This Is Not A Drill ... FDA Publishes Fee Rates Under the Over-the-Counter Monograph Drug User Fee Program for Fiscal Year 2021

On March 26, 2021, the Food and Drug Administration (FDA) issued a new Federal Register notice finally announcing the fee rates under the Over-the-Counter (OTC) Monograph Drug User Fee Program for Fiscal Year 2021.¹  As we discussed in a previous Bulletin, the CARES Act, among other things, amended the Federal Food, Drug, and Cosmetic Act (FD&C Act) to allow FDA to assess and collect user fees from qualifying owners of OTC monograph drug facilities²  and qualifying submitters of OTC monograph order requests (OMORs).³  The fees are meant to support FDA in its OTC monograph drug activities, including inspections of facilities associated with such products.

We also discussed in a previous Bulletin that, in January of this year, the Department of Health and Human Services (HHS) withdrew FDA’s December 2020 initial attempt to start collecting user fees, noting that “FDA lacked the delegated authority” to issue a Federal Register notice establishing the user fees, and ordering the agency to “cease further collection efforts.”

Additionally, HHS issued a separate notice to clarify that companies that entered the OTC drug industry for the first time in order to manufacture hand sanitizers to help combat the pandemic were not considered “OTC drug monograph facilities” subject to the facility fees authorized under the CARES Act.  In announcing the new user fees, FDA specifically noted that, because hand sanitizer manufacturers, including those that manufacture antiseptic hand rubs or antiseptic hand wipes, are not subject to the facility fees, OTC drug manufacturers “will see an increase in the fiscal year 2021 facility fees, compared to fees shown in the withdrawn fee notice.”⁵  This is because the agency divided the $23.3 million that Congress authorized it to collect for the program amongst all the other companies that are registered as OTC drug manufacturers or contract manufacturing organizations in determining the new fee amount.  The agency also reminded industry that “by supporting [its] OTC monograph reform efforts, these fees will aid in improving the efficiency, timeliness, and predictability of the review process for OTC monograph drugs.”

New Facility Fees

The notice confirms that FDA will assess and collect fees with respect to both OTC monograph drug facilities and contract manufacturing organization facilities.⁶  Full facility fees will be assessed to each qualifying person that owns a facility identified as an OTC monograph drug facility, and a reduced facility fee of two-thirds will be assessed to each qualifying person that owns a facility identified as a contract manufacturing organization facility. The fee schedule for Fiscal Year 2021 is as follows:

• OTC monograph drug facilities (MDFs): $20,322 (increased from $14,060 in December 2020)

• Contract manufacturing organizations (CMOs): $13,548 (increased from $9,373 in December 2020)

The new fee rates are effective from October 1, 2020 through September 30, 2021 for FY 2021.  These fees will most likely be adjusted for inflation for FY 2022.  Payment is due within 45 days of the publication of the Federal Register notice or around May 10, 2021.

OTC monograph drug facilities will be exempt from FY 2021 facility fees if they ceased OTC monograph drug activities and updated their registration with FDA to that effect prior to December 31, 2019.  FDA also clarified in the notice that facilities that only manufacture the Active Pharmaceutical Ingredient (API) of an OTC monograph drug do not meet the definition of an OTC monograph drug facility.  In addition, a facility is not an OTC monograph drug facility if its only manufacturing or processing activities are one or more of the following:

1. production of clinical research supplies;
2. testing; or
3. placement of outer packaging on packages containing multiple products, for purposes such as creating multipacks, when each monograph drug product contained within the overpackaging is already in a final packaged form prior to placement in the outer overpackaging.

OTC Monograph Order Requests (OMORS)

FDA will also be collecting fees for an OMOR submission, which is a request for an administrative order submitted to the agency under Section 505G(b)(2) of the FD&C Act.  There are two levels of OMOR fees, based on whether the OMOR is a Tier 1 or Tier 2 OMOR.⁷

The OMOR fees for FY 2021 are as follows:

• Tier 1 OMOR Fees – $500,000

• Tier 2 OMOR Fees – $100,000

The fees are not changing from those established by the CARES Act in March 2020.  However, similar to the facility fees, they may be adjusted for inflation in 2022.

[1] See 86 Fed. Reg. 16,223 (March 26, 2021), available at https://www.govinfo.gov/content/pkg/FR-2021-03-26/pdf/2021-06361.pdf

[2] An OTC monograph drug facility is “a foreign or domestic business or other entity that, in addition to meeting other criteria, is engaged in manufacturing or processing the finished dosage form of an OTC monograph drug.”

[3] See Section 744M of the FD&C Act (21 U.S.C. § 379j-72).

[4] We discussed the agency’s previous attempt at issuing the new fee rates under the Over-the-Counter Monograph Drug User Fee Program here.

[5] See FDA In Brief; FDA Republishing Fee Rates under the Over-the-Counter Monograph Drug User Fee Program, available at https://www.fda.gov/news-events/fda-brief/fda-brief-fda-republishing-fee-rates-under-over-counter-monograph-drug-user-fee-program.

[6] An OTC monograph drug facility (MDF) is defined as “a foreign or domestic business or other entity that, in addition to meeting other criteria, is engaged in manufacturing or processing the finished dosage form of an OTC monograph drug (see section 744L(1) of the FD&C Act).”  A contract manufacturing organization facility “is an OTC monograph drug facility where neither the owner nor any affiliate of the owner or facility sells the OTC monograph drug produced at such facility directly to wholesalers, retailers, or consumers in the United States.”

[7] The term “Tier 1 OTC monograph order request” is defined under the statute as any OTC monograph order request not determined to be a Tier 2 OTC monograph order request.  The term “Tier 2 OTC monograph order request” is defined as an OTC monograph request for “(i) the reordering of existing information in the drug facts label of an OTC monograph drug; (ii) the addition of information to the other information section of the drug facts label . . . . (iii) modification to the directions for use section of the drug facts label of an OTC monograph drug, . . . .(iv) the standardization of the concentration or dose of a specific finalized ingredient without a particular finalized monograph; (v) a change to ingredient nomenclature to align with nomenclature of a standards-setting organization; or (vi) addition of an interchangeable term.”  See sections 744L(8) and 744L(9) of the FD&C Act.