«4160-01-P DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration Unique Device Identification System; Final Rule Docket No. ...»
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
Unique Device Identification System; Final Rule
Docket No. FDA-2011-N-0090
Final Regulatory Impact Analysis
Final Regulatory Flexibility Analysis
Unfunded Mandates Reform Act Analysis
Office of Planning
Office of Policy and Planning
Office of the Commissioner
Table of Contents
I. Analysis of Impacts
A. Summary of Costs
B. Need for Regulation and Summary of the Final Rule C. Summary of Comments on the Proposed Regulatory Impacts Analysis D. Medical Device Manufacturing Profile Update E. Costs of the Final Rule F. Analysis of the Uncertainty of Costs G. Benefits H. Alternatives to the Final Rule I. Small Business Impact J. Foreign Impacts II. References CDRH201336 I. Analysis of Impacts FDA has examined the impacts of the final rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Orders 12866 and 13563 direct Agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts;
and equity). The FDA finds that this final rule is an economically significant regulatory action under Executive Order 12866.
The Regulatory Flexibility Act requires Agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. FDA has examined the impacts of this rule as required by the Regulatory Flexibility Act. FDA finds that the potential impact of the final rule on some small entities may be significant. This Regulatory Impact Analysis (RIA) and other sections of the preamble to the final rule constitute the FDA’s regulatory flexibility analysis.
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that Agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $141 million, using the most current (2012) Implicit Price Deflator for the Gross Domestic Product. The estimated costs of this final rule will result in a 1
This final rule establishes a system to adequately identify devices through distribution and use. Under this rule, each medical device must be labeled with a unique device identifier (UDI) and the labeler must submit information concerning each device to FDA’s Global Unique Device Identification Database (GUDID), unless subject to an exception or alternative. The system established by this rule requires the label and device package of each medical device to include a UDI and requires that each UDI be provided in a plain-text version and in a form that uses automatic identification and data capture (AIDC) technology. The UDI is required to be directly marked on the device itself if the device is intended to be used more than once and intended to be reprocessed before each use. The rule provides for alternative placement and exceptions in certain circumstances. Medical device records throughout the required device recordkeeping and reporting systems will have to include the UDI. In addition, the final rule establishes accreditation requirements for agencies that may operate a system for the issuance of UDIs and establishes the conditions for when FDA might act as an issuing agency.
Summary of Costs The detailed data for this cost analysis were developed by Eastern Research Group, Inc.
(ERG) under contract to FDA and are presented in the full report “Unique Device Identification (UDI) for Medical Devices: Economic Analysis of the Final Rule,” 2013 (Ref. 1). The final ERG report updates the 2012 ERG cost analysis (Ref. 2) used to support FDA’s Preliminary Regulatory Impact Analysis of the proposed rule (Ref. 3).
Table 1 of this document presents for each affected sector a summary of the estimated present value and the annualized domestic costs of this final rule over 10 years using discount
costs is $642.2 million using a 7 percent discount rate and $737.7 million using a 3 percent rate, and the annualized costs are $85.7 million using a 7 percent discount rate and $84.1 million using a 3 percent discount rate.
Table 1.--Summary of the Estimated Domestic Regulatory Costs of the Final Rule (2012 dollars)
Costs to Domestic Labelers The majority of the costs of this final rule will be incurred by labelers of medical devices.
Labelers include manufacturers, reprocessors, specification developers, repackagers and relabelers that cause a label to be applied to a medical device. The estimated present value of the costs for domestic labelers over 10 years is $620.4 million at a 7 percent discount rate and $713.2 million at 3 percent. Over 10 years, the annualized costs for domestic labelers are $82.6 million at a 7 percent discount rate and $81.2 million at 3 percent. The largest components of one-time costs include planning and administration and the costs to integrate the UDI into existing information systems; to install, test, and validate barcode printing software; and to train employees. Other significant components of one-time costs include costs to redesign labels of devices to incorporate a barcode (note: this analysis uses the term “barcode” as shorthand to refer to all forms of AIDC technology, because that is the most commonly-used form of AIDC at
UDI on labels. In addition, labelers will incur one-time costs for recordkeeping and reporting requirements, and the direct marking of certain devices.
The largest annual cost components include labor, operating, and maintenance associated with equipment for printing operations, and labor related to software maintenance and training needed to maintain the UDI information system.
Costs to Issuing Agencies Three existing organizations now perform functions similar to those of an issuing agency under the final rule; the estimated present value of costs over 10 years for these three to apply for FDA accreditation and comply with the final reporting requirements is $1.3 million at a 7 percent discount rate and $1.4 million at 3 percent. The annualized costs over 10 years are $0.2 million at both 7 percent and 3 percent discount rates. There may be other qualified organizations that might apply to FDA to become an issuing agency. In such cases, the estimated application preparation, legal, and reporting costs would apply to these other organizations.
Costs to FDA to Establish and Maintain the GUDID The estimated present value over 10 years of the costs to FDA to establish and maintain the GUDID is $20.5 million at a 7 percent discount rate and $23.1 million at 3 percent. The annualized costs over 10 years are $2.9 million at 7 percent and $2.7 million at 3 percent.
Costs to Foreign Labelers Although we excluded foreign costs from our initial regulatory analysis, in our final regulatory impact analysis we include an estimate of the costs to foreign labelers. From FDA device registration and listing data we find that foreign labelers exporting devices to the United States are located in about 90 countries. Because there can be substantial variability in the labor
and apply different assumptions to each group. The present value of the total costs of the final rule for foreign labelers equals about $561 million with a 7 percent discount rate, and equals about $661 million with a 3 percent discount rate. The annualized present value equals about $75 million with both a 7 and 3 percent discount rate.
Uncertainty We computed uncertainty ranges based on the percentage relationship between the lower and upper bounds surrounding the central estimate of the costs to domestic labelers. The lower bound is about 57 percent lower and the upper bound about 43 percent higher than the central estimate. Applying a similar range of uncertainty to the total costs of the final rule to domestic labelers, issuing agencies, and FDA, over 10 years the total annualized domestic costs range from $48.8 million to $122.5 million at 7 percent and $47.9 million to $120.2 million at 3 percent.
Alternatives For the final rule, we compare two alternatives to the final rule. We estimate costs for a full coverage UDI requirement that does not allow reduced requirements for class I devices and for devices that FDA has by regulation exempted from the good manufacturing practices (GMP) requirements. The second alternative varies the content of the UDI across all device classes.
Over 10 years at 7 percent, the annualized present value of the highest cost alternative is about $108.0 million. This alternative applies the UDI requirements to class I, II, and III devices, as well as unclassified devices, unless excepted by final § 801.30(a)(3) through (11).
Under the lower cost alternative labelers do not incur costs in certain categories such as purchasing and installing printing equipment and software. The annualized present value of this
Summary of Regulatory Flexibility Analysis FDA conducted a regulatory flexibility analysis of the impact of the final rule on small entities. About 96 percent of domestic labelers are small firms according to Small Business Administration (SBA) size standards (table 20). The average annualized costs of compliance for domestic labelers as a percentage of annual receipts exceed 1 percent for about 32 firms with fewer than 19 employees that label multiple-use devices subject to the direct marking requirements (table 25). These firms represent less than 1 percent of all affected firms in this size category. Without direct marking, the impact on small firms does not exceed 1 percent of average annual receipts (table 24).
Summary of Benefits The public health benefits from the UDI are related to reductions in medical devicerelated patient injuries and deaths. The final rule is expected to improve medical device event reporting by providing a standardized, reliable and unique identifier with which to report a problem device. With more reliable identification of devices associated with an adverse medical event, FDA would be able to improve postmarket surveillance of medical devices and detect problem devices more rapidly. FDA expects that more accurate and prompt identification of problems would lead to a reduced incidence of adverse events. Public health safety alerts, for example, could be more accurate and timely. Similarly, FDA expects that recall actions could more effectively target a problem device. We expect that the increased accuracy of adverse medical device reporting and improved recalls would reduce the total number of adverse medical device events, although we are unable to quantify that reduction.
In addition, a standardized UDI will contribute to future potential public health benefits
these benefits, however, require complementary developments and innovations in the private and public sectors, and investments by the healthcare industry; such benefits (and additional costs) are beyond the scope of this rule.
Secretary shall promulgate regulations establishing a unique device identification system for medical devices requiring the label of devices to bear a unique identifier, unless the Secretary requires an alternative placement or provides an exception for a particular device or type of device.
The unique identifier shall adequately identify the device through distribution and use, and may include information on the lot or serial number.” Section 614 of the Food and Drug Administration Safety and Innovation Act (FDASIA) (Public Law 112-144) amended section 519(f) so that it now reads as follows:
regulations establishing a unique device identification system for medical devices requiring the label of devices to bear a unique identifier, unless the Secretary requires an alternative placement or provides an exception for a particular device or type of device. The unique identifier shall adequately identify the device through distribution and use, and may include information on the lot or serial number. The Secretary shall finalize the proposed regulations not later than 6 months after the close of the comment period and shall implement the final regulations with respect to devices that are implantable, life-saving, and life sustaining not later than 2 years after the regulations are finalized, taking into account patient access to medical devices and therapies.
The final rule implements this provision requiring a UDI to appear on the label and on the package of affected medical devices in an easily-readable plain-text form and in a form using AIDC technology, by establishing a GUDID, and by requiring device labelers to submit
FDA has specified certain categories of devices that are excepted from some or all of the UDI requirements.