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Included in the CARES Act are long-awaited reforms to the FDA’s regulation of over-the-counter (OTC) medications. H.R. 748, §§ 3851-3862. The FDA has hailed the law as granting it “transformative, new authorities that will meaningfully advance our efforts to modernize the OTC drug development and review process.”1 In particular, the new regime brings clarity to the regulatory status of many OTC products, contains new streamlined processes for OTC monograph review, and grants exclusivity incentives for OTC drug developers. While largely a boon for OTC manufacturers, the CARES Act does introduce a user fee system, and some manufacturers may need to seek further approval for certain currently marketed drugs.
Due to the sheer number of OTC medications, the FDA regulates them under a system that groups products by category, rather than approving labels for individual products, as it does with prescription medications. For each category, the FDA issues a monograph, which is a “kind of ‘recipe book’ covering acceptable ingredients, doses, formulations, and labeling . . . . Once a final monograph is implemented, companies can make and market an OTC product without the need for FDA pre-approval.”2 When it proposes a monograph, the FDA also classifies the covered ingredients as Category I (Generally Recognized as Safe and Effective [GRASE]), Category II (not GRASE or unacceptable indications), or Category III (insufficient data available to permit final classification). Prior to the enactment of the CARES Act, the regulations required approval of a new monograph via formal notice-and-comment rulemaking, and many products have languished for years under “tentative final monographs” that have never been formally codified in the Code of Federal Regulations, leaving many products in a sort of regulatory limbo.
The CARES Act aims to modernize and streamline the OTC regulatory process through several key changes. First, the CARES Act clarifies the status of currently marketed OTC medications based on their category and monograph status:
Category I drugs subject to a final monograph or a tentative final monograph will be allowed to remain on the market without filing a New Drug Application.
Category II drugs subject to a tentative final monograph are deemed “new drugs” and must submit a New Drug Application in order to remain on the market. Previously, these drugs were allowed to remain marketed until a monograph was finalized (which could take years, if ever).
Category III drugs subject to a tentative final monograph that meet certain requirements will be allowed to remain on the market without filing a New Drug Application.3
Second, the CARES Act replaces the notice-and-comment rulemaking system for monographs with an administrative order process. An order can be issued on the initiative of the Secretary of Health and Human Services or in response to a request from a manufacturer.4 Proposed orders will remain subject to public comment. Note that a final administrative order issued in response to a request will grant the requestor an 18-month marketing exclusivity period, though there are exceptions, including certain minor changes, safety-related changes or changes related to the methods of testing safety or efficacy.
Third, the CARES Act imposes a user fee system, under which any manufacturer that submits a request for an administrative order must pay either $100,000 or $500,000, depending on the type of request, with the lower fee largely applied to requests involving minor modifications to existing monographs.
Much of how the new monograph process will work in practice will require further clarification from implementing regulations and FDA guidance. In the meantime, manufacturers of OTC medications should assess the regulatory status of their products under the old regime and determine what steps, if any, will be required for their products to remain on the market.
In addition to the reforms outlined above, the CARES Act also:
includes reforms to the regulatory process for review of sunscreen products (previously subject to a separate process under the Sunscreen Innovation Act of 2014) to bring them in line with the new procedures for OTC drug monographs outlined in the CARES Act
directs HHS to study of the use of OTC cough and cold medicines in children under age six, and to periodically report to Congress on its findings until the applicable monograph is revised
makes OTC medications eligible for purchase through flexible spending accounts, health savings accounts and health reimbursement arrangements without a prescription from a physician, which will likely be a boon for OTC drug sales.
1 FDA on Signing of the COVID-19 Emergency Relief Bill, Including Landmark Over-the-Counter Drug Reform and User Fee Legislation, https://www.fda.gov/news-events/press-announcements/fda-signing-covid-19-emergency-relief-bill-including-landmark-over-counter-drug-reform-and-user-fee.
2 FDA, Drug Applications for Over-the-Counter (OTC) Drugs, https://www.fda.gov/drugs/types-applications/drug-applications-over-counter-otc-drugs.
3 The same is true for Category I drugs that are currently the subject of a proposed monograph or advance notice of proposed rulemaking.
4 The Secretary also has the authority to issue expedited administrative orders in the case of an imminent threat to public health.
The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship.