Notice That Persons That Entered the Over-the-Counter Drug Market To Supply Hand Sanitizer During the COVID-19 Public Health Emergency Are Not Subject to the Over-the-Counter Drug Monograph Facility Fee, 2420-2421 [2021-00237]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 86, Number 7 (Tuesday, January 12, 2021)]
[Notices]
[Pages 2420-2421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00237]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Docket No. FDA-2020-N-2246]


Notice That Persons That Entered the Over-the-Counter Drug Market 
To Supply Hand Sanitizer During the COVID-19 Public Health Emergency 
Are Not Subject to the Over-the-Counter Drug Monograph Facility Fee

AGENCY: Food and Drug Administration (FDA), Department of Health and 
Human Services (HHS).

ACTION: Notice.

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SUMMARY: The Department of Health and Human Services is issuing this 
Notice to clarify that persons that entered into the over-the-counter 
drug industry for the first time in order to supply hand sanitizers 
during the COVID-19 Public Health Emergency are not persons subject to 
the facility fee the Secretary is authorized to collect under section 
744M of the Food, Drug, and Cosmetic Act.

DATES: January 12, 2021.

FOR FURTHER INFORMATION CONTACT: David Haas, Office of Financial 
Management, Food and Drug Administration, 4041 Powder Mill Rd., Rm. 
61075, Beltsville, MD 20705-4304, 240-402 4585.

SUPPLEMENTARY INFORMATION: On December 29, 2020, FDA published a Notice 
in the Federal Register entitled Fee Rates Under the Over-the-Counter 
Monograph User Fee Program for Fiscal Year 2021. 85 FR 85646. The 
Department since withdrew that Notice because it was not approved by 
the Secretary. For the reasons provided below, the Department is 
clarifying that persons that entered the over-the-counter drug market 
to supply hand sanitizer products in response to the COVID-19 Public 
Health Emergency are not subject to the facility fee the Secretary is 
authorized to collect under section 744M of the Food, Drug, and 
Cosmetic Act (FD&C Act).
    In March 2020, FDA issued a temporary policy to enable increased 
production of alcohol-based hand sanitizers.\1\ The agency acknowledged 
``that some consumers and health care personnel are currently 
experiencing difficulties accessing alcohol-based hand sanitizers,'' 
and that some were relying on home-made hand sanitizers as a result.\2\ 
FDA issued the guidance in response to requests from ``certain entities 
that are not currently regulated by FDA as drug manufacturers'' that 
nevertheless rose up to meet this public health need.\3\ FDA stated it 
``does not intend to take action against firms that'' produce hand 
sanitizer products during the COVID-19 Public Health Emergency, 
provided the firm's activities are consistent with the guidance.\4\
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    \1\ FDA, Temporary Policy for Preparation of Certain Alcohol-
Based Hand Sanitizer Products During the Public Health Emergency 
(COVID-19) Guidance for Industry (Mar. 2020; updated Aug. 7, 2020).
    \2\ Id. at 3.
    \3\ Id.
    \4\ Id.
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    The guidance, which FDA amended after the Coronavirus Aid, Relief, 
and Economic Security Act (``CARES Act''), Public Law 116-136, 134 
Stat. 281 (March 27, 2020) became law, contains no mention of user or 
facility fees. FDA's website on Hand Sanitizers and COVID-19, contains 
a sub-bullet under the link to the guidance announcing that ``the 
facility fee applies to all OTC hand sanitizer manufacturers registered 
with FDA, including facilities that manufacture or process hand 
sanitizer products under this temporary policy,'' but that language was 
added about the same time as the aforementioned withdrawn Notice was 
published in the Federal Register.\5\ Entities that began producing 
hand sanitizers in reliance on the guidance were understandably 
surprised when FDA contacted them to collect an establishment fee in 
excess of $14,000.\6\
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    \5\ An archived version of the website shows the language at 
issue was not on the website as late as December 29, 2020. See: 
https://web.archive.org/web/20201229105739/https://www.fda.gov/drugs/coronavirus-covid-19-drugs/hand-sanitizers-covid-19.
    \6\ This surprise, coupled with the guidance's silence on 
facility fees, raises reliance interests concerns under the Supreme 
Court's decision in Department of Homeland Security v. Regents of 
the University of California, 140 S. Ct. 1891 (2020).
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    FDA's purported authority for these facility fees comes from the 
CARES Act. In section 3862 of the CARES Act, Congress provided the 
Secretary with the authority to assess user and facility fees from 
``each person that owns a facility identified as an OTC drug monograph 
facility on December 31 of the fiscal year or at any time during the 
preceding 12-month period.'' FD&C Act 744M(a)(1)(A), 21 U.S.C. 379j-

[[Page 2421]]

72(a)(1)(A). An ``OTC drug monograph facility'' is defined, in relevant 
part, as ``a foreign or domestic business or other entity that is under 
one management, either direct or indirect; and at one geographic 
location or address engaged in manufacturing or processing the finished 
dosage form of an OTC monograph drug.'' FD&C Act 744L(10)(A)(i)(I)-
(II), 21 U.S.C. 379j-71(10)(A)(i)(I)-(II).
    The Department has concluded that persons that entered the over-
the-counter drug market in order to produce hand sanitizers in reliance 
on the guidance cited above are not ``identified as . . . OTC drug 
monograph facilit[ies]'' and are thus not subject to the facility fees 
authorized under section 744M of the FD&CT Act, 21 U.S.C. 379j-72. The 
Department reached this conclusion for two reasons. First, as the 
guidance itself acknowledges, the parties at issue are not in the drug 
manufacturing business. Many of them produce alcoholic beverages. These 
entities do not hold themselves out to the public as drug makers nor 
does the public generally encounter them as such. Under the 
extraordinary circumstances presented by the COVID-19 pandemic, the 
Department declines to identify these entities as OTC drug 
manufacturing facilities.
    Second, imposing facility fees on these entities is inconsistent 
with Congress' stated intent elsewhere in the CARES Act. Section 2308 
of the Act provides a temporary exemption from excise taxes for 
distilled spirits ``use[d] in or contained in hand sanitizer produced 
and distributed in a manner consistent with any guidance issued by the 
Food and Drug Administration that is related to the outbreak of virus 
SARS-CoV-2 or coronavirus disease 2019 (COVID-19).'' It is unlikely 
Congress intended to save these entities from excise taxes only to 
impose tens of thousands of dollars in facility fees from an unfamiliar 
regulator. The Department declines to discern such a design under these 
circumstances.
    In conclusion, the Department clarifies that persons that were not 
registered with FDA as drug manufacturers prior to the COVID-19 Public 
Health Emergency, which then later registered with FDA for the purpose 
of producing hand sanitizers, are not ``identified'' as ``OTC drug 
manufacturing facilit[ies]'' under section 744M of the FD&C Act, 21 
U.S.C. 379j-72, and are thus not subject to the facility fee contained 
therein. The Department's conclusion does not apply to such persons 
which (1) manufacture, distribute, and sell over-the-counter drugs in 
addition to hand sanitizer or (2) continue to manufacture (as opposed 
to hold, distribute, or sell existing inventories) hand sanitizer 
products as of December 31 of the year immediately following the year 
during which the COVID-19 Public Health Emergency is terminated. In 
those cases, the Department may identify such persons as OTC drug 
manufacturing facilities.

    Dated: January 5, 2021.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-00237 Filed 1-8-21; 1:30 pm]
BILLING CODE 4164-01-P