Outsourcing Facility Fee Rates for Fiscal Year 2021, 47225-47228 [2020-16856]

Download as PDF Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES 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 that are 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. If a check, bank draft, or postal money order is submitted, make it payable to the order of the Food and Drug Administration and include the user fee ID number to ensure that the payment is applied to the correct fee(s). Payments can be mailed to: Food and Drug Administration, P.O. Box 979108, St. Louis, MO 63197–9000. If a check, bank draft, or money order is to be sent by a courier that requests a street address, the courier should deliver your payment to: U.S. Bank, Attention: Government Lockbox 979108, 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 U.S. Bank at 314–418–4013. This telephone number is only for questions about courier delivery.) Please make sure that the FDA post office box number (P.O. Box 979108) and ID number is written on the check, bank draft, or postal money order. For payments made by wire transfer, include the unique user fee ID number to ensure that the payment is applied to the correct fee(s). Without the unique user fee ID number, the payment may not be applied. The originating financial institution may charge a wire transfer fee. Include applicable wire transfer fees with payment to ensure fees are fully paid. Questions about wire transfer fees should be addressed to the financial institution. The following account information should be used to send payments by wire transfer: U.S. Department of the Treasury, TREAS NYC, 33 Liberty St., New York, NY 10045, Acct. No.: 75060099, Routing No.: 021030004, SWIFT: FRNYUS33. FDA’s tax identification number is 53– 0196965. B. Annual BPD and Program Fees FDA will issue invoices with payment instructions for FY 2021 annual BPD and program fees under the new fee schedule in August 2020. Payment will be due on October 1, 2020. If sponsors join the BPD program after the annual BPD invoices have been issued in August 2020, FDA will issue invoices in December 2020 to firms subject to fees for FY 2021 that qualify for the annual BPD fee after the August 2020 billing. FDA will issue invoices in December VerDate Sep<11>2014 18:14 Aug 03, 2020 Jkt 250001 2020 for any annual program fees for FY 2021 that qualify for fee assessments and were not issued in August 2020. Dated: July 29, 2020. Lauren K. Roth, Associate Commissioner for Policy. [FR Doc. 2020–16858 Filed 7–30–20; 4:15 pm] BILLING CODE 4164–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration [Docket No. FDA–2020–N–1693] Outsourcing Facility Fee Rates for Fiscal Year 2021 AGENCY: Food and Drug Administration, HHS. ACTION: Notice. The Food and Drug Administration (FDA) is announcing the fiscal year (FY) 2021 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 (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 2021 rates for the small business establishment fee ($5,695), the nonsmall business establishment fee ($18,837), and the re-inspection fee ($17,085) for outsourcing facilities; provides information on how the fees for FY 2021 were determined; and describes the payment procedures outsourcing facilities should follow. These fee rates are effective October 1, 2020, and will remain in effect through September 30, 2021. FOR FURTHER INFORMATION CONTACT: For more information on human drug compounding and outsourcing facility fees: Visit FDA’s website at: https:// www.fda.gov/Drugs/Guidance ComplianceRegulatoryInformation/ PharmacyCompounding/default.htm. For questions relating to this notice: Lola Olajide, Office of Financial Management, Food and Drug Administration, 4041 Powder Mill Rd., Rm. 61077B, Beltsville, MD 20705– 4304, 240–402–4244. SUPPLEMENTARY INFORMATION: SUMMARY: I. Background The Drug Quality and Security Act contains important provisions relating to the oversight of compounding human PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 47225 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 website at: https://www.fda.gov/ media/136683/download. E:\FR\FM\04AUN1.SGM 04AUN1 47226 Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices II. Fees for FY 2021 A. Methodology for Calculating FY 2021 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 2021. The 3-year average is 1.2644 percent. TABLE 1—FDA PC&BS EACH YEAR AND PERCENT CHANGE Fiscal year 2017 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 1.2644 percent should be multiplied by the proportion 2018 $2,581,551,000 17,022 $151,660 2.8845% $2,690,678,000 17,023 $158,061 4.2206% 2019 $2,620,052,000 17,144 $152,826 ¥3.3120% 3-Year average ............................ ............................ ............................ 1.2644% of PC&B to total costs of an average FDA FTE for the same 3 fiscal years. TABLE 2—FDA PC&BS AS A PERCENT OF FDA TOTAL COSTS OF AN AVERAGE FTE Fiscal year 2017 Total PC&B ...................................................................................... Total Costs ....................................................................................... PC&B Percent .................................................................................. The payroll adjustment is 1.2644 percent multiplied by 48.9777 percent, or 0.6193 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 2021 is equal to the average annual percent change in the Consumer Price Index (CPI) for urban consumers 2018 $2,581,551,000 $5,104,580,000 50.5732% $2,690,678,000 $5,370,935,000 50.0970% (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 2019 $2,620,052,000 $5,663,389,000 46.2630% 3-Year average ............................ ............................ 48.9777% CPI for U.S. cities. These data are published by the Bureau of Labor Statistics and can be found on its website: https://data.bls.gov/cgi-bin/ surveymost?cu. The data can be viewed by checking the box marked ‘‘U.S. city average, All items—CUUR0000SA0’’ and then selecting ‘‘Retrieve Data.’’ TABLE 3—ANNUAL AND 3-YEAR AVERAGE PERCENT CHANGE IN U.S. CITY AVERAGE CPI Year 2017 jbell on DSKJLSW7X2PROD with NOTICES Annual CPI ....................................................................................... Annual Percent Change .................................................................. Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that this 2.1283 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 2017 to 2019 is 51.0223 percent (100 percent ¥48.9777 percent = 51.0223 percent). Therefore, the nonpay adjustment is 2.1283 percent times 51.0233 percent, or 1.0859 percent. The PC&B component (0.6193 percent) is added to the non-PC&B component (1.0859 percent), for a total inflation adjustment of 1.7052 percent (rounded). Section 744K(c)(2)(A)(i) of VerDate Sep<11>2014 18:14 Aug 03, 2020 Jkt 250001 2018 245.120 2.1304% the FD&C Act specifies that one is added to that figure, making the inflation adjustment 1.017052. 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 2021 (1.7052 percent) is compounded by adding one to it, and then multiplying it by one plus the inflation adjustment factor for FY 2020 (11.9895 percent), as published in the Federal Register on July 31, 2019 (84 FR 37311 at 37312). The result of this multiplication of the inflation factors for the 6 years since FY 2015 (1.017052 × 1.119895) becomes the inflation adjustment for FY 2021. For FY 2021, PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 2019 251.107 2.4425% 255.657 1.8120% 3-Year average ............................ 2.1283% the inflation adjustment is 13.8991 percent (rounded). We then add one, making the FY 2021 inflation adjustment factor 1.138991. 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 E:\FR\FM\04AUN1.SGM 04AUN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices 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 2021, FDA must estimate: (1) The number of outsourcing facilities that will pay the reduced fee for small businesses for FY 2021 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 2021 were to pay the inflation-adjusted fee amount of $17,085). With respect to (1), FDA estimates that 15 entities will qualify for small business exceptions and will pay the reduced fee for FY 2021. With respect to (2), to estimate the total number of entities that will register as outsourcing facilities for FY 2021, FDA used data submitted by outsourcing facilities through the voluntary registration process, which began in December 2013. Accordingly, FDA estimates that 85 outsourcing facilities, including 15 small businesses, will be registered with FDA in FY 2021. If the projected 85 outsourcing facilities paid the full inflation-adjusted fee of $17,085, this would result in total revenue of $1,452,225 in FY 2021 ($17,085 × 85). However, 15 of the entities that are expected to register as outsourcing facilities for FY 2021 are projected to qualify for the small business exception and to pay one-third of the full fee ($5,695 × 15), totaling $85,425 instead of paying the full fee ($17,085 × 15), which would total $256,275. This would leave a potential shortfall of $170,850 ($256,275 ¥ $85,425). 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 VerDate Sep<11>2014 18:14 Aug 03, 2020 Jkt 250001 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 2019 ($2,248), to what would have been the small business adjustment factor for FY 2019 ($1,560) 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 2019, this was $1,310,560 ($16,382 × 80). The actual FY 2019 revenue from the 80 total registrants (i.e., 70 registrants paying FY 2019 non-small business establishment fee and 10 small business registrants) paying establishment fees is $1,201,350. $1,201,350 is calculated as follows: (FY 2019 Non-Small Business Establishment Fee adjusted for inflation only) × (total number of registrants in FY 2019 paying Non-Small Business Establishment Fee) + (FY 2019 Small Business Establishment Fee) × (total number of small business registrants in FY 2019 paying Small Business Establishment Fee). $16,382 × 70 + $5,461 × 10 = $1,201,350. This left a shortfall of $109,210 from the estimated total target collection amount ($1,310,560¥$1,201,350). $109,210 divided by the total number of registrants in FY 2019 paying Standard Establishment Fee (70) equals $1,560. The difference between the small business adjustment factor used in FY 2019 and the small business adjustment factor that would have been used had FDA estimated perfectly is $688 ($2,248¥$1,560). The $688 (rounded to the nearest dollar) is then multiplied by the number of actual registrants who paid the standard fee for FY 2019 (70), which provides us a total excess collection of $48,181 in FY 2019. Therefore, to calculate the small business adjustment factor for FY 2021, FDA subtracts $48,181 from the projected shortfall of $170,850 for FY 2021 to arrive at the numerator for the small business adjustment amount, which equals $122,669. This number divided by 70 (the number of expected non-small businesses for FY 2021) is the small business adjustment amount for FY 2021, which is $1,752 (rounded to the nearest dollar). PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 47227 B. FY 2021 Rates for Small Business Establishment Fee, Non-Small Business Establishment Fee, and Re-Inspection Fee 1. Establishment Fee for Qualified Small Businesses 1 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 2021 is 1.138991. See section II.A.1 for the methodology used to calculate the FY 2021 inflation adjustment factor. Therefore, the establishment fee for a qualified small business for FY 2021 is one third of $17,085, which equals $5,695 (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 2021 is 1.138991. The small business adjustment amount for FY 2021 is $1,752. See section II.A.2 for the methodology used to calculate the small business adjustment factor for FY 2021. Therefore, the establishment fee for a non-small business for FY 2021 is $15,000 multiplied by 1.138991 plus $1,752, which equals $18,837 (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 2021 re-inspection fee is equal to $15,000, multiplied by the inflation adjustment factor for that fiscal year. The inflation adjustment factor for FY 2021 is 1.138991. Therefore, the re-inspection fee for FY 2021 is $15,000 multiplied by 1.138991, which equals $17,085 (rounded to the nearest dollar). There is 1 To qualify for a small business reduction of the FY 2021 establishment fee, entities had to submit their exception requests by April 30, 2020. See section 744K(c)(4)(B) of the FD&C Act. The time for requesting a small business exception for FY 2021 has now passed. An entity that wishes to request a small business exception for FY 2022 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 website at https://www.fda.gov/media/136683/ download. E:\FR\FM\04AUN1.SGM 04AUN1 47228 Federal Register / Vol. 85, No. 150 / Tuesday, August 4, 2020 / Notices no reduction in this fee for small businesses. C. Fee Payment Procedures 1. The preferred payment method is online using electronic check (Automated Clearing House (ACH) also TABLE 4—OUTSOURCING FACILITY known as eCheck) or credit card FEES (Discover, VISA, MasterCard, American Express). Secure electronic payments Qualified Small Business Establishcan be submitted using the User Fees ment Fee ....................................... $5,695 Payment Portal at https:// Non-Small Business Establishment userfees.fda.gov/pay. (Note: Only full Fee ................................................ 18,837 Re-inspection Fee ............................ 17,085 payments are accepted. No partial payments can be made online.) Once you search for your invoice, click ‘‘Pay III. Fee Payment Options and Now’’ to be redirected to Pay.gov. Procedures Electronic payment options are based on A. Establishment Fee the balance due. Payment by credit card is available for balances less than Once an entity submits registration $25,000. If the balance exceeds this information and FDA has determined amount, only the ACH option is that the information is complete, the available. Payments must be made using entity will incur the annual U.S bank accounts as well as U.S. credit establishment fee. FDA will send an cards. invoice to the entity, via email to the email address indicated in the 2. If paying with a paper check: registration file, or via regular mail if Checks must be in U.S. currency from email is not an option. The invoice will a U.S. bank and made payable to the contain information regarding the Food and Drug Administration. obligation incurred, the amount owed, Payments can be mailed to: Food and and payment procedures. A facility will Drug Administration, P.O. Box 979033, not be registered as an outsourcing St. Louis, MO 63197–9000. Include facility until it has paid the annual invoice number on check. If a check is establishment fee under section 744K of sent by a courier that requests a street the FD&C Act. Accordingly, it is address, the courier can deliver the important that facilities seeking to check to: U.S. Bank, Attn: Government operate as outsourcing facilities pay all Lockbox 979033, 1005 Convention fees immediately upon receiving an Plaza, St. Louis, MO 63101. (Note: This invoice. If an entity does not pay the full U.S. Bank address is for courier delivery invoiced amount within 15 calendar only. If you have any questions days after FDA issues the invoice, FDA concerning courier delivery, contact the will consider the submission of U.S. Bank at 314–418–4013). registration information to have been 3. When paying by wire transfer, the withdrawn and adjust the invoice to invoice number must be included. reflect that no fee is due. Without the invoice number the Outsourcing facilities that registered payment may not be applied. Regarding in FY 2020 and wish to maintain their re-inspection fees, if the payment status as an outsourcing facility in FY amount is not applied, the invoice 2021 must register during the annual amount will be referred to collections. registration period that lasts from The originating financial institution October 1, 2020, to December 31, 2020. may charge a wire transfer fee. If the Failure to register and complete financial institution charges a wire payment by December 31, 2020, will transfer fee, it is required that the result in a loss of status as an outsourcing facility add that amount to outsourcing facility on January 1, 2021. Entities should submit their registration the payment to ensure that the invoice is paid in full. Use the following information no later than December 10, account information when sending a 2021, to allow enough time for review wire transfer: U.S. Dept of the Treasury, of the registration information, TREAS NYC, 33 Liberty St., New York, invoicing, and payment of fees before NY 10045, Acct. No. 75060099, Routing the end of the registration period. No. 021030004, SWIFT: FRNYUS33. If B. Re-Inspection Fee needed, FDA’s tax identification FDA will issue invoices for each renumber is 53–0196965. inspection after the conclusion of the reDated: July 29, 2020. inspection, via email to the email Lauren K. Roth, address indicated in the registration file Associate Commissioner for Policy. or via regular mail if email is not an option. Invoices must be paid within 30 [FR Doc. 2020–16856 Filed 7–30–20; 11:15 am] days. BILLING CODE 4164–01–P jbell on DSKJLSW7X2PROD with NOTICES C. Summary of FY 2021 Fee Rates VerDate Sep<11>2014 18:14 Aug 03, 2020 Jkt 250001 PO 00000 Frm 00069 Fmt 4703 Sfmt 4703 DEPARTMENT OF HEALTH AND HUMAN SERVICES Office of the Secretary Statement of Organization, Functions, and Delegations of Authority July 7, 2020. Office of the General Counsel, Office of the Secretary, HHS. This document announces that the Statement of Organization, Functions, and Delegations of Authority for the Department of Health and Human Services, Office of the General Counsel (OGC), is being amended to reflect a new component, changes in titles and order of succession, and changes in the law, and is being re-compiled so that the Statement of Organization incorporates all amendments, as may be amended herein, after the issuance of the last compiled Statement of Organization in 1973. See 38 FR 17,032 (June 28, 1973). SUPPLEMENTARY INFORMATION: The Office of the Secretary (OS)’s Statement of Organization, Functions, and Delegations of Authority for the Department of Health and Human Services, Office of the General Counsel (OGC), should now read as follows: Section I. Mission. The Mission of the Office of the General Counsel and the General Counsel, who is the special advisor to the Secretary on legal matters, is to provide all legal services and advice to the Secretary, Deputy Secretary, and all subordinate organizational components of the Department. Section II. Organization. The Office of the General Counsel, under the supervision of a General Counsel, consists of: 1. The General Counsel and Immediate Office of the General Counsel 2. Divisions in the Office of the General Counsel 3. Ten Regional Offices AGENCY: Subsection A. The Immediate Office of the General Counsel 1. The Immediate Office of the General Counsel. The Immediate Office of the General Counsel shall consist of the General Counsel, his or her executive assistant, a Principal Deputy General Counsel, such other Deputy General Counsel, both non-career and career, as the Secretary deems appropriate and appoints, Associate and Assistant Deputy General Counsel, Senior Counsel, and such other attorneys and assistants as the General Counsel deems appropriate, and the Office of Legal Resources (OLR). a. The General Counsel. The General Counsel is the chief legal officer of the E:\FR\FM\04AUN1.SGM 04AUN1

Agencies

[Federal Register Volume 85, Number 150 (Tuesday, August 4, 2020)]
[Notices]
[Pages 47225-47228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16856]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2020-N-1693]


Outsourcing Facility Fee Rates for Fiscal Year 2021

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Food and Drug Administration (FDA) is announcing the 
fiscal year (FY) 2021 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 (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 2021 rates for the small 
business establishment fee ($5,695), the non-small business 
establishment fee ($18,837), and the re-inspection fee ($17,085) for 
outsourcing facilities; provides information on how the fees for FY 
2021 were determined; and describes the payment procedures outsourcing 
facilities should follow. These fee rates are effective October 1, 
2020, and will remain in effect through September 30, 2021.

FOR FURTHER INFORMATION CONTACT: 
    For more information on human drug compounding and outsourcing 
facility fees: Visit FDA's website at: https://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/default.htm.
    For questions relating to this notice: Lola Olajide, Office of 
Financial Management, Food and Drug Administration, 4041 Powder Mill 
Rd., Rm. 61077B, Beltsville, MD 20705-4304, 240-402-4244.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Drug Quality and Security Act 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 website at: https://www.fda.gov/media/136683/download.

[[Page 47226]]

II. Fees for FY 2021

A. Methodology for Calculating FY 2021 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 2021. The 3-year average is 1.2644 percent.

                                 Table 1--FDA PC&Bs Each Year and Percent Change
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               Fiscal year                      2017              2018              2019         3-Year average
----------------------------------------------------------------------------------------------------------------
Total PC&B..............................    $2,581,551,000    $2,690,678,000    $2,620,052,000  ................
Total FTE...............................            17,022            17,023            17,144  ................
PC&B per FTE............................          $151,660          $158,061          $152,826  ................
Percent change from previous year.......           2.8845%           4.2206%          -3.3120%           1.2644%
----------------------------------------------------------------------------------------------------------------

    Section 744K(c)(2)(A)(ii) of the FD&C Act specifies that this 
1.2644 percent should be multiplied by the proportion of PC&B to total 
costs of an average FDA FTE for the same 3 fiscal years.

                      Table 2--FDA PC&Bs as a Percent of FDA Total Costs of an Average FTE
----------------------------------------------------------------------------------------------------------------
               Fiscal year                      2017              2018              2019         3-Year average
----------------------------------------------------------------------------------------------------------------
Total PC&B..............................    $2,581,551,000    $2,690,678,000    $2,620,052,000  ................
Total Costs.............................    $5,104,580,000    $5,370,935,000    $5,663,389,000  ................
PC&B Percent............................          50.5732%          50.0970%          46.2630%          48.9777%
----------------------------------------------------------------------------------------------------------------

    The payroll adjustment is 1.2644 percent multiplied by 48.9777 
percent, or 0.6193 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 2021 
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 website: https://data.bls.gov/cgi-bin/surveymost?cu. The data can be viewed by checking 
the box marked ``U.S. city average, All items--CUUR0000SA0'' and then 
selecting ``Retrieve Data.''

                   Table 3--Annual and 3-Year Average Percent Change in U.S. City Average CPI
----------------------------------------------------------------------------------------------------------------
                  Year                          2017              2018              2019         3-Year average
----------------------------------------------------------------------------------------------------------------
Annual CPI..............................           245.120           251.107           255.657  ................
Annual Percent Change...................           2.1304%           2.4425%           1.8120%           2.1283%
----------------------------------------------------------------------------------------------------------------

    Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that this 
2.1283 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 2017 to 2019 is 51.0223 percent (100 percent -48.9777 percent = 
51.0223 percent). Therefore, the non-pay adjustment is 2.1283 percent 
times 51.0233 percent, or 1.0859 percent.
    The PC&B component (0.6193 percent) is added to the non-PC&B 
component (1.0859 percent), for a total inflation adjustment of 1.7052 
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 
1.017052.
    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 2021 
(1.7052 percent) is compounded by adding one to it, and then 
multiplying it by one plus the inflation adjustment factor for FY 2020 
(11.9895 percent), as published in the Federal Register on July 31, 
2019 (84 FR 37311 at 37312). The result of this multiplication of the 
inflation factors for the 6 years since FY 2015 (1.017052 x 1.119895) 
becomes the inflation adjustment for FY 2021. For FY 2021, the 
inflation adjustment is 13.8991 percent (rounded). We then add one, 
making the FY 2021 inflation adjustment factor 1.138991.
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

[[Page 47227]]

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 2021, FDA must 
estimate: (1) The number of outsourcing facilities that will pay the 
reduced fee for small businesses for FY 2021 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 2021 were to pay the inflation-adjusted fee 
amount of $17,085).
    With respect to (1), FDA estimates that 15 entities will qualify 
for small business exceptions and will pay the reduced fee for FY 2021. 
With respect to (2), to estimate the total number of entities that will 
register as outsourcing facilities for FY 2021, FDA used data submitted 
by outsourcing facilities through the voluntary registration process, 
which began in December 2013. Accordingly, FDA estimates that 85 
outsourcing facilities, including 15 small businesses, will be 
registered with FDA in FY 2021.
    If the projected 85 outsourcing facilities paid the full inflation-
adjusted fee of $17,085, this would result in total revenue of 
$1,452,225 in FY 2021 ($17,085 x 85). However, 15 of the entities that 
are expected to register as outsourcing facilities for FY 2021 are 
projected to qualify for the small business exception and to pay one-
third of the full fee ($5,695 x 15), totaling $85,425 instead of paying 
the full fee ($17,085 x 15), which would total $256,275. This would 
leave a potential shortfall of $170,850 ($256,275 - $85,425).
    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 2019 ($2,248), to what would have been the small business 
adjustment factor for FY 2019 ($1,560) 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 2019, this 
was $1,310,560 ($16,382 x 80). The actual FY 2019 revenue from the 80 
total registrants (i.e., 70 registrants paying FY 2019 non-small 
business establishment fee and 10 small business registrants) paying 
establishment fees is $1,201,350. $1,201,350 is calculated as follows: 
(FY 2019 Non-Small Business Establishment Fee adjusted for inflation 
only) x (total number of registrants in FY 2019 paying Non-Small 
Business Establishment Fee) + (FY 2019 Small Business Establishment 
Fee) x (total number of small business registrants in FY 2019 paying 
Small Business Establishment Fee). $16,382 x 70 + $5,461 x 10 = 
$1,201,350. This left a shortfall of $109,210 from the estimated total 
target collection amount ($1,310,560-$1,201,350). $109,210 divided by 
the total number of registrants in FY 2019 paying Standard 
Establishment Fee (70) equals $1,560.
    The difference between the small business adjustment factor used in 
FY 2019 and the small business adjustment factor that would have been 
used had FDA estimated perfectly is $688 ($2,248-$1,560). The $688 
(rounded to the nearest dollar) is then multiplied by the number of 
actual registrants who paid the standard fee for FY 2019 (70), which 
provides us a total excess collection of $48,181 in FY 2019.
    Therefore, to calculate the small business adjustment factor for FY 
2021, FDA subtracts $48,181 from the projected shortfall of $170,850 
for FY 2021 to arrive at the numerator for the small business 
adjustment amount, which equals $122,669. This number divided by 70 
(the number of expected non-small businesses for FY 2021) is the small 
business adjustment amount for FY 2021, which is $1,752 (rounded to the 
nearest dollar).

B. FY 2021 Rates for Small Business Establishment Fee, Non-Small 
Business Establishment Fee, and Re-Inspection Fee

1. Establishment Fee for Qualified Small Businesses \1\
---------------------------------------------------------------------------

    \1\ To qualify for a small business reduction of the FY 2021 
establishment fee, entities had to submit their exception requests 
by April 30, 2020. See section 744K(c)(4)(B) of the FD&C Act. The 
time for requesting a small business exception for FY 2021 has now 
passed. An entity that wishes to request a small business exception 
for FY 2022 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 website 
at https://www.fda.gov/media/136683/download.
---------------------------------------------------------------------------

    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 2021 
is 1.138991. See section II.A.1 for the methodology used to calculate 
the FY 2021 inflation adjustment factor. Therefore, the establishment 
fee for a qualified small business for FY 2021 is one third of $17,085, 
which equals $5,695 (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 2021 is 1.138991. The 
small business adjustment amount for FY 2021 is $1,752. See section 
II.A.2 for the methodology used to calculate the small business 
adjustment factor for FY 2021. Therefore, the establishment fee for a 
non-small business for FY 2021 is $15,000 multiplied by 1.138991 plus 
$1,752, which equals $18,837 (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 2021 re-inspection fee is equal to $15,000, multiplied by the 
inflation adjustment factor for that fiscal year. The inflation 
adjustment factor for FY 2021 is 1.138991. Therefore, the re-inspection 
fee for FY 2021 is $15,000 multiplied by 1.138991, which equals $17,085 
(rounded to the nearest dollar). There is

[[Page 47228]]

no reduction in this fee for small businesses.

C. Summary of FY 2021 Fee Rates

                   Table 4--Outsourcing Facility Fees
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Qualified Small Business Establishment Fee.....................   $5,695
Non-Small Business Establishment Fee...........................   18,837
Re-inspection Fee..............................................   17,085
------------------------------------------------------------------------

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 2020 and wish to 
maintain their status as an outsourcing facility in FY 2021 must 
register during the annual registration period that lasts from October 
1, 2020, to December 31, 2020. Failure to register and complete payment 
by December 31, 2020, will result in a loss of status as an outsourcing 
facility on January 1, 2021. Entities should submit their registration 
information no later than December 10, 2021, 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.

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. Include invoice number on check. 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: U.S. Dept of the Treasury, TREAS NYC, 33 
Liberty St., New York, NY 10045, Acct. No. 75060099, Routing No. 
021030004, SWIFT: FRNYUS33. If needed, FDA's tax identification number 
is 53-0196965.

    Dated: July 29, 2020.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2020-16856 Filed 7-30-20; 11:15 am]
BILLING CODE 4164-01-P

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