OTC Drug Manufacturers are Required to Pay FDA Facility User Fees by May 10, 2021

Co-Authored by Denise Calle.

On March 26, 2021, Food and Drug Administration (FDA) published the Federal Register Notice, “Fee Rates Under the Over-the-Counter Monograph Drug User Fee Program for Fiscal Year 2021,” announcing the OTC Monograph Drug user fee program fee rates for FY 2021. This is the first year FDA has expanded user fees to OTC Drug Manufacturers and submitters of OTC monograph order requests.

Background

An OTC monograph drug is a nonprescription, over-the-counter (or OTC) drug that may be marketed without an approved drug application under section 505 of the FD&C Act if it meets the requirements of section 505G of the FD&C Act, as well as other applicable requirements.

The CARES Act, enacted on March 27, 2020, includes important reforms that modernize the way OTC monograph drugs are regulated in the United States. Specifically, the CARES Act replaces the rulemaking process with an administrative order process for issuing, revising, and amending OTC monographs. On March 27, 2020, the FDA added new provisions to the Federal Food, Drug, and Cosmetic Act (FD&C Act), pursuant to the CARES Act. These new provisions authorize FDA to assess and collect user fees from 1) qualifying manufacturers of OTC monograph drugs and 2) submitters of OTC monograph order requests.

What is the Fee Structure?

FDA is assessing a full facility fee to each qualifying person that owns a facility identified as a monograph drug facility (MDF). Contract manufacturing organization (CMO) facilities are being assessed a reduced facility fee of two-thirds:

When are Fees Owed?

The facility fees are due May 10, 2021 (45 days after the date of publication of the federal register notice (March 26, 2021). See section 744M(a)(1)(D)(i) of the FD&C Act. Thereafter, the facility fee is due annually.

Who Must Pay the OTC User Fee?

Facilities:

There are two types of OTC monograph drug facilities—MDF and CMO facilities —required to pay the Facility Fee. Each facility that is identified as an OTC monograph drug facility during the period from January 2020 through December 2020 must pay the facility fee for FY 2021.

OTC monograph drug facility (MDF) defined:

• Under section 744L of the FD&C Act, an OTC monograph drug facility is generally defined as a foreign or domestic business or other entity that:
  • is under one management, either direct or indirect, and at one geographic location or address engaged in manufacturing or processing the finished dosage form of an OTC monograph drug;
  • includes a finished dosage form manufacturer facility in a contractual relationship with the sponsor of one or more OTC monograph drugs to manufacture or process such drugs. 

Contract manufacturing organization (CMO) facility defined:

• As defined in section 744L of the FD&C Act, a CMO facility is an OTC monograph drug facility where neither the owner of such manufacturing facility nor any affiliate of such owner or facility sells the OTC monograph drug produced at such facility directly to wholesalers, retailers, or consumers in the United States.

Submitters

Submitters of OTC Monograph Order Requests (OMOR), except for OMORs which request certain safety-related changes are subject to FY2021 User fees. An OTC Monograph Order Request (OMOR) is a request for an administrative order, with respect to an OTC monograph drug, which is submitted under section 505G(b)(5) of the FD&C Act.

Who is Exempted From the Facility Fee?

“Monograph drug facility” does not include a business or other entity whose only manufacturing or processing activities are one or more of the following:

• Production of clinical research supplies;
• Conduct product testing (g., contract laboratories); or
• Conduct “outer packaging” activities for OTC products that are already in final packaged form (g., creating multipacks).

The OTC Monograph User Fee program does not assess a facility fee for human OTC drug products that are produced under an approved drug application.

OTC monograph drug facilities are exempt from FY 2021 facility fees if they had ceased OTC monograph drug activities, and updated their registration with FDA to that effect, prior to December 31, 2019.

Entities that registered with FDA during the COVID-19 pandemic whose sole activity with respect to OTC monograph drugs during the pandemic consists (or had consisted) of manufacturing OTC hand sanitizer products are not identified as OTC monograph drug facilities subject to OTC facility fees.

Diaz Trade Law assists companies meet the new user fee requirement in a timely manner. Contact Diaz Trade Law at info@diaztradelaw.com to speak with our attorneys to confirm whether your facility is required to pay the new OTC facility user fees.