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President Bill Clinton
Vice President Al Gore

National Performance Review
April 1995


"Today, Americans don't have to worry about safety or 

effectiveness when they buy [drugs and medical devices]--

from cough syrups to the latest antibiotics or pacemakers. 

The Food and Drug Administration has made American 

drugs and medical devices the envy of the world and in 

demand all over the world. And we are going to stick with 

the standards we have--the highest in the world. But strong 

standards need not mean business as usual in every area."

       President Clinton -- March 16, 1995


Reforming the Federal government's regulatory processes, while 

maintaining critical public health and safety standards, has been and 

will continue to be a top priority for the Clinton Administration. 

Consistent with this commitment, President Clinton and Vice 

President Gore asked Health and Human Services Secretary Donna 

Shalala to help them carefully examine the regulatory requirements 

of the Food and Drug Administration (FDA).

As part of the Vice President's reinventing government initiative, 

FDA has been reviewing its regulatory processes to determine which 

requirements could be reduced or eliminated without lowering 

health and safety standards. This report contains recommendations 

resulting from the initial phase of the review of drug and medical 

device regulation.



FDA is the Agency within the Department of Health and Human 

Services charged with ensuring that drugs, vaccines, and medical 

devices are safe and effective and that foods meet basic safety 

standards. In carrying out these and other responsibilities, FDA 

annually oversees more than $1 trillion worth of products, which 

account for 25 cents of every dollar spent by American consumers.

FDA was created in 1906 to protect Americans from unsafe foods and 

drugs. In 1976, FDA's responsibilities were expanded to include 

additional authority over medical devices. During this 

Administration, FDA has taken significant initial steps to streamline 

the regulatory process. These recent initiatives, building on earlier 

reforms to ensure access for patients to new drugs and to accelerate 

approval of treatments for life-threatening illnesses, have resulted in 

new products being brought to market sooner; but more can be done.

A Record of Accomplishment

FDA's recent regulatory improvements include:

Shortening Review Times for New Drugs and Devices

1)	FDA now uses expert review panels to expedite the review of 

certain biotechnology products. (For example, a joint committee of 

FDA experts oversaw the licensing in record time of the drug 

interferon beta 1b to treat certain patients with multiple sclerosis.)

2)	Under the Prescription Drug User Fee Act of 1992, drugs are 

now reviewed more quickly. This law authorizes FDA to charge user 

fees for drug applications, and to use these additional resources for 

the reviews of new drugs, vaccines, and biotechnology products.

Already, review times for new chemical drugs have dropped from an 

average of 30 months in 1992 to 20 months in 1994.(1) By 1997, FDA 

will be getting these products to market in a year or less, as fast as 

or faster than anywhere else in the world, with no sacrifice in review 


3)	Medical devices are benefiting from a number of new processes 

that speed up their review; for example, devices that provide 

significant medical advances are now given priority review. 

4)	Animal drugs are now reviewed in a more efficient manner, 

resulting in a record number of 38 new drugs approved in 1994.

Eliminating Unnecessary Regulatory Burdens

1)	FDA exempted 148 categories of low-risk medical devices from 

premarket review in December 1994, relieving manufacturers from 

submitting applications to the Agency and waiting for their approval.

2)	FDA has helped to assure safe and high-quality mammography 

by using existing private sector standards to certify mammography 

facilities, which are mostly small businesses. Utilizing these 

standards allowed FDA to implement the requirements of the 1992 

law quickly and with minimum burden on accredited and certified 


3)	FDA has begun a joint program with the Customs Service to 

automate the entry of imported products into the United States. The 

program allows an importer to notify FDA by computer of import 

entries and receive prompt permission for the products to enter this 


4)	FDA has issued a proposed regulation to permit regulated 

companies to use electronic records and signatures in place of paper. 

This will save industry substantial costs by simplifying record-

keeping and speeding the filing of applications and other regulatory 


As noted in the President's State of the Union address and his recent 

announcement highlighting some of the recommendations in this 

report, the Administration is committed to promoting results and not 

rules. The reforms this report advocates will reduce paperwork, 

eliminate unnecessary regulation, and thus get products to market 

more quickly. In so doing, they will strengthen the economy and 

maintain the health and safety of Americans.

Principles for Reforming FDA Regulation in Carrying out this Review

In carrying out its regulatory review, the Agency carefully 

considered the financial burdens that its requirements impose on 

industry and consumers. It looked for ways to eliminate these 

burdens so that its regulatory systems would not be a bar to bringing 

beneficial new products to market. In reforming its procedures and 

requirements, FDA followed these principles:

*	Using performance standards, rather than command 

and control regulations, whenever possible;

*	Expediting product review without sacrificing the 

health and safety of the public;

*	Eliminating unnecessary requirements that may 

have been appropriate once but are not now necessary to public 

health; and

*	Utilizing modern automated technology as a tool in 

streamlining internal Agency management and as an aid to industry 

in meeting its regulatory requirements.

Regulatory Reform Recommendations

FDA is proposing a number of reforms that reinvent how FDA 

regulates. The reforms included in this report are estimated to save 

the drug and device industries $500 million per year in unnecessary 

regulatory costs. These reforms will also let FDA better target its 

resources toward expediting market access of new products:

*	Reducing or eliminating many of the FDA 

requirements for companies to get approval for changes in their 

manufacturing facilities or processes for manufacturing drugs, 

biotechnology drugs, and other biologics;

*	Allowing manufacturers of biological drugs to get 

licenses for pilot facilities instead of making them build full-

scale plants. Manufacturers will still have to show they can meet 

safety, purity, and potency standards; 

*	Permitting greater flexibility in the appearance of 

distributors' names on biological product containers, package labels, 

and labeling;

*	Eliminating outdated requirements for insulin and 

antibiotics and allowing a private standard-setting body to establish 

testing and quality standards (thus eliminating nearly 700 pages of 

Federal regulations);

*	Excluding drug and biologic manufacturers from 

requirements for most environmental assessments, which currently 

cost tens of thousands of dollars each time a new product is 

developed yet provide no real benefit to the environment;

*	Exempting nearly 125 additional categories of low-risk 

medical devices from premarket review;

*	Eliminating the "Reference List" by clarifying that 

market clearances of devices will not be withheld unless FDA finds a 

reasonable relationship between the nature of current violations and 

the application under review;

*	Developing a pilot program for review of low-risk 

medical devices by outside review organizations to determine if such 

a system could be developed permanently;

*	Speeding the marketing of medical devices by seeking 

authority to charge industry user fees for device reviews, and 

committing FDA to meet certain strict performance goals;

*	Expanding opportunities to export drugs and 

medical devices to industrialized countries;

*	Issuing a public statement clarifying how FDA 

determines the effectiveness of new drugs and devices and that 

a single, multi-center study may support approval of a drug;

*	Harmonizing FDA's drug and device testing 

requirements with those of other countries, thus expediting 

worldwide marketing of new products by reducing duplicative 


*	Expanding and standardizing the use of new 

information technologies for reviewing new products and speeding 

up import entries.

Additional proposals for reforming the regulation of drugs and 

medical devices are being developed and will be announced later. 

They will accompany recommendations related to the regulation of 

foods and veterinary products.



New drugs must be approved by FDA prior to marketing. Under the 

provisions of the Federal Food, Drug, and Cosmetic Act, they are 

tested first in animals, then in humans, and the data are submitted to 

FDA scientists for review via a New Drug Application. Biologics 

include vaccines and blood products, and drugs made using 

biotechnology. They are licensed under a different legal authority 

from drugs, and are therefore subject to somewhat different 

requirements. Before marketing a new biological product, the 

sponsor must submit for FDA's approval a Product License 

Application, which presents safety and efficacy data. The facility 

making the product must submit an Establishment License 

Application demonstrating that the product can be accurately and 

safely manufactured. 

Although full marketing of drugs must await FDA review and 

approval, in recent years the Agency has established ways for 

patients to gain early access to treatments for life-threatening 


FDA also approves such changes as substituting different ingredients 

by reviewing a "supplement" to the original application for approval.

This section of the report describes reforms in the regulation of 

biologics and drugs. The reforms include: permitting biologics 

manufacturers to demonstrate their capability to make the product 

without first building a full-scale production plant; changing biologics 

labeling requirements to remove an impediment to flexible 

manufacturing, packaging, and distribution arrangements; allowing 

manufacturing changes for both drugs and biologics to be made with 

less FDA prior approval; eliminating certain manufacturing 

requirements concerning antibiotics and insulin; and eliminating 

most environmental impact assessments for both biologics and drugs.


Drugs and Biologics: Eliminating Many Requirements

For FDA Approval of Manufacturing Changes

Background: FDA regulations governing drugs and biologics require 

applicants to obtain FDA approval before implementing many 

manufacturing changes for those products. To obtain approval, 

manufacturers submit "supplemental" applications to FDA, of which 

the Agency receives several thousand each year. These changes 

range from the addition or subtraction of an ingredient, to the use of 

a different production facility or different equipment within the 

same facility, to changes in packaging. Manufacturers must often 

wait six to twelve months to receive FDA approval, during which 

time the manufacturers are prevented from making changes to the 

product or production facility that they believe are more efficient or 

otherwise necessary.

Proposal and Justification: FDA will reduce the number of 

changes that require pre-approval. Described below are the 

procedures for implementing this new policy for drugs and biologics.


FDA's Center for Drug Evaluation and Research (CDER), the Agency 

component responsible for oversight of human drug products, is 

developing a guidance document for drugs in tablet and capsule form 

(other than those for controlled release). This document, designed to 

ease pre-approval requirements for certain manufacturing changes, 

would distinguish changes that are unlikely to have any detectable 

impact on a drug product's quality and performance from those that 

could have a significant impact. Examples of changes unlikely to have 

an impact include the deletion of a color from a product or changes 

from non-automated or non-mechanical equipment to automated or 

mechanical equipment for moving ingredients. The proposed FDA 

guidance would ease the pre-approval requirements for these and 

other manufacturing changes when the proposed manufacturing 

change does not affect the drug's quality or performance. 

In all instances in which prior approval would no longer be required, 

FDA would still receive notification of the manufacturing changes 

from the drug manufacturer, either when the change takes effect or 

through annual reports on the drug application.


The Agency will create a reporting process tailored to the severity 

and complexity of the change. Less stringent reporting requirements 

will apply when the changes do not pose demonstrable effects on 

product purity, potency, or safety -- or when changes are readily 

amenable to on-site scrutiny during routine inspection of the 

production facility. FDA will classify its oversight of manufacturing 

changes for biologics as follows:

Category I: Changes where no supplement submission will be 

required. The sponsor will generate and retain all relevant data 

defining (and validating, if necessary) changes being made. The firm 

may voluntarily notify the Agency of the changes and dates of 


Examples: Changes in the supplier of components (such as stoppers, 

vials, seals) that meet established specifications; changes which 

tighten existing specifications to provide greater assurance of 

product purity and potency; relocation of equipment in appropriate 

areas within approved facilities.

Category II: Changes for which the sponsor submits a standard 

supplement; unless the Agency objects, the sponsor can automatically 

implement the change in 30 days.

Examples: Expansion of existing manufacturing support systems 

(such as heating, ventilation, and air conditioning); modification of an 

approved manufacturing area which does not adversely affect safety, 

purity, or potency of product (such as adding new interior partitions 

or walls to increase control over the environment or replacing or 

adding new surfaces to enhance cleaning); replacement of equipment 

with that of similar but not identical design and operating principle 

that does not change the manufacturing process.

Category III: Changes requiring Agency approval prior to 


Examples: Change in processing conditions (such as process time, 

process temperature, or filtration process); change in dosage form 

(such as a change from a liquid to a powder); extension of dating 

period; use of a previously unapproved manufacturing area or 


Impact: These changes will benefit industry by: (1) saving resources 

that would have been spent on preparing supplemental applications; 

(2) permitting changes to occur without waiting for prior FDA 

approval; and (3) encouraging certain manufacturing improvements. 

Under the new procedures, the manufacturing site changes described 

above for drugs could be carried out--and the new site could begin 

operating--in a matter of weeks, and with significant cost savings. 

And the new policy will permit a drug manufacturer to change 

automated equipment without prior FDA approval, an improvement 

that will make newer facilities and equipment available to 

manufacturers much more quickly. Similar changes for biologics 

manufacturers will speed their ability to make changes in production 

facilities or make other manufacturing improvements.

FDA will also benefit from these changes. The Agency estimates that 

this reform will eliminate its current review of more than 800 

supplemental applications for drugs and 500 for biologics annually(2).  

Implementation and Timeline: For drugs, by the end of the year 

FDA will issue guidance for most products sold in tablet form that 

will describe how these requirements will be relaxed. By the end of 

1996, FDA will develop a similar guidance document for other dosage 

forms, including controlled release drugs, liquids, and semi-solids. 

For biologics, FDA will immediately issue a guidance document to 

implement the new three-category plan. The document will identify 

the types of changes in manufacturing procedures and 

establishments that may be carried out without prior approval. It 

will clarify which changes will not require a supplement at all. 

Within nine months, in a second step, FDA will propose amending its 

regulations to further reduce the instances requiring its approval 

before products may be marketed. Likewise, the Agency will review 

its policy on lot release of some biologics (i.e., a procedure whereby 

the Agency approves each batch of biologics prior to distribution), to 

determine how those burdens can be minimized as well.

New Policy to Permit Use of Small-Scale and Pilot Facilities

During Development of Biologics

Background: Lack of clarity about establishment licensure 

requirements has led some biologics manufacturers to make major 

capital investments in full-scale manufacturing facilities before 

initiating the large clinical trials necessary to demonstrate the safety 

and efficacy of their products. Such investments can result in 

significant financial losses if the product is not ultimately brought to 


Proposal and Justification: FDA will specifically state that 

manufacturers may use pilot and small-scale facilities to 

demonstrate safety and effectiveness and to support 

approval. Under this reform, companies may immediately submit 

applications for clinical studies or approval of products manufactured 

in small-scale or pilot facilities. 

Although the manufacture of biologics warrants a high degree of 

quality control and regulatory oversight, FDA believes that licensure 

of pilot and small-scale facilities provides industry with the 

flexibility it needs without diminishing public health protection. As a 

result, FDA will issue product and establishment licenses on the basis 

of demonstrated safety, purity, and potency of the product 

manufactured in the pilot or small-scale facility. Moving to a full-

scale facility will require only a supplement to the manufacturer's 

product/establishment license applications.

Impact: Of 1,500 active and pending investigational new drug 

applications (INDs) (the manufacturer's application to begin testing a 

drug product in humans) for biologics, 100 to 500 current applicants 

need to decide whether to construct new facilities. Under this reform, 

a significant number of these companies may choose not to construct 

a new full-scale manufacturing facility. Instead, they may decide to 

use a pilot or small-scale facility, with potentially great cost savings. 

It has been estimated to cost $25 million to construct a biologics 

manufacturing facility, and about $15 million a year to operate it. 

Implementation and Timeline: Companies may apply 

immediately for licensure of small-scale and pilot facilities and their 

applications will be considered. FDA will issue a guidance document 

to clarify its policy on licensing small-scale and pilot facilities within 

the next three months.

Revision of Labeling Requirements for Biological Products 

Background: Companies that develop a product sometimes find it 

advantageous to have their product manufactured by another 

company. Many small start-up companies, such as many 

biotechnology firms, prefer this option because they do not always 

have the manufacturing capabilities necessary to produce 

commercial quantities of a drug. However, FDA's current labeling 

regulations are a disincentive to such arrangements: The 

manufacturer's name must be displayed on the label more 

prominently than that of the developer (which can be listed only as a 

selling agent or distributor).

Proposal and Justification: FDA will allow the distributors' 

and selling agents' names to be displayed prominently on 

biological product containers, package labels, and labeling. 

This change will provide the biological products industry with the 

flexibility that it wants, and, at the same time, maintain current label 

information on product manufacture and origin.

Impact: The change in labeling requirements will allow prominent 

display of the name of the distributor or selling agent, thereby 

removing an impediment to flexible manufacturing, packaging and 

distribution arrangements.

Implementation and Timeline: FDA will publish a proposal to 

revise its biologics labeling regulations within six months.


Antibiotic and Insulin Standards and Insulin Certification

Background: Section 506 of the Federal Food, Drug, and Cosmetic 

Act requires FDA to certify individual batches of drugs containing 

insulin as meeting the standards of identity, strength, quality, and 

purity that are described by FDA regulations.


Section 507 of the Act imposes similar requirements for antibiotic 

drugs. The regulatory specifications for antibiotic drug products 

occupy almost 700 pages in the Code of Federal Regulations. 


Antibiotics and insulin are subject to more stringent requirements 

than those applied to other drug products. For example, section 505 

of the Act, which applies to most human drugs, does not require FDA 

to certify individual batches of drug products or to issue product 

specifications prescribed in regulations. Moreover, in some cases, the 

insulin and antibiotic regulations known as "monographs" are 

outdated, reflect old technology or methodology, prescribe standards 

for products that are no longer marketed, or conflict with the 

standards found in the United States Pharmacopeia (USP). The USP, a 

compendium of standards of strength, quality, and purity for drug 

products, is published by the United States Pharmacopeial 

Convention, a private entity. Because the FDA can change its 

standards for insulin and antibiotic products only by regulation, the 

USP standards are often more up to date. The existence of conflicting 

standards can be confusing to the industry and to FDA staff who 

must determine whether a particular product meets the correct 


Proposal and Justification: FDA proposes to support the 

repeal of the certification requirement for insulin. Congress 

enacted this statutory requirement decades ago, when insulin 

products were new and manufacturing and testing technology was 

rudimentary. Since then, the Agency and industry alike have become 

much more sophisticated and experienced with insulin 

manufacturing, so that certifying each batch of insulin is no longer 

necessary. Moreover, only two firms currently market insulin in the 

United States, and in the past 8 years FDA has found no failures in 

more than 500 batches of insulin that it has tested for certification 


FDA also proposes to support the repeal of the statutory 

requirements for the FDA monographs that are now issued for 

insulin and antibiotics. In the 1940's, when Congress enacted those 

sections of the Federal Food, Drug, and Cosmetic Act, detailed 

regulations setting forth standards and tests were thought to be 

necessary to ensure the quality and the safety of these products. At 

that time, Congress also expressly recognized, at least with respect to 

antibiotics, that a time would come when manufacturing technology 

would overcome the need for such detailed regulation and that the 

manufacturing controls used for chemically synthesized drugs would 

suffice for antibiotics as well. 

FDA also supports the repeal of the statutory provisions which 

provide for the certification of antibiotic drugs. The ability to control 

antibiotic drug quality is also well-established. For example, a GAO 

study published in 1981 reported that from 1977 through 1980, less 

than one percent of all antibiotic products did not comply with 

monograph standards. FDA therefore concludes that the additional 

controls are no longer necessary to ensure the safety and efficacy of 

antibiotic drug products.

The Agency therefore proposes to regulate the approval of new 

insulin and antibiotic drug products, and generic antibiotic drug 

products, much as it does for other human drug products. Concerning 

tests and methods of assay, the USP will maintain the standards for 

insulin and antibiotics in the same way that it maintains such 

standards for other drugs. 

Impact: Under this reform, insulin manufacturers would no longer 

be required to submit applications and samples to obtain batch 

certification. And because the insulin industry is subject to 

certification fees under section 506 of the Act, the change would 

eliminate those fees. 


Eliminating the statutory requirement for FDA to issue antibiotic 

monographs that set forth product standards, tests, and methods of 

assay for particular drugs would benefit antibiotic drug product 

manufacturers. This change would eliminate the confusion created by 

actual and potential differences between FDA regulatory standards 

and the USP.


Eliminating the regulations specifying insulin and antibiotic drug 

standards and tests will remove nearly 700 pages from the Code of 

Federal Regulations. 

Implementation and Timeline: The Administration will promptly 

propose legislation to repeal section 506 of the Act (which pertains to 

insulin) and to repeal section 507 of the Act (which pertains to 

antibiotic drug products). FDA would seek to have both insulin and 

antibiotic drug products regulated under section 505 of the Act.

Environmental Assessments for Human Drugs

Background: The National Environmental Policy Act (NEPA) 

requires all federal agencies, including the FDA, to assess the 

environmental impact of their actions which may significantly affect 

the quality of the human environment. A drug cannot be approved 

unless the manufacturer has submitted an acceptable Environmental 

Assessment (EA). On the basis of FDA analysis of the EA, the Agency 

can either issue a "finding of no significant impact" (FONSI), or decide 

that a full environmental impact statement (EIS) must be prepared. 

Preparation of an EA is usually quite expensive; yet, in virtually 

every case, FDA issues a FONSI.

Each year, the pharmaceutical industry submits approximately 50 to 

60 full EAs and about 50 abbreviated EAs to CDER. Pharmaceutical 

firms also send 20 to 25 EAs annually to the Center for Biologics 

Evaluation and Research (CBER), some in abbreviated form. It can 

take up to 6 months to review an EA, obtain additional information 

from the firm to correct any deficiencies, and issue a FONSI. 

And yet, in recent years, FDA has identified only one product, Taxol, 

as presenting any potentially significant environmental concerns. In 

the case of Taxol, the environmental impact was due to harvesting of 

Pacific yew trees, an endangered species. In Taxol's case, CDER 

incorporated by reference the EIS prepared by the U.S. Forest Service 

to address the resource question; the manufacturing process and use 

were addressed through the routine EA and were found to have no 

significant impact.

Proposal and Justification: FDA proposes to increase the 

number of categorical exclusions from the EA and EIS 


FDA proposes to reduce the number of EAs required to be submitted 

by industry and, consequently, the number of FONSIs prepared by 

the Agency under NEPA by increasing the number of categorical 

exclusions based upon little or no impact on the environment from 

the use of the drug. Based upon its experience to date in reviewing 

environmental assessments, FDA believes that nearly all product 

approvals will qualify for categorical exclusion. For example, 

virtually all drug approvals would result in only minute releases of 

the drug into the environment as a result of human use and such 

releases would not be environmentally significant. FDA procedures 

will provide for extraordinary circumstances in which a normally 

excluded action may have a significant environmental impact--

circumstances that would require at least an EA. Taxol is an example 

of such an extraordinary circumstance.

Impact: These changes will substantially benefit industry and will 

improve regulatory efficiency without having any adverse impact on 

public health or the environment. Industry would save from $40,000 

to $150,000 on each EA.  

Implementation and Timeline: These changes will be 

implemented by amending FDA regulations, in consultation with the 

President's Council on Environmental Quality (CEQ), to increase the 

number of categorically excluded actions for which an EA or EIS is 

not required. New regulations will be proposed in consultation with 

CEQ in six to nine months. Policy guidelines clarifying current 

procedures will be published sooner.


Medical Devices

There are three classes of medical devices. Class I devices, such as 

tongue depressors, are subject only to general regulatory controls 

and receive little Agency oversight. Class II devices, such as infant 

incubators, are subject to special controls, such as performance 

standards, to ensure their safe and effective use. Class III devices, 

such as implantable pacemakers, are generally life-sustaining or life-

supporting, are implanted in the body, or present potential 

unreasonable risk of illness or injury.

New devices enter the market in one of two ways: (1) through a 

premarket notification process, known as a "510(k)" because it is 

authorized under section 510(k) of the Federal Food, Drug, and 

Cosmetic Act; and (2) through a more extensive premarket approval 

application (PMA).


Under the 510(k) process, FDA must determine whether a device is 

"substantially equivalent" to a device that is already legally 

marketed. A manufacturer using the premarket notification process 

informs FDA about the device and why any changes in its device can 

be made safely. (Some low-risk devices have been exempted from 

premarket notification.) If FDA finds the device to be "substantially 

equivalent," the manufacturer may market the device and must then 

comply with good manufacturing practice (GMP) requirements to 

ensure that the device is properly made. More than 90 percent of all 

devices enter the market under the premarket notification process. 

The more extensive premarket approval application is targeted 

toward Class III devices.

The reforms below are: additional exemptions from premarket 

notification; elimination of the current reference list program, which 

links GMP inspections to new device approvals, and its replacement 

by a process that focuses on serious GMP problems and how they 

may be applicable to individual premarket notification actions; a 

pilot program for external review of new devices; and, a user fee 

program to speed device approvals.

Medical Device Exemptions from Premarket Notification

Background: Currently, the Federal Food, Drug, and Cosmetic Act 

requires that manufacturers of most medical devices submit 

information to FDA and receive FDA clearance before putting a 

device on the market, even if the device has an extremely low risk. 

Review of low-risk devices is not necessary to protect the public 

health, places an unnecessary regulatory burden on device 

manufacturers, and delays introduction of new devices.

FDA currently regulates about 1,700 types of medical devices. Of 

these, 441 categories of low-risk devices (such as stethoscopes, 

hernia supports, and surgical microscopes) have already been 

exempted from the requirement of premarket notification, including 

148 exempted in December 1994.

Proposal and Justification: FDA will exempt up to an 

additional 125 medical device categories from premarket 

notification requirements. As a result, about 570 categories, 

or one-third of all categories of devices, will be exempt 

from premarket notification requirements.

Public health will not be compromised by the exemption of these 

devices from premarket review. These devices will reach the market 

sooner and will remain subject to good manufacturing practice 

requirements, which include regular factory inspections, record 

keeping and device problem reporting. (Of course, continuation of an 

exemption is dependent upon a safe marketing history, and 

exemptions can be revoked if safety problems are later identified; a 

review of whether these exemptions should be continued, or others 

added, will be conducted in two years.)

Impact: The device industry will no longer have to prepare and 

submit--and the Agency will not have to process and review--510(k) 

premarket notification submissions for the exempted device 

categories. FDA receives about 700 submissions each year for devices 

in these 125 categories and will be able to redirect the resources for 

the review of these products to more complex products.

Implementation and Timeline: FDA device advisory panel chairs 

are now reviewing the proposed exemptions. The majority of the 

device categories are currently in Class II and, under the law, must 

be reclassified to Class I before being exempted from FDA review. By 

June 1995, FDA will propose to reclassify these devices from Class II 

to Class I and to exempt them from premarket notification 



Elimination of the Reference List

Problem: Under a program known as the "Reference List," FDA 

tracks medical device manufacturers found by FDA field inspections 

to have serious GMP violations. GMP violations are flaws in the 

manufacturing process that have the potential to affect the safety or 

efficacy of the product. If a firm is on the list, FDA may defer 

authorization for the firm to market a new product under section 

510(k) of the FD&C Act. 

The basis for placing a firm on the list has been an inspectional 

finding of serious GMP problems. In issuing the manufacturer a 

warning letter about its GMP violations, FDA has advised the 

manufacturer that the Agency may not give marketing clearance to 

pending applications until the violations are corrected. A company is 

removed from the list only after FDA has re-inspected the firm and 

found that all serious GMP violations have been corrected. This 

process can take up to 6 months.


Industry has criticized the list as not needed to protect the public 

health. Industry views the list as a "blacklist" because it feels that 

the Agency does not make clear which firms are placed on the 

Reference List or when they are removed from it. Moreover, because 

it takes time to re-inspect after violations are found, manufacturers 

may be delayed in marketing their products.

Proposal and Justification: FDA will eliminate the Reference 

List and instead focus attention on the appropriate linkage 

between serious GMP deficiencies and individual pending 

510(k) applications. FDA will also clarify that market clearances 

of Class I and II devices will not be deferred unless FDA finds a 

reasonable relationship between the nature of the current GMP 

violations and the application under review. A reasonable 

relationship will be found only if there are GMP violations that are 

directly related to the product under review or if there are systemic 

violations that are generally applicable. FDA will not defer 510(k) 

applications if no such reasonable relationship is found.

Second, if market clearance of a 510(k) is deferred because 

of GMP violations, FDA will either reinspect the firm within 

60 days after being notified that corrective actions have 

been taken, or clear the 510(k) application without a 


Finally, FDA will prepare clear written policies and 

procedures so that companies will know if they have an 

outstanding GMP violation, will understand when their 

510(k) applications may be held up due to GMP violations, 

and will know the procedures to follow to correct the 

problems and obtain marketing clearance. 

Impact: The proposed changes benefit industry by providing 

assurance that no market clearance will be deferred unless a clear 

linkage between GMP violations and the device under review is 

found. In addition, by clarifying FDA's procedures, any industry fear 

of indiscriminate delay in the clearance of a 510(k) application will 

be eliminated. Finally, the fixed time frame for reinspection benefits 

manufacturers by removing uncertainty about when they will be 

able to market their products after they correct GMP violations.

Implementation and Timeline: The Agency will implement these 

new policies and procedures by publication of a notice in the Federal 

Register by May 1995. FDA will immediately review all deferred 

applications to determine if the GMP violations are reasonably 

related to the pending applications. Firms with GMP violations 

unrelated to the pending applications will have their applications 

cleared unless there are other problems.

Medical Device External Review Pilot Program

Background: Almost all medical devices enter the market by an 

application process in which the manufacturer demonstrates that the 

device is "substantially equivalent" to a device already marketed. 

The device industry contends that this process inhibits innovation 

and competitiveness because, due to limited resources, FDA takes too 

long to review these applications. (A comprehensive assessment of 

FDA's device review resource needs, conducted by FDA and audited 

by the device industry, documented an annual shortfall of about $24 

million and more than 200 staff positions.) 

Industry recommends that FDA adopt an approach similar to that 

used in the European Community, in which device firms have their 

device applications reviewed by a third-party scientific organization 

accredited by the government. Under this approach, a manufacturer 

pays a third-party organization for its review, the third-party 

organization notifies the government of the results of its review, the 

device is marketed without government review, and the government 

monitors the device after it is on the market for subsequent safety 

problems. This concept has not been tried in the United States, so its 

applicability in this country is unknown.

Proposal and Justification: FDA proposes to create a pilot 

program for external reviews of devices. This pilot program 

will contain several key elements of the European model to test 

whether that model is appropriate for the United States. The 

program will have the following elements:

*	At least ten categories of devices, comprising at least 

100-400 device applications annually, will be identified for eligibility 

in the program;

*	Those categories of devices will have a low to moderate 

risk profile, clear standards for market clearance, and no 

requirement for clinical data as part of their application (e.g., 

applications which principally raise engineering issues);

*	The outside reviewers will be accredited by FDA as 

capable of assessing the design, performance, and safety of devices;

*	The accredited review organization will be responsible 

for conducting the entire review of the device application, producing 

a written review document, and making a recommendation to FDA. 

The review will be checked by FDA, and the final decision will be 

made by FDA and communicated to the company; 

*	The program will be funded by the manufacturer's 

payment to the reviewer for its services. Participation by 

manufacturers will be voluntary; and


*	The accredited reviewing organization will be expected to 

demonstrate independence from device manufacturers for whom it 

will be doing reviews and adherence to conflict of interest standards.

Impact: The pilot program will allow FDA and the device industry to 

determine the feasibility of third-party reviews of devices. It will 

answer questions such as whether private groups can conduct a 

thorough, rapid review; whether such groups exist or will need to be 

created; whether safeguards against improper influence of non-

government reviewers can be established; and how much groups will 

charge for these services. 

Implementation and Timeline: The pilot program will begin 

early in the next fiscal year. The pilot program will operate for two 

years, and during the second year FDA will evaluate its success and 

potential for expansion and permanent continuation.

Device User Fees

Background: Even if the medical device external review pilot 

program and other streamlining efforts detailed in this report are 

successful in reducing resource demands upon FDA's device program, 

the Agency will still lack sufficient resources to ensure timely review 

of device applications. Each year, FDA receives approximately 40 to 

60 Premarket Approval Applications (PMAs), 400 PMA supplements, 

and 6,000 premarket notification actions for marketing devices 

under section 510(k) of the Federal Food, Drug, and Cosmetic Act. In 

fiscal year 1994, the average review times were about 2 years for 

PMAs, 1 year for PMA supplements, and 215 days for premarket 

notifications(3). Compare that to fiscal year 1990, when the average 

review times were 10 months for PMAs, 6 months for PMA 

supplements, and 100 days for premarket notifications. These 

lengthy review times delay the introduction of devices to the market. 

FDA can reduce these review times, without diminishing the public 

health protections it provides, if it has adequate resources to review 


Proposal and Justification: FDA proposes to authorize user 

fees for applications. FDA will collect fees for reviewing PMAs, 

PMA supplements and premarket notification actions -- 510(k)s -- 

and dedicate them to funding premarket review and related 

activities. In addition, FDA will commit to specific performance goals.

FDA will agree to performance goals of (1) eliminating the backlog of 

applications within 24 months; (2) completing a comprehensive, 

substantive review for 90 percent of PMAs in 180 days; and (3) 

taking a final action on 95 percent of 510(k)s in 90 days. These 

performance goals were negotiated with the industry as part of 

legislation proposed last year, and major segments of the device 

industry supported them. 

Impact: The proposed solution will address a major complaint about 

federal premarket review times for devices. The device industry will 

benefit from increasingly faster review and approval times, will be 

able to market new and innovative products faster, and will become 

more competitive in foreign markets. Consumers inside and outside 

the United States will benefit from easier access to new and 

improved products.

Implementation and Timeline: User fees will require statutory 

changes to the Federal Food, Drug, and Cosmetic Act. The 

Administration has proposed these changes in the budget for fiscal 

year 1996. Device user fees would account for $23,740,000 of the 

Agency's budget for the entire fiscal year, and the funds would 

include associated start-up costs and the hiring of over 200 staff 

people over the first two years.


Several issues confronting FDA cut across product lines and affect 

both the pharmaceutical and medical device industries. Two such 

issues involve exports. One of them is the different mandatory 

requirements that the Agency must follow in approving exports of 

drugs and medical devices. The other export issue stems from the 

varying standards for regulated health care products in the United 

States and in many of its trading partners. FDA plans to ease some of 

the current export restrictions. Also, the Agency will intensify its 

efforts to bring into harmony international standards for health care 

products, so that firms developing new products will have to deal 

with only one set of requirements.

Another issue raised by both the drug and device industries is 

whether FDA requires new products to be shown to be superior, as 

opposed to equal, to products that are already on the market. An 

upcoming policy statement will clarify the Agency position. FDA also 

proposes to take steps to advance the development of an electronic 

information system to support the review processes, and to 

implement the second phase of an automated system for the 

processing of imports.


Drug and Device Exports

Background: Drugs and medical devices not approved for sale in the 

United States are now exported under different statutory 


Drugs may be exported only to the 21 developed countries listed in 

the statute if, among other things, (1) the sponsor has an 

investigational new drug (IND) exemption in effect that permits 

testing in humans, and (2) the drug is approved in the importing 



Devices may be exported if FDA determines, based on information 

supplied by the exporting company, that (1) export of the device 

does not harm public health and safety, and (2) the device is 

approved for importation by the importing country. 

Manufacturers have contended that these requirements place them 

at a competitive disadvantage and that FDA review of exportation to 

foreign countries is both time-consuming and unnecessary.

Proposal and Justification: It is proposed to allow the 

export of drugs to any of the countries listed in the statute 

without an IND. In addition, the Administration proposes to work 

with Congress on changes in the current law based on an examination 

of whether to amend the present list of 21 countries, and whether to 

adopt other changes.

FDA proposes two new criteria for allowing devices not 

approved in the United States to be exported for marketing 

abroad without prior FDA permission: (1) devices can be 

exported to advanced industrialized countries (the list of which 

would be determined in consultations with Congress) if the devices 

conform to the importing country's laws; (2) devices can be exported 

to countries not on the above-mentioned list if the exporter has an 

Investigational Device Exemption (IDE) permitting testing on humans 

in the United States, the importing country has given FDA a letter 

providing blanket import approval for IDE-type devices, and the 

device is in compliance with the importing country's laws.

This change from current procedures would significantly relax 

restrictions on exports to industrialized countries, while leaving 

intact existing protections for countries that are not industrialized.

Impact: For drugs, companies will be able to export their products 

for marketing in the 21 developed countries listed in current law, 

even if they do not have an IND in the United States. 

For devices, exports to the most significant markets--industrialized 

nations such as Japan and the European Community--will be exempt 

from FDA's oversight. The U.S. industry will be spared the expense of 

developing and submitting export requests to FDA and would not 

need to await FDA review, which now averages 16 days but can take 

as long as 150 days. Furthermore, a firm with an approved IDE will 

be able to export the unapproved device to less developed countries 

which have agreed to such importation, without going through FDA 

review, currently averaging 10 days. The U.S. device industry 

believes that these changes will encourage firms to remain in the 

United States rather than moving their operations abroad. FDA could 

redirect the resources used for the current export approval program 

to more pressing public health matters.

Implementation and Timeline: Discussions with Congress on both 

drug and device legislation could begin immediately. Permitting 

devices with an IDE to be exported without further FDA clearance to 

countries which have provided prior agreement can be accomplished 

administratively by FDA, and proposed regulations will be issued 

within 4 to 6 months.


Effectiveness of Drugs and Devices

Background: The pharmaceutical and medical device industries 

have argued that FDA requires a new drug or Class III (highest risk) 

device to be shown to be more effective for its intended use than 

comparable therapies that are already approved for marketing. 

Representatives of these industries believe FDA's requirements for 

demonstrating efficacy present unreasonable difficulties in 

developing new therapies and bringing them to market. 

Proposal and Justification: FDA proposes to issue a public 

statement to respond to this concern. The statement will make 

the following points:

Under the Federal Food, Drug, and Cosmetic Act, new drugs and Class 

III devices must be shown to be safe and effective for their intended 

uses. In evaluating the safety of a new drug or Class III device, the 

Agency weighs the demonstrated effectiveness of the product against 

its risks to determine whether the benefits outweigh the risks. This 

weighing process also takes into account information such as the 

seriousness and outcome of the disease, the presence and adequacy 

of existing treatments, and adverse reaction data.

In evaluating effectiveness, as with safety, FDA reviews new drugs 

and Class III devices on their merits. The Agency does not require 

new drugs and Class III devices to be more effective than therapies 

for the same disease or condition that are already approved for 

marketing. In general, both new drugs and Class III devices must be 

shown to be effective through evidence consisting of well controlled 

investigations that provide a basis on which it can be concluded that 

the drug or Class III device will have the effect it is represented to 


For the majority of new drugs and Class III devices, i.e., new 

products intended to treat less serious illness or provide relief from 

symptoms, a showing of effectiveness is usually based on a clinical 

trial comparing the product to a placebo. Such a showing does not 

involve a comparison to any other product.

In certain circumstances, however, it may be important to consider 

whether a new product is less effective than available alternative 

therapies, when less effectiveness could present a danger to the 

patient or to the public. For example, it is essential for public health 

protection that a new therapy be as effective as alternatives that are 

already approved for marketing when:

1.	the disease to be treated is life-threatening or capable of 

causing irreversible morbidity (e.g., stroke or heart attack); or

2. 	the disease to be treated is a contagious illness that poses 

serious consequences to the health of others (e.g., sexually 

transmitted disease).

It should be noted that new products are often developed for 

particular subpopulations who either do not respond to or are not 

able to tolerate an existing approved therapy. FDA will generally 

approve for use in such a subpopulation a product that is shown to 

have effectiveness in this group, regardless of whether the product 

can be shown to be as effective in the broad target population as the 

alternative therapy. This is because, in effect, there is no available 

alternative therapy for the subpopulation. For example, a number of 

patients cannot tolerate a widely used therapy for an AIDS-related 

pneumonia. FDA approved the drug atovaquone for use in these 

patients, even though it had been shown to be less effective than the 

standard therapy when tested in a broad population.

Impact: Placing such a statement in the public record would clarify 

for sponsors of drugs and Class III devices how FDA addresses and 

evaluates effectiveness in the context of overall review for product 

approvability. This clarification should be helpful to product sponsors 

in the planning and development of new products.

Implementation and Timeline: Within the next 3 months, FDA 

will publish a statement for comment in the Federal Register. 

Additional Effectiveness Issue:

Industry representatives also argue that the Food, Drug, and 

Cosmetic Act should not be read to require multiple clinical studies 

when one pivotal study could suffice.

Clarification: FDA believes that a showing of effectiveness must be 

replicated to constitute an adequate demonstration of effectiveness 

for a new product. While a second study may well be needed to 

replicate results demonstrated in a first study, in some instances it is 

possible to replicate results within one large, well-designed multi-

center study. It should be emphasized that this approach can be 

successful only when results are strong. A statistically marginal 

result, even in a very large study, cannot provide convincing 

evidence of replication.

The biotechnology drug Pulmozyme was recently approved to treat 

cystic fibrosis on the basis of one multi-center study with features 

that provided elements of replication. Similarly, the drug timolol was 

approved to treat people after a heart attack following a 

demonstration of improved survival in a single study. In that study, 

the favorable effect was seen in patients at several levels of severity 

at three different hospitals. A simple multi-center double-blind 

placebo-controlled trial led to prompt approval of zidovudine for 

AIDS in 1987 when it was found that 16 deaths had occurred in the 

placebo group, as opposed to one death in the group receiving the 

drug. FDA has also approved vaccines, including a vaccine for 

hepatitis A, that have been studied for effectiveness in a single 

controlled multi-center study.


Harmonization of Standards

Background: Nations have differing requirements for approval of 

new drugs, biologics, medical devices, and animal drugs. This results 

in multiple tests on animals and humans and different applications 

for marketing approval. Nations also have differing standards for 

manufacturing practices and regulatory inspections. There is a 

substantial need to harmonize standards wherever possible, while 

retaining the United States' high level of public health protection.

Proposal and Justification: Seek common international 

standards. FDA will work with other countries, particularly the 

European Community, Japan, and North American Free Trade 

Agreement (NAFTA) partners, to harmonize product testing and 

development standards with those of the United States. Work has 

already begun on drug development and should be expanded to 

other areas of FDA regulation.

In addition, where appropriate, FDA will adopt international 

standards developed by multilateral or private-sector standards-

development bodies.

Impact: Increased harmonization offers clear benefits for U.S. public 

health. It increases the safety and quality of imports into the United 

States. It can also improve the safety and quality of products sold in 

foreign countries and may help increase the availability of new 


Harmonization benefits industry by replacing many different 

standards with one international standard that industry must meet. 

In the long run, this brings cost savings to industry and enhanced 

opportunities for export of U.S. goods, and may lessen the time 

needed to bring new products to market.

Harmonization permits FDA to make more efficient use of its 

resources, as other countries share the workload of developing new 

standards. Harmonization also may save future FDA resources by 

enabling cooperation with other countries in the assessment of new 

products. (However, it should be noted that a sizable up-front 

investment of FDA resources is needed to reach harmonization.)

Implementation and Timeline: FDA will build on and expand 

efforts to achieve international harmonization by:

1.	Launching work on new harmonization topics in the testing of 

human drugs, biologics, and devices related to clinical trials, 

biotechnology, medical terminology, and standards for the electronic 

transfer of regulatory information. Harmonized standards will be 

issued as guidelines for industry. Substantial progress on guideline 

development is expected within 2 years.

2.	Accelerating work on harmonizing drug Good Manufacturing 

Practices, Good Laboratory Practices, and Good Clinical Practices 

standards and inspections. A number of proposals for harmonized 

guidelines should be completed within 2 years; however, 

harmonization of inspections will probably take longer.

3.	Beginning an initiative to harmonize registration requirements 

for animal drugs. The first proposal for harmonized guidelines should 

be completed within 3 years.

4.	Initiating work towards more harmonization with our NAFTA 

partners. Such harmonization efforts should become part of the work 

plans of existing technical working groups formed under the 

Canada/U.S. Free Trade Agreement.

Submission Management and Review Tracking (SMART) Program

Background: The current premarket review processes (preparation, 

handling, and storage of information related to product applications) 

are paper intensive with limited electronic means of accessing, 

sharing, or archiving product-related information within the Agency. 

Many applications consist of hundreds of volumes of detailed 

scientific information. The regulated industry is similarly affected by 

the need to generate an overwhelming amount of paper.

The Prescription Drug User Fee Act of 1992 (PDUFA) mandates 

significant reductions in the time required to review new drug 

applications. PDUFA funds the hiring of additional review staff to 

accomplish these goals. However, one of the longer term objectives is 

to improve the efficiency of the review process and to begin 

addressing ways to improve regulated industry's data handling 

efficiencies as well. FDA has begun to develop a comprehensive, 

standardized information management system (SMART) to support 

the review processes.

Proposal and Justification: FDA proposes to proceed with 

the development of SMART by pursuing a series of 

information systems pilot projects which will directly 

support FDA's meeting the near-term PDUFA goals. The 

Agency is already putting in place a system to identify, evaluate, and 

prioritize these pilots. A longer term SMART strategic plan has been 

developed that articulates how these pilots will serve as building 

blocks toward integrated drug development/review information 


The pilots will focus on upgrading and interconnecting the hardware 

and software on the reviewer's desk; establishing standards; 

developing applications which will directly support the receipt, 

review, tracking, and archiving of industry submissions; and provide 

analytical tools to support the review process. This proposed 

approach will provide the most immediate benefit to shortened 

review times and will be funded with PDUFA fees.

Impact: The drug and biotechnology industries will continue to see 

progress in meeting the PDUFA review time goals. Through 

information systems design, the review processes will be clarified 

and managed for greater consistency, better documentation, and 

improved efficiencies. As standards are developed and implemented, 

the regulated industry will achieve greater internal efficiencies in its 

development and formatting of regulatory submissions and 

significant savings on paper record generation, handling, storage, and 


Implementation and Timeline: Over the next 12 to 24 months, 

FDA's drug review programs will complete the upgrade of reviewer 

hardware and software and networking capability, and develop and 

implement a number of automated applications (e.g., electronic 

Establishment Licensing Applications, electronic lot release testing, 

gene therapy patient registry, pre-approval inspections, and other 

pilots). The program offices will also begin selecting and 

implementing electronic data interchange standards which are 

acceptable to the regulated industry and to regulatory authorities in 

Europe and Japan.


Operational and Administrative System for Import Support (OASIS)

Background: FDA is responsible for ensuring that the imported 

products it regulates meet the same safety, efficacy, and quality 

standards as products produced domestically. Importers must have 

FDA clearance for each shipment before it can enter the United 

States. The number of imported shipments of FDA-related products 

has doubled in the 1990s to more than 2 million per year.

FDA's traditional process for clearing import shipments has required 

that importers prepare and submit a prescribed form, with invoices 

and any other documentation attached, for each shipment. FDA staff 

reviews the documentation, decides whether to admit the shipment 

in the country, and sends a paper response back to the importer. This 

paper process often takes days to complete, and delays in clearing 

shipments are a serious problem for importers. Reductions in 

government resources and increasing workload make it clear that 

FDA's traditional paper system for clearing imports must be 

improved. Automation of the process is essential.

Proposal and Justification: FDA has begun developing a phased 

information systems initiative to support automation of the import 

clearance process. Phase I was implemented nationwide in 1994. It 

operates in conjunction with the Customs Service, with which import 

brokers are already on line. 

The new FDA system enables the import broker to enter additional 

FDA-specific data, which pass through a screening process that 

recognizes what the product is, country of origin, producer, and 

shipper. FDA has developed a set of decision criteria based on its 

experience with import risks and surveillance-sampling techniques 

to determine whether the shipment is admissible, or whether FDA 

needs to look at it more closely. 

Within minutes, the broker receives a return message, advising 

either that FDA has cleared the shipment or that further examination 

testing is needed. Shipments in which FDA has no further interest 

can move immediately into commercial channels.

FDA will proceed with implementing Phase II of the 

Operational and Administrative System for Import Support 

(OASIS). Whereas Phase I automated the initial submission and 

screening of import data from import brokers, Phase II will automate 

FDA's internal handling of those import transactions requiring FDA 

review beyond the initial screening. The Phase II system will 

provide automated links between FDA laboratories and inspection 

and compliance units. 

FDA will achieve national uniformity in tracking and enforcement of 

suspect products and a more rapid final response to brokers on 

import disposition. In addition, full implementation of the OASIS 

system will permit electronic links with other FDA data bases that 

must be accessed during the import entry review process. For 

example, FDA must confirm that an imported drug has an effective 

NDA or an IND, that medical devices are approved and have been 

properly registered, and that manufacturers of low-acid canned 

foods have registered.

Impact: In February 1995, 67 percent of all shipments processed in 

FDA's electronic system received final clearance within minutes. 

Import brokers need not prepare and submit to FDA any paperwork 

for these shipments that are cleared electronically. Importers' costs 

for holding up shipments awaiting FDA clearance are reduced 

markedly. Perishable shipments no longer risk spoilage from 

clearance delays. 

The American consumer is the major beneficiary. The freeing up of 

FDA resources that would have been required to handle and review 

the paperwork submitted by importers for all shipments allows the 

Agency to focus its attention on those shipments that may not 

conform to required standards. Implementation of the full OASIS 

system will speed the clearance of the one-third of shipments that 

require some form of FDA detailed review. FDA can target its 

resources on those import shipments that are suspected of not 

meeting quality requirements.

Implementation and Timeline: The full system will take several 

more years to complete, assuming funding is available. FDA is 

seeking user fees, to be paid by the importers, to fund full 

development and implementation of the OASIS system.


1.  The 1994 median review time for all new chemical drugs was 

17.5 months; (the subset of drugs reviewed in 1994 under the user 

fee program was reviewed in a median time of 13.5 months.

2.  For biologics, approximately 25 percent of supplemental 

applications (250 a year) will fall into Category I, 25 percent (250) 

will fall into Category II, and 50 percent (500) will fall into Category 


3.  However, premarket notifications, which have been the most 

controversial, were down to a median time of 98 days as of January 


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