OTC Monograph Drug User Fees FY2021 (Temporarily?) Off the Table

January 11, 2021By Riëtte van Laack & Deborah L. Livornese

That did not take long.  As we reported at the end of 2020, FDA announced in a notice the User Fees for OTC Monograph Drug Manufacturers and other fees.  Then on Jan. 6, 2021, HHS announced that the fees are off the table.

What happened?  Well, apparently, the notice about user fees for OTC monograph drug manufacturers took some parties by surprise.  Notably, distilleries and other parties, which, during the pandemic, had started to manufacture badly needed hand sanitizer (a monograph product), learned that their registration as OTC monograph drug manufacturers (a requirement to fall under FDA’s temporary policy) was associated with a significant price ticket that would negate at least some of the benefit (if any) of their (temporary?) move into drug manufacturing.  FDA’s temporary policy makes no mention of possible liability for user fees and many were unaware that these fees might apply to their activities under the policy.

Not long after the notice was published, just before the end of 2020, HHS issued a statement that the action by FDA had not been

cleared by HHS leadership, who only learned of it through media reports . . . HHS leadership convened an emergency meeting  . . . to discuss the matter and requested an immediate legal review. The HHS Office of the General Counsel (OGC) has reviewed the matter and determined that the manner in which the fees were announced and issued has the force and effect of a legislative rule. Only the HHS Secretary has the authority to issue legislative rules.

This is consistent with the HHS memo from September 2020, which stated that all departmental rules must be signed by the Secretary.

The Jan 6, 2021 Federal Register announcement states that HHS has “ordered FDA to cease collections activities related to the Over-the-Counter Monograph User Fee Program (‘OMUFA’) until, with the approval of the Secretary, the Department issues further direction concerning FDA’s administration of OMUFA which provides the public with notice and opportunity for comment.”  The latter is somewhat surprising as other user fee programs have not been treated as rules and the setting of annual fees has not been subject to notice and comment prior to going into effect.

Since the user fees are an essential component of the OTC monograph reform program, a new notice (with opportunity to comment this time) can be expected.  It seems that the monograph system’s long history of delay is not yet over.