[Federal Register Volume 63, Number 168 (Monday, August 31, 1998)]
[Rules and Regulations]
[Pages 46171-46174]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23304]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 801

[Docket No. 96N-0119]


Amended Economic Impact Analysis of Final Rule Requiring Use of 
Labeling on Natural Rubber Containing Devices

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule; amended economic analysis statement.

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SUMMARY: The Food and Drug Administration (FDA) is issuing an amended 
economic analysis statement relating to a final rule that published in 
the Federal Register  of September 30, 1997 (62 FR 51021), requiring 
labeling statements concerning the presence of natural rubber latex in 
medical devices. This rule was issued in response to numerous reports 
of severe allergic reactions and deaths related to a wide range of 
medical devices containing natural rubber. The final rule becomes 
effective on September 30, 1998. In order to allow further comment on 
the economic impact of the September 30, 1997, final rule, FDA 
published in the Federal Register of June 1, 1998, an amended economic 
impact statement, including an amended initial regulatory flexibility 
analysis (IRFA) that it prepared under the Regulatory Flexibility Act 
(RFA), as amended by the Small Business Regulatory Enforcement and 
Fairness Act (SBREFA). After considering comments submitted in response 
to the June 1, 1998, amended economic analysis statement, FDA is 
issuing the amended final economic impact statement, including an 
amended final regulatory flexibility analysis.

DATES: The September 30, 1997, final rule is effective on September 30, 
1998, except for products that contain natural rubber latex solely in 
cold-seal type packaging. The rule will not apply to these products for 
an additional 270 days from the September 30, 1998, effective date of 
the final rule. Elsewhere in this issue of the Federal Register, FDA is 
announcing a stay of the effective date of the September 30, 1997, 
final rule for these products.

ADDRESSES: References are available in the Dockets Management Branch 
(HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Donald E. Marlowe, Center for Devices 
and Radiological Health (HFZ-100), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20850, 301-827-4777, FAX 301-827-4787.

SUPPLEMENTARY INFORMATION: 

I. Background

    In the Federal Register of September 30, 1997 (62 FR 51021), FDA 
published a final rule (to be codified at 21 CFR 801.437), under its 
authority in section 505(a) and (f) of the Federal Food, Drug, and 
Cosmetic Act (the act) (21 U.S.C. 352(a) and (f)), requiring certain 
labeling statements on medical devices that contain or have packaging 
that contains natural rubber. This rule becomes effective on September 
30, 1998. The agency issued this rule because medical devices composed 
of natural rubber may pose a significant health risk to some consumers 
and health care providers who are sensitized to natural latex proteins. 
FDA has received numerous reports about adverse effects related to 
reactions to natural latex proteins contained in medical devices, 
including 16 deaths following barium enemas. These deaths were 
associated with anaphylactic reactions to the natural rubber latex cuff 
on the tip of barium enema catheters. Scientific studies and case 
reports have documented sensitivity to natural latex proteins found in 
a wide range of medical devices. It is estimated that 5 to 17 percent 
of health care workers are sensitive to latex proteins (Refs. 1 through 
5.)
    The September 30, 1997, final rule (hereinafter referred to as the 
final rule) specifically requires that devices that contain natural 
rubber that is intended to contact or is likely to contact the health 
care worker or patient bear one or more of four labeling statements, 
depending on the type of natural rubber in the device and depending on 
whether the natural rubber is in the device itself or in its packaging. 
These statements are as follows: ``This Product Contains Dry Natural 
Rubber.''; ``Caution: This Product Contains Natural Rubber Latex Which 
May Cause Allergic Reactions.''; ``The Packaging of This Product 
Contains Dry Natural Rubber.''; and ``The Packaging of This Product 
Contains Natural Rubber Latex Which May Cause Allergic Reactions.'' The 
final rule also prohibits the use of the word ``hypoallergenic'' on 
devices that contain natural rubber latex.
    In the June 24, 1996, proposed rule (61 FR 32618), FDA stated that 
it did not believe that the proposed rule would be a significant 
regulatory action as defined by Executive Order 12866, and certified 
under the Regulatory Flexibility Act (5 U.S.C. 601-602) that the rule 
would not have a significant economic impact on a substantial number of 
small entities. FDA stated that it believed the rule's proposed 
effective date 180 days after publication would allow manufacturers to 
exhaust their existing labeling supplies.
    FDA received comments concerning the economic impact of the 
proposed rule stating that the requirement would have a major impact on 
multinational companies, costing at least $15,000 per device for 
labeling. Another comment stated that the agency underestimated the 
impact of the rule, as each manufacturer will need to draft, review, 
and relabel primary and secondary packages of hundreds, if not 
thousands of devices.
    Based on FDA's information, the agency responded that it did not 
agree that the regulation would require the relabeling of hundreds or 
thousands of devices, and that agency estimates of relabeling costs 
were between $1,000 to $2,000 for each type of device. The agency also 
noted that the extended 1 year effective date should allow most 
manufacturers to exhaust their current labeling stock prior to the 
effective date of the regulation. On this basis, the agency stated that 
the final rule was not a significant regulatory action under the 
Executive Order, and certified that although a substantial number of 
small entities would be affected by the rule, the estimated $1,000 to 
$2,000 cost of implementing the final rule would not have a significant 
economic impact on those entities (62 FR 51021 at 51029).
     On October 7, 1997, the Office of the Chief Counsel for Advocacy 
of the U.S. Small Business Administration submitted a comment stating 
that the agency had not supplied data in the preamble to the final rule 
to support its cost estimates. The agency also received information 
from industry, subsequent to the issuance of the final rule, 
identifying additional products that would be subject to the final 
rule. On the basis of this information, FDA issued an amended economic 
impact analysis, including an IRFA, and offered opportunity for further 
comment before the implementation of the rule (63 FR 29552). FDA stated 
that after consideration of these comments, FDA will decide whether to 
issue the rule on its current effective date, to stay the effective 
date of the final rule, and/or repropose the rule.

II. Comments to the Amended Economic Impact Analysis Statement

    FDA received three comments to the amended economic analysis. Two 
comments were from the Health Industry Manufacturers Association

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(HIMA), and the other comment was from an in vitro diagnostic 
manufacturer.
    The in vitro diagnostic manufacturer stated that health care 
professionals using in vitro products are trained in and expected to 
follow universal precautions for handling potential biohazards by 
wearing protective gloves. Accordingly, the comment maintained that 
health care professionals would not come into contact with latex in in 
vitro diagnostic products.
    FDA believes that training in universal precautions will not 
prevent contact with the latex in in vitro diagnostic products for 
several reasons. Contact may occur under a variety of situations 
including failure to follow universal precautions, the absence of 
wearing protective gloves during the set up phase of testing, the 
retrieval of the products from storage or packing, or the disposal of 
products. While FDA does not believe that in vitro diagnostic products 
may be categorically excluded from the scope of this rule because of 
the universal precautions that may be undertaken, FDA believes that 
given the variety of product designs, there may be certain in vitro 
diagnostic products that may contain latex that are designed in such a 
manner as to preclude contact with the user. Currently, FDA is unaware 
of any products that are designed in such manner. If, however, there 
are such products, these products would not be subject to the final 
rule.
    The in vitro diagnostic manufacturer and HIMA also commented that 
if in vitro diagnostic devices fell within the scope of the rule, they 
had not been included in the amended economic impact analysis. This 
omission was an oversight. FDA referred this comment and others 
described below to Eastern Research Group (ERG), Lexington, MA for 
analysis. ERG, after considering comments to the June 1, 1998, amended 
economic impact analysis, has issued an amended economic impact 
analysis which includes in vitro diagnostic products. The substantive 
parts of this analysis are reproduced in their entirety in Appendix 1 
of this document.
    HIMA submitted two comments. One comment requested an extension of 
the comment period to the economic impact analysis until July 31, 1998. 
Subsequently, HIMA submitted timely preliminary substantive comments.
    FDA denied the request for an extension to the comment period. The 
public has now had two separate opportunities to comment on the 
economic impact of this rule. Interested persons had 90 days to respond 
to the economic impact statement in the proposed rule (61 FR 32618). 
FDA received only two comments related to the economic impact of the 
proposed rule. The amended economic impact analysis provided an 
additional opportunity for comment on the economic impact. FDA believes 
that 30 days is an adequate time to respond to the comments, 
particularly given the fact that this is the second opportunity for 
comment.
    Moreover, FDA needed to notify the public whether the comments 
related to the costs of the rule would result in a stay of the rule, a 
reproposal of the rule, or whether FDA would retain the September 30, 
1998, effective date. FDA needed sufficient time to analyze the 
comments and publish in the Federal Register a document notifying the 
public of its course of action before the September 30, 1998, effective 
date. FDA believes that allowing until July 31, 1998, for the 
submission of the second round of comments would not have allowed the 
agency adequate time to analyze comments and publish in the Federal 
Register a document in sufficient time before the September 30, 1998, 
effective date of the rule.
    While HIMA's request for an extension was pending, HIMA submitted 
timely comments to FDA from several of its members. The fact that many 
HIMA members submitted responses within the comment period further 
demonstrates that the period of time was adequate for the submission of 
comments.
    HIMA raised several substantive comments in its July 1, 1998, 
submission. These comments stated that HIMA was uncertain if the June 
1, 1998, estimate included costs related to the following items or 
factors: New plates and film for each new label, purchasing or 
manufacturing new relabeled boxes and cartons, slow moving inventory or 
sterile products that cannot be repackaged, ``specialty'' products that 
are manufactured on an intermittent basis and kept in inventory for 2 
to 3 years, and inability to place sticker labels on existing inventory 
for products that are sterile or carry several layers of packaging. 
HIMA also stated that one member had estimated the total cost per SKU 
to be $28,000.
    These cost factors stated by HIMA were considered by ERG and FDA. 
Moreover, the figure reported to HIMA by one member for total cost per 
SKU does not affect the conclusions of FDA and ERG about the economic 
impact of this rule. The final ERG report, which is reproduced in 
Appendix 1, addresses these comments in further detail.
    HIMA also stated that the agency did not comply with the Regulatory 
Flexibility Act in that it did not publish the initial regulatory 
flexibility analysis at the time of the publication of the proposed 
rulemaking. FDA does not agree. Regulatory flexibility analyses are 
only required if there is a significant impact on a substantial number 
of small entities. If an agency certifies there is no significant 
impact on a substantial number of small entities, the agency is not 
required to perform an initial or final regulatory flexibility analysis 
(5 U.S.C. 605(b)).
    In both the proposed and final rules, FDA certified that under 5 
U.S.C. 605(b) no such analysis was required (61 FR 32618, June 24, 
1996; 62 FR 51021 at 51029, September 30, 1997). The first ERG 
analysis, as described in the Federal Register of June 1, 1998, and the 
subsequent ERG analysis, as described below, that responds to industry 
comments, supports FDA's conclusion that no regulatory flexibility 
analysis under 5 U.S.C. 603 and 604 is required. Even if such an 
analysis is required, FDA believes that the agency can satisfy the 
requirements under 5 U.S.C. 603 and 604 by issuing amended initial and 
final analyses after a proposed rule is issued.

III. Analysis of Impacts

    During the course of reexamining the appropriateness of its 
certification that no regulatory flexibility analysis was required, FDA 
has already gathered sufficient information to perform a regulatory 
flexibility analysis. Accordingly, although FDA believes no regulatory 
flexibility analysis is required because there is no significant impact 
on a substantial number of small entities, FDA is providing a final 
regulatory flexibility analysis, as described below, in this amended 
economic impact analysis statement.
    FDA has examined the impacts of the final rule under Executive 
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the 
Unfunded Mandates Reform Act (2 U.S.C 1501 et seq.). Executive Order 
12866 directs agencies to assess all costs and benefits of available 
regulatory alternatives and, when regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). Under the Regulatory 
Flexibility Act, if a rule has a significant impact on a substantial 
number of small entities, an agency must analyze regulatory options 
that would minimize any significant impact of the rule on small 
entities. Title II of the Unfunded Mandates Reform Act (21 U.S.C. 1532) 
requires that agencies prepare a written assessment of

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anticipated costs and benefits before proposing any rule that may 
result in an expenditure in any 1 year by State, local, and tribal 
governments, in the aggregate, or by the private sector of $100 million 
(adjusted annually for inflation).
    The agency believes that this rule is consistent with the 
regulatory philosophy and principles identified in Executive Order 
12866 and in these two statutes. The purpose of this rule is to add 
labeling statements that will help ensure the safe and effective use by 
health care workers and patients of natural rubber devices. Potential 
benefits include early recognition of symptoms that could develop into 
severe latex allergies, and the prevention of severe allergic reactions 
and death that may occur if persons who are allergic to natural rubber 
inadvertently use natural rubber devices.
    Based on other information referenced in this document, and on the 
analysis performed by the ERG, FDA is issuing this amended economic 
analysis statement. Since the rule does not impose any mandates on 
State, local or tribal governments, or the private sector that will 
result in an expenditure in any 1 year of $100 million or more, FDA is 
not required to perform a cost-benefit analysis according to the 
Unfunded Mandates Reform Act. The rule is not a significant regulatory 
action as defined by the Executive Order.
    ERG amended its report based on comments received to the June 1, 
1998, amended economic analysis statement. The final ERG analysis 
estimated that this rule will affect approximately 2,340 small 
businesses. Total annualized compliance costs for small businesses are 
estimated at $4.1 million, which represent 0.05 percent of revenues for 
small medical device manufacturers. This economic analysis indicates 
that this rule will not have a significant economic impact on a 
substantial number of small entities.
    The final natural rubber latex labeling rule would require certain 
labeling statements on products that contain natural rubber latex. This 
rule would not invoke new recordkeeping and reporting requirements. 
Manufacturers of several types of products may include natural rubber 
latex and therefore be subject to this rule. Manufacturers of the 
products listed in Table 1-1 of the final ERG report will be subject to 
the final rule (63 FR 29552 at 29560).
    Manufacturers of natural rubber latex devices need to employ 
certain professional skills to implement the new labeling requirements. 
Regulatory affairs staff will need to identify the need for a revised 
label, and coordinate the labeling review and revision processes with 
other departments such as marketing, medical and legal departments, and 
prepare the new labeling language. Graphic artists and label layout 
specialists will prepare the revised labels. Art work might be prepared 
by in-house or external staff. Once prepared, the revised label is 
normally sent to outside vendors who prepare new printing plates and 
perform final printing. The manufacturing personnel receive and review 
the final revised labeling, replace and discard old inventory, 
incorporate the new labels into the material control and inventory 
systems, and modify labeling and packaging equipment as necessary to 
accommodate new labels.

IV. Steps Taken to Minimize the Economic Impact on Small Entities 
and Regulatory Alternatives Examined

    FDA has analyzed several alternatives and taken several steps to 
minimize the economic impact of this final rule on small entities. FDA 
did not receive any comments regarding proposed regulatory alternatives 
in response to the June 1, 1998, amended economic analysis statement. 
As discussed previously, FDA received a comment asking for 
clarification regarding the applicability of the final rule to in vitro 
diagnostic products, a request for an extension of the comment period, 
and several questions from HIMA relating to costs analysis issues. 
FDA's response to those comments is discussed in section II of this 
document.

 A. Application of the Rule to Combination Products and Packaging

    Although FDA did not receive any comments to the June 1, 1998, 
amended economic analysis statement proposing any regulatory 
alternatives, FDA did receive requests from industry, since publication 
of the final rule, for alternative approaches regarding the 
applicability of the rule. FDA considered both these alternatives, and 
modified the application of the rule under these requests in a manner 
that reduces the economic impact of the rule on industry, including 
small entities.
    First, FDA received comments from industry requesting that the rule 
does not apply to combination products containing device components 
that had previously been regulated solely as drugs or biologics. In the 
Federal Register of May 6, 1998 (63 FR 24934), FDA issued a document 
stating that upon consideration of these comments and the need to 
provide a uniform labeling approach for all drug and biological 
products, including combination products, the agency did not intend to 
apply the final rule to combination products currently regulated as 
drugs or biologics, and instead intends to initiate a separate 
proceeding to propose rulemaking requirements for labeling statements 
on natural rubber-containing products regulated as drugs and biologics, 
including combination products, currently regulated under drug or 
biologic authorities.
    Second, on June 5, 1998, HIMA submitted a citizen petition 
requesting a stay of the implementation of the final rule as it 
pertains to packaging (Ref. 6). As a basis for the stay, HIMA cited 
several grounds, including assertions that many manufacturers were 
confused as to the applicability of the rule to cold seal packaging, 
and, therefore, needed additional time to come into compliance with the 
new labeling requirements.
    On June 19, 1998, FDA responded to this petition by stating it 
would stay the effective date of the latex labeling statements required 
by the final rule for cold-seal packaging for an additional 270 days 
from the September 30, 1998, effective date of the final rule. The stay 
of the effective date for the provisions of the September 30, 1997, 
final rule as they relate to cold-seal packaging is published elsewhere 
in this issue of the Federal Register. FDA is not granting a stay of 
the effective date for all packaging because of the evidence of serious 
risks latex poses for certain individuals and the need to inform those 
individuals of the presence of natural rubber latex in devices (Ref. 
7).

B. Voluntary Compliance

    FDA could have issued guidance stating FDA considered statements 
about the presence of natural rubber necessary to comply with existing 
general statutory and regulatory prohibitions against false and 
misleading labeling (section 505(a) of the act), and failure to provide 
adequate directions for use (section 505(f)). Given the significant 
health risks associated with natural rubber products, FDA does not 
believe that existing general statutory labeling authority and 
regulations provide adequate protection to ensure that health care 
workers and patients are warned about the risks associated with natural 
rubber.
    Without the final regulation, manufacturers may not provide any 
information at all. The ERG report and FDA's own experience indicate 
that some manufacturers never voluntarily revise their labeling. Even 
if it could be assumed that all manufacturers would voluntarily provide 
some labeling information about the presence of

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natural rubber, such information is likely to be presented in a variety 
of ways that may confuse consumers and limit the effectiveness of the 
natural rubber statement. FDA believes that the provision of 
consistent, accurate information to consumers is critical. FDA believes 
that this regulation, which provides accurate, consistent information 
in a standardized manner, will assure that the safety information is 
communicated effectively to the public.

C. Implementation Periods

    FDA considered various implementation periods for the effective 
date after the issuance of the final rule. The June 24, 1996, proposed 
rule proposed an effective date 6 months after the publication of the 
final rule. The final rule has reduced the impact on small businesses 
by extending the effective date to 1 year after issuance of the final 
rule for all products, except those containing natural rubber latex 
solely in cold-seal type packaging. For those products the agency is 
providing, for the reasons stated previously, an additional 270 days to 
comply with the rule.
    Based on the ERG report figures, the total industry cost of 
compliance for this rule with a 1-year implementation period is $64.1 
million. This figure may be somewhat higher than actual costs because 
of the extension for compliance granted to cold seal packaged products, 
however FDA did not reduce cost estimates related to this variable. The 
total annualized costs are calculated at $9.1 million per year. The 
costs for a 6-month effective date are 26 percent greater than a 1-year 
effective date. Allowing a 24-month implementation date would reduce 
costs by 40 percent.
    FDA rejected the 6-month implementation period and extended the 
implementation period to 1 year to allow manufacturers of products 
containing natural rubber latex, including small businesses, to reduce 
costs by depleting existing inventories and coordinating this labeling 
change with other planned labeling changes. Although costs could 
further be reduced by allowing a 24-month implementation period, FDA 
believes that the public need for this information about devices that 
pose serious risks justifies rejecting this alternative.

D. Exempting Small Businesses

    FDA has considered the option of exempting small businesses from 
the final regulation. The ERG report estimates that approximately 83 
percent of the manufacturers of natural rubber latex products are small 
businesses. FDA believes that given that the large majority of 
manufacturers of products containing natural rubber latex are small 
businesses, and given the risks associated with these devices, 
exempting small businesses from this regulation would result in a 
significant decrease of consumer protection. Accordingly, FDA does not 
believe that small businesses should be exempt from this regulation.

 E. Allowance of Supplementary Labeling

    FDA could have chosen a regulatory alternative that would require 
that all labeling be directly printed on the existing packaging and 
labeling. Such a regulatory provision would decrease the possibility 
that the required statement would become dislodged during distribution. 
Instead, the final rule allows the use of supplementary labeling 
(stickers) to provide the required labeling information. As noted in 
the ERG report, this will allow a number of firms, including small 
businesses, to reduce costs by avoiding extensive repackaging of 
existing product inventory that will not be sold prior to the end of 
the regulatory implementation period. FDA decided to include this 
option in the final rule.

F. Requiring a Labeling Statement on Only One Level of Labeling

    Under the provisions of the final rule, FDA estimates that most 
devices covered under the final rule will bear the required natural 
rubber statement on two or three levels of labeling. FDA considered 
requiring labeling statements on only one level of labeling. This 
alternative was rejected because of the importance of the information 
contained in the required labeling statements. Users may not have the 
necessary opportunity to read the statement if it is included only on 
some levels of labeling. For some products, especially those with 
multiple users, some labeling may be discarded prior to use by 
subsequent consumers. The inclusion of the statement on each level of 
labeling increases the likelihood that consumers will be aware of the 
risks posed by the natural rubber in the product.

V. References

     The following references have been placed on display in the 
Dockets Management Branch (address above) and may be seen by interested 
persons between 9 a.m. and 4 p.m., Monday through Friday.
    1. Kibby, T., and M. Akl, ``Prevalence of Latex Sensitization in 
a Hospital Employee Population,'' Annals of Allergy, Asthma and 
Immunology, 78:41-44, 1997.
    2. Kaczmarek, R. G., B. G. Silverman, T. P. Gross, et al., 
``Prevalence of Latex-specific IgE Antibodies in Hospital 
Personnel,'' Annals of Allergy, Asthma and Immunology, 76:51-56, 
1996.
    3. Arellano, R., J. Bradley, and G. Sussman, ``Prevalence of 
Latex Sensitization Among Hospital Employees Occupationally Exposed 
to Latex Gloves,'' Anesthesiology, 77:905-908, 1992.
    4. Lagier, F., D. Vervloet, I. Lhernet, et al., ``Prevalence of 
Latex Allergy in Operating Room Nurses,'' Journal of Allergy and 
Clinical Immunology, 90:319-322, 1992.
    5. Yassin, M., M. Lierl, T. Fisher, et al., ``Latex Allergy in 
Hospital Employees,'' Annals of Allergy, 72:245-249, 1994.
    6. June 5, 1998, HIMA citizen petition requesting a stay of the 
implementation of the final rule as it pertains to packaging.
    7. June 19, 1998, FDA response to HIMA citizen petition 
requesting stay of the implementation of the final rule as it 
pertains to packaging.

VI. Public Outreach

    FDA has conducted extensive public outreach relating to the final 
rule to small businesses. Interactions with the public on issues 
relating to this rule are discussed in detail in the amended economic 
analysis statement published in the Federal Register of June 1, 1998 
(63 FR 29552, at 29553 and 29554).

    Dated: August 13, 1998.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 98-23304 Filed 8-28-98; 8:45 am]
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