Food Safety Modernization Act Domestic and Foreign Facility Reinspection, Recall, and Importer Reinspection Fee Rates for Fiscal Year 2017, 50525-50528 [2016-18089]
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Federal Register / Vol. 81, No. 147 / Monday, August 1, 2016 / Notices
TABLE 1—ESTIMATED INITIAL REPORTING BURDEN 1
Number of
responses per
respondent
Number of
respondents
Information collection activity
Average
burden per
response
Total annual
responses
Total hours
Submission of Initial Product Report ...................................
Waiver Request From Electronic Submission of Initial
Product Report .................................................................
55
220
12,100
2
24,200
1
1
1
1
1
Total ..............................................................................
........................
........................
........................
........................
24,201
1 There
are no capital costs or operating and maintenance costs associated with the information collection.
TABLE 2—ESTIMATED ANNUAL REPORTING BURDEN 1
Number of
respondents
Information collection activity
Number of
responses per
respondent
Average
burden per
response
Total annual
responses
Total hours
Submission for June Product Report ...........................
Submission for December Product Report ..................
Waiver Request From Electronic Submission of Product Reports.
55
55
1
220
220
1
12,100
12,100
1
0.5 (30 minutes) ....
0.5 (30 minutes) ....
1 ............................
6,050
6,050
1
Total ......................................................................
........................
........................
........................
...............................
12,101
1 There
are no capital costs or operating and maintenance costs associated with the information collection.
Dated: July 26, 2016.
Jeremy Sharp,
Deputy Commissioner for Policy, Planning,
Legislation, and Analysis.
[FR Doc. 2016–18048 Filed 7–29–16; 8:45 am]
BILLING CODE 4164–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA–2016–N–0007]
Food Safety Modernization Act
Domestic and Foreign Facility
Reinspection, Recall, and Importer
Reinspection Fee Rates for Fiscal Year
2017
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Notice.
The Food and Drug
Administration (FDA) is announcing the
fiscal year (FY) 2017 fee rates for certain
domestic and foreign facility
reinspections, failures to comply with a
recall order, and importer reinspections
that are authorized by the Federal Food,
Drug, and Cosmetic Act (the FD&C Act),
as amended by the FDA Food Safety
Modernization Act (FSMA). These fees
are effective on October 1, 2016, and
will remain in effect through September
30, 2017.
FOR FURTHER INFORMATION CONTACT:
Jason Lewis, Office of Resource
Management, Office of Regulatory
Affairs, Food and Drug Administration,
12420 Parklawn Dr., Rm. 2046,
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SUMMARY:
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Rockville, MD 20857, 301–796–5957,
email: Jason.Lewis@fda.hhs.gov.
SUPPLEMENTARY INFORMATION:
I. Background
Section 107 of FSMA (Pub. L. 111–
353) added section 743 to the FD&C Act
(21 U.S.C. 379j–31) to provide FDA with
the authority to assess and collect fees
from, in part: (1) The responsible party
for each domestic facility and the U.S.
agent for each foreign facility subject to
a reinspection, to cover reinspectionrelated costs; (2) the responsible party
for a domestic facility and an importer
who does not comply with a recall
order, to cover food 1 recall activities
associated with such order; and (3) each
importer subject to a reinspection to
cover reinspection-related costs
(sections 743(a)(1)(A), (B), and (D) of the
FD&C Act). Section 743 of the FD&C Act
directs FDA to establish fees for each of
these activities based on an estimate of
100 percent of the costs of each activity
for each year (sections 743(b)(2)(A)(i),
(ii), and (iv)), and these fees must be
made available solely to pay for the
costs of each activity for which the fee
was incurred (section 743(b)(3)). These
fees are effective on October 1, 2016,
and will remain in effect through
September 30, 2017. Section
743(b)(2)(B)(iii) of the FD&C Act directs
FDA to develop a proposed set of
guidelines in consideration of the
burden of fee amounts on small
businesses. As a first step in developing
1 The term ‘‘food’’ for purposes of this document
has the same meaning as such term in section 201(f)
of the FD&C Act (21 U.S.C. 321(f)).
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these guidelines, FDA invited public
comment on the potential impact of the
fees authorized by section 743 of the
FD&C Act on small businesses (76 FR
45818, August 1, 2011). The comment
period for this request ended November
30, 2011. As stated in FDA’s September
2011 ‘‘Guidance for Industry:
Implementation of the Fee Provisions of
Section 107 of the FDA Food Safety
Modernization Act,’’ (https://
www.fda.gov/Food/
GuidanceRegulation/
GuidanceDocuments
RegulatoryInformation/FoodDefense/
ucm274176.htm), because FDA
recognizes that for small businesses the
full cost recovery of FDA reinspection
or recall oversight could impose severe
economic hardship, FDA intends to
consider reducing certain fees for those
firms. FDA does not intend to issue
invoices for reinspection or recall order
fees until FDA publishes a guidance
document outlining the process through
which firms may request a reduction in
fees.
In addition, as stated in the
September 2011 Guidance, FDA is in
the process of considering various
issues associated with the assessment
and collection of importer reinspection
fees. The fee rates set forth in this notice
will be used to determine any importer
reinspection fees assessed in FY 2017.
II. Estimating the Average Cost of a
Supported Direct FDA Work Hour for
FY 2017
FDA is required to estimate 100
percent of its costs for each activity in
order to establish fee rates for FY 2017.
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In each year, the costs of salary (or
personnel compensation) and benefits
for FDA employees account for between
50 and 60 percent of the funds available
to, and used by, FDA. Almost all of the
remaining funds (operating funds)
available to FDA are used to support
FDA employees for paying rent, travel,
utility, information technology, and
other operating costs.
A. Estimating the Full Cost per Direct
Work Hour in FY 2015
In general, the starting point for
estimating the full cost per direct work
hour is to estimate the cost of a full-time
equivalent (FTE) or paid staff year for
the relevant activity. This is done by
dividing the total funds allocated to the
elements of FDA primarily responsible
for carrying out the activities for which
fees are being collected by the total
FTEs allocated to those activities. For
the purposes of the reinspection and
recall order fees authorized by section
743 of the FD&C Act (the fees that are
the subject of this notice), primary
responsibility for the activities for
which fees will be collected rests with
FDA’s Office of Regulatory Affairs
(ORA). ORA carries out inspections and
other field-based activities on behalf of
FDA’s product centers, including the
Center for Food Safety and Applied
Nutrition (CFSAN) and the Center for
Veterinary Medicine (CVM). Thus, as
the starting point for estimating the full
cost per direct work hour, FDA will use
the total funds allocated to ORA for
CFSAN and CVM related field activities.
The most recent FY with available data
was FY 2015. In that year, FDA
obligated a total of $666,722,326 for
ORA in carrying out the CFSAN and
CVM related field activities work,
excluding the cost of inspection travel.
In that same year, the number of ORA
staff primarily conducting the CFSAN
and CVM related field activities was
3,022 FTEs or paid staff years. Dividing
$666,722,326 by 3,022 FTEs results in
an average cost of $220,623 per paid
staff year, excluding travel costs.
Not all of the FTEs required to
support the activities for which fees will
be collected are conducting direct work
such as inspecting or reinspecting
facilities, examining imports, or
monitoring recalls. Data collected over a
number of years and used consistently
in other FDA user fee programs (e.g.,
under the Prescription Drug User Fee
Act (PDUFA) and the Medical Device
User Fee and Modernization Act
(MDUFA)) show that every seven FTEs
who perform direct FDA work require
three indirect and supporting FTEs.
These indirect and supporting FTEs
function in budget, facility, human
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resource, information technology,
planning, security, administrative
support, legislative liaison, legal
counsel, program management, and
other essential program areas. On
average, two of these indirect and
supporting FTEs are located in ORA or
the FDA center where the direct work is
being conducted, and one of them is
located in the Office of the
Commissioner. To get the fully
supported cost of an FTE, FDA needs to
multiply the average cost of an FTE by
1.43, to take into account the indirect
and supporting functions. The 1.43
factor is derived by dividing the 10 fully
supported FTEs by 7 direct FTEs. In FY
2015, the average cost of an FTE was
$220,623. Multiplying this amount by
1.43 results in an average fully
supported cost of $315,491 per FTE,
excluding the cost of inspection travel.
To calculate an hourly rate, FDA must
divide the average fully supported cost
of $315,491 per FTE by the average
number of supported direct FDA work
hours. See table 1.
TABLE 1—SUPPORTED DIRECT FDA
WORK HOURS IN A PAID STAFF YEAR
Total number of hours in a paid staff
year .................................................
Less:
10 paid holidays ..............................
20 days of annual leave .................
10 days of sick leave ......................
10 days of training ..........................
2 hours of meetings per week ........
Net Supported Direct FDA Work
Hours Available for Assignments .......................................
2,080
80
160
80
80
80
1,600
Dividing the average fully supported
cost of an FTE in FY 2015 ($315,491) by
the total number of supported direct
work hours available for assignment
(1,600) results in an average fully
supported cost of $197 (rounded to the
nearest dollar), excluding inspection
travel costs, per supported direct work
hour in FY 2015—the last FY for which
data are available.
B. Adjusting FY 2015 Costs for Inflation
To Estimate FY 2017 Costs
To adjust the hourly rate for FY 2017,
FDA must estimate the cost of inflation
in each year for FY 2016 and FY 2017.
FDA uses the method prescribed for
estimating inflationary costs under the
PDUFA provisions of the FD&C Act
(section 736(c)(1) (21 U.S.C. 379h(c)(1)),
the statutory method for inflation
adjustment in the FD&C Act that FDA
has used consistently. FDA previously
determined the FY 2016 inflation rate to
be 2.0266; this rate was published in the
FY 2016 PDUFA user fee rates notice in
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the Federal Register of August 3, 2015
(80 FR 46028). Utilizing the method set
forth in section 736(c)(1) of the FD&C
Act, FDA has calculated an inflation
rate of 1.5468 percent for FY 2017 and
FDA intends to use this inflation rate to
make inflation adjustments for FY 2017
for several of its user fee programs; the
derivation of this rate is published in
the Federal Register in the FY 2017
notice for the PDUFA user fee rates. The
compounded inflation rate for FYs 2016
and 2017, therefore, is 3.6047 percent (1
plus 2.0266 percent times 1 plus 1.5468
percent).
Increasing the FY 2015 average fully
supported cost per supported direct
FDA work hour of $197 (excluding
inspection travel costs) by 3.6047
percent yields an inflationary adjusted
estimated cost of $204 per a supported
direct work hour in FY 2017, excluding
inspection travel costs. FDA will use
this base unit fee in determining the
hourly fee rate for reinspection and
recall order fees for FY 2017 prior to
including domestic or foreign travel
costs as applicable for the activity.
In FY 2015, ORA spent a total of
$4,497,078 for domestic regulatory
inspection travel costs and General
Services Administration Vehicle costs
related to FDA’s CFSAN and CVM field
activities programs. The total ORA
domestic travel costs spent is then
divided by the 8,987 CFSAN and CVM
domestic inspections, which averages a
total of $500 per inspection. These
inspections average 32.14 hours per
inspection. Dividing $500 per
inspection by 32.14 hours per
inspection results in a total and an
additional cost of $16 per hour spent for
domestic inspection travel costs in FY
2015. To adjust $16 for inflationary
increases in FY 2016 and FY 2017, FDA
must multiply it by the same inflation
factor mentioned previously in this
document (1.036047), which results in
an estimated cost of $17 dollars per paid
hour in addition to $204 for a total of
$221 per paid hour ($204 plus $17) for
each direct hour of work requiring
domestic inspection travel. FDA will
use these rates in charging fees in FY
2017 when domestic travel is required.
In FY 2015, ORA spent a total of
$2,521,216 on 269 foreign inspection
trips related to FDA’s CFSAN and CVM
field activities programs, which
averaged a total of $9,373 per foreign
inspection trip. These trips averaged 3
weeks (or 120 paid hours) per trip.
Dividing $9,373 per trip by 120 hours
per trip results in a total and an
additional cost of $78 per paid hour
spent for foreign inspection travel costs
in FY 2015. To adjust $78 for
inflationary increases in FY 2016 and
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situation. FDA intends to issue guidance
to provide additional information about
the circumstances under which FDA
would consider non-compliance to be
materially related to a food safety
requirement of the FD&C Act.
Under section 743(a)(1)(A) of the
FD&C Act, FDA is directed to assess and
collect fees from ‘‘the responsible party
for each domestic facility (as defined in
section 415(b) (21 U.S.C. 350d(b))) and
the United States agent for each foreign
TABLE 2—FSMA FEE SCHEDULE FOR facility subject to a reinspection’’ to
cover reinspection-related costs.
FY 2017
Section 743(a)(2)(A)(i) of the FD&C
Act defines the term ‘‘reinspection’’
Fee rates
with respect to domestic facilities as ‘‘1
Fee category
for FY
2017
or more inspections conducted under
section 704 subsequent to an inspection
Hourly rate if domestic travel is
conducted under such provision which
required ...................................
$221
identified non-compliance materially
Hourly rate if foreign travel is required ......................................
285 related to a food safety requirement of
th[e] Act, specifically to determine
whether compliance has been achieved
III. Fees for Reinspections of Domestic
to the Secretary’s satisfaction.’’
or Foreign Facilities Under Section
The FD&C Act does not contain a
743(a)(1)(A)
definition of ‘‘reinspection’’ specific to
foreign facilities. In order to give
A. What will cause this fee to be
meaning to the language in section
assessed?
743(a)(1)(A) of the FD&C Act to collect
The fee will be assessed for a
fees from the U.S. agent of a foreign
reinspection conducted under section
facility subject to a reinspection, the
704 of the FD&C Act (21 U.S.C. 374) to
Agency is using the following definition
determine whether corrective actions
of ‘‘reinspection’’ for purposes of
have been implemented and are
assessing and collecting fees under
effective and compliance has been
section 743(a)(1)(A), with respect to a
achieved to the Secretary of Health and
foreign facility, ‘‘1 or more inspections
Human Services’ (the Secretary) (and,
conducted by officers or employees duly
by delegation, FDA’s) satisfaction at a
designated by the Secretary subsequent
facility that manufactures, processes,
to such an inspection which identified
packs, or holds food for consumption
non-compliance materially related to a
necessitated as a result of a previous
food safety requirement of the FD&C
inspection (also conducted under
Act, specifically to determine whether
section 704) of this facility, which had
compliance has been achieved to the
a final classification of Official Action
Secretary’s (and, by delegation, FDA’s)
Indicated (OAI) conducted by or on
satisfaction.’’
behalf of FDA, when FDA determined
This definition allows FDA to fulfill
the non-compliance was materially
the mandate to assess and collect fees
related to food safety requirements of
from the U.S. agent of a foreign facility
the FD&C Act. FDA considers such non- in the event that an inspection reveals
compliance to include non-compliance
non-compliance materially related to a
with a statutory or regulatory
food safety requirement of the FD&C
requirement under section 402 of the
Act, causing one or more subsequent
FD&C Act (21 U.S.C. 342) and section
inspections to determine whether
403(w) of the FD&C Act (21 U.S.C.
compliance has been achieved to the
343(w)). However, FDA does not
Secretary’s (and, by delegation, FDA’s)
consider non-compliance that is
satisfaction. By requiring the initial
materially related to a food safety
inspection to be conducted by officers
requirement to include circumstances
or employees duly designated by the
where the non-compliance is of a
Secretary, the definition ensures that a
technical nature and not food safety
foreign facility would be subject to fees
related (e.g., failure to comply with a
only in the event that FDA, or an entity
food standard or incorrect font size on
designated to act on its behalf, has made
a food label). Determining when nonthe requisite identification at an initial
compliance, other than under sections
inspection of non-compliance materially
402 and 403(w) of the FD&C Act, is
related to a food safety requirement of
materially related to a food safety
the FD&C Act. The definition of
requirement of the FD&C Act may
‘‘reinspection-related costs’’ in section
depend on the facts of a particular
743(a)(2)(B) of the FD&C Act relates to
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FY 2017, FDA must multiply it by the
same inflation factor mentioned
previously in this document (1.036047),
which results in an estimated cost of
$81 dollars per paid hour in addition to
$204 for a total of $285 per paid hour
($204 plus $81) for each direct hour of
work requiring foreign inspection travel.
FDA will use these rates in charging fees
in FY 2017 when foreign travel is
required.
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50527
both a domestic facility reinspection
and a foreign facility reinspection, as
described in section 743(a)(1)(A).
B. Who will be responsible for paying
this fee?
The FD&C Act states that this fee is to
be paid by the responsible party for each
domestic facility (as defined in section
415(b) of the FD&C Act) and by the U.S.
agent for each foreign facility (section
743(a)(1)(A) of the FD&C Act). This is
the party to whom FDA will send the
invoice for any fees that are assessed
under this section.
C. How much will this fee be?
The fee is based on the number of
direct hours spent on such
reinspections, including time spent
conducting the physical surveillance
and/or compliance reinspection at the
facility, or whatever components of
such an inspection are deemed
necessary, making preparations and
arrangements for the reinspection,
traveling to and from the facility,
preparing any reports, analyzing any
samples or examining any labels if
required, and performing other activities
as part of the OAI reinspection until the
facility is again determined to be in
compliance. The direct hours spent on
each such reinspection will be billed at
the appropriate hourly rate shown in
table 2 of this document.
IV. Fees for Non-Compliance With a
Recall Order Under Section 743(a)(1)(B)
A. What will cause this fee to be
assessed?
The fee will be assessed for not
complying with a recall order under
section 423(d) (21 U.S.C. 350l(d)) or
section 412(f) of the FD&C Act (21
U.S.C. 350a(f)) to cover food recall
activities associated with such order
performed by the Secretary (and by
delegation, FDA) (section 743(a)(1)(B) of
the FD&C Act). Non-compliance may
include the following: (1) Not initiating
a recall as ordered by FDA; (2) not
conducting the recall in the manner
specified by FDA in the recall order; or
(3) not providing FDA with requested
information regarding the recall, as
ordered by FDA.
B. Who will be responsible for paying
this fee?
Section 743(a)(1)(B) of the FD&C Act
states that the fee is to be paid by the
responsible party for a domestic facility
(as defined in section 415(b) of the
FD&C Act) and an importer who does
not comply with a recall order under
section 423 or under section 412(f) of
the FD&C Act. In other words, the party
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Federal Register / Vol. 81, No. 147 / Monday, August 1, 2016 / Notices
paying the fee would be the party that
received the recall order.
C. How much will this fee be?
The fee is based on the number of
direct hours spent on taking action in
response to the firm’s failure to comply
with a recall order. Types of activities
could include conducting recall audit
checks, reviewing periodic status
reports, analyzing the status reports and
the results of the audit checks,
conducting inspections, traveling to and
from locations, and monitoring product
disposition. The direct hours spent on
each such recall will be billed at the
appropriate hourly rate shown in table
2 of this document.
V. How must the fees be paid?
An invoice will be sent to the
responsible party for paying the fee after
FDA completes the work on which the
invoice is based. Payment must be made
within 90 days of the invoice date in
U.S. currency by check, bank draft, or
U.S. postal money order payable to the
order of the Food and Drug
Administration. Detailed payment
information will be included with the
invoice when it is issued.
VI. What are the consequences of not
paying these fees?
Under section 743(e)(2) of the FD&C
Act, any fee that is not paid within 30
days after it is due shall be treated as a
claim of the U.S. Government subject to
provisions of subchapter II of chapter 37
of title 31, United States Code.
Dated: July 27, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016–18089 Filed 7–29–16; 8:45 am]
BILLING CODE 4164–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA–2016–N–0007]
Outsourcing Facility Fee Rates for
Fiscal Year 2017
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Notice.
The Food and Drug
Administration (FDA) is announcing the
fiscal year (FY) 2017 rates for the
establishment and re-inspection fees
related to entities that compound
human drugs and elect to register as
outsourcing facilities under the Federal
Food, Drug, and Cosmetic Act (the
FD&C Act). The FD&C Act authorizes
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FDA to assess and collect an annual
establishment fee from outsourcing
facilities, as well as a re-inspection fee
for each re-inspection of an outsourcing
facility. This document establishes the
FY 2017 rates for the small business
establishment fee ($5,279), the nonsmall business establishment fee
($16,852), and the re-inspection fee
($15,837) for outsourcing facilities;
provides information on how the fees
for FY 2017 were determined; and
describes the payment procedures
outsourcing facilities should follow.
These fee rates are effective October 1,
2016, and will remain in effect through
September 30, 2017.
FOR FURTHER INFORMATION CONTACT: For
more information on human drug
compounding and outsourcing facility
fees, visit FDA’s Web site at: https://
www.fda.gov/Drugs/Guidance
ComplianceRegulatoryInformation/
PharmacyCompounding/default.htm.
For questions relating to this notice:
Monica R. Vega, Office of Financial
Management, Food and Drug
Administration, 8455 Colesville Rd.,
COLE–14202J, Silver Spring, MD
20993–0002, 301–796–2127.
SUPPLEMENTARY INFORMATION:
I. Background
On November 27, 2013, President
Obama signed the Drug Quality and
Security Act (DQSA), legislation that
contains important provisions relating
to the oversight of compounding of
human drugs. Title I of this law, the
Compounding Quality Act, created a
new section 503B in the FD&C Act (21
U.S.C. 353b). Under section 503B of the
FD&C Act, a human drug compounder
can become an ‘‘outsourcing facility.’’
Outsourcing facilities, as defined in
section 503B(d)(4) of the FD&C Act, are
facilities that meet all of the conditions
described in section 503B(a), including
registering with FDA as an outsourcing
facility and paying an annual
establishment fee. If the conditions of
section 503B are met, a drug
compounded by or under the direct
supervision of a licensed pharmacist in
an outsourcing facility is exempt from
three sections of the FD&C Act: (1)
Section 502(f)(1) (21 U.S.C. 352(f)(1))
concerning the labeling of drugs with
adequate directions for use; (2) section
505 (21 U.S.C. 355) concerning the
approval of human drug products under
new drug applications (NDAs) or
abbreviated new drug applications
(ANDAs); and (3) section 582 (21 U.S.C.
360eee–1) concerning drug supply chain
security requirements. Drugs
compounded in outsourcing facilities
are not exempt from the requirements of
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section 501(a)(2)(B) of the FD&C Act (21
U.S.C. 351(a)(2)(B)) concerning current
good manufacturing practice
requirements for drugs.
Section 744K of the FD&C Act (21
U.S.C. 379j–62) authorizes FDA to
assess and collect the following fees
associated with outsourcing facilities:
(1) An annual establishment fee from
each outsourcing facility and (2) a reinspection fee from each outsourcing
facility subject to a re-inspection (see
section 744K(a)(1) of the FD&C Act).
Under statutorily defined conditions, a
qualified applicant may pay a reduced
small business establishment fee (see
section 744K(c)(4) of the FD&C Act).
FDA announced in the Federal
Register of November 24, 2014 (79 FR
69856), the availability of a final
guidance for industry entitled ‘‘Fees for
Human Drug Compounding Outsourcing
Facilities Under Sections 503B and
744K of the FD&C Act.’’ The guidance
provides additional information on the
annual fees for outsourcing facilities
and adjustments required by law, reinspection fees, how to submit payment,
the effect of failure to pay fees, and how
to qualify as a small business to obtain
a reduction of the annual establishment
fee. This guidance can be accessed on
FDA’s Web site at: https://www.fda.gov/
downloads/Drugs/GuidanceCompliance
RegulatoryInformation/Guidances/
UCM391102.pdf.
II. Fees for FY 2017
A. Methodology for Calculating FY 2017
Adjustment Factors
1. Inflation Adjustment Factor
Section 744K(c)(2) of the FD&C Act
specifies the annual inflation
adjustment for outsourcing facility fees.
The inflation adjustment has two
components: One based on FDA’s
payroll costs and one based on FDA’s
non-payroll costs for the first three of
the four previous fiscal years. The
payroll component of the annual
inflation adjustment is calculated by
taking the average change in the FDA’s
per-full time equivalent (FTE) personnel
compensation and benefits (PC&B) in
the first three of the four previous fiscal
years (see section 744K(c)(2)(A)(ii) of
the FD&C Act). FDA’s total annual
spending on PC&B is divided by the
total number of FTEs per fiscal year to
determine the average PC&B per FTE.
Table 1 summarizes the actual cost
and FTE data for the specified fiscal
years, and provides the percent change
from the previous fiscal year and the
average percent change over the first
three of the four fiscal years preceding
FY 2017. The 3-year average is 1.8759
percent.
E:\FR\FM\01AUN1.SGM
01AUN1
]]>Agencies
[Federal Register Volume 81, Number 147 (Monday, August 1, 2016)]
[Notices]
[Pages 50525-50528]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18089]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA-2016-N-0007]
Food Safety Modernization Act Domestic and Foreign Facility
Reinspection, Recall, and Importer Reinspection Fee Rates for Fiscal
Year 2017
AGENCY: Food and Drug Administration, HHS.
ACTION: Notice.
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SUMMARY: The Food and Drug Administration (FDA) is announcing the
fiscal year (FY) 2017 fee rates for certain domestic and foreign
facility reinspections, failures to comply with a recall order, and
importer reinspections that are authorized by the Federal Food, Drug,
and Cosmetic Act (the FD&C Act), as amended by the FDA Food Safety
Modernization Act (FSMA). These fees are effective on October 1, 2016,
and will remain in effect through September 30, 2017.
FOR FURTHER INFORMATION CONTACT: Jason Lewis, Office of Resource
Management, Office of Regulatory Affairs, Food and Drug Administration,
12420 Parklawn Dr., Rm. 2046, Rockville, MD 20857, 301-796-5957, email:
Jason.Lewis@fda.hhs.gov.
SUPPLEMENTARY INFORMATION:
I. Background
Section 107 of FSMA (Pub. L. 111-353) added section 743 to the FD&C
Act (21 U.S.C. 379j-31) to provide FDA with the authority to assess and
collect fees from, in part: (1) The responsible party for each domestic
facility and the U.S. agent for each foreign facility subject to a
reinspection, to cover reinspection-related costs; (2) the responsible
party for a domestic facility and an importer who does not comply with
a recall order, to cover food \1\ recall activities associated with
such order; and (3) each importer subject to a reinspection to cover
reinspection-related costs (sections 743(a)(1)(A), (B), and (D) of the
FD&C Act). Section 743 of the FD&C Act directs FDA to establish fees
for each of these activities based on an estimate of 100 percent of the
costs of each activity for each year (sections 743(b)(2)(A)(i), (ii),
and (iv)), and these fees must be made available solely to pay for the
costs of each activity for which the fee was incurred (section
743(b)(3)). These fees are effective on October 1, 2016, and will
remain in effect through September 30, 2017. Section 743(b)(2)(B)(iii)
of the FD&C Act directs FDA to develop a proposed set of guidelines in
consideration of the burden of fee amounts on small businesses. As a
first step in developing these guidelines, FDA invited public comment
on the potential impact of the fees authorized by section 743 of the
FD&C Act on small businesses (76 FR 45818, August 1, 2011). The comment
period for this request ended November 30, 2011. As stated in FDA's
September 2011 ``Guidance for Industry: Implementation of the Fee
Provisions of Section 107 of the FDA Food Safety Modernization Act,''
(https://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/FoodDefense/ucm274176.htm),
because FDA recognizes that for small businesses the full cost recovery
of FDA reinspection or recall oversight could impose severe economic
hardship, FDA intends to consider reducing certain fees for those
firms. FDA does not intend to issue invoices for reinspection or recall
order fees until FDA publishes a guidance document outlining the
process through which firms may request a reduction in fees.
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\1\ The term ``food'' for purposes of this document has the same
meaning as such term in section 201(f) of the FD&C Act (21 U.S.C.
321(f)).
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In addition, as stated in the September 2011 Guidance, FDA is in
the process of considering various issues associated with the
assessment and collection of importer reinspection fees. The fee rates
set forth in this notice will be used to determine any importer
reinspection fees assessed in FY 2017.
II. Estimating the Average Cost of a Supported Direct FDA Work Hour for
FY 2017
FDA is required to estimate 100 percent of its costs for each
activity in order to establish fee rates for FY 2017.
[[Page 50526]]
In each year, the costs of salary (or personnel compensation) and
benefits for FDA employees account for between 50 and 60 percent of the
funds available to, and used by, FDA. Almost all of the remaining funds
(operating funds) available to FDA are used to support FDA employees
for paying rent, travel, utility, information technology, and other
operating costs.
A. Estimating the Full Cost per Direct Work Hour in FY 2015
In general, the starting point for estimating the full cost per
direct work hour is to estimate the cost of a full-time equivalent
(FTE) or paid staff year for the relevant activity. This is done by
dividing the total funds allocated to the elements of FDA primarily
responsible for carrying out the activities for which fees are being
collected by the total FTEs allocated to those activities. For the
purposes of the reinspection and recall order fees authorized by
section 743 of the FD&C Act (the fees that are the subject of this
notice), primary responsibility for the activities for which fees will
be collected rests with FDA's Office of Regulatory Affairs (ORA). ORA
carries out inspections and other field-based activities on behalf of
FDA's product centers, including the Center for Food Safety and Applied
Nutrition (CFSAN) and the Center for Veterinary Medicine (CVM). Thus,
as the starting point for estimating the full cost per direct work
hour, FDA will use the total funds allocated to ORA for CFSAN and CVM
related field activities. The most recent FY with available data was FY
2015. In that year, FDA obligated a total of $666,722,326 for ORA in
carrying out the CFSAN and CVM related field activities work, excluding
the cost of inspection travel. In that same year, the number of ORA
staff primarily conducting the CFSAN and CVM related field activities
was 3,022 FTEs or paid staff years. Dividing $666,722,326 by 3,022 FTEs
results in an average cost of $220,623 per paid staff year, excluding
travel costs.
Not all of the FTEs required to support the activities for which
fees will be collected are conducting direct work such as inspecting or
reinspecting facilities, examining imports, or monitoring recalls. Data
collected over a number of years and used consistently in other FDA
user fee programs (e.g., under the Prescription Drug User Fee Act
(PDUFA) and the Medical Device User Fee and Modernization Act (MDUFA))
show that every seven FTEs who perform direct FDA work require three
indirect and supporting FTEs. These indirect and supporting FTEs
function in budget, facility, human resource, information technology,
planning, security, administrative support, legislative liaison, legal
counsel, program management, and other essential program areas. On
average, two of these indirect and supporting FTEs are located in ORA
or the FDA center where the direct work is being conducted, and one of
them is located in the Office of the Commissioner. To get the fully
supported cost of an FTE, FDA needs to multiply the average cost of an
FTE by 1.43, to take into account the indirect and supporting
functions. The 1.43 factor is derived by dividing the 10 fully
supported FTEs by 7 direct FTEs. In FY 2015, the average cost of an FTE
was $220,623. Multiplying this amount by 1.43 results in an average
fully supported cost of $315,491 per FTE, excluding the cost of
inspection travel.
To calculate an hourly rate, FDA must divide the average fully
supported cost of $315,491 per FTE by the average number of supported
direct FDA work hours. See table 1.
Table 1--Supported Direct FDA Work Hours in a Paid Staff Year
------------------------------------------------------------------------
------------------------------------------------------------------------
Total number of hours in a paid staff year...................... 2,080
Less:
10 paid holidays.............................................. 80
20 days of annual leave....................................... 160
10 days of sick leave......................................... 80
10 days of training........................................... 80
2 hours of meetings per week.................................. 80
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Net Supported Direct FDA Work Hours Available for 1,600
Assignments................................................
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Dividing the average fully supported cost of an FTE in FY 2015
($315,491) by the total number of supported direct work hours available
for assignment (1,600) results in an average fully supported cost of
$197 (rounded to the nearest dollar), excluding inspection travel
costs, per supported direct work hour in FY 2015--the last FY for which
data are available.
B. Adjusting FY 2015 Costs for Inflation To Estimate FY 2017 Costs
To adjust the hourly rate for FY 2017, FDA must estimate the cost
of inflation in each year for FY 2016 and FY 2017. FDA uses the method
prescribed for estimating inflationary costs under the PDUFA provisions
of the FD&C Act (section 736(c)(1) (21 U.S.C. 379h(c)(1)), the
statutory method for inflation adjustment in the FD&C Act that FDA has
used consistently. FDA previously determined the FY 2016 inflation rate
to be 2.0266; this rate was published in the FY 2016 PDUFA user fee
rates notice in the Federal Register of August 3, 2015 (80 FR 46028).
Utilizing the method set forth in section 736(c)(1) of the FD&C Act,
FDA has calculated an inflation rate of 1.5468 percent for FY 2017 and
FDA intends to use this inflation rate to make inflation adjustments
for FY 2017 for several of its user fee programs; the derivation of
this rate is published in the Federal Register in the FY 2017 notice
for the PDUFA user fee rates. The compounded inflation rate for FYs
2016 and 2017, therefore, is 3.6047 percent (1 plus 2.0266 percent
times 1 plus 1.5468 percent).
Increasing the FY 2015 average fully supported cost per supported
direct FDA work hour of $197 (excluding inspection travel costs) by
3.6047 percent yields an inflationary adjusted estimated cost of $204
per a supported direct work hour in FY 2017, excluding inspection
travel costs. FDA will use this base unit fee in determining the hourly
fee rate for reinspection and recall order fees for FY 2017 prior to
including domestic or foreign travel costs as applicable for the
activity.
In FY 2015, ORA spent a total of $4,497,078 for domestic regulatory
inspection travel costs and General Services Administration Vehicle
costs related to FDA's CFSAN and CVM field activities programs. The
total ORA domestic travel costs spent is then divided by the 8,987
CFSAN and CVM domestic inspections, which averages a total of $500 per
inspection. These inspections average 32.14 hours per inspection.
Dividing $500 per inspection by 32.14 hours per inspection results in a
total and an additional cost of $16 per hour spent for domestic
inspection travel costs in FY 2015. To adjust $16 for inflationary
increases in FY 2016 and FY 2017, FDA must multiply it by the same
inflation factor mentioned previously in this document (1.036047),
which results in an estimated cost of $17 dollars per paid hour in
addition to $204 for a total of $221 per paid hour ($204 plus $17) for
each direct hour of work requiring domestic inspection travel. FDA will
use these rates in charging fees in FY 2017 when domestic travel is
required.
In FY 2015, ORA spent a total of $2,521,216 on 269 foreign
inspection trips related to FDA's CFSAN and CVM field activities
programs, which averaged a total of $9,373 per foreign inspection trip.
These trips averaged 3 weeks (or 120 paid hours) per trip. Dividing
$9,373 per trip by 120 hours per trip results in a total and an
additional cost of $78 per paid hour spent for foreign inspection
travel costs in FY 2015. To adjust $78 for inflationary increases in FY
2016 and
[[Page 50527]]
FY 2017, FDA must multiply it by the same inflation factor mentioned
previously in this document (1.036047), which results in an estimated
cost of $81 dollars per paid hour in addition to $204 for a total of
$285 per paid hour ($204 plus $81) for each direct hour of work
requiring foreign inspection travel. FDA will use these rates in
charging fees in FY 2017 when foreign travel is required.
Table 2--FSMA Fee Schedule for FY 2017
------------------------------------------------------------------------
Fee rates
Fee category for FY
2017
------------------------------------------------------------------------
Hourly rate if domestic travel is required.................. $221
Hourly rate if foreign travel is required................... 285
------------------------------------------------------------------------
III. Fees for Reinspections of Domestic or Foreign Facilities Under
Section 743(a)(1)(A)
A. What will cause this fee to be assessed?
The fee will be assessed for a reinspection conducted under section
704 of the FD&C Act (21 U.S.C. 374) to determine whether corrective
actions have been implemented and are effective and compliance has been
achieved to the Secretary of Health and Human Services' (the Secretary)
(and, by delegation, FDA's) satisfaction at a facility that
manufactures, processes, packs, or holds food for consumption
necessitated as a result of a previous inspection (also conducted under
section 704) of this facility, which had a final classification of
Official Action Indicated (OAI) conducted by or on behalf of FDA, when
FDA determined the non-compliance was materially related to food safety
requirements of the FD&C Act. FDA considers such non-compliance to
include non-compliance with a statutory or regulatory requirement under
section 402 of the FD&C Act (21 U.S.C. 342) and section 403(w) of the
FD&C Act (21 U.S.C. 343(w)). However, FDA does not consider non-
compliance that is materially related to a food safety requirement to
include circumstances where the non-compliance is of a technical nature
and not food safety related (e.g., failure to comply with a food
standard or incorrect font size on a food label). Determining when non-
compliance, other than under sections 402 and 403(w) of the FD&C Act,
is materially related to a food safety requirement of the FD&C Act may
depend on the facts of a particular situation. FDA intends to issue
guidance to provide additional information about the circumstances
under which FDA would consider non-compliance to be materially related
to a food safety requirement of the FD&C Act.
Under section 743(a)(1)(A) of the FD&C Act, FDA is directed to
assess and collect fees from ``the responsible party for each domestic
facility (as defined in section 415(b) (21 U.S.C. 350d(b))) and the
United States agent for each foreign facility subject to a
reinspection'' to cover reinspection-related costs.
Section 743(a)(2)(A)(i) of the FD&C Act defines the term
``reinspection'' with respect to domestic facilities as ``1 or more
inspections conducted under section 704 subsequent to an inspection
conducted under such provision which identified non-compliance
materially related to a food safety requirement of th[e] Act,
specifically to determine whether compliance has been achieved to the
Secretary's satisfaction.''
The FD&C Act does not contain a definition of ``reinspection''
specific to foreign facilities. In order to give meaning to the
language in section 743(a)(1)(A) of the FD&C Act to collect fees from
the U.S. agent of a foreign facility subject to a reinspection, the
Agency is using the following definition of ``reinspection'' for
purposes of assessing and collecting fees under section 743(a)(1)(A),
with respect to a foreign facility, ``1 or more inspections conducted
by officers or employees duly designated by the Secretary subsequent to
such an inspection which identified non-compliance materially related
to a food safety requirement of the FD&C Act, specifically to determine
whether compliance has been achieved to the Secretary's (and, by
delegation, FDA's) satisfaction.''
This definition allows FDA to fulfill the mandate to assess and
collect fees from the U.S. agent of a foreign facility in the event
that an inspection reveals non-compliance materially related to a food
safety requirement of the FD&C Act, causing one or more subsequent
inspections to determine whether compliance has been achieved to the
Secretary's (and, by delegation, FDA's) satisfaction. By requiring the
initial inspection to be conducted by officers or employees duly
designated by the Secretary, the definition ensures that a foreign
facility would be subject to fees only in the event that FDA, or an
entity designated to act on its behalf, has made the requisite
identification at an initial inspection of non-compliance materially
related to a food safety requirement of the FD&C Act. The definition of
``reinspection-related costs'' in section 743(a)(2)(B) of the FD&C Act
relates to both a domestic facility reinspection and a foreign facility
reinspection, as described in section 743(a)(1)(A).
B. Who will be responsible for paying this fee?
The FD&C Act states that this fee is to be paid by the responsible
party for each domestic facility (as defined in section 415(b) of the
FD&C Act) and by the U.S. agent for each foreign facility (section
743(a)(1)(A) of the FD&C Act). This is the party to whom FDA will send
the invoice for any fees that are assessed under this section.
C. How much will this fee be?
The fee is based on the number of direct hours spent on such
reinspections, including time spent conducting the physical
surveillance and/or compliance reinspection at the facility, or
whatever components of such an inspection are deemed necessary, making
preparations and arrangements for the reinspection, traveling to and
from the facility, preparing any reports, analyzing any samples or
examining any labels if required, and performing other activities as
part of the OAI reinspection until the facility is again determined to
be in compliance. The direct hours spent on each such reinspection will
be billed at the appropriate hourly rate shown in table 2 of this
document.
IV. Fees for Non-Compliance With a Recall Order Under Section
743(a)(1)(B)
A. What will cause this fee to be assessed?
The fee will be assessed for not complying with a recall order
under section 423(d) (21 U.S.C. 350l(d)) or section 412(f) of the FD&C
Act (21 U.S.C. 350a(f)) to cover food recall activities associated with
such order performed by the Secretary (and by delegation, FDA) (section
743(a)(1)(B) of the FD&C Act). Non-compliance may include the
following: (1) Not initiating a recall as ordered by FDA; (2) not
conducting the recall in the manner specified by FDA in the recall
order; or (3) not providing FDA with requested information regarding
the recall, as ordered by FDA.
B. Who will be responsible for paying this fee?
Section 743(a)(1)(B) of the FD&C Act states that the fee is to be
paid by the responsible party for a domestic facility (as defined in
section 415(b) of the FD&C Act) and an importer who does not comply
with a recall order under section 423 or under section 412(f) of the
FD&C Act. In other words, the party
[[Page 50528]]
paying the fee would be the party that received the recall order.
C. How much will this fee be?
The fee is based on the number of direct hours spent on taking
action in response to the firm's failure to comply with a recall order.
Types of activities could include conducting recall audit checks,
reviewing periodic status reports, analyzing the status reports and the
results of the audit checks, conducting inspections, traveling to and
from locations, and monitoring product disposition. The direct hours
spent on each such recall will be billed at the appropriate hourly rate
shown in table 2 of this document.
V. How must the fees be paid?
An invoice will be sent to the responsible party for paying the fee
after FDA completes the work on which the invoice is based. Payment
must be made within 90 days of the invoice date in U.S. currency by
check, bank draft, or U.S. postal money order payable to the order of
the Food and Drug Administration. Detailed payment information will be
included with the invoice when it is issued.
VI. What are the consequences of not paying these fees?
Under section 743(e)(2) of the FD&C Act, any fee that is not paid
within 30 days after it is due shall be treated as a claim of the U.S.
Government subject to provisions of subchapter II of chapter 37 of
title 31, United States Code.
Dated: July 27, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-18089 Filed 7-29-16; 8:45 am]
BILLING CODE 4164-01-P
