SUPPLEMENTARY INFORMATION:

I. Background

The act establishes fees in sections 737 and 738 (21 U.S.C. 379i and j) for different kinds of medical device applications. Fees are assessed on certain types of medical device applications and supplements. When certain conditions are met, FDA may waive or reduce fees (21 U.S.C. 379j(d) and (e)).

For FY 2003 through FY 2007, MDUFMA establishes revenue amounts for the aggregate of all application fee revenues. Revenue amounts established for years after FY 2003 are subject to adjustment for inflation, workload, and revenue shortfalls from previous years. Fees for applications are to be established each year by FDA so that revenues will approximate the levels established in the statute, after those amounts have first been adjusted for inflation, workload, and, if required, revenue shortfalls from previous years.

This notice establishes fee rates for FY 2003. These fees are effective on October 1, 2002, and will remain in effect through September 30, 2003.

II. Inflation, Workload, and Compensating Adjustment Process

MDUFMA provides that fee revenue amounts for each FY after 2003 shall be adjusted for inflation. The adjustment must reflect the greater of: (1) The total percentage change that occurred in the Consumer Price Index (all items, U.S. city average) during the 12-month period ending on June 30 preceding the FY for which fees are being set, or (2) the total percentage pay change for the previous FY for Federal employees stationed in the Washington, DC metropolitan area. MDUFMA provides for this annual adjustment to be cumulative and compounded annually after 2003 (21 U.S.C. 379j(c)(1)). No inflation adjustment is to be made with respect to fee revenue amounts established in the statute for FY 2003.

For each FY beginning in FY 2004, MDUFMA provides that fee revenue amounts, after they have been adjusted for inflation, shall be further adjusted to reflect changes in workload for the process for the review of medical device applications (21 U.S.C. 379j(c)(2)). No workload adjustment is to made be with respect to fee revenue amounts established in the statute for FY 2003.

For each FY beginning in FY 2004, MDUFMA provides that fee revenue amounts, after they have been adjusted for inflation and workload, shall be further adjusted, if necessary, to compensate for any shortfall in fee revenue from previous years (21 U.S.C. 379j(c)(3)). No compensating adjustment is to be made with respect to fee revenue amounts established in the statute for FY 2003.

Inflation, workload, and compensating adjustments do not apply to the revenue amounts established in MDUFMA for FY 2003.

III. Fee Calculations for FY 2003

MDUFMA establishes the fee for a premarket application (PMA) at $154,000 in FY 2003. All other fees are set as a percent of this fee. At these rates, the medical device user fees are expected to generate $25,125,000 in FY 2003. The applications subject to fees, the rate of each fee as a percent of a premarket application, and the FY 2003 ( printed page 70229) fee rate are set out in table 1 of this document. For all applications other than premarket notification submissions, the small business rate is 38 percent of the full fee rate. For premarket notification submissions, there is no small business rate in FY 2003. In FY 2004 and subsequent fiscal years, fees for premarket notification submissions will be set so that a small business fee will be 80 percent of a full application fee.

IV. Adjustment for Excess Collections in Previous Years

Under the provisions of MDUFMA, if the agency collects more fees than were provided for in appropriations in any year, FDA is required to reduce its anticipated fee collections in a subsequent year by that amount (21 U.S.C. 379j(h)(4)). No adjustments under this provision are required for fees assessed in FY 2003.

V. Implementation of Fee Collections

A. No Fees May Be Collected Until Enabling Appropriations are Enacted

Under section 738(h) of the act, fees authorized by MDUFMA may neither be collected nor available for obligation unless they are first provided for in appropriation acts. For this reason FDA is not able to accept or deposit any fee revenues until such appropriations are enacted for FY 2003. Therefore, no fees are to be submitted until such appropriations are enacted. After the enactment of enabling appropriations, FDA will publish another notice in the Federal Register with detailed payment instructions.

B. Procedures for Firms Seeking to Qualify for Small Business Exemption for First PMA or for Lower Fees for Subsequent Applications.

Firms with gross sales and revenues of $30 million or less, including gross sales and revenues of all affiliate, partner, and parent firms, may qualify for a waiver of the fee for their first PMA, and for lower rates for subsequent PMAs, PMRs, and supplements. Such firms may also qualify for lower rates for premarket notification submissions in FY 2004 and subsequent years. To qualify, these firms will have to submit certified copies of their Federal income tax return for the most recent taxable year, including certified copies of the income tax returns of their affiliate, partner, and parent firms. More detailed procedures for qualifying for small business first-time PMA waiver and lower rates will also be included in the Federal Register notice published after the date of enabling appropriations.

C. Subsequent Payment of Fees

Any application or supplement subject to fees under MDUFMA that is submitted after September 30, 2002, is subject to the fee set out in table 1 of this document. FDA will issue invoices for all fees payable for applications submitted between October 1, 2002, and 30 days after the date of the Federal Register notice the agency will issue after enactment of enabling appropriations. Those invoices will be due and payable within 30 days of issuance. Subsequently, fees must be submitted to FDA at the time that applications are submitted.

Payment, when due, must be made in U.S. currency by check, bank draft, or U.S. postal money order payable to the order of FDA. More complete payment instructions will be included in the Federal Register notice published after the date of enabling appropriations.