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entitled 'Medical Devices: Status of FDA's Program for Inspections by 
Accredited Organizations' which was released on January 5, 2007. 

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Report to Congressional Committees: 

United States Government Accountability Office: 

GAO: 

January 2007: 

Medical Devices: 

Status of FDA's Program for Inspections by Accredited Organizations: 

Inspections by Accredited Organizations: 

GAO-07-157: 

GAO Highlights: 

Highlights of GAO-07-157, a report to congressional committees 

Why GAO Did This Study: 

The Food and Drug Administration (FDA) inspects domestic and foreign 
establishments where U.S.-marketed medical devices are manufactured to 
assess compliance with FDA’s quality system requirements for ensuring 
good manufacturing practices and other applicable requirements. The 
Medical Device User Fee and Modernization Act of 2002 (MDUFMA) required 
FDA to accredit organizations to inspect certain establishments where 
devices that are marketed in both the United States and other countries 
are manufactured. 

This report includes information that MDUFMA requires GAO to provide on 
(1) the number of organizations that sought accreditation, the number 
that were accredited, and reasons for denial of accreditation and (2) 
the number of inspections conducted by accredited organizations. It 
also includes information about factors that could influence 
manufacturers’ interest in voluntarily requesting and paying for an 
inspection by an accredited organization. 

GAO examined FDA documents, interviewed FDA officials, and obtained 
information from FDA on the number of inspections conducted from March 
11, 2004—when FDA first cleared an accredited organization to conduct 
independent inspections—through October 31, 2006. GAO also interviewed 
affected entities, including accredited organizations and medical 
device manufacturers. 

What GAO Found: 

FDA granted accreditation to 17 of 23 organizations that applied to 
conduct inspections of establishments where medical devices are 
manufactured. FDA denied accreditation to applicants that did not meet 
minimum criteria because their applications were not correctly 
completed or did not demonstrate the applicants’ technical competence. 
During the first accreditation year, which started in April 2003, FDA 
received 23 applications. Of the 23 applications, 2 were not correctly 
completed and 2 did not demonstrate that the applicants had adequate 
technical competence. Although the remaining 19 applicants met the 
minimum criteria, MDUFMA limited the number of organizations that could 
be accredited to 15 during the first year after FDA issued criteria for 
accreditation. FDA scored the 19 applications against these criteria 
and rank-ordered them. It accredited the 15 organizations with the 
highest ranking applications, but 1 organization later withdrew. After 
the initial accreditation year, FDA received 2 more applications for 
accreditation and it accredited both organizations. These 16 
organizations remained accredited as of October 31, 2006. 

Between March 11, 2004, and October 31, 2006, two accredited 
organizations conducted independent inspections—one inspection of a 
domestic establishment and one inspection of a foreign establishment. 
During that same period, 36 inspections of domestic establishments and 
1 inspection of a foreign establishment were conducted by accredited 
organizations jointly with FDA officials as part of training that FDA 
requires of accredited organizations. As of October 31, 2006, 
individuals from 7 of the 16 accredited organizations had completed all 
training requirements and were cleared to conduct independent 
inspections. 

Several factors may influence manufacturers’ interest in voluntarily 
requesting an inspection by an accredited organization. According to 
FDA and representatives of affected entities, there are potential 
incentives and disincentives to requesting an inspection, as well as 
reasons for deferring participation in the program. Potential 
incentives include the opportunity to reduce the number of inspections 
conducted to meet FDA and other countries’ requirements and to control 
the scheduling of the inspection. Potential disincentives include 
bearing the cost for the inspection and uncertainty about the potential 
consequences of making a commitment to having an inspection to assess 
compliance with FDA requirements in the near future. Some manufacturers 
might be deferring participation. For example, manufacturers that 
already contract with a specific accredited organization to conduct 
inspections to meet the requirements of other countries might defer 
participation until FDA has cleared that organization to conduct 
independent inspections. 

The Department of Health and Human Services provided technical comments 
on a draft of this report, which GAO incorporated as appropriate. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-157]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Marcia Crosse at (202) 
512-7119 or crossem@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

FDA Accredited 17 of 23 Organizations and Denied Accreditation When 
Criteria Were Not Met or Because MDUFMA Limited the Number That Could 
Be Accredited: 

Two Inspections Independently Conducted by an Accredited Organization: 

Several Factors Could Influence Manufacturers' Interest in 
Participating in the Program: 

Agency Comments: 

Appendix I: Inspections Conducted by the Food and Drug Administration: 

Appendix II: Scope and Methodology: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Dates on Which FDA Cleared Accredited Organizations to Conduct 
Independent Inspections: 

Table 2: Affected Entities with Which We Conducted Interviews: 

Abbreviations: 

FDA: Food and Drug Administration: 
GMP: good manufacturing practices: 
MDUFMA: Medical Device User Fee and Modernization Act of 2002: 

United States Government Accountability Office: 

Washington, DC 20548: 

January 5, 2007: 

The Honorable Edward M. Kennedy: 
Chairman: 
The Honorable Michael B. Enzi: 
Ranking Minority Member: 
Committee on Health, Education, Labor and Pensions: 
United States Senate: 

The Honorable John D. Dingell: 
Chairman: 
The Honorable Joe Barton: 
Ranking Minority Member: 
Committee on Energy and Commerce: 
House of Representatives: 

The Food and Drug Administration (FDA) is responsible for regulating 
medical devices that are marketed in the United States.[Footnote 1] As 
part of its responsibilities, FDA inspects domestic and foreign 
establishments[Footnote 2] where medical devices that are marketed in 
the United States are manufactured[Footnote 3] to assess compliance 
with FDA's quality system requirements[Footnote 4] for ensuring good 
manufacturing practices (GMP) and other applicable requirements. During 
quality system inspections, FDA investigators examine manufacturing 
controls, processes, and records. These inspections are FDA's primary 
means of assuring that the safety and effectiveness of medical devices 
are not jeopardized by poor manufacturing practices. FDA is required, 
by statute, to inspect certain domestic establishments where medical 
devices are manufactured at least once every 2 years.[Footnote 5] FDA 
has not, however, been meeting this requirement. Instead, 5 or 6 years 
sometimes pass between FDA inspections at any one establishment. In 
addition to FDA inspections, many foreign countries require inspections 
of establishments where medical devices are manufactured. As a result, 
manufacturers that market their devices internationally may face 
multiple inspections of their establishments to assess conformity with 
quality system requirements of multiple regulatory authorities. Some 
foreign countries have accredited, certified, or otherwise recognized 
organizations to conduct inspections. 

In 2002, the U.S. House of Representatives Committee on Energy and 
Commerce recognized that the growth of the medical device industry, 
combined with resource constraints at FDA, had made it difficult for 
FDA to meets its obligation to inspect, every 2 years, domestic 
establishments where class II and class III medical devices are 
manufactured.[Footnote 6] It also noted that some manufacturers have 
faced an increase in the number of inspections required by foreign 
countries, and that the number of inspections could be reduced if the 
manufacturers could contract with one of these recognized organizations 
to conduct a single inspection that would satisfy the requirements of 
both the FDA and foreign countries.[Footnote 7] The Medical Device User 
Fee and Modernization Act of 2002 (MDUFMA), enacted in October 2002, 
included provisions designed to (1) increase the number of medical 
device manufacturers' establishments that are inspected for compliance 
with FDA requirements and (2) help manufacturers who market medical 
devices in both the United States and foreign countries meet multiple 
inspection requirements with fewer inspections.[Footnote 8] 

Specifically, MDUFMA, as amended by the Medical Devices Technical 
Corrections Act,[Footnote 9] required FDA to accredit persons--which 
are organizations--to conduct inspections of certain establishments. In 
response, FDA implemented an accredited persons inspection program, 
which provides an alternative to a traditional FDA-conducted postmarket 
inspection for eligible manufacturers of medical devices who apply to 
participate and are willing to pay an accredited organization to 
conduct the inspection.[Footnote 10] (FDA conducts inspections at no 
cost to the manufacturer.) Under this program, organizations accredited 
by FDA may inspect establishments and submit reports to FDA, which 
makes the final determination of compliance with applicable laws and 
regulations. MDUFMA specified eligibility criteria for manufacturers to 
participate in the program, including that the manufacturer markets, or 
intends to market, a medical device in a foreign country, and that the 
establishment did not receive warnings for significant deviations from 
compliance requirements based on its last inspection.[Footnote 11] 
MDUFMA also established minimum requirements for organizations to be 
accredited to conduct inspections through this program, including 
protecting against financial conflicts of interest and ensuring the 
competence of the organization to conduct inspections. MDUFMA required 
FDA to issue criteria for accreditation within 180 days of its 
enactment, and limited the number of organizations that FDA could 
accredit during the first year after issuance of criteria for 
accreditation to 15.[Footnote 12] 

MDUFMA requires us to report on several aspects of FDA's accredited 
persons inspection program.[Footnote 13] This report provides 
information on the status of the program, specifically, (1) the number 
of organizations that sought accreditation, the number that were 
accredited, and reasons for denial of accreditation and (2) the number 
of inspections conducted by accredited organizations. This report also 
provides information about factors that could influence manufacturers' 
interest in voluntarily participating in FDA's accredited persons 
inspection program. In addition, MDUFMA also requires us to report on 
the number of inspections conducted by FDA; this information is 
included in appendix I. MDUFMA also requires us to report on other 
aspects related to the oversight and effectiveness of the accredited 
persons inspection program, but data were too limited for us to provide 
meaningful information on these aspects of the program at this time. 

To conduct our review, we examined FDA documentation of the number of 
applications for accreditation it received and its evaluation of those 
applications, and we interviewed FDA officials. We also asked FDA to 
provide the number of inspections conducted from March 11, 2004--the 
date when FDA first cleared an accredited organization to conduct 
independent inspections--through October 31, 2006. We determined that 
the data FDA provided were sufficiently reliable for the purposes of 
this report. To gain perspective on manufacturers' interest in 
participating in the accredited persons inspection program, we 
interviewed representatives of FDA and affected entities--four 
accredited organizations, three organizations that represent 
manufacturers, and six manufacturers. The information we obtained from 
this nonscientific sample of representatives of affected entities can 
not be generalized to other accredited organizations or manufacturers. 
We conducted our work from February 2006 through November 2006 in 
accordance with generally accepted government auditing standards. See 
appendix II for a more detailed discussion of our methodology. 

Results in Brief: 

FDA granted accreditation to 17 of 23 organizations that applied to 
conduct inspections of establishments. FDA denied accreditation to 
applicants that did not meet minimum criteria because their 
applications were not correctly completed or did not demonstrate the 
applicants' technical competence. During the first accreditation year-
-which started in April 2003--FDA received 23 applications. Of the 23 
applications, 2 were not correctly completed and 2 did not demonstrate 
that the applicants had adequate technical competence. Although the 
remaining 19 applicants met the minimum criteria, MDUFMA limited the 
number of organizations that could be accredited to 15 during the first 
year after FDA issued criteria for accreditation. FDA scored the 19 
applications against these criteria and rank-ordered them. It 
accredited the 15 organizations with the highest ranking applications, 
but 1 organization later withdrew. After the initial accreditation 
year, FDA received 2 additional applications for accreditation and it 
accredited both organizations. These 16 organizations remained 
accredited as of October 31, 2006. 

Between March 11, 2004, and October 31, 2006, two accredited 
organizations conducted independent inspections--one inspection of a 
domestic establishment and one inspection of a foreign establishment. 
During this same time period, 36 inspections of domestic establishments 
and 1 inspection of a foreign establishment were conducted by 
accredited organizations jointly with FDA officials as part of the 
training FDA requires of accredited organizations. As of October 31, 
2006, individuals from 7 of the 16 accredited organizations had 
completed all training requirements and were cleared to conduct 
independent inspections. The remaining 9 accredited organizations had 
not completed all training requirements by that date. 

Several factors may influence manufacturers' interest in voluntarily 
participating in the accredited persons inspection program, either by 
requesting an inspection or by hosting a training inspection. According 
to FDA and representatives of affected entities, factors that might 
influence manufacturers' decisions to request an inspection by an 
accredited organization include (a) potential incentives, (b) potential 
disincentives, and (c) reasons for deferring participation in the 
inspection program. Potential incentives include the opportunity to 
reduce the number of inspections conducted to meet FDA and other 
countries' requirements and to control the scheduling of the inspection 
by an accredited organization. For example, the one inspection of a 
domestic establishment that an accredited organization completed 
independently before October 31, 2006, was a single inspection designed 
to meet the requirements of FDA, the European Union, and Canada. 
Potential disincentives to participation include bearing the cost for 
the inspection and uncertainty about the potential consequences of 
making a commitment to having an inspection to assess compliance with 
FDA requirements in the near future. Some manufacturers might be 
deferring participation in the program. For example, manufacturers that 
already contract with a specific accredited organization to conduct 
inspections to meet the requirements of other countries might defer 
participation until FDA has cleared that organization to conduct 
independent inspections. Manufacturers may also participate in the 
accredited persons inspection program by hosting training inspections, 
and their interest in doing so might be influenced by other factors. 
For example, some representatives of affected entities speculated that 
some manufacturers may choose not to host training inspections because 
of a concern that they might require more time and effort for 
manufacturers' staff (and thus be more disruptive) than inspections 
conducted by fully trained personnel. 

The Department of Health and Human Services provided technical comments 
on a draft of this report, which we incorporated as appropriate. 

Background: 

FDA conducts quality system inspections of medical device 
manufacturers' establishments to assess compliance with applicable FDA 
regulations, including the quality system regulation to ensure good 
manufacturing practices[Footnote 14] and the regulation requiring 
reporting of adverse events. FDA's routine postmarket quality system 
inspections include both comprehensive and abbreviated inspections, 
which differ in the scope of inspectional activity. A comprehensive 
postmarket inspection of an establishment assesses multiple aspects of 
the manufacturer's quality system, including management activities to 
establish, implement, and review the quality system; procedures to 
control the design and the production or processing of the device to 
ensure that it conforms to specifications and user requirements; and 
procedures for preventing, identifying, and correcting quality 
problems. Based upon its findings during inspection, FDA classifies 
completed inspections into one of three categories based on the extent 
to which the establishment deviates from applicable requirements of the 
quality system regulation: No action indicated (which indicates no 
deviations or only minor deviations), voluntary action indicated (which 
indicates minor to significant deviations), or official action 
indicated (which indicates significant deviations and warnings). 

MDUFMA required FDA to accredit third persons--which are organizations-
-to conduct inspections of certain establishments. Manufacturers that 
meet eligibility requirements may request a postmarket inspection by an 
FDA-accredited organization.[Footnote 15] 

To be eligible to request an inspection of an establishment by an 
accredited organization, a manufacturer must: 

* manufacture a class II or class III medical device; 

* market at least one of those devices in the United States; 

* market or intend to market at least one of those devices in a foreign 
country and either (a) one of those countries certifies, accredits, or 
otherwise recognizes the FDA-accredited organization as authorized to 
conduct inspections of establishments or (b) the manufacturer submits a 
statement to FDA that the law of one of the countries recognizes an 
inspection by FDA or the FDA-accredited organization;[Footnote 16] 

* have received, after its most recent inspection, a classification by 
FDA as "no action indicated" or "voluntary action indicated" for the 
establishment that it seeks to have inspected by an accredited 
organization;[Footnote 17] and: 

* request and receive FDA's approval to use a specific accredited 
organization. 

In addition, to be eligible to request an inspection by an accredited 
organization, domestic establishments may not have been inspected by 
the accredited organization during the previous four years, unless the 
manufacturer requests and receives a waiver from FDA, and foreign 
establishments must be periodically inspected by FDA.[Footnote 18] 

Organizations seeking accreditation to conduct inspections through the 
accredited persons inspection program submit applications to FDA for 
review. FDA established criteria for accreditation that incorporate the 
minimum requirements set out in MDUFMA, including the independence and 
competence of the accredited organizations. For example, to ensure the 
independence of organizations accredited to conduct inspections of 
medical device establishments, MDUFMA prohibits accredited 
organizations from engaging in the design, manufacture, promotion, or 
sale of articles regulated by FDA, and FDA's criteria include whether 
the organization has procedures in place to prevent conflicts of 
interest. To ensure that accredited organizations are competent to 
conduct inspections, MDUFMA requires that accredited organizations 
agree to limit their work to that for which they have sufficient 
competence and capacity, and FDA's criteria include whether the 
organizations' personnel have knowledge of pertinent FDA laws, 
regulations, and inspection procedures. FDA developed a scoring 
procedure to evaluate applications from organizations in light of these 
and other criteria. 

FDA also developed a training program for inspectors from accredited 
organizations that involves both formal classroom training and training 
inspections of establishments. The formal classroom training includes 
instruction on FDA's regulations pertaining to medical devices and 
FDA's techniques for conducting quality system inspections. FDA also 
requires inspectors to successfully complete three joint inspections 
with FDA before being cleared to conduct independent inspections. FDA 
relies on manufacturers to volunteer to host these joint inspections. 
During the first training inspection, an FDA inspector leads the 
inspection and the accredited organization's inspector acts primarily 
as an observer. During the second training inspection, the accredited 
organization's inspector conducts an inspection while being observed 
and evaluated by an FDA inspector who may provide assistance to the 
trainee. During the third training inspection, the accredited 
organization's inspector conducts an inspection while being observed 
and evaluated by an FDA inspector who may not provide assistance to the 
trainee. Each individual inspector from an accredited organization must 
complete all training requirements successfully before being cleared to 
conduct independent inspections. 

Manufacturers that want to have an inspection through the accredited 
persons inspection program submit a request to FDA that identifies the 
accredited organization they intend to use and asks for FDA's approval. 
Manufacturers include with that request documentation showing that they 
meet the eligibility criteria. FDA can then provide clearance and 
approve the request, ask for additional information, or deny the 
request. If the request is approved, the manufacturer enters an 
agreement with the approved accredited organization and schedules an 
inspection. Once the accredited organization completes its inspection, 
it prepares a report and submits it to FDA. FDA makes the final 
assessment of compliance with applicable requirements. 

FDA Accredited 17 of 23 Organizations and Denied Accreditation When 
Criteria Were Not Met or Because MDUFMA Limited the Number That Could 
Be Accredited: 

FDA granted accreditation to 17 of 23 organizations. FDA denied 
accreditation to applicants that did not meet minimum criteria because 
their applications were not correctly completed or did not demonstrate 
technical competence. In addition, some applicants were denied 
accreditation because MDUFMA limited the number of organizations that 
could be accredited to 15 during the first year after FDA issued 
criteria for accreditation. 

FDA granted accreditation to 17 of 23 organizations that applied to 
conduct inspections of establishments through the accredited persons 
inspection program. One or more foreign governments had already 
authorized each of these accredited organizations to conduct 
inspections to assess compliance with quality system requirements. FDA 
announced accreditation of 15 of 22 applicant organizations on November 
6, 2003. One of these accredited organizations withdrew from the 
program in December 2003, leaving 14 accredited organizations. After 
the initial accreditation year, FDA received two additional 
applications for accreditation, including one from an organization that 
had been denied accreditation during the first year; FDA accredited 
both of these organizations. The total number of accredited 
organizations as of October 31, 2006, was thus 16. 

FDA denied accreditation to applicants that did not meet minimum 
criteria because their applications were not correctly completed or did 
not demonstrate the applicants' technical competence and because more 
organizations met the minimum criteria for accreditation than FDA could 
legally accredit. During the first accreditation year, FDA received a 
total of 23 applications from 22 organizations. Of these 23 
applications, 2 were not correctly completed and the applicants were 
denied accreditation. For example, these applications did not include 
required documentation showing the authority, responsibility, and 
reporting structure of the individuals who would perform work through 
the accredited persons inspection program. One of the organizations 
that had initially submitted an application that was not correctly 
completed submitted a second, correctly completed application within 
the first accreditation year. (This second application is included 
among the total of 23 applications FDA received during the first 
accreditation year.) Thus, FDA received 21 correctly completed 
applications from 21 organizations during the first accreditation year. 

FDA also denied accreditation to applicants that did not meet minimum 
criteria because their applications did not demonstrate that the 
applicants had adequate technical competence. To evaluate 
organizations' qualifications, FDA developed a checklist for scoring 
applications against the criteria for accreditation. A group of FDA 
staff assessed the applications and assigned scores to specific 
elements, such as technical competence and prevention of conflict of 
interest. FDA determined that 2 of the 21 correctly completed 
applications did not demonstrate that the organization had adequate 
technical competence, and it denied accreditation to these 2 
organizations. 

FDA found that the remaining 19 organizations that applied for 
accreditation during the first accreditation year met the minimum 
criteria for accreditation, but it was limited to accrediting 15 
organizations during that year. FDA rank-ordered the applications by 
the total score it assigned through use of the checklist. FDA granted 
accreditation to the 15 organizations with the highest ranking 
applications, and denied accreditation to the remaining 4 organizations 
with lower-ranking applications. 

Two Inspections Independently Conducted by an Accredited Organization: 

Between March 11, 2004--the date when FDA first cleared an accredited 
organization to conduct independent inspections of establishments--and 
October 31, 2006, two accredited organizations conducted independent 
inspections--one inspection of a domestic establishment and one 
inspection of a foreign establishment. During the same time period, 36 
inspections of domestic establishments and 1 inspection of a foreign 
establishment were conducted by accredited organizations jointly with 
FDA officials as part of the training FDA required of accredited 
organizations. As shown in table 1, individuals from 7 of 16 accredited 
organizations completed all training requirements and were cleared to 
conduct independent inspections by October 17, 2006. The remaining 9 
accredited organizations had not completed all training requirements as 
of October 31, 2006. 

Table 1: Dates on Which FDA Cleared Accredited Organizations to Conduct 
Independent Inspections: 

Accredited organization: # 1; 
Date: March 11, 2004. 

Accredited organization: # 2; 
Date: May 17, 2004. 

Accredited organization: # 3; 
Date: June 1, 2004. 

Accredited organization: # 4; 
Date: July 28, 2004. 

Accredited organization: # 5; 
Date: April 27, 2005. 

Accredited organization: # 6; 
Date: September 26, 2006. 

Accredited organization: # 7; 
Date: October 17, 2006. 

Accredited organization: # 8 through # 16; 
Date: Pending completion of training requirements as of October 31, 
2006. 

Source: FDA. 

[End of table] 

To gain perspective on the number of inspections conducted by 
accredited organizations, we asked FDA how many inspections it had 
conducted from March 11, 2004, through October 31, 2006, that could 
potentially have been conducted by accredited organizations. FDA could 
not provide exact counts of these inspections for two reasons. First, 
only those manufacturers that market, or intend to market, a device in 
a foreign country are eligible to be inspected by an accredited 
organization, but FDA does not routinely obtain information about 
foreign marketing activities or plans. Second, eligibility for an 
inspection by an accredited organization is limited to manufacturers of 
class II or III medical devices, but FDA does not have readily 
available information about the classification of devices that were 
manufactured at establishments at the time of inspection.[Footnote 19] 
Instead of providing exact counts of the number of inspections FDA had 
conducted that could potentially have been conducted by accredited 
organizations, FDA told us how many comprehensive postmarket quality 
system inspections it had conducted of establishments where class II or 
III medical devices were manufactured as of October 31, 2006, and that 
met the criteria for an inspection by an accredited organization other 
than the criterion that the manufacturer markets, or intends to market, 
a medical device in a foreign country. These counts provide an upper 
bound estimate of the number of inspections FDA had conducted that 
could potentially have been conducted by accredited organizations. From 
March 11, 2004, through October 31, 2006, FDA conducted 229 inspections 
of domestic establishments and 48 inspections of foreign 
establishments.[Footnote 20] 

Several Factors Could Influence Manufacturers' Interest in 
Participating in the Program: 

According to FDA and representatives of affected entities, several 
factors could influence manufacturers' interest in voluntarily 
participating in the accredited persons inspection program, whether by 
requesting an inspection or by hosting a training inspection. FDA and 
representatives of affected entities described factors that could serve 
as potential incentives, disincentives, or reasons to defer making a 
request for an inspection by an accredited organization. Additional 
factors may influence manufacturers' interest in participating in the 
program by hosting required training inspections. 

Potential incentives to having an inspection by an accredited 
organization include the opportunity to reduce the number of 
inspections conducted to meet FDA and other countries' requirements and 
to control the scheduling of the inspection by an accredited 
organization. 

* FDA and representatives of affected entities told us that 
manufacturers would prefer to reduce the number of inspections they 
need to undergo by having a single inspection cover requirements of FDA 
and other governments, rather than having separate 
inspections.[Footnote 21] One reason for this preference is that 
inspections are disruptive to manufacturers. FDA and representatives of 
affected entities told us that FDA's requirements are similar, but not 
identical, to the requirements of other countries.[Footnote 22] As a 
result, a single inspection designed to cover multiple requirements 
would likely take more time than a single inspection designed to meet 
any one set of requirements, but less time than separate inspections. 
Representatives of the accredited organizations with whom we spoke 
stated that they expect to be able to address multiple inspection 
requirements in a single inspection, and the one inspection of a 
domestic establishment that an accredited organization completed 
independently before October 31, 2006, was a single inspection designed 
to meet the requirements of FDA, the European Union, and Canada. 

* According to FDA and many representatives of affected entities, 
another potential incentive to requesting an inspection by an 
accredited organization is that manufacturers can work with accredited 
organizations to schedule inspections and can schedule them months in 
advance. In contrast, FDA generally notifies manufacturers of 
inspections about a week in advance. The reasons representatives of 
affected entities gave for the preference for scheduling inspections 
well in advance include that it enables them to ensure the availability 
of their quality managers and minimize disruption to their normal work 
activities. 

FDA and representatives of affected entities told us that the potential 
disincentives to having an inspection by an accredited organization 
include bearing the cost for the inspection, doubts about whether 
accredited organizations can cover multiple requirements in a single 
inspection, and uncertainty about the potential consequences of making 
a commitment to having an inspection to assess compliance with FDA 
requirements in the near future. 

* Manufacturers pay for inspections that are conducted by accredited 
organizations; in contrast, manufacturers are not charged for 
inspections conducted by FDA.[Footnote 23] Manufacturers that already 
pay for inspections to meet requirements of foreign countries will 
likely face a higher cost for an inspection that also covers FDA 
requirements because the requirements are not identical and the 
inspection will therefore likely take longer. FDA and representatives 
of affected entities stated that bearing the cost for the inspection 
might be a disincentive to participation in the program, and some of 
these representatives suggested that cost could be particularly 
important to small manufacturers. 

* Although a goal of the accredited persons inspection program is to 
reduce the total number of inspections for manufacturers that market 
devices in the United States and other countries, some representatives 
of FDA and manufacturers raised doubts about whether the accredited 
organizations could cover multiple requirements in a single inspection. 
One of them told us that the accredited organization that inspects its 
establishments stated that it would not combine the inspection to 
assess compliance with FDA requirements with an inspection to address 
other requirements, and would instead conduct two separate inspections. 
Similarly, some FDA officials expressed uncertainty about whether all 
of the accredited organizations would develop inspection strategies 
that effectively address multiple requirements. FDA and Canada are in 
the process of establishing a pilot program to assess whether 
accredited organizations can meet the requirements of both countries in 
a single inspection. 

* In addition, uncertainty about the potential consequences of making a 
commitment to having an inspection to assess compliance with FDA 
requirements in the near future is a potential disincentive. 
Manufacturers who request an inspection by an accredited organization 
are committing to an inspection to assess compliance with FDA 
requirements in the near future, even though it is possible that FDA 
would not inspect them in the next 5 or 6 years--and inspections carry 
the risk of regulatory action. FDA and most of the representatives of 
affected entities with whom we spoke told us that this commitment to an 
inspection is a potential disincentive to participation in the program. 
For example, one industry representative questioned why manufacturers 
would ask for--and pay for--inspections when the result could be that 
FDA closes them down. In addition, because FDA will make the final 
determination of compliance with its requirements, some representatives 
of affected entities suggested that manufacturers might be uncertain 
about whether the accredited organization's inspection will satisfy 
FDA, or whether FDA will conduct an additional inspection after reading 
the report prepared by the accredited organization. 

Some representatives of affected entities suggested that manufacturers 
might defer a decision about whether to request an inspection by an 
accredited organization until uncertainties about the potential 
incentives and disincentives have been reduced. For example, 
manufacturers might defer a decision until there is greater certainty 
about whether accredited organizations are able to conduct single 
inspections to cover multiple sets of requirements and about how FDA 
will respond to the inspection reports prepared by accredited 
organizations. 

According to representatives of affected entities, some manufacturers-
-those that are already paying to have routine quality system 
inspections of their establishments to meet the requirements of other 
countries--might have other reasons for deferring a request for an 
inspection by an accredited organization. Manufacturers that already 
contract with a specific accredited organization to conduct inspections 
to meet the requirements of other countries might defer participation 
until that organization has completed all required training and been 
cleared by FDA to conduct independent inspections. In addition, because 
manufacturers want to minimize the disruptiveness of inspections, they 
might defer requesting an inspection through FDA's accredited persons 
inspection program until accredited organizations have honed their 
procedures for conducting inspections to cover FDA's requirements. 

Manufacturers' participation in the accredited persons inspection 
program also includes their willingness to host training inspections. 
In addition to some of the potential incentives and disincentives to 
requesting an inspection by an accredited organization, other factors 
may have influenced manufacturers' interest in hosting required 
training inspections. Fewer manufacturers have volunteered to host 
training inspections than needed for all of the accredited 
organizations to complete their training. Some representatives of 
affected entities speculated that manufacturers might have believed 
that training inspections would require more time and effort for their 
staff (and would thus be more disruptive) than inspections conducted by 
fully trained personnel, or that manufacturers might have believed that 
training inspections would be more rigorous than nontraining 
inspections if the trainees and FDA personnel were to take particular 
care to demonstrate their thoroughness to each other. Moreover, FDA and 
representatives of affected entities indicated that scheduling training 
inspections was difficult. For example, FDA schedules inspections a 
relatively short period of time prior to the actual inspection, and 
some accredited organizations were not available to participate because 
they had already made prior commitments. 

Agency Comments: 

We provided a draft of this report to the Department of Health and 
Human Services for comment. The department stated that our report 
provides an accurate and balanced explanation of the accredited persons 
inspection program and provided technical comments, which we 
incorporated as appropriate. 

We are sending copies of this report to the Secretary of Health and 
Human Services 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 [Hyperlink, http://www.gao.gov]. If 
you or your staffs have questions about this report, please contact me 
at (202) 512-7119 or crossem@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made major contributions to this 
report are listed in appendix III. 

Signed by: 

Marcia Crosse: 
Director, Health Care: 

[End of section] 

Appendix I: Inspections Conducted by the Food and Drug Administration: 

The Medical Device User Fee and Modernization Act of 2002 (MDUFMA) 
requires us to report on the number of inspections of medical device 
establishments conducted by the Food and Drug Administration 
(FDA).[Footnote 24] We are reporting the number of postmarket quality 
system inspections of domestic establishments where medium or high risk 
medical devices (referred to as class II or class III medical devices) 
are manufactured[Footnote 25] and the number of inspections of foreign 
medical device establishments conducted by FDA. 

To provide this information, we asked FDA how many inspections it 
conducted from March 11, 2004--the date when FDA first cleared an 
accredited organization to conduct independent inspections--through 
October 31, 2006. With regard to domestic establishments, we asked for 
the number of quality system inspections of establishments where class 
II or class III medical devices are manufactured. FDA provided us with 
the number of such inspections based on the classification of medical 
devices as of October 31, 2006, because FDA does not have readily 
available information about the classification of devices manufactured 
at the establishments at the time of inspection. FDA updates the 
information about device classification in its inspection database when 
the types of medical devices an establishment handles changes, for 
example, when a manufacturer changes its device inventory or when FDA 
reclassifies a device.[Footnote 26] Based on our review of FDA 
documents and discussions with FDA officials, we determined that the 
data FDA provided were sufficiently reliable for the purposes of this 
report. 

FDA reported that from March 11, 2004, through October 31, 2006, it 
conducted 2,814 postmarket quality system inspections of domestic 
establishments where a class II or III medical device was manufactured 
as of October 31, 2006. These establishments included medical device 
manufacturers and remanufacturers, packers and repackers, labelers and 
relabelers, contract sterilizers, software manufacturers, and 
reprocessors. During this time period, another 86 domestic inspections 
were conducted by state investigators under contract to FDA. FDA also 
reported that it conducted 656 inspections of foreign medical device 
establishments from March 11, 2004, through October 31, 2006.[Footnote 
27] 

[End of section] 

Appendix II: Scope and Methodology: 

To determine the number of organizations that sought accreditation, the 
number that were accredited, and reasons for denial of accreditation, 
we reviewed FDA documentation of the number of applications for 
accreditation it received and its evaluation of those applications, and 
we interviewed FDA officials. 

To determine the number of inspections of foreign and domestic 
establishments conducted by accredited persons, we asked FDA to provide 
counts of the number of inspections conducted from March 11, 2004--the 
date when FDA first cleared an accredited organization to conduct 
independent inspections--through October 31, 2006. Based on our review 
of FDA documents and discussions with FDA officials, we determined that 
the data were sufficiently reliable for our purposes. 

To determine whether there are factors that could influence 
manufacturers' interest in voluntarily participating in FDA's 
accredited persons inspection program, we interviewed FDA officials and 
representatives of affected entities. As indicated in table 2, the 
affected entities with which we conducted interviews were four 
accredited organizations, three organizations that represent medical 
device manufacturers, and six global medical device manufacturers. For 
our sample of accredited organizations, we selected two that had been 
cleared by FDA to conduct independent inspections as of April 2006 and 
two that had not. To select our sample of manufacturers, we asked the 
representatives of each of the three organizations that represent 
manufacturers to provide us with a list of five manufacturers. Two of 
the organizations provided lists of five manufactures and one 
organization provided a list of four manufacturers. We randomly 
selected two global manufacturers from each list. The information we 
obtained from these representatives of affected entities can not be 
generalized to other manufacturers or accredited organizations. 

Table 2: Affected Entities with Which We Conducted Interviews: 

Type of affected entity: Organizations that FDA accredited to conduct 
inspections; 
Specific entity: 
* Danish Standards; 
* KEMA Quality B.V; 
* TUV Rheinland of North America, Inc; 
* Underwriters Laboratories, Inc.. 

Type of affected entity: Organizations that represent medical device 
manufacturers; 
Specific entity: 
* Advanced Medical Technology Association (AdvaMed); 
* Medical Device Manufacturers Association (MDMA); 
* National Electrical Manufacturers Association (NEMA). 

Type of affected entity: Global manufacturers of medical devices; 
Specific entity: 
* Abbott Laboratories; 
* Acorn Cardiovascular, Inc; 
* Gen-Probe, Inc; 
* Philips Medical Systems; 
* Siemens Medical Solutions; 
* Wescor, Inc.. 

Source: GAO. 

[End of table] 

We also reviewed applicable law, regulations, legislative history, FDA 
guidance, and other relevant documents. We conducted our work from 
February 2006 through November 2006 in accordance with generally 
accepted government auditing standards. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Marcia Crosse, (202) 512-7119 or crossem@gao.gov: 

Acknowledgments: 

In addition to the contact named above, James McClyde, Assistant 
Director; Kristen Joan Anderson; Cathleen J. Hamann; and Julian Klazkin 
made key contributions to this report. 

FOOTNOTES 

[1] Medical devices include instruments, apparatuses, machines, and 
implants that are intended for use to diagnose, cure, treat, or prevent 
disease, or to affect the structure or any function of the body. 21 
U.S.C. § 321(h). 

[2] FDA regulations define an establishment as a place of business 
under one management at one general physical location at which a device 
is manufactured, assembled, or otherwise processed. 21 C.F.R. § 
807.3(c) (2006). Medical device manufacturers may have more than one 
establishment. 

[3] We use the term "manufacture" to refer to activities including 
manufacturing, preparing, and processing devices. 

[4] The quality system regulation requires, among other things, that 
domestic or foreign manufacturers have a quality system in place to 
implement current good manufacturing practices in the design, 
manufacture, packaging, labeling, storage, installation, and servicing 
of finished medical devices intended for human use in the United 
States. A quality system includes the organizational structure, 
responsibilities, procedures, processes, and resources for implementing 
quality management. 21 C.F.R. §§ 820.1, 820.3(v), 820.20. 

[5] 21 U.S.C. § 360(h). Although there is no similar requirement for 
FDA's inspections of foreign medical device establishments, the 
products manufactured at such establishments may be prohibited from 
importation into the United States if an FDA request to inspect is 
denied. 21 U.S.C. § 381(a), 21 C.F.R. § 820.1(d) (2006). 

[6] Medical devices are classified into one of three classes. Class I 
includes "low risk" devices, such as tongue depressors, elastic 
bandages, and bedpans. Class II includes "medium risk" devices, such as 
syringes, hearing aids, and electrocardiograph machines. Class III 
includes "high risk" devices, such as heart valves, pacemakers, and 
defibrillators. 

[7] H.R. Rep. No. 107-728, at 32-36 (2002). 

[8] See Pub. L. No. 107-250, § 201, 116 Stat. 1588, 1602-1609 
(codified, as amended, at 21 U.S.C. § 374(g)). 

[9] Pub. L. No. 108-214, § 2(b)(1), 118 Stat. 572-575. 

[10] FDA conducts both premarket and postmarket inspections of 
establishments. Premarket inspections are conducted prior to the 
initial introduction of devices into the U.S. market. Postmarket 
inspections occur after a device has already been marketed. 

[11] FDA officials told us that they can not tell how many 
manufacturers meet the criteria for participation in the accredited 
persons inspection program because it does not routinely collect 
information about whether manufacturers market, or intend to market, 
medical devices in foreign countries. 

[12] FDA issued criteria for accreditation on April 28, 2003. 68 Fed. 
Reg. 22400. MDUFMA did not limit the number of organizations that FDA 
could accredit after the 1st accreditation year. 

[13] 21 U.S.C. § 374(g)(12). 

[14] See 21 C.F.R. pt. 820 (2006). 

[15] Accredited organizations may conduct comprehensive postmarket 
quality system inspections, but not other types of inspections of 
establishments that FDA has the authority to conduct, such as premarket 
or for-cause inspections (that is, inspections conducted in response to 
specific information that raised questions, concerns, or problems such 
as a potential serious health risk). FDA may conduct its own 
inspections of establishments even after inspection by an accredited 
organization. 

[16] FDA officials told us that they are not aware of any country where 
the law recognizes an inspection by FDA, and that only organizations 
that are certified, accredited, or otherwise recognized by one or more 
foreign countries to conduct inspections of establishments can conduct 
inspections through FDA's accredited persons inspection program. 

[17] If a manufacturer's most recent inspection was conducted by an 
accredited organization and FDA classified it as official action 
indicated, but the manufacturer meets all other eligibility criteria 
for the accredited persons inspection program, the manufacturer may 
petition FDA for an exception. The petition should explain how the 
manufacturer corrected the identified problems. 

[18] As enacted, MDUFMA prohibited an inspection of an establishment by 
an accredited organization if its two immediately preceding inspections 
had been conducted by an accredited organization, unless the 
manufacturer requested and received approval from FDA. Because 
accredited organizations often completed inspections in two or more 
visits, this provision, in effect, limited manufacturers to no more 
than one completed inspection of an establishment by an accredited 
organization. In part, in an attempt to correct this limitation, 
Congress passed the Medical Devices Technical Corrections Act, Pub. L. 
No. 108-214, § 2(b)(1), 118 Stat. 572, 573-574, which included a 
provision excluding establishments inspected by accredited 
organizations during the previous four years. According to a report of 
the U.S. House Committee on Energy and Commerce accompanying the act, 
this provision was intended to ensure "that [establishments] can work 
with [accredited organizations] to allow them to complete a full 
[quality system] inspection over the course of a two year period . . . 
[and] can use [accredited organizations] for two consecutive [quality 
system] inspections before requesting special permission from [FDA] for 
the third such inspection." H.R. Rep. No 108-433, at 8 (2004). FDA 
guidance, which reflects the objectives stated in the committee report, 
states: "The change limits the use of [inspections by accredited 
organizations] to a four-year period rather than a limit of two 
consecutive inspections. This reflects [the Medical Devices Technical 
Corrections Act's] shift to permit an inspection by an accredited 
[organization] to be completed in stages during a two-year period. 
Because a complete [inspection by an accredited organization] must be 
completed within two years, FDA expects two complete [inspections by 
accredited organizations] during the four-year period provided by this 
section." However, instead of expanding the use of accredited 
organizations, this provision would appear to disqualify a manufacturer 
for four years after any one inspection by an accredited organization, 
contrary to the committee report and FDA guidance. An FDA official 
acknowledged the problem and stated that it is considering a proposal 
for an additional technical correction to address it. No establishment 
has been found ineligible for an inspection by an accredited 
organization on the basis of this criterion. 

[19] When a manufacturer changes its device inventory or when FDA 
reclassifies a device, FDA replaces the existing information about 
device classification in its inspection database with the new 
information. For example, if a class II medical device was manufactured 
at an establishment at the time when it was inspected, and the 
manufacturer subsequently stopped manufacturing that device and now 
manufactures only class I medical devices, then FDA's database would 
not indicate that class II devices had been manufactured at the 
establishment at the time of inspection. An FDA official told us that 
the classification of medical devices handled by specific 
establishments is generally relatively stable over time periods of 
approximately 2 years. 

[20] See app. I for information on the number of postmarket quality 
system inspections of domestic establishments where class II or class 
III medical devices are manufactured and the number of inspections of 
foreign establishments where medical devices are manufactured that FDA 
conducted. 

[21] We use the term "single inspection" to mean a complete inspection 
that covers all requirements of two or more countries, without 
repeating those activities covered under more than one set of 
requirements. A complete inspection can be conducted during a single 
block of time or in multiple phases. Two or more separate inspection 
reports could be generated on the basis of that single inspection. 

[22] The United States and other countries are working to bring their 
requirements for inspections of medical device establishments into line 
with one another, that is, to harmonize their requirements. The 
majority of representatives of affected entities with whom we spoke 
supported harmonization. 

[23] Representatives of the accredited organizations with whom we spoke 
indicated that the cost to manufacturers would vary depending on such 
factors as the size of the manufacturer and how much extra time would 
be required to assess compliance with FDA requirements. Representatives 
suggested that covering FDA's requirements could take 2 or more days in 
addition to the time spent assessing other countries' requirements, 
plus time for advance preparation and writing the inspection report. 
They speculated that they would probably charge manufacturers from 
$1,700 to $2,500 per day, plus the cost of travel and living expenses. 

[24] 21 U.S.C. § 374(g)(12)(A). 

[25] We use the term "manufacture" to refer to activities including 
manufacturing, preparing, and processing devices. 

[26] An FDA official told us that the classification of medical devices 
handled by specific establishments is generally relatively stable over 
time periods of approximately 2 years. 

[27] During this time period, FDA also conducted 36 inspections of 
domestic establishments and 1 inspection of a foreign establishment 
jointly with accredited organizations as part of the training FDA 
required of these organizations. 

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