Outsourcing Facility Fee Rates for Fiscal Year 2018, 35962-35965 [2017-16185]
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35962
Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / Notices
For questions relating to this notice:
Rachel Richter, Office of Financial
Management, Food and Drug
Administration, 8455 Colesville Rd.,
COLE–14216, Silver Spring, MD 20993–
0002, 301–796–7111.
SUPPLEMENTARY INFORMATION:
FY 2018 that qualify for fees after the
December 2017 billing.
Dated: July 26, 2017.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2017–16181 Filed 8–1–17; 8:45 am]
BILLING CODE 4164–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA–2017–N–0007]
Outsourcing Facility Fee Rates for
Fiscal Year 2018
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Notice.
The Food and Drug
Administration (FDA) is announcing the
fiscal year (FY) 2018 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
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 2018 rates for the small business
establishment fee ($5,364), the nonsmall business establishment fee
($17,364), and the re-inspection fee
($16,093) for outsourcing facilities;
provides information on how the fees
for FY 2018 were determined; and
describes the payment procedures
outsourcing facilities should follow.
These fee rates are effective October 1,
2017, and will remain in effect through
September 30, 2018.
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/
GuidanceCompliance
RegulatoryInformation/
PharmacyCompounding/default.htm.
SUMMARY:
I. Background
The Drug Quality and Security Act
(DQSA) contains important provisions
relating to the oversight of
compounding 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
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 2018
A. Methodology for Calculating FY 2018
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 3 of the 4
previous fiscal years. The payroll
component of the annual inflation
adjustment is calculated by taking the
average change in FDA’s per-full time
equivalent (FTE) personnel
compensation and benefits (PC&B) in
the first 3 of the 4 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 3
of the 4 fiscal years preceding FY 2018.
The 3-year average is 2.2354 percent.
TABLE 1—FDA PC&BS EACH YEAR AND PERCENT CHANGE
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Fiscal year
2014
Total PC&B ..............................................................................
Total FTE .................................................................................
PC&B per FTE .........................................................................
Percent change from previous year ........................................
Section 744K(c)(2)(A)(ii) of the FD&C
Act specifies that this 2.2354 percent
should be multiplied by the proportion
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$2,054,937,000
14,555
$141,184
2.3451%
2015
$2,232,304,000
15,484
$144,168
2.1136%
2016
$2,414,728,159
16,381
$147,408
2.2474%
of PC&B to total costs of an average FDA
FTE for the same 3 fiscal years.
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3-Year average
..............................
..............................
..............................
2.2354%
Federal Register / Vol. 82, No. 147 / Wednesday, August 2, 2017 / Notices
35963
TABLE 2—FDA PC&BS AS A PERCENT OF FDA TOTAL COSTS OF AN AVERAGE FTE
Fiscal year
2014
Total PC&B ..............................................................................
Total Costs ...............................................................................
PC&B Percent ..........................................................................
The payroll adjustment is 2.2354
percent multiplied by 49.6819 percent,
or 1.1106 percent.
Section 744K(c)(2)(A)(iii) of the FD&C
Act specifies that the portion of the
inflation adjustment for non-payroll
costs for FY 2018 is equal to the average
annual percent change in the Consumer
Price Index (CPI) for urban consumers
$2,054,937,000
$4,298,476,000
47.8062%
2015
2016
$2,232,304,000
$4,510,565,000
49.4906%
(U.S. City Average; Not Seasonally
Adjusted; All items; Annual Index) for
the first 3 years of the preceding 4 years
of available data, multiplied by the
proportion of all non-PC&B costs to total
costs of an average FDA FTE for the
same period.
Table 2 provides the summary data
for the percent change in the specified
$2,414,728,159
$4,666,236,000
51.7490%
3-Year average
..............................
..............................
49.6819%
CPI for U.S. cities. These data are
published by the Bureau of Labor
Statistics and can be found on its Web
site: https://data.bls.gov/cgi-bin/
surveymost?cu. The data can be viewed
by checking the box marked ‘‘U.S. All
items, 1982–84 = 100—CUUR0000SA0’’
and then selecting ‘‘Retrieve Data’’.
TABLE 3—ANNUAL AND 3-YEAR AVERAGE PERCENT CHANGE IN U.S. CITY AVERAGE CPI
Year
2014
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Annual CPI ...............................................................................
Annual Percent Change ..........................................................
Section 744K(c)(2)(A)(iii) of the FD&C
Act specifies that this 1.0008 percent
should be multiplied by the proportion
of all non-PC&B costs to total costs of an
average FTE for the same 3 fiscal years.
The proportion of all non-PC&B costs to
total costs of an average FDA FTE for
FYs 2014 to 2016 is 50.3181 percent
(100 percent¥49.6819 percent =
50.3181 percent). Therefore, the nonpay adjustment is 1.0008 percent times
50.3181 percent, or 0.5036 percent.
The PC&B component (1.1106
percent) is added to the non-PC&B
component (0.5036 percent), for a total
inflation adjustment of 1.6142 percent
(rounded). Section 744K(c)(2)(A)(i) of
the FD&C Act specifies that one is
added to that figure, making the
inflation adjustment 1.016142.
Section 744K(c)(2)(B) of the FD&C Act
provides for this inflation adjustment to
be compounded after FY 2015. This
factor for FY 2018 (1.6142 percent) is
compounded by adding one to it, and
then multiplying it by one plus the
inflation adjustment factor for FY 2017
(5.5792 percent), as published in the
Federal Register of August 1, 2016 (81
FR 50528 at 50529). The result of this
multiplication of the inflation factors for
the 3 years since FY 2015 (1.016142 ×
1.055792) becomes the inflation
adjustment for FY 2018. For FY 2018,
the inflation adjustment is 7.2835
percent (rounded). We then add one,
making the FY 2018 inflation
adjustment factor 1.072835.
2. Small Business Adjustment Factor
Section 744K(c)(3) of the FD&C Act
specifies that in addition to the inflation
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236.736
1.6222%
2015
237.017
0.1187%
adjustment factor, the establishment fee
for non-small businesses is to be further
adjusted for a small business adjustment
factor. Section 744K(c)(3)(B) of the
FD&C Act provides that the small
business adjustment factor is the
adjustment to the establishment fee for
non-small businesses that is necessary
to achieve total fees equaling the
amount that FDA would have collected
if no entity qualified for the small
business exception in section 744K(c)(4)
of the FD&C Act. Additionally, section
744K(c)(5)(A) states that in establishing
the small business adjustment factor for
a fiscal year, FDA shall provide for the
crediting of fees from the previous year
to the next year if FDA overestimated
the amount of the small business
adjustment factor for such previous
fiscal year.
Therefore, to calculate the small
business adjustment to the
establishment fee for non-small
businesses for FY 2018, FDA must
estimate: (1) The number of outsourcing
facilities that will pay the reduced fee
for small businesses for FY 2018 and (2)
the total fee revenue it would have
collected if no entity had qualified for
the small business exception (i.e., if
each entity that registers as an
outsourcing facility for FY 2018 were to
pay the inflation-adjusted fee amount of
$16,093).
With respect to (1), FDA estimates
that 12 entities will qualify for small
business exceptions and will pay the
reduced fee for FY 2018. With respect
to (2), to estimate the total number of
entities that will register as outsourcing
facilities for FY 2018, FDA used data
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2016
240.007
1.2615%
3-Year average
..............................
1.0008%
submitted by outsourcing facilities
through the voluntary registration
process, which began in December 2013.
Accordingly, FDA estimates that 76
outsourcing facilities, including 12
small businesses, will be registered with
FDA in FY 2018.
If the projected 76 outsourcing
facilities paid the full inflation-adjusted
fee of $16,093, this would result in total
revenue of $1,223,068 in FY 2018
($16,093 × 76). However, 12 of the
entities that are expected to register as
outsourcing facilities for FY 2018 are
projected to qualify for the small
business exception and to pay one-third
of the full fee ($5,364 × 12), totaling
$64,368 instead of paying the full fee
($16,093 × 12), which would total
$193,116. This would leave a potential
shortfall of $128,748
($193,116¥$64,368).
Additionally, section 744K(c)(5)(A) of
the FD&C Act states that in establishing
the small business adjustment factor for
a fiscal year, FDA shall provide for the
crediting of fees from the previous year
to the next year if FDA overestimated
the amount of the small business
adjustment factor for such previous
fiscal year. FDA has determined that it
is appropriate to credit excess fees
collected from the last completed fiscal
year, due to the inability to conclusively
determine the amount of excess fees
from the fiscal year that is in progress
at the time this calculation is made.
This crediting is done by comparing the
small business adjustment factor for the
last completed fiscal year, FY 2016
($1,771), to what would have been the
small business adjustment factor for FY
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2016 ($1,007) if FDA had estimated
perfectly.
The calculation for what the small
business adjustment would have been if
FDA had estimated perfectly begins by
determining the total target collections
(15,000 × [inflation adjustment factor] ×
[number of registrants]). For the most
recent complete fiscal year, FY 2016,
this was $1,061,480 ($15,610 × 68). The
actual FY 2016 revenue from the 68
total registrants (i.e., 62 registrants
paying FY 2016 non-small business
establishment fee and six small business
registrants) paying establishment fees is
$999,038. $999,038 is calculated as
follows: [FY 2016 Non-Small Business
Establishment Fee adjusted for inflation
only] × [total number of registrants in
FY 2016 paying Non-Small Business
Establishment Fee] + [FY 2016 Small
Business Establishment Fee] × [total
number of small business registrants in
FY 2016 paying Small Business
Establishment Fee]. $15,610 × 62 +
$5,203 × 6 = $999,038. This left a
shortfall of $62,442 from the estimated
total target collection amount
($1,061,480¥$999,038). $62,442
divided by the total number of
registrants in FY 2016 paying Standard
Establishment Fee (62) equals $1,007.
The difference between the small
business adjustment factor used in FY
2016 and the small business adjustment
factor that would have been used had
FDA estimated perfectly, is $764
($1,771¥$1,007). The $764 is then
multiplied by the number of actual
registrants who paid the standard fee for
FY 2016 (62), which provides us a total
excess collection of $47,385 in FY
2016.1
Therefore, to calculate the small
business adjustment factor for FY 2018,
FDA subtracts $47,385 from the
projected shortfall of $128,748 for FY
2018 to arrive at the numerator for the
small business adjustment amount,
which equals $81,363. This number
divided by 64 (the number of expected
non-small businesses for FY 2018) is the
small business adjustment amount for
FY 2018, which is $1,271.
1 The small business adjustment credit in place
for FY 2017 fee setting is not relevant to setting fees
for FY 2018 due to having more complete collection
information.
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B. FY 2018 Rates for Small Business
Establishment Fee, Non-Small Business
Establishment Fee, and Re-Inspection
Fee
1. Establishment Fee for Qualified Small
Businesses 2
The amount of the establishment fee
for a qualified small business is equal to
$15,000 multiplied by the inflation
adjustment factor for that fiscal year,
divided by three (see section
744K(c)(4)(A) and (c)(1)(A) of the FD&C
Act). The inflation adjustment factor for
FY 2018 is 1.072835. See section II.A.1
for the methodology used to calculate
the FY 2018 inflation adjustment factor.
Therefore, the establishment fee for a
qualified small business for FY 2018 is
one third of $16,093, which equals
$5,364 (rounded to the nearest dollar).
2. Establishment Fee for Non-Small
Businesses
Under section 744K(c) of the FD&C
Act, the amount of the establishment fee
for a non-small business is equal to
$15,000 multiplied by the inflation
adjustment factor for that fiscal year,
plus the small business adjustment
factor for that fiscal year, and plus or
minus an adjustment factor to account
for over- or under-collections due to the
small business adjustment factor in the
prior year. The inflation adjustment
factor for FY 2018 is 1.072835. The
small business adjustment amount for
FY 2018 is $1,271. See section II.A.2 for
the methodology used to calculate the
small business adjustment factor for FY
2018. Therefore, the establishment fee
for a non-small business for FY 2018 is
$15,000 multiplied by 1.072835 plus
$1,271, which equals $17,364 (rounded
to the nearest dollar).
3. Re-Inspection Fee
Section 744K(c)(1)(B) of the FD&C Act
provides that the amount of the FY 2018
re-inspection fee is equal to $15,000,
multiplied by the inflation adjustment
factor for that fiscal year. The inflation
adjustment factor for FY 2018 is
1.072835. Therefore, the re-inspection
fee for FY 2018 is $15,000 multiplied by
1.072835, which equals $16,093
2 To qualify for a small business reduction of the
FY 2018 establishment fee, entities had to submit
their exception requests by April 30, 2017. See
section 744K(c)(4)(B) of the FD&C Act. Although the
time for requesting a small business exception for
FY 2018 has now passed, an entity that wishes to
request a small business exception for FY 2019
should consult section 744K(c)(4) of the FD&C Act
and section III.D of FDA’s guidance for industry
entitled ‘‘Fees for Human Drug Compounding
Outsourcing Facilities Under Sections 503B and
744K of the FD&C Act,’’ which can be accessed on
FDA’s Web site at https://www.fda.gov/downloads/
drugs/guidancecomplianceregulatoryinformation/
guidances/ucm391102.pdf.
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(rounded to the nearest dollar). There is
no reduction in this fee for small
businesses.
C. Summary of FY 2018 Fee Rates
TABLE 4—OUTSOURCING FACILITY
FEES
Qualified Small Business Establishment Fee ................
Non-Small Business Establishment Fee .....................
Re-inspection Fee ................
$5,364
17,364
16,093
III. Fee Payment Options and
Procedures
A. Establishment Fee
Once an entity submits registration
information and FDA has determined
that the information is complete, the
entity will incur the annual
establishment fee. FDA will send an
invoice to the entity, via email to the
email address indicated in the
registration file, or via regular mail if
email is not an option. The invoice will
contain information regarding the
obligation incurred, the amount owed,
and payment procedures. A facility will
not be registered as an outsourcing
facility until it has paid the annual
establishment fee under section 744K of
the FD&C Act. Accordingly, it is
important that facilities seeking to
operate as outsourcing facilities pay all
fees immediately upon receiving an
invoice. If an entity does not pay the full
invoiced amount within 15 calendar
days after FDA issues the invoice, FDA
will consider the submission of
registration information to have been
withdrawn and adjust the invoice to
reflect that no fee is due.
Outsourcing facilities that registered
in FY 2017 and wish to maintain their
status as an outsourcing facility in FY
2018 must register during the annual
registration period that lasts from
October 1, 2017, to December 31, 2017.
Failure to register and complete
payment by December 31, 2017, will
result in a loss of status as an
outsourcing facility on January 1, 2018.
Entities should submit their registration
information no later than December 10,
2017, to allow enough time for review
of the registration information,
invoicing, and payment of fees before
the end of the registration period.
B. Re-Inspection Fee
FDA will issue invoices for each reinspection after the conclusion of the reinspection, via email to the email
address indicated in the registration file
or via regular mail if email is not an
option. Invoices must be paid within 30
days.
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C. Fee Payment Procedures
1. The preferred payment method is
online using electronic check
(Automated Clearing House (ACH) also
known as eCheck) or credit card
(Discover, VISA, MasterCard, American
Express). Secure electronic payments
can be submitted using the User Fees
Payment Portal at https://
userfees.fda.gov/pay. (Note: Only full
payments are accepted. No partial
payments can be made online.) Once
you search for your invoice, click ‘‘Pay
Now’’ to be redirected to Pay.gov.
Electronic payment options are based on
the balance due. Payment by credit card
is available for balances less than
$25,000. If the balance exceeds this
amount, only the ACH option is
available. Payments must be made using
U.S bank accounts as well as U.S. credit
cards.
2. If paying with a paper check:
Checks must be in U.S. currency from
a U.S. bank and made payable to the
Food and Drug Administration.
Payments can be mailed to: Food and
Drug Administration, P.O. Box 979033,
St. Louis, MO 63197–9000. If a check is
sent by a courier that requests a street
address, the courier can deliver the
check to: U.S. Bank, Attn: Government
Lockbox 979033, 1005 Convention
Plaza, St. Louis, MO 63101. (Note: This
U.S. Bank address is for courier delivery
only. If you have any questions
concerning courier delivery, contact the
U.S. Bank at 314–418–4013).
3. When paying by wire transfer, the
invoice number must be included.
Without the invoice number the
payment may not be applied. Regarding
re-inspection fees, if the payment
amount is not applied, the invoice
amount will be referred to collections.
The originating financial institution
may charge a wire transfer fee. If the
financial institution charges a wire
transfer fee, it is required that the
outsourcing facility add that amount to
the payment to ensure that the invoice
is paid in full. Use the following
account information when sending a
wire transfer: New York Federal Reserve
Bank, U.S. Dept of Treasury, TREAS
NYC, 33 Liberty St., New York, NY
10045, Acct. No. 75060099, Routing No.
021030004, SWIFT: FRNYUS33,
Beneficiary: FDA, 8455 Colesville Rd.,
14th Floor, Silver Spring, MD 20993–
0002. If needed, FDA’s tax identification
number is 53–0196965.
Dated: July 25, 2017.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2017–16185 Filed 8–1–17; 8:45 am]
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DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Food and Drug Administration
Over-the-Counter Monograph User
Fees: Stakeholder Meeting
AGENCY:
Food and Drug Administration,
HHS.
ACTION:
Notice of public meeting.
The Food and Drug
Administration (FDA) will hold a
webinar for stakeholders on August 23,
2017, to provide stakeholders with a
status update on the process of FDA and
industry discussions on an Over-theCounter (OTC) Monograph user fee
program that began in July 2016. FDA
will also provide an overview of
proposed performance goals and
procedures related to a potential new
OTC monograph user fee program. This
webinar is intended to be a followup to
the June 10, 2016, public meeting and
the September 6, 2016, stakeholder
webinar on a potential new OTC
monograph user fee program.
DATES: FDA will hold a webinar for
stakeholders on Wednesday, August 23,
2017, from 12:30 p.m. to 2 p.m. EDT.
FOR FURTHER INFORMATION CONTACT:
Mary Vienna, Office of Executive
Programs, Center for Drug Evaluation
and Research, Food and Drug
Administration, 10903 New Hampshire
Ave., Silver Spring, MD 20903–0002,
301–796–4150, email:
OTCMonographUserFeeProgram@
fda.hhs.gov.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Introduction
On June 10, 2016, FDA held a public
meeting on a potential new user fee
program for nonprescription (over-thecounter or OTC) monograph drugs. In
the announcement of the public meeting
in the Federal Register (May 11, 2016,
81 FR 29275), FDA invited public
comment as the Agency considers a
user-fee program for OTC monograph
drugs. A user-fee program would
provide funding to supplement
congressional non-user-fee
appropriations, and would support
timely and efficient FDA review of the
efficacy and safety of ingredients
included in or proposed for inclusion in
a monograph. Interested persons were
given until July 11, 2016, to submit
comments. A stakeholder webinar was
held on September 6, 2016, which
provided stakeholders with a status
update on the process of FDA and
industry discussions that began in July
2016. In the notice of public meeting
(August 8, 2016, 81 FR 52444), FDA
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35965
invited public comments and interested
parties were given until October 6, 2016,
to submit comments.
FDA will hold a webinar for
stakeholders on August 23, 2017, to
provide stakeholders with a status
update on the process of FDA and
industry discussions on an OTC
Monograph user fee program that began
in July 2016. FDA will also provide an
overview of proposed performance goals
and procedures related to a potential
new OTC monograph user fee program.
This webinar is intended to be a
followup to the June 10, 2016, public
meeting and the September 6, 2016,
stakeholder webinar on a potential new
OTC monograph user fee program.
II. Background
Meeting minutes from FDA and
industry discussions on a new OTC
monograph user fee program can be
found at: https://www.fda.gov/
ForIndustry/UserFees/
OTCMonographUserFee/default.htm.
The proposed OTC Monograph User Fee
Program Performance Goals and
Procedures—Fiscal Years 2018–2022
document can also be found at that
same Web site.
Additional background information
on OTC monograph drugs (such as how
OTC drugs can be marketed, and the
differences between marketing through
approved applications and marketing
under the monographs), factors FDA
considers important in developing a
user-fee program, and the questions for
which FDA asked the public to consider
and provide input, can be found in the
Federal Register notice from the June
10, 2016, public meeting (https://
www.federalregister.gov/articles/2016/
05/11/2016-11098/over-the-countermonograph-user-fees-public-meetingrequest-for-comments). The meeting
transcript, meeting recording, and
presentations from the June 10, 2016,
public meeting, which can serve as
further background information, can be
found at: https://www.fda.gov/
ForIndustry/UserFees/
OTCMonographUserFee/default.htm. A
summary of the September 6, 2016,
stakeholders’ webinar, can also be found
at: https://www.fda.gov/ForIndustry/
UserFees/OTCMonographUserFee/
default.htm.
III. Stakeholder Meeting Participation
FDA is seeking participation at the
webinar by stakeholders, including
scientific and academic experts, health
care professionals, representatives of
patient and consumer advocacy groups,
and representatives of the OTC
monograph industry. Participating in
the webinar is free. The webinar format
E:\FR\FM\02AUN1.SGM
02AUN1
Agencies
[Federal Register Volume 82, Number 147 (Wednesday, August 2, 2017)]
[Notices]
[Pages 35962-35965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-16185]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA-2017-N-0007]
Outsourcing Facility Fee Rates for Fiscal Year 2018
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) 2018 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 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 2018 rates for the small
business establishment fee ($5,364), the non-small business
establishment fee ($17,364), and the re-inspection fee ($16,093) for
outsourcing facilities; provides information on how the fees for FY
2018 were determined; and describes the payment procedures outsourcing
facilities should follow. These fee rates are effective October 1,
2017, and will remain in effect through September 30, 2018.
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/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/default.htm.
For questions relating to this notice: Rachel Richter, Office of
Financial Management, Food and Drug Administration, 8455 Colesville
Rd., COLE-14216, Silver Spring, MD 20993-0002, 301-796-7111.
SUPPLEMENTARY INFORMATION:
I. Background
The Drug Quality and Security Act (DQSA) contains important
provisions relating to the oversight of compounding 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 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 re-inspection 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, re-inspection 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/GuidanceComplianceRegulatoryInformation/Guidances/UCM391102.pdf.
II. Fees for FY 2018
A. Methodology for Calculating FY 2018 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 3 of the 4 previous fiscal years. The
payroll component of the annual inflation adjustment is calculated by
taking the average change in FDA's per-full time equivalent (FTE)
personnel compensation and benefits (PC&B) in the first 3 of the 4
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 3 of the 4 fiscal
years preceding FY 2018. The 3-year average is 2.2354 percent.
Table 1--FDA PC&Bs Each Year and Percent Change
----------------------------------------------------------------------------------------------------------------
Fiscal year 2014 2015 2016 3-Year average
----------------------------------------------------------------------------------------------------------------
Total PC&B.......................... $2,054,937,000 $2,232,304,000 $2,414,728,159 .................
Total FTE........................... 14,555 15,484 16,381 .................
PC&B per FTE........................ $141,184 $144,168 $147,408 .................
Percent change from previous year... 2.3451% 2.1136% 2.2474% 2.2354%
----------------------------------------------------------------------------------------------------------------
Section 744K(c)(2)(A)(ii) of the FD&C Act specifies that this
2.2354 percent should be multiplied by the proportion of PC&B to total
costs of an average FDA FTE for the same 3 fiscal years.
[[Page 35963]]
Table 2--FDA PC&Bs as a Percent of FDA Total Costs of an Average FTE
----------------------------------------------------------------------------------------------------------------
Fiscal year 2014 2015 2016 3-Year average
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Total PC&B.......................... $2,054,937,000 $2,232,304,000 $2,414,728,159 .................
Total Costs......................... $4,298,476,000 $4,510,565,000 $4,666,236,000 .................
PC&B Percent........................ 47.8062% 49.4906% 51.7490% 49.6819%
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The payroll adjustment is 2.2354 percent multiplied by 49.6819
percent, or 1.1106 percent.
Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that the
portion of the inflation adjustment for non-payroll costs for FY 2018
is equal to the average annual percent change in the Consumer Price
Index (CPI) for urban consumers (U.S. City Average; Not Seasonally
Adjusted; All items; Annual Index) for the first 3 years of the
preceding 4 years of available data, multiplied by the proportion of
all non-PC&B costs to total costs of an average FDA FTE for the same
period.
Table 2 provides the summary data for the percent change in the
specified CPI for U.S. cities. These data are published by the Bureau
of Labor Statistics and can be found on its Web site: https://data.bls.gov/cgi-bin/surveymost?cu. The data can be viewed by checking
the box marked ``U.S. All items, 1982-84 = 100--CUUR0000SA0'' and then
selecting ``Retrieve Data''.
Table 3--Annual and 3-Year Average Percent Change in U.S. City Average CPI
----------------------------------------------------------------------------------------------------------------
Year 2014 2015 2016 3-Year average
----------------------------------------------------------------------------------------------------------------
Annual CPI.......................... 236.736 237.017 240.007 .................
Annual Percent Change............... 1.6222% 0.1187% 1.2615% 1.0008%
----------------------------------------------------------------------------------------------------------------
Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that this
1.0008 percent should be multiplied by the proportion of all non-PC&B
costs to total costs of an average FTE for the same 3 fiscal years. The
proportion of all non-PC&B costs to total costs of an average FDA FTE
for FYs 2014 to 2016 is 50.3181 percent (100 percent-49.6819 percent =
50.3181 percent). Therefore, the non-pay adjustment is 1.0008 percent
times 50.3181 percent, or 0.5036 percent.
The PC&B component (1.1106 percent) is added to the non-PC&B
component (0.5036 percent), for a total inflation adjustment of 1.6142
percent (rounded). Section 744K(c)(2)(A)(i) of the FD&C Act specifies
that one is added to that figure, making the inflation adjustment
1.016142.
Section 744K(c)(2)(B) of the FD&C Act provides for this inflation
adjustment to be compounded after FY 2015. This factor for FY 2018
(1.6142 percent) is compounded by adding one to it, and then
multiplying it by one plus the inflation adjustment factor for FY 2017
(5.5792 percent), as published in the Federal Register of August 1,
2016 (81 FR 50528 at 50529). The result of this multiplication of the
inflation factors for the 3 years since FY 2015 (1.016142 x 1.055792)
becomes the inflation adjustment for FY 2018. For FY 2018, the
inflation adjustment is 7.2835 percent (rounded). We then add one,
making the FY 2018 inflation adjustment factor 1.072835.
2. Small Business Adjustment Factor
Section 744K(c)(3) of the FD&C Act specifies that in addition to
the inflation adjustment factor, the establishment fee for non-small
businesses is to be further adjusted for a small business adjustment
factor. Section 744K(c)(3)(B) of the FD&C Act provides that the small
business adjustment factor is the adjustment to the establishment fee
for non-small businesses that is necessary to achieve total fees
equaling the amount that FDA would have collected if no entity
qualified for the small business exception in section 744K(c)(4) of the
FD&C Act. Additionally, section 744K(c)(5)(A) states that in
establishing the small business adjustment factor for a fiscal year,
FDA shall provide for the crediting of fees from the previous year to
the next year if FDA overestimated the amount of the small business
adjustment factor for such previous fiscal year.
Therefore, to calculate the small business adjustment to the
establishment fee for non-small businesses for FY 2018, FDA must
estimate: (1) The number of outsourcing facilities that will pay the
reduced fee for small businesses for FY 2018 and (2) the total fee
revenue it would have collected if no entity had qualified for the
small business exception (i.e., if each entity that registers as an
outsourcing facility for FY 2018 were to pay the inflation-adjusted fee
amount of $16,093).
With respect to (1), FDA estimates that 12 entities will qualify
for small business exceptions and will pay the reduced fee for FY 2018.
With respect to (2), to estimate the total number of entities that will
register as outsourcing facilities for FY 2018, FDA used data submitted
by outsourcing facilities through the voluntary registration process,
which began in December 2013. Accordingly, FDA estimates that 76
outsourcing facilities, including 12 small businesses, will be
registered with FDA in FY 2018.
If the projected 76 outsourcing facilities paid the full inflation-
adjusted fee of $16,093, this would result in total revenue of
$1,223,068 in FY 2018 ($16,093 x 76). However, 12 of the entities that
are expected to register as outsourcing facilities for FY 2018 are
projected to qualify for the small business exception and to pay one-
third of the full fee ($5,364 x 12), totaling $64,368 instead of paying
the full fee ($16,093 x 12), which would total $193,116. This would
leave a potential shortfall of $128,748 ($193,116-$64,368).
Additionally, section 744K(c)(5)(A) of the FD&C Act states that in
establishing the small business adjustment factor for a fiscal year,
FDA shall provide for the crediting of fees from the previous year to
the next year if FDA overestimated the amount of the small business
adjustment factor for such previous fiscal year. FDA has determined
that it is appropriate to credit excess fees collected from the last
completed fiscal year, due to the inability to conclusively determine
the amount of excess fees from the fiscal year that is in progress at
the time this calculation is made. This crediting is done by comparing
the small business adjustment factor for the last completed fiscal
year, FY 2016 ($1,771), to what would have been the small business
adjustment factor for FY
[[Page 35964]]
2016 ($1,007) if FDA had estimated perfectly.
The calculation for what the small business adjustment would have
been if FDA had estimated perfectly begins by determining the total
target collections (15,000 x [inflation adjustment factor] x [number of
registrants]). For the most recent complete fiscal year, FY 2016, this
was $1,061,480 ($15,610 x 68). The actual FY 2016 revenue from the 68
total registrants (i.e., 62 registrants paying FY 2016 non-small
business establishment fee and six small business registrants) paying
establishment fees is $999,038. $999,038 is calculated as follows: [FY
2016 Non-Small Business Establishment Fee adjusted for inflation only]
x [total number of registrants in FY 2016 paying Non-Small Business
Establishment Fee] + [FY 2016 Small Business Establishment Fee] x
[total number of small business registrants in FY 2016 paying Small
Business Establishment Fee]. $15,610 x 62 + $5,203 x 6 = $999,038. This
left a shortfall of $62,442 from the estimated total target collection
amount ($1,061,480-$999,038). $62,442 divided by the total number of
registrants in FY 2016 paying Standard Establishment Fee (62) equals
$1,007.
The difference between the small business adjustment factor used in
FY 2016 and the small business adjustment factor that would have been
used had FDA estimated perfectly, is $764 ($1,771-$1,007). The $764 is
then multiplied by the number of actual registrants who paid the
standard fee for FY 2016 (62), which provides us a total excess
collection of $47,385 in FY 2016.\1\
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\1\ The small business adjustment credit in place for FY 2017
fee setting is not relevant to setting fees for FY 2018 due to
having more complete collection information.
---------------------------------------------------------------------------
Therefore, to calculate the small business adjustment factor for FY
2018, FDA subtracts $47,385 from the projected shortfall of $128,748
for FY 2018 to arrive at the numerator for the small business
adjustment amount, which equals $81,363. This number divided by 64 (the
number of expected non-small businesses for FY 2018) is the small
business adjustment amount for FY 2018, which is $1,271.
B. FY 2018 Rates for Small Business Establishment Fee, Non-Small
Business Establishment Fee, and Re-Inspection Fee
1. Establishment Fee for Qualified Small Businesses \2\
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\2\ To qualify for a small business reduction of the FY 2018
establishment fee, entities had to submit their exception requests
by April 30, 2017. See section 744K(c)(4)(B) of the FD&C Act.
Although the time for requesting a small business exception for FY
2018 has now passed, an entity that wishes to request a small
business exception for FY 2019 should consult section 744K(c)(4) of
the FD&C Act and section III.D of FDA's guidance for industry
entitled ``Fees for Human Drug Compounding Outsourcing Facilities
Under Sections 503B and 744K of the FD&C Act,'' which can be
accessed on FDA's Web site at https://www.fda.gov/downloads/drugs/
guidancecomplianceregulatoryinformation/guidances/ucm391102.pdf.
---------------------------------------------------------------------------
The amount of the establishment fee for a qualified small business
is equal to $15,000 multiplied by the inflation adjustment factor for
that fiscal year, divided by three (see section 744K(c)(4)(A) and
(c)(1)(A) of the FD&C Act). The inflation adjustment factor for FY 2018
is 1.072835. See section II.A.1 for the methodology used to calculate
the FY 2018 inflation adjustment factor. Therefore, the establishment
fee for a qualified small business for FY 2018 is one third of $16,093,
which equals $5,364 (rounded to the nearest dollar).
2. Establishment Fee for Non-Small Businesses
Under section 744K(c) of the FD&C Act, the amount of the
establishment fee for a non-small business is equal to $15,000
multiplied by the inflation adjustment factor for that fiscal year,
plus the small business adjustment factor for that fiscal year, and
plus or minus an adjustment factor to account for over- or under-
collections due to the small business adjustment factor in the prior
year. The inflation adjustment factor for FY 2018 is 1.072835. The
small business adjustment amount for FY 2018 is $1,271. See section
II.A.2 for the methodology used to calculate the small business
adjustment factor for FY 2018. Therefore, the establishment fee for a
non-small business for FY 2018 is $15,000 multiplied by 1.072835 plus
$1,271, which equals $17,364 (rounded to the nearest dollar).
3. Re-Inspection Fee
Section 744K(c)(1)(B) of the FD&C Act provides that the amount of
the FY 2018 re-inspection fee is equal to $15,000, multiplied by the
inflation adjustment factor for that fiscal year. The inflation
adjustment factor for FY 2018 is 1.072835. Therefore, the re-inspection
fee for FY 2018 is $15,000 multiplied by 1.072835, which equals $16,093
(rounded to the nearest dollar). There is no reduction in this fee for
small businesses.
C. Summary of FY 2018 Fee Rates
Table 4--Outsourcing Facility Fees
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------------------------------------------------------------------------
Qualified Small Business Establishment Fee.............. $5,364
Non-Small Business Establishment Fee.................... 17,364
Re-inspection Fee....................................... 16,093
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III. Fee Payment Options and Procedures
A. Establishment Fee
Once an entity submits registration information and FDA has
determined that the information is complete, the entity will incur the
annual establishment fee. FDA will send an invoice to the entity, via
email to the email address indicated in the registration file, or via
regular mail if email is not an option. The invoice will contain
information regarding the obligation incurred, the amount owed, and
payment procedures. A facility will not be registered as an outsourcing
facility until it has paid the annual establishment fee under section
744K of the FD&C Act. Accordingly, it is important that facilities
seeking to operate as outsourcing facilities pay all fees immediately
upon receiving an invoice. If an entity does not pay the full invoiced
amount within 15 calendar days after FDA issues the invoice, FDA will
consider the submission of registration information to have been
withdrawn and adjust the invoice to reflect that no fee is due.
Outsourcing facilities that registered in FY 2017 and wish to
maintain their status as an outsourcing facility in FY 2018 must
register during the annual registration period that lasts from October
1, 2017, to December 31, 2017. Failure to register and complete payment
by December 31, 2017, will result in a loss of status as an outsourcing
facility on January 1, 2018. Entities should submit their registration
information no later than December 10, 2017, to allow enough time for
review of the registration information, invoicing, and payment of fees
before the end of the registration period.
B. Re-Inspection Fee
FDA will issue invoices for each re-inspection after the conclusion
of the re-inspection, via email to the email address indicated in the
registration file or via regular mail if email is not an option.
Invoices must be paid within 30 days.
[[Page 35965]]
C. Fee Payment Procedures
1. The preferred payment method is online using electronic check
(Automated Clearing House (ACH) also known as eCheck) or credit card
(Discover, VISA, MasterCard, American Express). Secure electronic
payments can be submitted using the User Fees Payment Portal at https://userfees.fda.gov/pay. (Note: Only full payments are accepted. No
partial payments can be made online.) Once you search for your invoice,
click ``Pay Now'' to be redirected to Pay.gov. Electronic payment
options are based on the balance due. Payment by credit card is
available for balances less than $25,000. If the balance exceeds this
amount, only the ACH option is available. Payments must be made using
U.S bank accounts as well as U.S. credit cards.
2. If paying with a paper check: Checks must be in U.S. currency
from a U.S. bank and made payable to the Food and Drug Administration.
Payments can be mailed to: Food and Drug Administration, P.O. Box
979033, St. Louis, MO 63197-9000. If a check is sent by a courier that
requests a street address, the courier can deliver the check to: U.S.
Bank, Attn: Government Lockbox 979033, 1005 Convention Plaza, St.
Louis, MO 63101. (Note: This U.S. Bank address is for courier delivery
only. If you have any questions concerning courier delivery, contact
the U.S. Bank at 314-418-4013).
3. When paying by wire transfer, the invoice number must be
included. Without the invoice number the payment may not be applied.
Regarding re-inspection fees, if the payment amount is not applied, the
invoice amount will be referred to collections. The originating
financial institution may charge a wire transfer fee. If the financial
institution charges a wire transfer fee, it is required that the
outsourcing facility add that amount to the payment to ensure that the
invoice is paid in full. Use the following account information when
sending a wire transfer: New York Federal Reserve Bank, U.S. Dept of
Treasury, TREAS NYC, 33 Liberty St., New York, NY 10045, Acct. No.
75060099, Routing No. 021030004, SWIFT: FRNYUS33, Beneficiary: FDA,
8455 Colesville Rd., 14th Floor, Silver Spring, MD 20993-0002. If
needed, FDA's tax identification number is 53-0196965.
Dated: July 25, 2017.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2017-16185 Filed 8-1-17; 8:45 am]
BILLING CODE 4164-01-P