It is Not All About the Coronavirus: The CARES Act Brings Long-Awaited Over-the-Counter (OTC) Monograph Reform

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On March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (the CARES Act), a $2 trillion emergency relief bill, to help address the economic impact of the Coronavirus Disease 2019 (COVID-19) pandemic.[1]  The CARES Act not only provided an additional $80 million in funding to assist with the Food and Drug Administration’s COVID-19 response efforts (e.g., the development of medical countermeasures and vaccines, promotion of the advanced manufacturing of medical products, and monitoring the medical product supply chain), it also very quietly but completely reformed and modernized the regulation of over-the-counter (OTC) drugs in the United States.[2]  This is the first significant update to the OTC drug regulations since FDA established the OTC Drug Review process in 1972 to evaluate the safety and effectiveness of OTC drug products.

Background

Under the 1972 OTC Drug Review, FDA established monographs for various categories of OTC drugs, from analgesics to cold medications, for example.  These monographs include all the information that a manufacturer needs in order to bring an OTC drug to market without any prior review or approval from FDA.[3]  The monographs include requirements regarding the types of active ingredients that may be used in a particular product and specific verbiage and information regarding indications, dosage, warnings, and directions for use.  If an OTC drug meets the monograph, it is considered Generally Recognized as Safe and Effective (GRASE) and, therefore, not a “new drug.”

While the agency completed its review of a good portion of the OTC drug monographs, many monographs remain in “tentative” status due to the lengthy process required to finalize a monograph, including the requirement to follow Notice and Comment Rulemaking procedures.  The lengthy process, combined with the lack of agency resources to devote to the review of OTC drug active ingredients, has left some monographs pending now for more than 40 years.  During this time, FDA has allowed manufacturers to sell products in those therapeutic categories that are still pending under Tentative Final Monographs (TFMs).  The agency will exercise enforcement discretion if the products are substantially consistent with the conditions described in those monographs.

The Cares Act

The CARES Act significantly changes the OTC Drug Review process by creating a faster process for FDA to review OTC drug ingredients without the need to go through the lengthy Notice and Comment Rulemaking process.  It also incentivizes OTC drug manufacturers with a period of exclusivity for certain innovations, such as bringing a new OTC drug ingredient to market.  In addition, it establishes a User Fees program for OTC drugs that will fund FDA’s continued review of OTC drug ingredients.

We provide a high-level overview of these changes below. We will not discuss every OTC-related change included in the CARES Act.

Regulation of Certain Nonprescription Drugs Marketed Without an Approved Drug Application (Section 3851)

The Cares Act added new Section 505G of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C § 355G), which implemented a number of changes related to the marketing of OTC drug products, including the following:

  • allows FDA to approve changes to OTC drugs by issuing an administrative order (either at FDA’s own initiative or at the request of industry), rather than having to go through full Notice and Comment rulemaking; and
  • provides for a shortened public comment process, a formal dispute resolution process, hearings, and judicial review of final administrative orders.

The new section also modifies the current OTC drug monograph system as follows:

  • Category I drugs marketed pursuant to a Final Monograph are deemed to be GRASE, as long as they comply with all the requirements of the monograph and the “general requirements” (which is the statutory language) for OTC drugs.
  • Category II drugs are deemed to be “new drugs” and require a new drug application, within 180 days from the enactment of the law, in order to continue to be marketed, unless FDA determines it is in the interest of the public health to extend the period during which a specific drug may be marketed without an approval.
  • Category III drugs subject to a TFM and category I drugs subject to an Advanced Notice of Proposed Rulemaking (ANPRM) will not require a new drug application if they comply with all the requirements in the TFM or ANPRM and the general requirements for OTC drugs, until FDA issues a final administrative order addressing the status of these ingredients.
  • Any other OTC drug that does not fall into one of these categories, or is not subject to a final administrative order, is deemed a “new drug” and requires a new drug application for marketing authorization.

Exclusivity Under New Section 505G of the FD&C Act

New section 505G of the FD&C Act also includes a number of provisions related to exclusivity for certain sponsors of “industry-initiated administrative orders.”  In particular, a sponsor of an industry-initiated administrative order may receive an 18-month period of exclusivity if there is:

  • a final administrative order issued in response to a request for a change to a monograph that incorporates an active ingredient not previously evaluated; or
  • a change in conditions of use, for which new human data studies are conducted or sponsored by the requestor (e., Tier 1 OTC monograph order requests[4]).

No exclusivity will be granted for the following:

  • an administrative order request for safety-related changes or any other changes necessary to assure safe use; or
  • changes related to testing for safety or efficacy; or
  • minor changes, such as the reordering of existing information or the addition of information to the “Other information” section of the Drug Facts label for OTC drug products (e., Tier 2 OTC monograph order requests).

Misbranding of OTC Drugs (Section 3852)

The CARES Act also amends section 502 of the FD&C Act (21 U.S.C. § 352) to clarify when an OTC drug will be misbranded. The section clarifies that an OTC drug is misbranded if it:

  • does not comply with the requirements set forth in Section 505G (Regulation of Certain Nonprescription Drugs that are Marketed without an Approved Drug Application); and
  • is manufactured, prepared, propagated, compounded, or processed in a facility that has not paid the required user fees described in Sections 3861 and 3862 of the CARES Act (to be discussed below).

Treatment of Sunscreen Innovation Act (Section 3854)

Section 3854 implements a number of changes to how FDA regulates OTC sunscreen, including the following:

  • allows a sponsor of an OTC sunscreen active ingredient that has pending sunscreen orders pursuant to the Sunscreen Innovation Act (the SIA) to have a choice of either:
    • continuing the review of an ingredient under the process set forth under the SIA; or
    • converting the pending sunscreen order into a request for an administrative order under the CARES Act within 180 days of the enactment of the law;
  • grants sponsors an 18-month period of marketing exclusivity to sell a sunscreen ingredient, subject to certain limitations (see Section 3851), beginning on the date that a final administrative order is issued by FDA, if the sunscreen order is for an active ingredient not previously marketed as a sunscreen monograph ingredient
    • only one 18-month period may be granted per ingredient
  • requires FDA to issue a proposed administrative order addressing OTC sunscreen ingredients “no later than 18 months” after enactment of the CARES Act
  • sunsets the provisions of the SIA at the end of Fiscal Year 2022
  • outlines procedures for allowing sponsors to request confidential meetings with FDA regarding a proposed sunscreen administrative order

Annual Update to Congress on Appropriate Pediatric Indication for Certain OTC Cough and Cold Drugs (Section 3855)

The CARES Act includes a number of provisions related to certain OTC cough and cold drugs for pediatric indications. The Act requires FDA to submit an annual report to Congress describing FDA’s progress in evaluating the cough and cold monograph with respect to children under 6 year of age and, as appropriate, revise the OTC drug cough and cold monograph to address these children (in accordance with the process in new section 505G, described above).

The cough and cold monograph consists of the conditions under which OTC drugs containing antitussive, expectorant, nasal decongestant, or antihistamine active ingredients (or a combination thereof) are GRASE. The annual report requirement applies until FDA has completed its evaluation and revised, in a final order, the cough and cold monograph as it applies to children under 6 year of age.

User Fees Relating to Over-the Counter Drugs (Sections 3861, 3862)

Sections 3861 and 3862 create a user fee program dedicated to OTC monograph drug activities.  Section 3862 establishes facility fees and OTC monograph order request fees beginning with Fiscal Year 2021.[5]  Each person that owns a facility identified as an OTC monograph drug facility on December 31 of the fiscal year “or at any time during the preceding 12-month period” will be assessed an annual fee for each facility. The annual fee for contract manufacturers will be equal to two-thirds of the amount of the fee for an OTC monograph drug facility that is not a contract manufacturing organization facility.  For the first program year, the facilities fee will be due on the later of July 1, 2020 or 45 days after FDA publishes the OTC monograph drug facilities fee for FY 2021.

In addition, each person that submits an OTC monograph order request must pay a user fee.  The amount of the fee shall be:

  • $500,000 for a Tier 1 OTC monograph order request (e.g., a request to add a new ingredient to a monograph)[6], adjusted for inflation; or
  • $100,000 for any Tier 2 OTC monograph order request for certain minor modifications of the monograph, adjusted for inflation.

The fees will be due on the date of the submission of the request.  A fee is not required if FDA determines that the OTC monograph order request seeks to change the Drug Facts labeling of an OTC monograph drug in a way that would add to or strengthen —

  • a contraindication, warning, or precaution;
  • a statement about risks associated with misuse or abuse; or
  • an instruction about dosage and administration that is intended to increase the safe use of the OTC monograph drug.

Failure of a facility to pay the required fees will result in the following:

  • the facility will be placed in a publicly available arrears-list;
  • all OTC monograph drugs manufactured at that facility or containing an ingredient manufactured the facility will be deemed misbranded;
  • an order request will be considered incomplete and will not be accepted for filling unless all fees owed have been paid; and
  • a person subject to fees will be considered ineligible for OTC monograph meetings until all such fees owed have been paid. [7]

AGG Observations

  • OTC drug manufacturers should conduct a careful review of their products’ regulatory statuses to determine how they will be affected by the CARES Act, particularly for those products marketed under a TFM. A product marketed under a TFM will not be deemed a “new drug” requiring approval, as long as it meets the specific conditions set forth in the TFM.
  • Any marketed OTC drug that contains a category II ingredient must be removed from the market within 180 days of the enactment of the CARES Act, unless FDA takes specific action to allow the product to stay on the market. Again, this emphasizes the importance for OTC drug manufacturers to understand the regulatory history of each of their products.
  • While the CARES Act provides for an 18-month exclusivity provision, exclusivity is only available under limited circumstances (g., where an active ingredient has not been previously allowed in a monograph, or where FDA approves a change to an existing monograph where new human clinical data is required for approval).
  • Sunscreen drug manufacturers must take action to determine, as quickly as possible, whether it would be beneficial to convert any pending sunscreen ingredient order under the SIA into an administrative order. The CARES Act only provides manufacturers with 180 days to make this determination.
  • The Congressional focus on pediatric indications for OTC cold and cough drugs could signal changes to that product category in the near future. Until now, manufacturers have voluntarily labeled their OTC cough and cold products not to be used in children under 4 years of age.[8]

[1] The full text of the CARES Act is available at https://www.govinfo.gov/content/pkg/BILLS-116hr748enr/pdf/BILLS-116hr748enr.pdf.

[2] See “FDA on Signing of the COVID-19 Emergency Relief Bill, Including Landmark Over-the-Counter Drug Reform and User Fee Legislation,” available at https://www.fda.gov/news-events/press-announcements/fda-signing-covid-19-emergency-relief-bill-including-landmark-over-counter-drug-reform-and-user-fee.

[3] During the 1972 OTC Review process, the panels classified ingredients in three categories:  Category I: generally recognized as safe and effective for the claimed therapeutic indication; Category II: not generally recognized as safe and effective or unacceptable indications; and Category III: insufficient data available to permit final classification.  See FDA’s “Over the Counter (OTC) Drug Monograph Process” available at https://www.fda.gov/drugs/current-good-manufacturing-practices-cgmp-drugs-reports-guidances-and-additional-information/over-counter-otc-drug-monograph-process.

[4] The term “Tier 1 OTC monograph order request” is defined under the statue 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.”

[5] FDA’s fiscal year 2021 starts on October 1, 2020.

[6] The Cares Act requires that FDA issue guidance on the format and content of the OTC monograph order request.  However, it does not provide a specific timeline for issuing the guidance.

[7] New section 505G establishes a protocol for meeting with FDA officials, when appropriate.   The section requires FDA to establish procedures for sponsors to obtain advice on the studies and other information necessary to support submission, and to discuss other matters relevant to OTC drug regulation and development of new OTC drugs.

[8] See FDA’s Use Caution When Giving Cough and Cold Products to Kids, available at https://www.fda.gov/drugs/special-features/use-caution-when-giving-cough-and-cold-products-kids.

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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