OTC Monograph Fees Announced… Not So Fast!

This article is co-authored by David Wilson, Sr. Account Executive, Reed Tech, and Carolina M. Wirth, Of Counsel, Arnall Golden Gregory, LLP.

On December 29, 2020, the U.S. Food and Drug Administration published a Federal Register notice setting the fee rates under the Over-the-Counter Monograph User Fee Act (OMUFA) Program for Fiscal Year 2021.   Reed Tech contributors Carolina Wirth and Genevieve Razick, both of Arnall Golden Gregory LLP, quickly digested the information and summarized the OMUFA program.  More importantly, the authors provided some information regarding the types of facilities that were impacted by these fees. You can read the full bulletin here.¹  However, less than a week later, the Department of Health and Human Services (HHS) published a withdrawal of the notice creating a lot of uncertainty within the industry.   According to the withdrawal notice, “FDA lacked the delegated authority” to issue the Federal Register notice and, as such, the agency was “ordered to cease further collection efforts.”

The withdrawal notice did not provide any information regarding when the Fiscal Year 2021 OMUFA fees will be published by FDA.  With the change in administration, however, we can expect some additional delays in the implementation of the OMUFA user fees for Fiscal Year 2021.  So for at least the time being, over-the-counter (OTC) drug manufacturers and distributors can breathe a sigh of relief because there is still time before any fees will be formally announced and come due.

In the meantime, on January 12, 2021, FDA and HHS issued a new Federal Register notice addressing the application of the OMUFA user fees to companies that entered the OTC drug industry for the first time in order to supply hand sanitizers during the COVID-19 pandemic after FDA issued a temporary policy to allow for the increased production of alcohol-based hand sanitizers.   In the notice, HHS concluded that “persons that entered the over-the-counter market in order to produce hand sanitizers in reliance on [FDA’s temporary policy] are not identified as . . . .  OTC drug monograph facility[ies] and are thus not subject to the facility fees authorized under section 744M” of the Federal Food, Drug, and Cosmetic Act.  Moreover, HHS concluded that imposing facility fees on these entities would be inconsistent with Congress’ intent, given that the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided a temporary exemption from excise taxes for distilled spirits used to make hand sanitizers in accordance with FDA’s guidance.

Therefore, companies that were not registered with the FDA as drug manufacturers prior to the COVID-19 pandemic, which then later registered solely for the purpose of producing hand sanitizers, are not ‘identified’ as OTC drug manufacturing facilities.  Of course, this does not apply to companies that were already marketing OTC drugs, including hand sanitizers, prior to the pandemic.

Even before the publication of the latest notices, there has been a lot of confusion regarding the OTC Monograph Reform details that were nestled into the 2020 CARES Act.  Among the confusion: What is an OMOR? What will the user fees be? Who will they apply to? When will they be due?  The CARES Act modernized the FDA Over-the-Counter (OTC) Drug Review Process and will have a significant impact on the industry, including current and future OTC Drug Products.  To learn more about OTC Monograph Reform generally, we recommend you view this webinar hosted by FDA in May 2020.

[1] It is important to note that that the AGG Bulletin was written prior to the publication of the withdrawal notice and will be updated once a new fee schedule is issued by FDA.