Department of Health and Human Services, Food and Drug Administration: Over-the-Counter Human Drugs and Labeling Requirements

Published by the Government Accountability Office on 1999-04-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Office of the General Counsel


      April 1, 1999

      The Honorable James M. Jeffords
      The Honorable Edward M. Kennedy
      Ranking Minority Member
      Committee on Health, Education, Labor, and Pensions
      United States Senate

      The Honorable Thomas J. Bliley, Jr.
      The Honorable John D. Dingell
      Ranking Minority Member
      Committee on Commerce
      House of Representatives

      Subject:   Department of Health and Human Services, Food and Drug
                 Administration: Over-the-Counter Human Drugs; Labeling Requirements

      Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on
      a major rule promulgated by the Department of Health and Human Services, Food
      and Drug Administration (FDA), entitled "Over-the-Counter Human Drugs; Labeling
      Requirements" (RIN: 0910-AA79). We received the rule on March 19, 1999. It was
      published in the Federal Register as a final rule on March 17, 1999. 64 Fed. Reg.

      The final rule establishes a standardized format and standardized content
      requirements for the labeling of over-the-counter drug products.

      The final rule has an announced effective date of April 16, 1999, which is less than
      the 60-day delay in a major rule's effective date required by the Small Business
      Regulatory Enforcement Fairness Act of 1996. 5 U.S.C § 801(a)(3). The FDA gives
      no reason in the rule's preamble as to why the 60-day delay provision was not met.
      While the rule has varying compliance dates that are much later than the announced
      effective date of the rule (some previously approved products covered by the rule
      have several years to become compliant with the labeling requirement), we do note

that products which have drug marketing applications approved on or after April 16,
1999, must comply upon approval.

Enclosed is our assessment of the FDA's compliance with the procedural steps
required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.
Our review indicates that the FDA, with the exception of the failure to allow the
60-day delay, complied with the applicable requirements.

If you have any questions about this report, please contact James W. Vickers,
Assistant General Counsel at (202) 512-8210. The official responsible for GAO
evaluation work relating to the Department of Health and Human Services, Food
and Drug Administration, is William Scanlon, Director, Health Financing and Public
Health Issues. Mr. Scanlon can be reached at (202) 512-7114.

Robert P. Murphy
General Counsel


cc: Ms. Jackie White
    Deputy Executive Secretariat
    Department of Health and Human Services

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       ANALYSIS UNDER 5 U.S.C. § 801(a)(1)(B)(i)-(iv) OF A MAJOR RULE
                                ISSUED BY
                             (RIN: 0910-AA79)

(i) Cost-benefit analysis

The FDA performed a cost-benefit analysis of the final rule. The analysis estimates
that the one-time costs of the rule to be about $58 million with annual recurring
costs of about $11.5 million.

The health benefits could not be quantified by the FDA, but FDA believes the
benefits to be substantial. If the rule prevents 5 percent of the hospitalizations
associated with the unintended consequences of self-medication, the economic
savings could be $39 million annually in direct benefits and $52 million annually
from indirect benefits. In addition, the rule is expected to produce more efficient
consumer search activities which could lead to time savings valued at $19 million to
$38 million per year. Based on the above, the total benefits of the rule range from
$110.5 million to $129.6 million per year.

(ii) Agency actions relevant to the Regulatory Flexibility Act, 5 U.S.C. §§ 603-605,
607, and 609

The preamble to the final rule contains the Final Regulatory Flexibility Analysis
conducted by the FDA.

Using the Small Business Administration's size designation for this industry of fewer
than 750 employees, FDA estimates that 70 percent of the 400 firms in the industry
would be considered small entities.

FDA finds that the one-time cost of compliance for each product, estimated to be
$600, should be manageable for small entities even if they manufacture 10 to 20
products that require relabeling at a cost of $6,000 to $12,000.

The analysis also discusses the alternatives considered such as different compliance
dates and the reasons for the alternative selected.

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform
Act of 1995, 2 U.S.C. §§ 1532-1535

FDA has found that the final rule will not impose a mandate on either state, local,
or tribal governments or the private sector in any one year of $100 million or more.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

The final rule was issued using the notice and comment procedures found at
5 U.S.C. § 553.

On February 27, 1997, the FDA published a Notice of Proposed Rulemaking in the
Federal Register. 62 Fed. Reg. 9024. The FDA received over 1,800 comments and
discusses the comments and the changes it made to the proposed rule in the
preamble to the final rule.

Paperwork Reduction Act, 44 U.S.C. §§ 3501-3520

The final rule contains information collections which are subject to review by the
Office of Management and Budget under the Paperwork Reduction Act.

The preamble to the final rule contains the information required by the Act,
including a description of the collection, the reason for the collection, and an
estimate of the annual burden hours imposed.

FDA estimates that the total burden hours annually will be 120,578 with 51,336
hours being a one-time burden. The burden hours are not higher because, with the
varied compliance dates for the labeling, many manufacturers will be able to change
the labels as part of the usual and customary business practice of redesigning the
labels and therefore no additional burden is incurred.

Statutory authorization for the rule

The final rule was issued pursuant to the authority of the Federal Food, Drug, and
Cosmetic Act and the Public Health Service Act as codified at 21 U.S.C. §§ 321, 331,
351, 352, 353, 355, 358, 360, 360b, 360gg-360ss, 371, 374, 379e and 42 U.S.C. §§ 216,
241, 262, and 264.

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Executive Order No. 12866

The final rule was reviewed by the Office of Management and Budget and
determined to be an economically significant regulatory action and approved as
complying with the order.

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