The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 2020 – Is your OTC Drug Company Ready?

Sep 9, 2020 | Drugs, FDA, Imports, Law & Regulatory, Registration

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to aid response efforts and ease the economic impact of COVID-19. In addition to COVID-19 response efforts, the CARES Act includes new reforms intended to modernize the way most over the counter (OTC) drugs are regulated in the United States. Currently, these drugs, known as OTC monograph drugs, may be marketed without an approved drug application under section 505 of the Federal Food, Drug, and Cosmetic (FD&C Act) if they meet the specifications of an FDA-issued OTC drug monograph. 

Some of the most important reforms prescribed by the CARES Act include a revamping of the process by which FDA issues, revises, and amends OTC drug monographs, the establishment of OTC drug establishment and user fees, and the ability for OTC drug companies to secure marketing exclusivity for an OTC drug under certain circumstances. The new law is intended to benefit Americans who use one or more of the roughly 300,000 OTC drugs being sold in the USA today.

What Will Not Change?

  • Ingredient based review
  • Active ingredients grouped by therapeutic category
  • Generally recognized as safe and effective (GRASE) determination
  • Drugs complying with OTC monograph and other applicable requirements may be marketed without FDA approval
  • Process that includes public comment period

What Will Change?

The CARES Act most notably replaces the current rulemaking process for issuing, revising, and amending OTC monographs with an administrative order process, which is intended to be more efficient, timely, and predictable.  The new administrative process will be similar to the current rulemaking process for OTC monographs, but will grant FDA substantially more procedural flexibility.  Since FDA first instituted the current OTC monograph system in 1972, it has become more and more apparent that the current system is not, for the most part, efficient, timely, and predictable.  As a topical example (no pun intended), although FDA recently finalized the OTC monograph for consumer hand sanitizer ingredients, the rest of the OTC monograph (e.g., label claims and indications) for consumer hand sanitizers is still primarily covered by a tentative final monograph issued by FDA in 1994.

More specifically, the CARES Act grants FDA the ability to issue an administrative order that can alter GRASE conditions for an OTC Monograph.  After an administrative order is proposed there will be a public comment period that will last at least 45 days (and possibly longer) to submit comments on each of the proposed reforms. These orders can be rushed if a drug is a proven hazardous to public health or there is a change to labeling, class, or a combination of the two that will affect how the drug is used.

The CARES Act also provides the FDA with the authority to collect user fees from certain OTC drug companies.  The general intent of these user fees is to help provide FDA with the resources to implement these changes.  As soon as October 1 of this year, establishments that manufacture an OTC drug covered by a monograph will have to pay an annual OTC monograph drug establishment fee, and persons who submit a request to FDA to issue an order amending an OTC monograph will have to pay a fee to submit the request.  FDA has not yet announced what the establishment fees will be.  The request fees in 2021 will be either $100,000 or $500,000 depending on the substance of the request.  FDA may waive the fee under certain circumstances specified in the law (for example, if the request seeks to add or strengthen a contraindication, warning, or precaution).  See our blog “FDA Announces New and Updated Drug and Medical Device User Fees” for more information.

Additionally, the CARES Act will:

  • Provide an 18-month period of marketing exclusivity to persons whose request to FDA results in FDA making certain key changes to an OTC monograph, such as the addition of a previously unevaluated active ingredient to an OTC monograph.
  • Require FDA to meet certain timelines and goals for reform of the OTC monograph processes.  By year 4 and 5, it is expected that FDA will have built sufficient effective review capacity to begin to establish and meet timelines and performance goals for the steady issuance, revision, and amendment of OTC monographs under the new process.
  • Require FDA to issue several guidance documents about the new process, including a guidance document about formal meetings between FDA and persons requesting a change to an OTC monograph.

The Sunscreen Innovation Act (SIA) is being sunset under the CARES Act. It states that the 1999 sunscreen monograph drug products will be considered GRASE but also mandates that FDA amend and revise the 1999 monograph. The revised order is to include provisions related to sun protection factors (SPFs) and all known dosage forms, or FDA must submit a report to the authorizing committees with a rationale and plans to address those provisions.

Additionally, the CARES Act may soon affect the legal status of some OTC drugs currently on the market, although the practical effect of these changes may not be immediately clear.  The CARES Act specifies that at the end of September of this year, all OTC drugs classified by FDA in a tentative final monograph or proposed rule as “Category II” (or not GRAS or having unacceptable indications) cannot remain on the market without FDA new drug approval.  FDA has long considered such OTC products to require FDA approval of a new drug application, although the CARES Act adds additional legal authority to FDA’s position.  The CARES Act also deems GRASE (for the specified therapeutic indication) those OTC drugs described as GRASE in an FDA tentative or final monograph.  Similarly, however, this change in the law generally memorializes FDA’s current policy on this issue.

With all of the new reforms that the CARES Act is proposing, FDA set its performance goals until 2022.  We predict that it will take at least three to six years for FDA to get to the point where they are fully implementing the new OTC drug monograph system prescribed by the CARES Act.  FDA is currently drafting guidance, hiring staff, and preparing the deemed final administrative orders.

In the meantime, if you are concerned about your OTC drug compliance and the steps you need to take to be ready for these changes please contact our legal and regulatory professionals at FDAImports and Benjamin L. England & Associates.

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