What happened with FDA’s OTC monograph user fee notice?

Regulatory NewsRegulatory News | 07 January 2021 |  By 

Just before the New Year, the US Food and Drug Administration (FDA) published a notice in the Federal Register announcing the fee rates it will collect for its Over-the-Counter (OTC) Monograph Drug user fee program (OMUFA) in FY2021, as it did earlier in the year for its other user fee programs.
The seemingly innocuous act proved controversial for its potential impact on liquor distillers who stepped in to manufacture hand sanitizers amid the COVID-19 pandemic and touched off a dispute with the Department of Health and Human Services (HHS) over FDA’s delegated authorities that led to the notice being withdrawn days later.
OMUFA, FDA’s newest user fee program, was created in March 2020 under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to modernize and reform the agency’s regulation of OTC monograph products. Like FDA’s other user fee programs, the CARES Act grants the secretary of HHS the authority to assess and collect two types of fees: facility fees and OTC monograph order request fees. Under the CARES Act, an OTC monograph drug facility is, “a foreign or domestic business or other entity that is … engaged in manufacturing or processing the finished dosage form of an OTC monograph drug.” The act also specifies that firms are required to pay a facility fee for the current fiscal year for facilities identified as OTC monograph drug facilities on 31 December or at any time during the preceding 12-month period.
While many consumers might not think of hand sanitizers as drugs, they are in fact regulated as OTC drugs by FDA and have been the subject of recent rulemaking by the agency. (RELATED: FDA finalizes rule on OTC hand sanitizers, Regulatory Focus 11 April 2019).
In an effort to boost the availability of hand sanitizers amid the COVID-19 pandemic back in March, FDA issued a temporary policy allowing entities not currently licensed or registered as drug manufacturers, such as distilleries, to produce alcohol-based hand sanitizers, so long as they register as an OTC drug manufacturer, packager or re-labeler in the FDA Drug Registration and Listing System.
Based on FDA’s interpretation of the CARES Act, this meant that distillers and other firms that manufactured hand sanitizers under its temporary policy and registered their facilities with the agency were liable for a facility fee of $14,060, due within 45 days of the notice.
In a Federal Register notice released Tuesday, FDA said the notice announcing the fee rates was being withdrawn because it was issued without being signed by HHS Secretary Alex Azar. Shortly after, in a notice posted to its website and pending publication in the Federal Register, HHS further clarified that entities that entered the OTC drug market for the first time to produce hand sanitizer during the COVID-19 public health are not subject to OMUFA facility fees.
In the notice, HHS makes arguments for why such entities should not be subject to facility fees and points out that FDA’s guidance does not mention user or facility fees. The notice also cites a note on FDA’s website that has since been removed that declared that, “The facility fee applies to all OTC hand sanitizer manufacturers registered with FDA, including facilities that manufacture or process hand sanitizer products under this temporary policy.”
HHS says it does not consider entities that entered the OTC hand sanitizer market based on FDA’s temporary policy to be identified as OTC drug monograph facilities for two reasons: that such entities “are not in the drug manufacturing business” nor are they perceived to be by the public and because the department views imposing fees on those entities is “inconsistent with Congress’ stated intent elsewhere in the CARES Act.”
The events surrounding the withdrawal of the notice follow efforts by HHS to consolidate rulemaking authority and require guidances deemed by HHS to be “significant” to go through notice-and-comment rulemaking.
While FDA has indicated it will work to reissue the notice so it can begin collecting OMUFA fees, the withdrawal of the notice could delay the agency’s rollout of the fledgling program.


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