On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act, or “CARES” Act (Pub. Law 116-136), which includes a comprehensive revision of the rules governing over-the-counter (OTC) drugs currently marketed under monographs published by the Food and Drug Administration (FDA). This law will have a major impact on the OTC drug marketplace.
In addition to fundamental changes in the way the OTC monograph process will work in the future (as described further below), the new law adopts two important features of drug regulation previously inapplicable to OTC monograph drugs: user fees and exclusivity.
Because of these key provisions, we anticipate that the CARES Act will transform the OTC drug marketplace. Traditional OTC drugs will still be permitted, but competition will encourage manufacturers to develop new products that may ultimately replace the old ones. The law provides a financial incentive for such development (in the form of 18-month exclusivity), and a new streamlined mechanism for obtaining authorization to market new products (assuming that FDA implements the law as intended). We therefore anticipate a much more rapid evolution of OTC drugs in the marketplace than has taken place over the last 50 years. OTC drug manufacturers that understand the new law and are prepared to invest in developing and seeking marketing authorization for new products may enjoy significant competitive advantages.
The following provides some background information on OTC drugs and more detail about the law:
Currently, most traditional OTC drugs are marketed under FDA’s OTC Drug Review. The OTC Drug Review permits the marketing of drugs on the basis that they are “generally recognized … as safe and effective” (GRASE) and have been “used to a material extent [and] for a material time,” and therefore are not “new drugs” under the Federal Food, Drug, and Cosmetic Act (FDCA) § 201(p). Accordingly, they do not need to be covered by an approved NDA in order to be marketed.
The OTC Drug Review regulates products using “monographs” published in the Federal Register and Code of Federal Regulations. FDA has typically published monographs in stages, beginning with a “Proposed Monograph” (PM), then a “Tentative Final Monograph” (TFM), and finally a “Final Monograph” (FM). At the PM and TFM stages, OTC active ingredients have been placed into one of three categories: “Category I” (GRASE), “Category II” (not GRASE) and “Category III” (needs more data). This process has been going on since 1972 and is still not complete for many OTC drugs.
The CARES Act effectively dismantles the OTC Drug Review by freezing the status of drugs under non-final monographs and providing for any future changes to be implemented by administrative orders instead of by the cumbersome notice-and-comment rulemaking process. FDA is required to issue guidance documents and administrative orders to implement the new law, and it must withdraw or alter its OTC drug regulations to conform to the statute. The law appears to be immediately effective and does not impose any specific schedule on FDA for purposes of changing its regulations or issuing guidance. FDCA § 505G(k), (l). FDA is beginning to implement the OTC drug provisions of the CARES Act: see https://www.fda.gov/industry/fda-user-fee-programs/potential-over-counter-monograph-user-fees.
SUMMARY OF THE LAW
Status of OTC Monograph Drugs Under the New Law. An OTC drug is deemed lawful for marketing without an approved NDA if it meets one of the following five conditions:
For each of the above five conditions, the drug must also comply with general requirements for OTC drugs (for example, requirements for inactive ingredients, good manufacturing practice, and labeling). FDCA § 505G(a)(1).
Sunscreens. OTC sunscreens are deemed lawful if they comply with the 1999 final monograph and the labeling requirements in 21 CFR 201.327. FDCA § 505G(a)(2). New sunscreen ingredients still being reviewed under the Sunscreen Innovation Act (21 USC 360fff-3) can now be reviewed under the new provisions for OTC drugs in the CARES Act. CARES Act § 3854.
Administrative Orders. FDA may issue an administrative order determining that products are or are not lawful OTC drugs. Persons who are adversely affected by such orders may follow procedures for formal dispute resolution, hearings, and judicial review. Abbreviated procedures are provided where there is an imminent hazard to the public health or FDA determines that label changes are necessary for safety. FDCA § 505G(b). Notice-and-comment rulemaking procedures do not apply to administrative orders. FDCA § 505G(p).
Requesting an Administrative Order. FDA may issue an administrative order on its own initiative or at the request of one or more “Requestors.” A Requestor may request that FDA determine that any drug or combination, or any change to a condition of use of a drug that is already considered GRASE, is a lawful OTC drug. However, a request for a changed condition of use for a category III drug under a TFM or a category I drug under PM must be accompanied by a request that FDA determine that the drug is GRASE. FDCA § 505G(b)(5)(A), (B).
Data to Support the Request. In addition to data supporting the requested change, for most OTC drugs a Requestor must submit information demonstrating a verifiable history of safe nonprescription marketing and use. FDCA § 505G(b)(6).
Exclusivity. If FDA issues an administrative order in response to a request, the Requestor is granted a period of 18 months of exclusive marketing rights where the administrative order covers: (1) an active ingredient (including any ester or salt) not previously incorporated in a lawful unapproved OTC drug, or (2) a change in conditions of use for which new human data studies conducted or sponsored by the Requestor (or to which the Requestor has an exclusive right of reference) were essential to the issuance of the order. Exclusivity is not available for certain minor changes to the drug (e.g., modifying directions for use due to changes that do not affect safety or effectiveness, or reordering information in the Drug Facts box), certain safety changes, and changes to testing methods. The term “new human data studies” refers to clinical trials, pharmacokinetics studies, or bioavailability studies that were not previously relied on and do not duplicate the results of a study previously relied on for drug approval. FDCA § 505G(b)(5)(C). There are limited protections for the confidentiality of a Requestor’s information. FDCA § 505G(d).
Minor Changes. FDA is required to issue an administrative order specifying requirements for a manufacturer to determine whether a minor change in dosage form will affect the safety or effectiveness of a drug. Based on such an order, a manufacturer may make minor changes in a dosage form without the need for a separate administrative order if the manufacturer maintains documentation in its files to show that the change will not affect safety or effectiveness and will not materially affect absorption or other exposure to the drug. Such information must be provided to FDA upon request. FDCA § 505G(c).
User Fees. The law establishes two categories of OTC drug user fees that must be paid for FY 2021 and thereafter:
The law authorizes FDA to use these fees in carrying out OTC drug activities. FDCA § 744M(f).
Please contact us if you need further information.