Thomas C. Novelli07.23.08
Lawmakers Spark Controversy With Newly Proposed Legislation Impacting the FDA
Thomas C. Novelli
Several high-profile food and drug import safety incidents have led some federal lawmakers to take a closer look at the inspection process for food, drugs, devices and cosmetics. In March, the FDA announced a major recall of the anticoagulant blood thinner heparin after the agency began to receive reports of serious injuries—and even fatalities—associated with use of the product. It eventually was determined that raw heparin stock was contaminated prior to importation from China. The heparin incident proved to be a critical motivation for lawmakers to introduce legislation to bolster the FDA’s inspection both domestically and abroad.
Supported by high-profile safety incidents and various government reports, lawmakers on the House Energy and Commerce Committee recently released a “discussion draft” aimed at increasing the number of inspections conducted by the FDA and to further compel user fees from manufacturers, including device manufacturers. The legislation, titled the “Food and Drug Administration Globalization Act of 2008,” is being driven by Energy and Commerce Chairman John Dingell (D-MI), a longtime critic of the FDA. Dingell and other likeminded members of the committee cited the recent problems with drug and food imports as compelling reasons to move forward with the legislation. Further, these members cited recent Government Accountability Office (GAO) reports as evidence that legislative action is needed. The GAO reports have highlighted the FDA's failure to conduct both foreign and domestic inspections of food, drug and device manufacturing facilities in accordance with mandated protocols and regulations. One GAO report, focusing specifically on the FDA inspection process for medical devices, found that the agency had inspected foreign Class II manufacturers every 27 years and foreign Class III manufacturers every six years.
The Dingell proposal would dramatically change the landscape for the medical device regulatory process. First, the proposal would create a real-time registry of all drug and device facilities that produce products that enter into interstate commerce within the United States. Drug and device manufacturers would be required to register each facility annually with the agency. A second, and more controversial, change would be the requirement of additional user fees by device manufacturers to fund the inspection process. The annual facility registration, which would be required per the proposal, would be accompanied by an annual fee. The proposal also aims to bolster foreign and domestic inspection frequency. Specifically, the proposal would require the FDA to inspect all foreign and domestic facilities every two years. These inspections would be required prior to a device entering into interstate commerce. Accordingly, impeding, refusing or delaying an inspection could result in the suspension of a manufacturer’s registration. The proposal also would require country-of-origin labeling for all foreign manufactured devices. Finally, the proposal strives to enhance the FDA’s enforcement authority by extending current FDA authority to detain unsafe medical devices discovered during the inspection process.
To further the goals of the proposal, the House Energy and Commerce Committee and subcommittees have held a series of hearings to discuss the impact the proposal would have on various industries. As anticipated, reactions by these stakeholders have been overwhelmingly cautious, especially in light of proposals to institute new user fees.
Industry’s Reaction to the Proposal
Criticism of the proposal has been widespread. To begin, the proposal appears to ignore the risk-based approach that the FDA uses to inspect facilities by requiring nearly all devices subject to a 510(k) and premarket approval application (PMA) to be inspected prior to entering into interstate commerce. The FDA’s risk-based approach was instituted to make better use of the agency’s oversight resources based on the risk that a product poses to a patient. Congress and the FDA historically have recognized the importance of allocating the FDA’s review of and regulatory control over medical devices according to the device's intended use, indications for use and, significantly, the risk the device poses to the patient. As the proposal currently is constructed, a low-risk device, such as a bedpan, would receive the same scrutiny as a higher-risk device, such as an implantable pacemaker or a cochlear implant. This could lead to a greater lapse in the time it takes for a patient to have access to a device of any sort. Many stakeholders also have cited that the proposal could further stifle innovation among manufacturers.
One set of provisions receiving significant criticism is the proposal to implement additional user fees for device manufactures to fund the inspection process. In general, the industry—especially small manufacturers—has been resistant to user fees as a way to fund both the review and inspection processes. However, in 2002, the Medical Device User Fee Modernization Act of 2002 (MDUFMA I) was enacted and established a user fee program. While MDUFMA I did include important provisions to ensure that smaller companies received fee relief, including a one-time waiver of fees for an initial PMA and reduced application fees for 510(k)s, PMAs and PMA supplements, it started the slippery slope of government reliance on industry fees. Moreover, in 2007, Congress reauthorized the MDUFMA as part of the Food and Drug Administration Amendments Act. In the end, the user fee reauthorization doubled the industry's contribution to the FDA from approximately $150 million from 2002 to 2007 to nearly $300 million from 2008 to 2012. The reauthorization also expanded fees beyond submission to include an annual registration fee of $1,704, which increases at an annual rate of 8.5%. In general, there has been a predominantly unified belief that resources for such processes should derive from congressional appropriations and not additional user fees.
The provisions to impose additional user fees strike a nerve in the device industry, especially for small, innovative manufacturers. The concern lies in the fact that overly burdensome fees eventually could prohibit manufacturers from further innovating and developing lifesaving technologies. While these fees may not be viewed as a hardship for multibillion-dollar drug companies, it is more likely that they would be a hardship for the thousands of small medical technology companies responsible for a majority of medical device innovation that eventually comes to market. Industry statistics indicate that 80% of all US medical device companies have fewer than 50 employees and 98% have fewer than 500 employees. Moreover, it raises the question of whether Congress is becoming too reliant on the industry to fill the void of under-appropriating the FDA.
Both public and industry stakeholders agree that the FDA is woefully under-funded and that additional appropriations are necessary for the agency to carry out its mission. Various reports, including an internal report commissioned by the FDA itself, cited that a lack of resources is leading to the agency's inability to successfully regulate food, drugs, devices and cosmetics. Moreover, these reports also cite the resource problem as a key factor in the FDA's ability to conduct necessary inspections. The responsibility of the agency is immense; the FDA regulates industries that account for nearly a quarter of the gross national product. While concerns about under-funding the agency are prevalent, the agency has been hesitant to call for additional funding. However, earlier this year, a senior FDA official told Congress that the agency would need an additional $275 million to adequately fulfill its regulatory duties. Accordingly, the Bush administration recently adjusted its initial fiscal year 2009 budget proposal to request the additional funds.
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Whether the new FDA budget request weakens the argument for those in favor of the FDA Globalization Act remains to be seen. Congressman Dingell still is publicly calling for the proposal to be debated. However, despite support by several lawmakers, the proposal has several flaws that would have considerable impact on the industry, especially for small device manufacturers. The outlook for the proposal also remains unclear. In an election year, the probability of any controversial legislation moving forward is greatly diminished. Despite a bleak political outlook, however, many in Congress still are actively pursuing these interests.