FDA Announces New Fees for Manufacturers of Over-the-Counter Drugs

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As we explained in a previous alert, one of the lesser-known provisions of the March 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act was a significant overhaul of the way that most OTC drugs are regulated in the United States.
 

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In order to support the new FDA review process for OTC monograph drugs, the CARES Act also established a new user fee system, which, among other things, requires owners and operators of facilities engaged in the manufacturing or processing of OTC monograph drugs to begin paying annual “facility fees.” On March 25, 2021, FDA published a Federal Register Notice in which the agency finally announced the amounts of the first annual OTC drug facility fees (for FY 2021), which are as follows:

  • Finished Dosage Form Manufacturers

    Foreign and domestic facilities engaged in the manufacturing or processing of an OTC monograph drug in its finished dosage form (a so-called “monograph drug facility” or “MDF”) will be required to pay an annual facility fee of $20,322 in FY 2021. The fees for each affected facility will be due by May 10, 2021, and failure to pay the fee will render OTC drugs produced therein “misbranded” (and therefore unlawful to sell in interstate commerce).

  • Contract Manufacturers

    Facilities “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” also are required to pay an annual facility fee, but at a reduced rate—two-thirds of the amount charged to MDFs, or $13,548 in FY 2021. (As with MDF facility fees, the CMO facility fees for FY 2021 are due by May 10, 2021, and failure to pay the required fee will render OTC drugs produced therein “misbranded.”)

In FY 2022 and beyond, OTC drug facility fees generally will be due on the first business day in June.

Not all manufacturers of OTC drugs will be required to pay this new facility fee. Some examples of manufacturers not subject to this fee include:

  • Manufacturers of OTC drugs that are marketed under an FDA-approved new drug application, rather than a monograph;
  • Manufacturers that first registered with FDA after the declaration of the COVID-19 public health emergency solely to manufacture OTC hand sanitizers during the pandemic; and
  • Manufacturers that ceased all activities related to OTC monograph drugs prior to December 31, 2019 and updated their FDA registration accordingly.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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