FDA User Fee for OTC Drugs: Beware of What You Wish For.

Last month, FDA held a public hearing to collect public opinions about enacting a new user fee for over-the-counter (OTC) drugs. The presenters at the hearing could be divided into three groups with distinct preferences. The FDA was the host of the hearing and a strong proponent of the OTC user fee giving several reasons why a user fee is desperately needed. The consumer and physician groups formed the second group that liked the idea of higher FDA oversight of OTC drugs aided by the new user fee. The third group consisted of speakers from industry that seemed suspicious of the intent of this new fee and the impact of higher regulation on the bottom line. The proposal for the OTC user fee is perhaps one of the trickiest one from FDA. There is no question that with more than 300,000 OTC drug products in the market, and only about 48 employees with an annual budget of $8.2 million to oversee these products, FDA can use additional resources. However, most OTC products are approved via the monograph process which approves ingredients and not individual products. A given monograph may be used by several manufacturers for similar OTC products. This makes it hard to design a user fee program similar to the other user fees imposed by FDA where single product-single manufacturer relationships are easier to establish. One of FDA’s main justifications to create the OTC user fee is to complete its review of monographs that have been pending for a long time, however, both the consumer groups and industry representatives wanted the user fee to only be for future monographs and improvements in the regulatory processes going forward. OTC products have a long history of use, thousands of these products being in the market for more than 40 years with no major safety issues. OTC products do not require a formal approval process, and the oversight of these products is limited to following the applicable monograph and labeling requirements making them easy low-cost commercial products. An OTC user fee will certainly increase the regulatory burden and cost for these products for the patients. The delay in FDA’s final decision on a given monograph does not affect the marketing of the OTC products based on it as they can be marketed under the “proposed” monographs. FDA claimed that at the current funding level, it would take it multiple decades to review and finalize all of the monographs that are currently in this non-final status. During this time, these OTC drugs will continue to stay in the market giving the industry and consumer little incentive to help speed up the FDA review process. Unlike generic drugs and biosimilar products where there was strong support from the industry for user fees to expedite FDA review, there is muted support at best for the OTC user fees. Neither consumer groups nor industry complained to the FDA prior to FDA’s announcement for the public hearing about the inadequacy of FDA’s process. So, FDA needs to convince the stakeholders of its benefit. What’s next; a user fee for dietary supplements, cosmetics, food? Similar arguments as the OTC drugs can be made for all other non-prescription FDA-regulated products. Some have predicted that the entire FDA budget may eventually be generated with user fees for all the products regulated by FDA. However, that may not be the best scenario. Over regulation creates its own headache for the consumers and industry alike. Be careful what you wish for.