FDA Facility Fees

[Bier Distillery]

Thoughts on the just announced facility fee ($14,060)?  Do they apply to distilleries registered to manufacture hand sanitizer?  If so, you'll want to deregister by the 31st.

[mgongalski]

We saw this come across from the FDA emailing as well. As far as we can tell, its retroactive, so if anyone manufactured an OTC throughout last year, they will be required to pay the 2021 FY fee.

 

[mgongalski]

We've reached out to the Michigan Craft Distillers Association to help get some answers/more clarification. Hoping that the FDA will not enforce these fees for hand sanitizer manufacturing that was/is specifically for covid reasons.

[Bier Distillery]

This is as clear as mud, but it looks like you're probably right.  Anyone that registered with the FDA during 2020 is going to get screwed out of $14k even if you deregister now.  It doesn't make any sense whatsoever, so maybe someone knows more.

https://www.federalregister.gov/documents/2020/12/29/2020-28714/fee-rates-under-the-over-the-counter-monograph-drug-user-fee-program-for-fiscal-year-2021?fbclid=IwAR1R41wSMRz8eFoDphxHoCHcK7kwyC2fQLCcO_SG9j1MvUAR5go9mAxKCKY

"Under the statute, a facility fee will not be assessed if the identified OTC monograph drug facility: (1) Has ceased all activities related to OTC monograph drugs prior to December 31 of the year immediately preceding the applicable fiscal year; and (2) has updated its eDRLS registration to reflect that change (see section 744M(a)(1)(B)(i) of the FD&C Act). As the applicable fiscal year for fee-setting under this notice is FY 2021, the year immediately preceding the applicable fiscal year is FY 2020. December of FY 2020 is December 2019. Thus, a FY 2021 facility fee will not be assessed with respect to an OTC monograph drug facility that, prior to December 31, 2019, had ceased all activities related to OTC monograph drugs and updated its eDRLS registration to that effect."

[KansasDistilling]

This is nuts. In the email announcing these retroactive fees sent out last night, the FDA made a point of stating "This includes fees related to OTC monograph drug facilities. The fee applies to all qualifying OTC monograph drug facilities, including OTC hand sanitizer manufacturers registered with FDA. " 

[Foreshot]

Nice that this is happening right before the deadline. There's no way we're going to figure this out by Thursday.

[bluestar]

Sadly, many small distilleries made hand sanitizer in small quantities in an effort as much to be helpful as well to produce perhaps a small supplemental income stream, unaware of the impending fee of this magnitude. For such small facilities, given all the other difficulties during the epidemic, this will probably put them out of business.

[CalwiseSpirits]

When I was audited a few weeks ago my inspector told me that the FDA was considering implementing a fee, but I got impression that it was going to be on future batches, not retroactive. I did find it interesting that part of his report was the value of the sanitizer I manufactured as well as the value of my current inventory on hand.

If we are retroactively charged a facility fee, we need to create a substantial PR backlash. I'm already pissed off that they chose to audit us during the second wave of the pandemic. There were a lot of folk who didn't even bother registering with the FDA - they won't have to deal with an audit nor pay any fees. We're getting punished for doing the right thing. This is so egregious that part of me believes there's no way this is actually going to happen. 

[bluestar]

Well, in any case, we and a few other of our neighbor distilleries have de-registered effective 12/31/20, and obviously will stop making sanitizer, if we haven't already done so, until this is sorted out. I presume we can re-register if they decide to provide an exception for distilleries in the future.

[Thatch]

Today the FDA announced rates for over-the-counter (OTC) monograph drug user fees in a Federal Register Notice (FRN) titled “Fee Rates under the Over-The-Counter Monograph Drug User Fee Program for Fiscal Year 2021.”  These fees are being levied under a newly established “OTC monograph drug user fee program,” which has established fees on OTC monograph drug facilities, as well as OTC Monograph Order Requests (OMORs) for FY 2021.  The fees for FY 2021 are due 45 days after publication of this notice, on February 11, 2021.  Additional information may be found on the FDA Over-The-Counter Monograph User Fee Program (OMUFA) webpage.   Temporary Policy Hand Sanitizer Manufacturers Included    Per the FDA Over-The-Counter Monograph User Fee Program (OMUFA) webpage, these fees do apply to facilities that manufacture or process hand sanitizers under the Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) Guidance for Industry.   Does the FY 2021 OMUFA facility fee apply to facilities that manufacture or process hand sanitizer products under the temporary policy during COVID-19? Yes, the facility fee applies to all qualifying OTC monograph drug facilities, including OTC hand sanitizer manufacturers registered with FDA.   Exempt Facilities   The FDA notice outlines some facilities that are exempt.  See below.  Note: the preceding year sets the fee schedule, so those who wish to avoid a FY 2022 fee need to take action by December 31, 2020.    Those facilities that only manufacture the active pharmaceutical ingredient (or API) of an OTC monograph drug do not meet the definition of an OTC monograph drug facility (see section 744L(10)(A)(i)(II)) of the FD&C Act). Likewise, a facility is not considered an OTC monograph drug facility if its only manufacturing or processing activities are one or more of the following: (a) Production of clinical research supplies; (b) testing; or (c) placement of outer packaging on packages containing multiple products, for such purposes as creating multipacks, when each monograph drug product contained within the overpackaging is already in a final packaged form prior to placement in the outer overpackaging (see section 744L(10)(A)(iii) of the FD&C Act). In addition, as noted above, certain OTC monograph drug facilities are exempt from facility fees. Under the statute, a facility fee will not be assessed if the identified OTC monograph drug facility: (1) Has ceased all activities related to OTC monograph drugs prior to December 31 of the year immediately preceding the applicable fiscal year; and (2) has updated its eDRLS registration to reflect that change (see section 744M(a)(1)(B)(i) of the FD&C Act). As the applicable fiscal year for fee-setting under this notice is FY 2021, the year immediately preceding the applicable fiscal year is FY 2020. December of FY 2020 is December 2019. Thus, a FY 2021 facility fee will not be assessed with respect to an OTC monograph drug facility that, prior to December 31, 2019, had ceased all activities related to OTC monograph drugs and updated its eDRLS registration to that effect.   If you have questions about registration and listing of drug products, email the eDRLS team at edrls@fda.hhs.gov.     Fiscal Year 2021 Facility Fee Rates and FAQs   Included below are the FY 2021 rates and some additional FAQs from the FDA about the facility fees.   Facility Fees FY 2021 Facility User Fee Rates  Monograph Drug Facility (MDF) Facility Fee $14,060 Contract Manufacturing Organization (CMO) Facility Fee $9,373   Who pays the OMUFA facility fee? The facility fee will be assessed for qualifying persons who own an OTC monograph drug facility, including contract manufacturing organization facilities. The OTC Monograph User Fee program does not assess a facility fee for human OTC drug products that are produced under an approved drug application.  The Federal Register Notice referenced above will provide more information about FY 2021 facility fees.   When is the facility fee due? The facility fee is due annually.   When are OMUFA facility fees due for FY 2021? OTC monograph drug facility fees for FY 2021 are due 45 calendar days after 12/29/2020, on 2/11/2021.   What is an OTC monograph drug facility? Under section 744L of the FD&C Act, an OTC monograph drug facility is generally defined 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;  includes a finished dosage form manufacturer facility in a contractual relationship with the sponsor of one or more OTC monograph drugs to manufacture or process such drugs; and  does not include a business or other entity whose only manufacturing or processing activities are one or more of the following: production of clinical research supplies; testing; or placement of outer packaging on packages containing multiple products, for such purposes as creating multipacks, when each monograph drug contained within the overpackaging is already in a final packaged form prior to placement in the outer overpackaging.    What is an OTC monograph drug contract manufacturing organization (CMO) facility? As defined in section 744L of the FD&C Act, a CMO facility is an OTC monograph drug facility where neither the owner of such manufacturing facility nor any affiliate of such owner or facility sells the OTC monograph drug produced at such facility directly to wholesalers, retailers, or consumers in the United States.   Are these CMO facilities required to pay a facility fee? Yes, a qualifying CMO facility pays a fee equal to two-thirds of the amount of the fee for a qualifying OTC monograph drug facility that is not a CMO facility.   How were OTC monograph drug facility fees for FY 2021 calculated? The statute mandates that facility fee rates shall be established to generate a calculated total facility revenue amount, which for FY 2021 is equal to $23,269,000 (rounded to the nearest thousand dollars).  FDA estimated the number of OTC monograph drug facilities subject to a facility fee using data from the Electronic Drug Registration and Listing System (eDRLS). FDA then calculated the per facility fee based on the number of each type of facility and other relevant factors.More information about the calculation of FY 2021 facility fees can be found in the Federal Register Notice publishing on 12/29/20, “Fee rates under the Over-The-Counter Monograph Drug User Fee Program for Fiscal Year 2021.”   Does the FY 2021 OMUFA facility fee apply to facilities that manufacture or process hand sanitizer products under the temporary policy during COVID-19? Yes, the facility fee applies to all qualifying OTC monograph drug facilities, including OTC hand sanitizer manufacturers registered with FDA.    Will the facility fee be assessed per product listing submitted (label), one fee per formula, or one per facility? The annual facility fee is assessed “per facility,” in accordance with the definition of an OTC monograph drug facility, as set forth in section 744L(10) of the FD&C Act, and the authority for facility fees under section 744M of the FD&C Act.  As defined in the statute, an OTC monograph drug facility means a foreign or domestic business or other entity that, in addition to other meeting other criteria, is engaged in manufacturing or processing the finished dosage form of an OTC monograph drug.  OTC monograph drug facilities can include a contract manufacturing organization facility (see section 744L(10) of the FD&C Act).  A contract manufacturing organization (CMO) facility is an OTC monograph drug facility where neither the owner nor any affiliate of the owner or facility sells the OTC monograph drug produced at such facility directly to wholesalers, retailers, or consumers in the United States (see section 744L(2) of the FD&C Act).   Does the FY 2021 OMUFA facility fee apply to my facility?  The FD&C Act defines which facilities are subject to an OMUFA fee. As stated above, the OMUFA FY 2021 facility fee applies to facilities meeting the FD&C Act definition of an OTC monograph drug facility, in addition to other criteria, as described in the Federal Register Notice “Fee rates under the Over-The-Counter Monograph Drug User Fee Program for Fiscal Year 2021” issuing on 12/29/2020. Further, FD&C Act section 744M(d) requires each person that owns an OTC monograph drug facility to identify that facility as such as part of annual establishment registration under FD&C Act section 510.   What is an FDA Establishment Identification number?  An FDA Establishment Identification (FEI) number is a unique identifier issued by FDA to track inspections of the regulated establishment or facility. FEI numbers are also used to track OTC facility fee payments. Please note that an FEI number is different from a Central File Number and Federal Tax Identification Number.  As stated in section 744L(4) of the FD&C Act, FEIs are automatically generated by FDA’s Field Accomplishments and Compliance Tracking System (FACTS) (or any successor system).    Questions or Requests for Waivers If you have questions about how this program and related fees may apply to your business or if you would like to request a waiver, please contact CDERCollections@fda.hhs.gov or call 301-796-7900.  If you have questions about registration and listing of drug products, email the eDRLS team at edrls@fda.hhs.gov.   ****   We are reaching out to FDA to learn more about how this program and fees will impact distillers who have produced hand sanitizer in response to the pandemic. We will pass along any additional information.  Please do not hesitate to reach out with any other questions or concerns in the interim.    Thanks, Courtney    Courtney Armour Chief Legal Officer and Corporate Secretary O: (240) 232‑8527 C: (202) 445‑1903     The US governments fiscal year defines the U.S. government's budget. It runs from October 1 of the budget's prior year through September 30 of the year being described. 2 For example: FY 2021 is between October 1, 2020 and September 30, 2021. I don't believe that de-registering now will be of any benefit to avoid this fee.  But, maybe DISCUS will come up with a way.

Edited December 31, 2020 by Thatch
Added information on the US governments physical year

[daveflintstone]

They can suck my 🍆

 

[Foreshot]

Anyone have any idea how to deregister their location? I can deregister the Food Facility but no idea on the OTC part. 

[CalwiseSpirits]

13 minutes ago, Foreshot said:

Anyone have any idea how to deregister their location? I can deregister the Food Facility but no idea on the OTC part. 

This whole thing is so asinine...

My attorney contacted the FDA and this is the step-by-step email they sent:

 

1) The first thing you will want to do is delist the drug product. To do this:

1)               Login to the CDER Direct Account (https://direct.fda.gov)

2)               Click on “Product Listing and Reporting”

3)               Click on “Submission Accepted” for the most recently, previously submitted Product Listing

4)               Click on “Create New Version” (do not alter any of the information in the Header Details as it is correctly updated for you when you click “Create New Version”)

5)               Click on the edit tool (pencil/notepad) next to the Product NDC toward the bottom of the page

6)               Change the Marketing Status from “ACTIVE” to “COMPLETED”

7)               Enter an End Marketing Date that corresponds to the last lot expiration date

😎               Click on “Save Product”

9)               Click on “Submit SPL”

 

2) After that submission returns as “Submission Accepted” (takes about 15 minutes), then you may De-Register your establishment. To do this:

1)               Login to your CDER Direct Account

2)               Click on “Establishment Registration”

3)               Click on “Submission Accepted” for the most recently submitted Establishment Registration

4)               Click on “Create New Version” (do not alter any of the information in the Header Details as it is correctly updated for you when you click “Create New Version”)

5)               Change the Document Type to “Establishment De-Registration”

6)               Click on “Submit SPL”

[Foreshot]

BOOM DONE. Thanks! I would not have known to end the NDC thing. 

 

[Patio29Dadio]

This is why I always vote for the candidates that promise more and bigger government.  sic.

[bluestar]

Note some have already de-registered before closing market activity of the products. We have rechecked, and you can delist the products after de-registering. You should also change the labeling to inactive.

[Bier Distillery]

16 minutes ago, bluestar said:

Note some have already de-registered before closing market activity of the products. Once you have deregistered, ironically, you can't close the market activity of the products. It is unclear if you have to re-register to close the market activity of the products to avoid the tax liability, or if that will even work.

So let's say theoretically a company with product on retail shelves goes out of business.  When/If they deregister, would everyone carrying their product no longer be able to sell them?  It seems to me there is a reason to still keep the products active, but the facility inactive/deregistered.

[Bier Distillery]

"on the heels of Association discussions with HHS Chief of Staff Brian Harrison and senior HHS leadership, together with an intensive outreach campaign over the past 48 hours to congressional legislators and members of the media, HHS has withdrawn the FDA’s scheduled $14,060 fees to craft distillers who produced hand sanitizer in 2020. "

Still need to de-register for 2021 though. 4.5 hours left.

[Thatch]

We are pleased to report that after extensive conversations with Legislators and the key agencies, Brian Harrison, HHS Chief of Staff, has just issued a statement that they have withdrawn the Notice published in the Federal Register re OTC Monograph Drug Facility Fees and directed FDA to cease enforcement of these fees.  Thank you to all the distillers that took swift action to contact their members of Congress and the FDA to protest the outrageous fees and the thousands of individuals that took action through Spirits United.  Of note, Mr. Harrison states: “Because HHS OGC has determined the notice is really a legislative rule and that no one at FDA has been delegated authority to issue such a rule, the notice is void. HHS leadership, based on this legal opinion, has ordered the Federal Register Notice to be withdrawn from the Federal Register, meaning these surprise user fees will not need to be paid.”     Mr. Harrison closes his statement with the following: “Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so. I’m pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees. Happy New Year, distilleries, and cheers to you for helping keep us safe!”   The full statement and Mr. Harrison’s related tweets are included below.    HHS Tweet: https://twitter.com/spoxhhs/status/1344782160084037639?s=21   Full HHS Statement:   Good Afternoon – early in the COVID-19 pandemic many small businesses across the country joined the fight to combat the virus and keep Americans safe – that included distilleries that augmented their operations to produce hand sanitizer, an important asset in the battle to deter the spread of COVID. In March, the Food and Drug Administration (FDA) issued a guidance document – the Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) – which provides flexibility for those entities capable of producing hand sanitizer to rapidly enter the market. In the guidance, the FDA stated it “does not intend to take action against firms that” produce hand sanitizer products – which are classified as over-the-counter drugs – during the COVID-19 Public Health Emergency, provided the firm’s activities are consistent with the guidance. Importantly, the guidance contains no discussion regarding user fees or any indication such fees would be due by these entities, many of which would be entering the drug manufacturing business for the first time. Nevertheless, on December 29, the FDA posted an over-the-counter drugs user fee notice that imposes a significant financial burden on these small businesses.   This action was not cleared by HHS leadership, who only learned of it through media reports late yesterday. HHS leadership convened an emergency meeting late last night 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, and he would never have authorized such an action during a time in which the Department is maximizing its regulatory flexibility to empower Americans to confront and defeat COVID-19. Because HHS OGC has determined the notice is really a legislative rule and that no one at FDA has been delegated authority to issue such a rule, the notice is void. HHS leadership, based on this legal opinion, has ordered the Federal Register Notice to be withdrawn from the Federal Register, meaning these surprise user fees will not need to be paid.     “Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so. I’m pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees. Happy New Year, distilleries, and cheers to you for helping keep us safe!” – Brian Harrison, HHS Chief of Staff    ###   We will continue to provide any further updates on this issue, but are very pleased to report this swift action by HHS leadership.   Happy New Year!   Thanks, Courtney and Kelly   Courtney Armour Chief Legal Officer and Corporate Secretary O: (240) 232‑8527 C: (202) 445‑1903   Kelly Poulsen Vice President, Federal Government Relations O: (202) 682‑8831 C: (571) 353‑0189

[bluestar]

Do we still need to deregister? Do we need to remove from market existing approved products?

[Foreshot]

If you're not making/selling it anymore deregister. Follow the instructions above for both the facility and the product.

[Bier Distillery]

I think making and selling are two different things, but in either case deregister.

[bluestar]

21 minutes ago, Bier Distillery said:

I think making and selling are two different things, but in either case deregister.

Yes, we deregistered, and therefore have stopped production. But we still have some product on hand. Most we sell into our own shop, but I assume, like for spirits, we can transfer from manufacture to retail shop by means of invoice, and that the product can still be sold? The ACSA gives instructions now for delisting product, but if you have already deregistered, but it works after you deregister as well. Also note when you delist, you must indicate when marketing will end, which means the product you have already manufactured can be sold thereafter, until this deadline, according to information forwarded by the ACSA from HHS/FDA.

[bluestar]

7 hours ago, Bier Distillery said:

So let's say theoretically a company with product on retail shelves goes out of business.  When/If they deregister, would everyone carrying their product no longer be able to sell them?  It seems to me there is a reason to still keep the products active, but the facility inactive/deregistered.

I have answered my question, you can delist after, and I did so. I have edited my original posting. Meanwhile, you can still sell product after de-registering and delisting, when you delist, you indicate the end of market date, which should match or be earlier than the expiration date of the last batch manufactured.

[Bier Distillery]

"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, and he would never have authorized such an action during a time in which the Department is maximizing its regulatory flexibility to empower Americans to confront and defeat COVID-19. Because HHS OGC has determined the notice is really a legislative rule and that no one at FDA has been delegated authority to issue such a rule, the notice is void. HHS leadership, based on this legal opinion, has ordered the Federal Register Notice to be withdrawn from the Federal Register, meaning these surprise user fees will not need to be paid.  "

So it seems the whole thing is null and void after the HHS slapped down the FDA hard (FDA is a part of HHS).  It makes me wonder what the FDA is going to try to do next.