). Along with this new tax, our Congress has authorized the use of Third Party Inspections for Class II and Class III devices manufacturers. What does this all mean for the American medical device industry and for those foreign companies who want to export their device to the US market? provide Let’s take a closer look at each part of this HR-5651 regulation. The bill entitled, Medical Device User Fee and Modernization Act of 2002, would establish a user fee program for medical devices, and further amend the Federal Food, Drug, and Cosmetic Act to, among other things, establish a third party inspection program and revise the regulatory scheme for reprocessed single use devices. The main goal of these measures is to improve FDA's ability to provide access to safe and effective medical devices.

That is to be seen.

It is possible that the agency really believes that allowing third party inspection similar to what the EU has been using for ISO certification provide the FDA the ability to provide access to safe and effective medical devices?

With the approval of this new bill, the FDA finally gets their user fees for the review of medical device applications. It is proposed that the FDA will charge upwards of $153,000. for a PMA application and $2187. for a 510(k) submission, that includes special 510(k)s also. (It is hard to image how they came up with that number, $2187.) The Bill has provisions for first time PMA applicants as well as refunds if the application is rejected or sent back.

It is no surprised that this was passed in that the FDA has been trying to get this through Congress for years. Now, with the Canadian government charging for their review —though at a much smaller cost for similar PMA type devices and more for 510(k) type devices — and understanding that the FDA has been charging for Drug reviews for several years, it was only a matter of time for the FDA to get fees for device reviews.

When are these fees going into effect? The fee is now in effect and has been since October 1, 2002. The FDA is still trying to figure out their collection method as well as a method for back the companies who submitted their device prior the start of the collection period.

Will these fees, in-fact, improve the FDA’s ability to provide access to safe and effective medical devices? That all depends on how they will look at this. For the FDA’s drug user fee program, it would appear that any company able to develop a new drug would have the ability to pay those fees. But the medical device industry is not the drug industry. Yes, there are those companies that will have no problem paying these fees and in all probability may favor the implementation of these user fees, thus reducing potential competition. The realization that the medical device industry is made up of thousands of small companies and hundreds of start-ups, makes one question how this fee will effect these companies? Not all new medical technologies provide for a return on investments that could recover a huge user fee. Many small companies may have to forestall new and novel technologies because of these fees and stick to the me-too type products.

And since the FDA will also be charging for “Special 510(k)s” as well, will companies take a more aggressive look at a device change and maybe make the decision that a “Special” is not necessary and save the $2187. For a small company that just maybe the scenario you will see being used.

Is this the way to insure access to safe and effective medical devices?

Will this fee cause hesitation by potential investors in new technologies?

Will the small inventor be forced to look for potential partners earlier in the process to assure them that their fees would be covered?

Now let’s look at the third party inspection part of this Medical Device User Fee and Modernization Act. I have been involved with the FDA regulations for over 30 years and if the FDA does goes along with this new Act, the FDA should surely be investigated for insanity.

Congress forced the FDA to try third party review for 510(k)s. That program was not well received nor made good use of. The original reason for the third party review was because in the early 1990s the FDA 510(k) review period exceeded 365 days. The third party review threat cause the FDA to speed up the 510(k) process. It worked but the cost and the effective ‘Return on Investment’ did not present itself as the alternative he industry wanted. The FDA just doesn’t get the fact that the medical device industry consists of primarily small companies that do not have the disposable capital to spend the way the pharmaceutical industry does. The third party review experiment was a flop but Congress asked it to be extended although there was no real reason to do so.

Now Congress and the FDA want to be able to certify third party auditors that companies will be able to pay for to conduct their “regulatory audits” in lieu of the FDA knocking on their door? I ask you, can the future of this program lead to success?

Can the FDA continue to give up its regulatory responsibilities and still continue to represent itself as the protector of the America public? Should the FDA continue to use the phase “this is being done to provide access to safe and effective medical devices?” I don’t think so.

Who will conduct the audits? How will the FDA qualify the auditors? What will the cost be? Will the audit be like an ISO audit? How will a volatile inspection be handled? Will the auditor act as a witness for the FDA in a legal action? Will the FDA ever take action on QSR/GMP violations again? What will be the FDA oversight on such audits? Will it actually save the FDA money? Maybe the FDA agreed to such a program based on a large number of FDA’ers who are soon up for retirement and who will need the work once on the outside?

These are questions that must be seriously contemplated before the FDA will be able to initiate such a program. My discussion with the FDA indicated that it maybe years before the FDA finalizes a pilot program and then institutes such a program.

And for the companies…. do you really think such a third party program will be beneficial? Perhaps it might be easier to know when you could schedule an audit and know that you will have to deal with a non-regulatory auditor; but, what if the third party auditor is more experienced than the FDA investigator and their audit becomes a more detailed and more probing affair? With a more experienced auditor, you can hope that they have a better handle on how to conduct an audit, and at the same time, they may have more knowledge on where to look, what to look for and can better determine if a company is in compliance or not.

The FDA needs to take a hard look before it decides to allow the ISO certifying bodies to conduct these audits. The FDA has always taken a negative look on ISO style audits because of the manner in which the audits are conducted. How many ISO certified companies fail an FDA audit? Too many….

We will be watching the development of this program closely in the coming months or years and keep you informed.

If you have any thoughts on this program we would like to hear from you.

tpa@mdiconsultants.com

The next Insight Report – To Be Announced

If you have any comments on these INSIGHTS we hope that you let us hear them. If you have any of your own INSIGHTS that you feel would be of value to other companies, we would be pleased to hear from you and to discuss them with you and if you allow, we would even put them up on this site for others to learn from.
e-mail INSIGHT

Close this window