Administrative Destruction, 47074-47080 [2024-11564]

Agencies

• Food and Drug Administration
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 89, Number 106 (Friday, May 31, 2024)]
[Rules and Regulations]
[Pages 47074-47080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11564]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1

[Docket No. FDA-2021-N-1348]
RIN 0910-AI59


Administrative Destruction

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA, Agency, or we) is 
issuing a regulation to implement our authority to destroy a device 
valued at $2,500 or less (or such higher amount as the Secretary of the 
Treasury may set by regulation) that has been refused admission into 
the United States by providing to the owner or consignee notice and an 
opportunity to appear and introduce testimony prior to the destruction. 
We are finalizing the change to our internal procedures for 
administrative destruction of drugs and devices. The notice of proposed 
rule making (NPRM) published in the Federal Register (October 7, 2022).

DATES: This rule is effective July 1, 2024.

ADDRESSES: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov and insert the 
docket number found in brackets in the heading of this final rule into 
the ``Search'' box and follow the prompts, and/or go to the Dockets 
Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852, 
240-402-7500.

FOR FURTHER INFORMATION CONTACT: Ann M. Metayer, Office of Regulatory 
Affairs, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 
32, Rm. 4375, Silver Spring, MD 20993-0002, 301-796-3324.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
    A. Purpose of the Final Rule
    B. Summary of the Major Provisions of the Final Rule
    C. Legal Authority
    D. Costs and Benefits
II. Table of Abbreviations/Commonly Used Acronyms in This Document
III. Background
    A. Need for the Regulation/History of This Rulemaking
    B. Summary of Comments to the Proposed Rule
IV. Legal Authority
V. Comments on the Proposed Rule and FDA Response

[[Page 47075]]

    A. Introduction
    B. Summary of General Comments to the Proposed Rule
    C. Specific Comments and FDA Response
VI. Comments on FDA Procedures for Administrative Destruction and 
FDA Response
VII. Effective Date
VIII. Economic Analysis of Impacts
    A. Introduction
    B. Overview of Benefits and Costs
IX. Analysis of Environmental Impact
X. Paperwork Reduction Act of 1995
XI. Federalism
XII. Consultation and Coordination With Indian Tribal Governments
XIII. Reference

I. Executive Summary

A. Purpose of the Final Rule

    The final rule provides to an owner or consignee notice and an 
opportunity to present testimony when the Agency intends to 
administratively destroy a device valued at $2,500 or less (or such 
higher amount as the Secretary of the Treasury may set by regulation) 
that has been refused admission into the United States. The 
Safeguarding Therapeutics Act (STA) (Pub. L. 116-304), signed into law 
on January 5, 2021, amended section 801(a) of the Federal Food, Drug, 
and Cosmetic Act (FD&C Act) (21 U.S.C. 381(a)) to provide FDA with the 
authority to administratively destroy certain refused devices without 
providing the owner or consignee with the opportunity for export. FDA 
is amending Sec.  1.94 (21 CFR 1.94) to provide to the owner or 
consignee of a refused device valued at $2,500 or less (or such higher 
amount as the Secretary of the Treasury may set by regulation) notice 
and an opportunity to present testimony to the Agency prior to 
destruction of the device.

B. Summary of the Major Provisions of the Final Rule

    The final rule provides to an owner or consignee notice and an 
opportunity to present testimony when the Agency intends to 
administratively destroy a device valued at $2,500 or less (or such 
higher amount as the Secretary of the Treasury may set by regulation) 
that has been refused admission into the United States under section 
801(a) of the FD&C Act.
    FDA is amending part 1 (21 CFR part 1) by expanding the scope of 
Sec.  1.94, which provides to the owner or consignee notice and 
opportunity to present testimony prior to the refusal and destruction 
of certain refused drugs, to also include notice and opportunity to 
present testimony prior to the refusal and destruction of certain 
refused devices.

C. Legal Authority

    We are issuing this final rule under sections 701 and 801 of the 
FD&C Act (21 U.S.C. 371 and 381, respectively).

D. Costs and Benefits

    The primary public health benefit of the final rule will be the 
value of preventing additional illnesses or deaths by destroying, 
rather than returning, refused devices valued at $2,500 or less, which 
may pose a public health risk. This benefit will accrue whenever FDA's 
existing enforcement tools would not have prevented the violative 
device from entering the U.S. market. The estimated primary costs of 
the final rule include the additional costs to destroy, rather than 
return, refused devices valued at $2,500 or less, and the additional 
costs to store these devices at International Mail Facilities (IMFs) 
prior to destruction. There will also be one-time costs to FDA to 
update its electronic Operational and Administrative System for Import 
Support (OASIS) and System for Entry Review and Import Operations 
(SERIO); revise its Regulatory Procedures Manual (RPM), Investigations 
Operations Manual (IOM), and additional FDA and inter-Agency 
procedures; and train employees on the new procedures. Express couriers 
will incur one-time costs to read and understand the rule. We estimate 
that the annualized benefits over 10 years will range from $148,000 to 
$750,000 at a 7 percent discount rate and a 3 percent discount rate, 
with a primary estimate of $317,000. The annualized costs will range 
from $68,000 to $1.59 million at a 7 percent discount rate, with a 
primary estimate of $475,000, and from $63,000 to $1.58 million at a 3 
percent discount rate, with a primary estimate of $470,000.

II. Table of Abbreviations/Commonly Used Acronyms in This Document

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     Abbreviation/acronym                    What it means
------------------------------------------------------------------------
Agency.......................  U.S. Food and Drug Administration.
CBP..........................  U.S. Customs and Border Protection.
COVID-19.....................  Disease caused by the severe acute
                                respiratory syndrome coronavirus 2 (SARS-
                                CoV-2).
FDA..........................  U.S. Food and Drug Administration.
FDASIA.......................  Food and Drug Administration Safety and
                                Innovation Act.
FD&C Act.....................  Federal Food, Drug, and Cosmetic Act.
IMFs.........................  International Mail Facilities.
IOM..........................  Investigations Operations Manual.
NPRM.........................  Notice of Proposed Rule Making.
OASIS........................  FDA's Operational and Administrative
                                System for Import Support.
RPM..........................  Regulatory Procedures Manual.
SERIO........................  FDA's System for Entry Review and Import
                                Operations.
STA..........................  Safeguarding Therapeutics Act.
TBT Agreement................  Technical Barriers to Trade Agreement.
USPS.........................  U.S. Postal Service.
We, Our, Us..................  U.S. Food and Drug Administration.
------------------------------------------------------------------------

III. Background

A. Need for the Regulation/History of This Rulemaking

    Section 708 in the Food and Drug Administration Safety and 
Innovation Act (FDASIA) (Pub. L. 112-144), enacted in 2012, gave FDA 
the authority in section 801(a) of the FD&C Act to destroy, without 
providing an opportunity for export, any refused drug valued at $2,500 
or less (or such higher amount as the Secretary of the Treasury may set 
by regulation). Section 801(a) of the FD&C Act, as amended by FDASIA, 
allows the Agency to combine the notice and opportunity to introduce 
testimony on the admissibility of the drug under section 801(a) of the 
FD&C Act with the notice and opportunity to introduce testimony on the 
destruction of the drug, as long as appropriate notice is provided to 
the owner or consignee.
    To implement that authority, FDA published a final rule in the 
Federal Register on September 15, 2015 (80 FR 55237) that revised Sec.  
1.94 to provide notice and an opportunity for the owner

[[Page 47076]]

or consignee to appear before the Agency and introduce testimony prior 
to the destruction of a drug.
    The STA expanded FDA's administrative destruction authority to 
include any refused device valued at $2,500 or less (or such higher 
amount as the Secretary of the Treasury may set by regulation). To 
implement this authority, we issued a proposed rule to amend Sec.  1.94 
to provide to the owner or consignee of any refused device valued at 
$2,500 or less (or such higher amount as the Secretary of the Treasury 
may set by regulation) notice and an opportunity to appear and 
introduce testimony prior to the destruction. An NPRM was published in 
the Federal Register on October 7, 2022 (87 FR 60947).
    As discussed in the preamble to the proposed rule, FDA has refused 
devices, including those valued at $2,500 or less, sent to the United 
States via international mail or express couriers, including illegal 
devices that are being imported to diagnose, prevent, or treat COVID-19 
such as test kits, respirators, and face masks. Examples of other 
devices that pose significant public health concerns if counterfeit, 
unapproved, or unauthorized, or otherwise misbranded or adulterated, 
include contact lenses and blood glucose test strips.
    There is currently little deterrence against sellers shipping 
illegal devices or re-sending previously refused devices to the United 
States via international mail or an express courier. Devices that have 
been refused admission into the United States might be subsequently 
offered for re-importation by unscrupulous sellers who attempt to 
circumvent U.S. import regulatory systems. Under the final rule, FDA 
will be better able to deter such shipments by having an administrative 
mechanism for destroying a device valued at $2,500 or less (or such 
higher amount as the Secretary of the Treasury may set by regulation) 
that has been refused admission into the United States.
    For further information on the need for this regulation, see 
section III.B. (Need for the Regulation) of the NPRM (87 FR 60947 at 
60949-60951). The need for this regulation as discussed in the preamble 
to the proposed rule applies to the final rule.

B. Summary of Comments to the Proposed Rule

    We received approximately 10 comment letters on the proposed rule 
by the close of the 60-day public comment period, each containing 1 or 
more comments on 1 or more issues. We received comments from 
individuals, an association, a business, medical personnel, and a 
foreign government. Some comments were submitted anonymously. The 
majority of the comments supported the proposed rule.

IV. Legal Authority

    FDA has the legal authority under section 801(a) of the FD&C Act, 
as amended by the STA, to administratively destroy, without providing 
opportunity for export, any device valued at $2,500 or less (or such 
higher amount as the Secretary of the Treasury may set by regulation) 
that has been refused admission into the United States. A device that 
is imported or offered for import is subject to refusal of admission 
under section 801(a) of the FD&C Act if, among other reasons, it 
appears to be adulterated or misbranded in violation of section 501 or 
502 of the FD&C Act (21 U.S.C. 351 or 352).
    Section 801(a) of the FD&C Act directs FDA to issue regulations 
that provide the owner or consignee of a device designated by the 
Agency for administrative destruction with notice and an opportunity to 
introduce testimony to us prior to the destruction of the device. 
Section 801(a) of the FD&C Act further states that this process may be 
combined with the notice and opportunity to appear before FDA and 
introduce testimony on the admissibility of the device under section 
801(a) of the FD&C Act, as long as appropriate notice is provided to 
the owner or consignee.
    Additionally, section 701(a) of the FD&C Act authorizes the Agency 
to issue regulations for the efficient enforcement of the FD&C Act.
    As used throughout, the term ``device'' means those articles 
meeting the definition of device in section 201(h) of the FD&C Act (21 
U.S.C. 321(h)), which includes devices intended for human or animal 
use. Section 201(h) of the FD&C Act defines the term ``device,'' in 
part, as an instrument, apparatus, implement, machine, contrivance, 
implant, in vitro reagent, or other similar or related article, 
including any component, part, or accessory, intended for use in the 
diagnosis of a disease or other condition or in the cure, mitigation, 
treatment, or prevention of a disease or intended to affect the 
structure or any function of the body, and that does not achieve its 
primary intended purposes through chemical action within or on the body 
of man or other animals or by being metabolized.

V. Comments on the Proposed Rule and FDA Response

A. Introduction

    We describe and respond to the comments received in the public 
docket in sections V.B., V.C., and VI of this document. We have 
numbered each comment to help distinguish between different comments. 
We have grouped similar comments together under the same number, and, 
in some cases, we have separated different issues discussed in the same 
comment and designated them as distinct comments for purposes of our 
responses. The number assigned to each comment or comment topic is 
purely for organizational purposes and does not signify the comment's 
importance or the order in which comments were received.
    The Agency also received a number of comments that were not 
responsive to the content of the proposed rule and therefore were not 
considered in its final development.
    After considering the comments responsive to the proposed rule, the 
Agency is not making any changes to the text of the regulation included 
in the proposed rule.

B. Summary of General Comments to the Proposed Rule

    Several commenters made general remarks supporting or opposing the 
proposed rule without focusing on a particular proposed provision. In 
the following paragraphs, we discuss and respond to such general 
comments.
    (Comment 1) Some commenters recommended that FDA consider granting 
greater reciprocity for foreign manufactured diagnostic devices rather 
than expand administrative destruction because the Agency had not 
documented those products' adverse effects and suggested that the 
Agency should assume that the product is suitable for the U.S. market 
if cleared by a foreign regulatory agency. One commenter recommended 
that FDA should return products cleared by a foreign regulatory agency 
so that they can be used in that foreign country.
    (Response 1) We decline to follow the suggestion that FDA rely on 
the findings of a foreign regulatory agency rather than effectuate the 
authority granted to FDA by Congress in the STA. Section 801(a) of the 
FD&C Act, as amended by the STA, authorizes FDA to administratively 
destroy certain devices that are refused admission into the United 
States, and directs FDA to issue regulations that provide the owner or 
consignee of a device designated by the Agency for administrative 
destruction

[[Page 47077]]

with notice and an opportunity to introduce testimony to us prior to 
the destruction of the device. The devices subject to administrative 
destruction are governed by the FD&C Act and its implementing 
regulations to protect public health. FDA generally plans to take risk 
and other factors into account in determining whether to seek 
destruction of a particular device. In addition, we disagree with the 
suggestion to return devices that meet the criteria for administrative 
destruction to the country where they have been ``cleared'' as this may 
be difficult due to an exporter not being located in that country and 
any such return could result in those products being reimported to the 
United States.
    (Comment 2) Some commenters asserted that device manufacturers are 
more compliant than drug manufacturers so there is no need to expand 
administrative destruction to devices. Other commenters noted the 
influx of ``faulty'' and ``fake'' devices such as COVID-19 tests, 
respirators, face masks, and other personal protective equipment during 
the COVID-19 pandemic.
    (Response 2) By passing the STA, Congress determined that expanding 
administrative destruction to devices was appropriate. Additionally, in 
the preamble to the proposed rule, we discussed numerous examples of 
illegal devices that were imported or offered for import, the public 
health risk associated with such illegal devices, and the lack of 
deterrence without administrative destruction (87 FR 60947 at 60949-
60951). As discussed above and in the preamble to the proposed rule, we 
believe administrative destruction of illegal devices that are imported 
or offered for import is appropriate.

C. Specific Comments and FDA Response

    (Comment 3) One commenter expressed concern that the proposed rule 
states that section 801(a) of the FD&C Act would apply to ``certain 
devices'' without clarification as to the identity of those devices and 
another commenter asked what the selection process is for 
administrative destruction of devices under the rule.
    (Response 3) As stated in the preamble to the proposed rule, the 
term ``device'' means those articles meeting the definition of device 
in section 201(h) of the FD&C Act, which includes devices intended for 
human or animal use (87 FR 60947 at 60951). When we use the term 
``certain devices'', we mean those devices that meet the criteria for 
administrative destruction as provided in section 801(a) of the FD&C 
Act: a device that is valued at $2,500 or less (or such higher amount 
as the Secretary of the Treasury may set by regulation) that is refused 
admission into the United States (e.g., because it appears to be 
adulterated or misbranded) and is not brought into compliance as 
described under section 801(b) of the FD&C Act.
    Any device that is reviewed by FDA for admissibility and meets the 
criteria for administrative destruction may initially be selected for 
destruction. FDA staff will then determine, taking into account any 
applicable policies and the circumstances regarding the device and 
importation, whether to seek destruction. If the decision is made to 
select the device for destruction, FDA will give notice to the owner or 
consignee of FDA's intent to refuse and destroy the device.
    (Comment 4) One comment asked whether the owner or consignee would 
have the option of having the shipment returned to its origin rather 
than destroyed as part of the notice and opportunity to offer testimony 
process.
    (Response 4) An owner or consignee has an opportunity to contest 
the destruction of a device by providing testimony at an informal 
hearing before the Agency. FDA, not the owner or consignee, makes the 
determination whether a refused device will be returned or destroyed.
    (Comment 5) One comment suggested that the Agency should include 
``the testimony opportunity for the company providing product subject 
to this policy'' in the final rule.
    (Response 5) We decline to require that the notice and opportunity 
for a hearing under Sec.  1.94 be given to the company that provided 
the device. Section 801(a) requires that FDA provide to the owner or 
consignee of a device notice and an opportunity to provide testimony 
prior to the administrative destruction. Owner or consignee is defined 
in 21 CFR 1.83. As discussed in the preamble to the proposed rule, if 
the article was sent by international mail, FDA generally considers the 
addressee of that package to be the owner or consignee (87 FR 60947 at 
60951). Consistent with section 801(a) of the FD&C Act and the process 
for administrative destruction of certain drugs under Sec.  1.94, FDA 
believes that providing the owner or consignee of a device notice and 
an opportunity to provide testimony prior to administrative destruction 
is sufficient. The owner or consignee can choose to present testimony 
from the company providing the product (assuming the owner or consignee 
is not the company providing the product) if the owner or consignee 
decides to contest the destruction at an informal hearing before the 
Agency.
    (Comment 6) One comment asked if there is a way for the public to 
be informed of the devices that are destroyed by FDA so that consumers 
can get rid of the item if it's in their possession.
    (Response 6) We decline to provide such notice in this rule. As 
discussed in our response to comment 5, the notice required in section 
801(a) of the FD&C Act and Sec.  1.94 is for the purpose of allowing 
the owner or consignee of the device to contest the administrative 
destruction.
    FDA currently provides on its website public notice of safety 
issues associated with devices through various means, e.g., information 
about device recalls, consumer alerts or updates, news releases, and 
safety communications. We referenced some of these public notices for 
coronavirus tests, vaccines, and treatments, and contact lenses and 
glucose test strips in the preamble to the proposed rule (87 FR 60947 
at 60954-60955). FDA also provides information about import alerts on 
its website to inform the Agency's field staff and the public that the 
Agency has enough evidence to allow for detention without physical 
examination of FDA-regulated products that appear to be in violation of 
FDA's laws and regulations.
    To provide the necessary information for consumers to take action 
on destroyed devices, FDA would have to expend a significant amount of 
our limited resources to identify and publish the name of each 
destroyed device, its manufacturer, batch and lot number, and 
expiration date. We do not believe that such a large expenditure of FDA 
resources to provide that additional information to the public is 
warranted.
    (Comment 7) A foreign government submitted a comment requesting 
that FDA clarify whether ``a device'' is regarded as a single item or a 
whole batch of devices of the same device category for the purpose of 
applying the $2,500 or less valuation for administrative destruction. 
The commenter also requested that the Agency provide a transition 
period for their device industry in accordance with Article 2.12 of the 
World Trade Organization Technical Barriers to Trade Agreement (TBT 
Agreement), stating that the rule will have a profound impact on the 
manufacturers or owners in their country.
    (Response 7) Section 801(a) of the FD&C Act states that FDA may 
destroy ``any drug or device refused admission under [section 801 of 
the FD&C Act], if

[[Page 47078]]

such drug or device is valued at an amount that is $2,500 or less (or 
such higher amount as the Secretary of the Treasury may set by 
regulation . . .)'' and requires the Agency to issue regulations 
providing notice and an opportunity to present testimony ``on 
destruction of a drug or device.'' FDA interprets this administrative 
destruction provision to apply the $2,500 or less valuation to a 
singular device rather than to an entire entry or shipment containing 
multiple devices of the same type or product code.
    We decline to provide an additional transition period beyond that 
required by the Administrative Procedure Act. Because this rule does 
not meet the definition of a ``technical regulation'' of the TBT 
Agreement, as defined in Annex 1 of the Agreement, Article 2.12 of the 
TBT Agreement does not apply.
    Additionally, we do not think an additional transition period is 
necessary, particularly since there is nothing for manufacturers to 
implement under this rule. This rule addresses certain illegal devices 
that are imported or being offered for import to the United States and 
implements the authority under the FD&C Act, as amended by the STA, for 
FDA to administratively destroy these devices rather than returning 
them.
    As noted earlier, the STA was signed into law on January 5, 2021, 
over 3 years ago. The proposed rule was published well over a year ago, 
on October 7, 2022, and a 60-day period for submission of public 
comment followed. The final rule will be effective 30 days from 
publication in the Federal Register.

VI. Comments on FDA Procedures for Administrative Destruction and FDA 
Response

    In the NPRM preamble, FDA explained that the Agency intends to make 
a change to the procedures for destroying a refused drug and intends to 
use the same procedures for devices that are subject to administrative 
destruction. Under our revised procedures for destruction, FDA might 
not make a determination that a drug or device subject to 
administrative destruction is, in fact, in violation of the FD&C Act if 
the owner or consignee has not requested a hearing to contest the 
administrative destruction (including the basis for refusal of 
admission). We will continue to make a determination that a drug or 
device is, in fact, in violation of the FD&C Act when an owner or 
consignee timely requests a hearing to contest the administrative 
destruction (including the basis for refusal of admission) (87 FR 60947 
at 60951-60952).
    The majority of the comments on the notice regarding the change to 
our internal administrative destruction procedures were supportive. FDA 
is finalizing the procedures described in the preamble in the NPRM 
published on October 7, 2022 (87 FR 60947 at 60951-60952) and will 
implement the procedures at the same time the final rule takes effect.
    (Comment 8) One comment stated that there should be data made 
available for the counterfeit devices that are the subject of this rule 
rather than using the 99 percent rate for drugs that are designated for 
destruction and found to be adulterated or misbranded. Another 
commenter suggested that we sunset the program to evaluate, sometime 
after implementation, to see whether the 99 percent rate is 
substantially the same for devices that are subject to destruction. A 
different commenter requested that we make a report on the 
effectiveness of the program publicly available.
    (Response 8) We used the data we have from the administrative 
destruction of drugs program that was implemented in April 2016 because 
we do not have data on the devices subject to administrative 
destruction given that the program for devices has not yet been 
implemented. FDA intends to periodically evaluate the effectiveness of 
its program and does not see a need to sunset the program while we 
perform an evaluation. Finally, at this time, we do not agree that 
public reports on the effectiveness of the program are warranted or 
would be an optimal use of FDA's limited resources.

VII. Effective Date

    The rule is effective 30 days after publication of a final rule in 
the Federal Register.

VIII. Economic Analysis of Impacts

A. Introduction

    We have examined the impacts of the final rule under Executive 
Order 12866, Executive Order 13563, Executive Order 14094, the 
Regulatory Flexibility Act (5 U.S.C. 601-612), the Congressional Review 
Act/Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801, 
Pub. L. 104-121), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4).
    Executive Orders 12866, 13563, and 14094 direct us to assess all 
benefits, costs, and transfers of available regulatory alternatives 
and, when regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential economic, environmental, 
public health and safety, and other advantages; distributive impacts; 
and equity). Rules are ``significant'' under Executive Order 12866 
Section 3(f)(1) (as amended by Executive Order 14094) if they ``have an 
annual effect on the economy of $200 million or more (adjusted every 3 
years by the Administrator of [the Office of Information and Regulatory 
Affairs (OIRA)] for changes in gross domestic product); or adversely 
affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local, territorial, or tribal governments or 
communities.'' OIRA has determined that this final rule is not a 
significant regulatory action under Executive Order 12866 section 
3(f)(1).
    Because this rule is not likely to result in an annual effect on 
the economy of $100 million or more or meets other criteria specified 
in the Congressional Review Act/Small Business Regulatory Enforcement 
Fairness Act, OIRA has determined that this rule does not fall within 
the scope of 5 U.S.C. 804(2).
    The Regulatory Flexibility Act requires us to analyze regulatory 
options that would minimize any significant impact of a rule on small 
entities. Because of the number of expected device destructions per 
year and the very small value per event, we certify that the final rule 
will not have a significant economic impact on a substantial number of 
small entities.
    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires 
us to prepare a written statement, which includes an assessment of 
anticipated costs and benefits, before issuing ``any rule that includes 
any Federal mandate that may result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more (adjusted annually for inflation) in any one 
year.'' The 2022 threshold after adjustment for inflation is $177 
million, using the 2022 Implicit Price Deflator for the Gross Domestic 
Product. This final rule will not result in an expenditure in any year 
that meets or exceeds this amount.

B. Overview of Benefits and Costs

    The final rule will implement the authority of FDA to destroy a 
device valued at $2,500 or less (or such higher amount as the Secretary 
of the Treasury may set by regulation) that has been offered for import 
and refused admission into the United States under the FD&C Act by 
providing notice and opportunity to the owner or consignee to appear 
and introduce testimony to FDA prior to the destruction. Because the 
majority of devices offered for import that are valued at $2,500 or 
less are shipped via international mail and

[[Page 47079]]

express couriers, FDA currently intends to implement the final rule at 
the IMFs and express couriers. We do not, therefore, consider impacts 
related to shipments via commercial air, land, and seaports.\1\
---------------------------------------------------------------------------

    \1\ Based on internal data, the majority of devices that were 
offered for import, valued at $2,500 or less, and refused in fiscal 
year 2022 were shipped via IMF or express courier.
---------------------------------------------------------------------------

    The costs and benefits of the final rule will depend on the number 
of administrative destructions that FDA orders each year for refused 
devices valued at $2,500 or less. For our primary estimates, we assume 
that FDA will order the destruction of 65 percent of refused devices 
valued at $2,500 or less. We additionally assume that FDA will contract 
out the act of destruction to a private firm and combine the notice and 
hearing process for destruction with the notice and hearing process for 
refusal. We summarize the costs and benefits of the final rule in table 
1.
    We estimate that the annualized benefits over 10 years will range 
from $148,000 to $750,000 at a 7 percent discount rate and a 3 percent 
discount rate, with a primary estimate of $317,000. The annualized 
costs will range from $68,000 to $1.59 million at a 7 percent discount 
rate, with a primary estimate of $475,000, and from $63,000 to $1.58 
million at a 3 percent discount rate, with a primary estimate of 
$470,000.
    Over 10 years, the present value of total benefits will range from 
$1.04 million to $5.27 million at a 7 percent discount rate, with a 
primary estimate of $2.22 million, and from $1.27 million to $6.39 
million at a 3 percent discount rate, with a primary estimate of $2.70 
million. The present value of total costs will range from $474,000 to 
$11.14 million at a 7 percent discount rate, with a primary estimate of 
$3.33 million, and from $539,000 to $13.49 million at a 3 percent 
discount rate, with a primary estimate of $4.01 million.

                                      Table 1--Summary of Benefits, Costs, and Distributional Effects of Final Rule
                                                               [Millions of 2022 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Units
                                                                           ------------------------------------
               Category                   Primary       Low        High                               Period                      Notes
                                         estimate    estimate    estimate      Year      Discount     covered
                                                                              dollars    rate (%)     (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized Monetized ($m/y) \1\...      $0.317      $0.148      $0.750        2022           7          10  Benefits include cost savings to express
                                             0.317       0.148       0.750        2022           3          10   couriers and USPS.
    Annualized Quantified.............  ..........  ..........  ..........  ..........           7
                                                                                                 3
                                       -----------------------------------------------------------------------------------------------------------------
    Qualitative.......................
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs:
    Annualized Monetized ($m/y) \1\...       0.475       0.068       1.586        2022           7          10
                                             0.470       0.063       1.582        2022           3          10
    Annualized Quantified.............  ..........  ..........  ..........  ..........           7
                                                                                                 3
                                       -----------------------------------------------------------------------------------------------------------------
    Qualitative.......................  Benefits of the final rule include the additional illnesses or deaths
                                        averted from destroying, rather than returning, refused devices valued
                                        at $2,500 or less (or such higher amount as the Secretary of the
                                        Treasury may set by regulation).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers:
    Federal Annualized Monetized ($m/   ..........  ..........  ..........  ..........           7
     y).                                                                                         3
                                       -----------------------------------------------------------------------------------------------------------------
    From/To...........................  From:
                                        To:
                                       -----------------------------------------------------------------------------------------------------------------
    Other Annualized Monetized ($m/y).  ..........  ..........  ..........  ..........           7
                                                                                                 3
                                       -----------------------------------------------------------------------------------------------------------------
    From/To...........................  From:
                                        To:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effects:
    State, Local or Tribal Government: No estimated effect..............................................................................................
    Small Business: No estimated effect.................................................................................................................
    Wages: No estimated effect..........................................................................................................................
    Growth: No estimated effect.........................................................................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ When calculating annualized benefits and costs, we assume that payments occur at the end of each period. Throughout our analysis, we use ``year 1''
  to represent impacts that occur during the year that the final rule is finalized.

    Notwithstanding the quantified estimated benefits described above, 
the primary benefit of the final rule will be the unquantified value of 
additional illnesses or deaths averted from destroying, rather than 
returning, refused devices valued at $2,500 or less (or such higher 
amount as the Secretary of the Treasury may set by regulation). 
Additionally, if a destroyed device is a counterfeit or an otherwise 
falsified version of an approved or cleared device, the owner of the 
approved or cleared device may benefit through increased sales, brand 
value, or research and development funding. The threat of destruction 
additionally may have a deterrent effect, reducing the amount of 
adulterated or misbranded (violative) devices that are offered for 
import into the United States. These benefits will accrue whenever 
FDA's existing enforcement tools would not have prevented the violative 
device from entering the U.S. market; the current policy for returning 
refused devices does not preclude the re-importation of

[[Page 47080]]

the device into the United States in the future. We do not have enough 
information to quantify these benefits.
    The destruction of refused devices will lessen the costs incurred 
to export and return refused devices to the country of origin (the 
current procedure for refused devices valued at $2,500 or less). 
Express couriers and the U.S. Postal Service (USPS) will incur 
quantified cost savings from exporting and returning fewer refused 
devices, respectively.
    Quantified costs of the final rule will include the costs to FDA to 
destroy, rather than return, refused devices valued at $2,500 or less, 
and the additional costs to store these devices at IMFs prior to 
destruction. FDA will additionally incur one-time costs to update its 
electronic OASIS and SERIO; revise its RPM, IOM, and additional FDA and 
inter-Agency procedures; and train employees on the new procedures. 
Express couriers will incur one-time costs to read and understand the 
rule.
    If our assumptions do not hold, FDA may incur additional costs, 
including costs to purchase equipment to destroy refused devices, costs 
to train employees administering the destruction of refused devices, 
costs to notify separately the owners or consignees of refused devices, 
and costs to prepare for hearings on destruction that the owners or 
consignees of refused devices request. We have developed a 
comprehensive Economic Analysis of Impacts that assesses the impacts of 
the final rule. The full analysis of economic impacts is available in 
the docket for this rule (Ref. 1) and at https://www.fda.gov/about-fda/economics-staff/regulatory-impact-analyses-ria.

IX. Analysis of Environmental Impact

    We have determined under 21 CFR 25.30(h) that this action is of a 
type that does not individually or cumulatively have a significant 
effect on the human environment. Therefore, neither an environmental 
assessment nor an environmental impact statement is required.

X. Paperwork Reduction Act of 1995

    This final rule contains no collection of information. Therefore, 
clearance by the Office of Management and Budget under the Paperwork 
Reduction Act of 1995 is not required.

XI. Federalism

    We have analyzed this final rule in accordance with the principles 
set forth in Executive Order 13132. FDA has determined that the rule 
does not contain policies that have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Accordingly, we conclude that the rule 
does not contain policies that have federalism implications as defined 
in the Executive order and, consequently, a federalism summary impact 
statement is not required.

XII. Consultation and Coordination With Indian Tribal Governments

    We have analyzed this rule in accordance with the principles set 
forth in Executive Order 13175. We have determined that the rule does 
not contain policies that have substantial direct effects on one or 
more Indian Tribes, on the relationship between the Federal Government 
and Indian Tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes. Accordingly, we 
conclude that the rule does not contain policies that have Tribal 
implications as defined in the Executive order and, consequently, a 
Tribal summary impact statement is not required.

XIII. Reference

    The following reference is on display with the Dockets Management 
Staff (see ADDRESSES) and is available for viewing by interested 
persons between 9 a.m. and 4 p.m., Monday through Friday; it also 
available electronically at https://www.regulations.gov. Although FDA 
verified the website addresses in this document, please note that 
websites are subject to change over time.

1. FDA. Administrative Destruction: Regulatory Impacts Analysis, 
Regulatory Flexibility Analysis, Unfunded Mandates Reform Act 
Analysis, 2023. https://www.fda.gov/about-fda/reports/economic-impact-analyses-fda-regulations.

List of Subjects in 21 CFR Part 1

    Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling, 
Reporting, and recordkeeping requirements.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, the Food and 
Drug Administration amends 21 CFR part 1 as follows:

PART 1--GENERAL ENFORCEMENT REGULATIONS

0
1. The authority citation for part 1 continues to read as follows:

    Authority: 15 U.S.C. 1333, 1453, 1454, 1455, 4402; 19 U.S.C. 
1490, 1491; 21 U.S.C. 321, 331, 332, 333, 334, 335a, 342, 343, 350c, 
350d, 350j, 352, 355, 360b, 360ccc, 360ccc-1, 360ccc-2, 362, 371, 
374, 381, 382, 384a, 387, 387a, 387c, 393, and 2223; 42 U.S.C. 216, 
241, 243, 262, 264, 271.


0
2. In Sec.  1.94, revise paragraphs (a) and (c) to read as follows:


Sec.  1.94  Hearing on refusal of admission or destruction.

    (a) If it appears that the article may be subject to refusal of 
admission or that the article is a drug or device that may be subject 
to destruction under section 801(a) of the Federal Food, Drug, and 
Cosmetic Act, the division director shall give the owner or consignee a 
written or electronic notice to that effect, stating the reasons 
therefor. The notice shall specify a place and a period of time during 
which the owner or consignee shall have an opportunity to introduce 
testimony. Upon timely request giving reasonable grounds therefor, such 
time and place may be changed. Such testimony shall be confined to 
matters relevant to the admissibility or destruction of the article, 
and may be introduced orally or in writing.
* * * * *
    (c) If the article is a drug or device that may be subject to 
destruction under section 801(a) of the Federal Food, Drug, and 
Cosmetic Act, the division director may give the owner or consignee a 
single written or electronic notice that provides the notice of refusal 
of admission and the notice of destruction of an article described in 
paragraph (a) of this section. The division director may also combine 
the hearing on refusal of admission with the hearing on destruction of 
the article described in paragraph (a) of this section into a single 
proceeding.

    Dated: May 17, 2024.
Robert M. Califf,
Commissioner of Food and Drugs.
[FR Doc. 2024-11564 Filed 5-30-24; 8:45 am]
BILLING CODE 4164-01-P