A complete overhaul to the over-the-counter (OTC) drug system quietly rode
its way into law with the Coronavirus Aid, Relief, and Economic Security
Act or the CARES Act (H.R. 748), along with several other significant
reform measures impacting pharmaceutical and medical device manufacturers.
Although a majority of the regulatory reform measures in the CARES Act aim
to address issues that have surfaced as part of the coronavirus (COVID-19)
pandemic, the OTC reform provisions modernize and substantially revise the
existing arcane and tedious OTC drug approval system. The CARES Act changes
are the first meaningful update to the OTC drug product approval system
since the early 1970s.
Read on for a brief history of the OTC drug approval process and five key
takeaways from the OTC drug system reform wrought by the CARES Act.
History of OTC Product Approvals
Unlike prescription drugs, which are approved by the U.S. Food and Drug
Administration (FDA) after rigorous review of clinical trial information to
ensure the product is both safe and effective for human use, the OTC drug
review process involves a lengthy three-phase public rulemaking process to
establish drug “monographs.” FDA often refers to these monographs as the
“rulebook” for OTC drug products. The monograph includes all necessary
product information such as indications, dosing information, strength and
warnings. Once a monograph becomes “final” through the rulemaking process,
it is published in federal regulations and companies can manufacture and
market an OTC drug product based on the monograph and without additional
FDA review or approval.
In a simplified sense, OTC drugs are made readily available to consumers
and are taken by patients who essentially diagnose and treat themselves
based solely on information obtained from the product labeling
of the product. Examples of everyday OTC drug products in monograph status
are cough and cold medicines, antacids, acne medication and antiperspirant,
to name a few. According to FDA, there are more than 300,000 marketed OTC
drug products; however, the OTC drug monograph process does not come close
to the FDA-scrutinized prescription drug approval regime.
At a high level under the current regime, OTC monographs are categorized
based on their ingredients:
- Category I — Generally recognized as safe and effective
(GRASE) for the claimed therapeutic indication
- Category II — Not GRASE and ineffective or unacceptable
indications
- Category III — Insufficient data available to permit
final classification
The greatest shortcoming of the OTC drug monograph process is the lengthy
delays that result from the public rulemaking process. These delays leave
many OTC drug products in perpetual approval purgatory and “proposed” rule
status (a tentative final monograph or TFM), and the process to update any
OTC drug monograph to address safety or other concerns is ineffective and
often allows safety concerns to simply fall between the cracks.
CARES Act Reform of OTC Monograph Process
- Provisions Addressing Current OTC Monograph Status. The
CARES Act significantly revises the status for each category of OTC drugs.
The revisions and necessary go-forward requirements depend on the current
product monograph status (proposed, TFM or final) and on the GRASE
category:
- A Category I drug under a TFM or one that meets the requirements of a
final monograph would be considered GRASE and not a “new drug,” so long as
all applicable requirements are met.
- Category II drugs are now automatically deemed new drugs. Manufacturers
of these OTC products must submit new drug applications within 180 calendar
days of exclusivity unless FDA determines that it is in the interest of
public health to extend the period. Failure to comply may subject these
products to FDA enforcement.
- Category III drugs meeting certain requirements will be allowed to
transition to OTC drug status.
Any OTC drug
currently on the market that fails to meet the requirements above or are
not subject to an administrative order (as described below) will be deemed
a “new drug” subject to FDA’s new drug approval process and will be
considered misbranded and subject to enforcement if otherwise marketed.
- Monographs Issued by Administrative Order. FDA now has
the authority to utilize an administrative order process for OTC drug
products that can be initiated by FDA or through a request by any person
marketing, manufacturing, processing or developing a drug. The
administrative order process continues to provide for certain public
comment periods and appeal measures. The provisions for the administrative
order process also set forth other processes to allow FDA to better
determine whether certain product changes will affect safety or
effectiveness of an OTC drug.
- Market Exclusivity for Certain OTC Drugs. To encourage
innovation, certain qualifying OTC drugs that, among other things, contain
an active ingredient not previously used or provide for a change in the
conditions of use of a drug for which new human data studies were conducted
may receive 18 months of market exclusivity.
- User Fees. The OTC industry finally must join the rest
of the drug industry in terms of being required to pay facility fees and
user fees for new OTC drug monographs, which are set to begin in fiscal
year 20201. The fees are intended to fund FDA and the new OTC review
process.
- OTC Cough and Cold Products. Through the CARES
Act, Congress has revisited potential issues related to OTC cough and cold
drugs for pediatric uses. Some have suspected that cough and cold drugs
presently sold on the market may cause adverse reactions or possess
inadequate labeling for pediatric patients. Congress has directed the
Secretary of Health and Human Service to, within one year, begin submitting
a report on cough and cold OTC drug monographs for children under the age
of 6, encouraging the Secretary, as appropriate, to revise such monographs.
The inquiry is limited to OTC drugs containing “antitussive, expectorant,
nasal decongestant, or antihistamine ingredients (or combinations).
Importantly, many of the CARES Act OTC reform measures take immediate
effect. Here are some key takeaways for OTC drug manufacturers,
distributers and marketers:
- The company should know the OTC drug’s history and monograph status and
review whether the drug’s current status will be impacted by these changes,
particularly if the OTC’s current category may require the submission of a
new drug application.
- Confirm that any OTC product currently sold is made in accordance with
OTC monographs that are GRASE or finalized.
- Keep an eye out for user fees and be prepared to pay FDA annually for
the right to manufacture OTC drugs.
- Private Label Distributors (PLD),
manufacturers and contract manufacturers should closely analyze products to
confirm whether user fees will apply.
- Companies should know their cough and cold OTCs and what evidence is out
there for pediatric safety, as this category may be facing changes in the
future.
Please contact the authors for additional information. McGuireWoods has published
additional thought leadership on how companies across various industries
can address crucial coronavirus-related business and legal issues. The
firm’s
COVID-19 response team
stands ready to help clients navigate urgent and evolving legal and
business issues arising from the COVID-19 pandemic.
