Dockets Management Branch (HFA-305)
Food and Drug Administration
12420 Parklawn Drive, Rm. 1-23
Rockville, MD 20857
Dear Dockets Management Clerk:
On September 23, 1997, the Food and Drug Administration (FDA) published a proposed rule concerning sterility requirements for inhalation solution products. The rule raises the number of these products manufactured to be sterile from approximately 50% to 100% in order to reduce the incidents of adverse drug reactions from contaminated non-sterile solutions.
The Office of the Chief Counsel for Advocacy of the U.S. Small Business Administration was created in 1976 to represent the views and interests of small business in federal policy making activities.(1) The Chief Counsel participates in rulemakings when he deems it necessary to ensure proper representation of small business interests. In addition to these responsibilities, the Chief Counsel monitors compliance with the Regulatory Flexibility Act (RFA),(2) and works with federal agencies to ensure that their rulemakings demonstrate an analysis of the impact that their decisions will have on small businesses.
The instant rulemaking only affects those manufacturers of inhalation solutions for nebulization that do not already manufacture the products to be sterile. Based on FDA's own estimates, approximately 18% of the industry will face "significant adverse effects."(3) The five OTC and/or generic firms that do not currently have sterile processes or that contract out the manufacturing of their inhalation products to firms that use a sterile process, would be required to implement such procedures in the future in order to comply with the regulation within one year of the final rule.
According to FDA, the cost of building a new clean room would be about $600 per square foot-with the size varying from 200 to 2,500 square feet. The estimated cost, therefore, would range from $120,000 to $1,500,000 per firm for construction only. In addition, validation of the inhalation solution process could cost $75,000 to $100,00 per product. Using an average of two products as the basis of its cost analysis, FDA finds that the cost per firm would be $150,000 to $200,000 for validation. Each firm also would be required to incur certain undisclosed costs for preparing and submitting any supplemental applications and acquiring professional skills for dealing with sterility procedures. In total, the five affected firms could pay anywhere from $270,000 to $1,700,00 each, for a total cost to the industry of $1,350,000 to $8,500,000. These figures are accurate only if there are five affected businesses as represented by FDA.
I. Analysis of Impacts
In critiquing FDA's analysis, it needs to be clearly understood that the Office of Advocacy is not suggesting that FDA's health and safety goals are not without merit. Rather, that there is insufficient information in the record for the public to evaluate the need for the regulation, as measured by the incidents of illness, against the enormous cost of compliance.
First, there are no estimates for paperwork or training costs. The logical conclusion is that these requirements will impose additional cost on the affected entities. By not including these costs in the analysis, FDA has effectively underestimated the true cost of the proposed regulation.
The second problem is that FDA calculates annualized costs for the five firms based on a 10-year amortization period with a 7 percent interest rate. This calculation results in amortized costs of $192,000 to $1,210,000. These daunting figures do not reflect certain realities like the ability of a firm to obtain financing in the first place. Moreover, each of the five firms may operate with significantly different profit margins. As such, it would not be reasonable to assume that costs could be amortized evenly or absorbed equally among the five.
Finally, the most significant deficit in FDA's analysis is that the agency never presented any evidence to suggest that individuals have become ill or have compromised their health by using non-sterile products. It is important for an agency to document the need for any proposed regulation-particularly one that is likely to put 18% of the industry out of business. The agency states that current good manufacturing practices (CGMP) have proven inadequate in preventing contamination, and cites three instances (1987, 1992 and 1994) in which contaminated inhalation solution products either were recalled or never reached the market. Then, the agency expresses concern regarding the fact that many of the patients using the products have suppressed pulmonary defense mechanisms and are at a high risk of serious infection. FDA, however, does not establish a link between the recalled products and sick patients.
II. Alternatives
The only alternative studied by the agency to address the impact of the proposed rule was to extend the time for compliance from six months to a year. While lengthening the time in which small businesses have to comply generally is one way to ease the economic burden, other options may exist that might further reduce the economic burden. In the instant case, the result of extending the time for compliance merely prolongs the economic demise of the five affected entities.
The Office of Advocacy opines that other less expensive methods may address FDA's concerns. For instance, the agency might consider a system similar to the one used in the meat and seafood industries-hazard analysis and critical control points (HACCP). This is a method for identifying places in a processing line where potential hazards or pathogens are likely to be introduced to a product and then determining how to prevent the hazard through sanitation, pathogen testing and other procedures. Records documenting procedures and test results are to be maintained by the manufacturer. A less complicated alternative might simply be to end-test the product in batches prior to shipment from the manufacturing facility.(4)
The aforementioned options may, in fact, not be feasible; however, the alternatives were never considered or presented for public comment. In light of this, the agency should at least consider the alternatives outlined herein and determine whether the agency's goals can be met while reducing the burden on the five affected entities.
Finally, the Office of Advocacy believes that whatever regulatory options are adopted by the agency, the time for compliance should be increased to two years. In this way, some of the affected entities may have time to shift production to other products and salvage their businesses.
Thank you for your consideration of these important issues. Please do not hesitate to
contact me or Ms. Shawne Carter McGibbon of my staff if you require assistance in this
matter or any other matter that impacts small entities, 202-205-6533.
Sincerely,
Jere W. Glover
Chief Counsel for Advocacy
Shawne Carter McGibbon
Asst. Chief Counsel
for Advocacy
ENDNOTES
1. Pub. L. No. 94-305, 90 Stat. 668 (codified as amended at 15 U.S.C. §§ 634a-g, 637).
2. Regulatory Flexibility Act, 5 U.S.C. § 601, as amended by the Small Business Regulatory Enforcement Fairness Act, Pub. L. No. 104-121, 110 Stat. 866 (1996).
3. FDA estimates that about five firms out of a total 28 firms currently manufacture non-sterile inhalation solutions for nebulization, and that those five firms are likely to be small entities as defined by the RFA. 62 Fed. Reg. at 49,640. The percentage may be higher than 18%, however, because FDA lacks precise data.
4. It is noteworthy that all of the contaminated products to date have
been caught prior to reaching or harming patients who use them.