[Federal Register Volume 69, Number 78 (Thursday, April 22, 2004)]
[Proposed Rules]
[Pages 21778-21796]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-9069]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 201, 208, and 209

[Docket No. 2003N-0324]
RIN 0910-AC35


Toll-Free Number for Reporting Adverse Events on Labeling for 
Human Drug Products

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to amend 
its regulations governing the format and content of labeling for human 
drug products for which an application is approved under section 505 of 
the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 355). The 
proposed rule would require the addition of a statement that includes a 
toll-free number and advises that the number is to be used only for 
reporting side effects and is not intended for medical advice (the side 
effects statement). When finalized, this rule will bring FDA 
regulations into compliance with provisions of the Best Pharmaceuticals 
for Children Act (the BPCA).

DATES: Submit written or electronic comments by July 21, 2004. See 
section IV of this document for the proposed effective date of any 
final rule based on this proposal.

ADDRESSES: You may submit comments, identified by Docket No. 2003N-0324 
and RIN 0910-AC35, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
     Agency Web site: http://www.fda.gov/dockets/ecomments. Follow the instructions for submitting comments on the 
agency Web site.
     E-mail: [email protected]. Include Docket 
No. 2003N-0324 and RIN 0910-AC35 in the subject line of your e-mail 
message.

[[Page 21779]]

     FAX: 301-827-6870.
     Mail/Hand delivery/Courier [For paper, disk, or 
CD-ROM submissions]: Division of Dockets Management, 5630 Fishers Lane, 
rm. 1061, Rockville, MD 20852.
Instructions: All submissions received must include the agency name and 
Docket No. 2003N-0324 and RIN 0910-AC35 or Regulatory Information 
Number (RIN) for this rulemaking. All comments received will be posted 
without change to http://www.fda.gov/dockets/ecomments, including any 
personal information provided. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see the 
``Comments'' heading of the SUPPLEMENTARY INFORMATION section of this 
document.
Docket: For access to the docket to read background documents or 
comments received, go to http://www.fda.gov/dockets/ecomments and/or 
the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Carol Drew, Center for Drug Evaluation 
and Research (HFD-7), Food and Drug Administration, 5600 Fishers Lane, 
Rockville, MD 20857, 301-594-2041.

SUPPLEMENTARY INFORMATION:

I. Background

A. BPCA Requirements

    Section 17 of the BPCA (Public Law 107-109) requires FDA to issue a 
final rule requiring the labeling of each human drug product for which 
an application is approved under section 505 of the act (21 U.S.C. 355) 
to include: (1) A toll-free number maintained by FDA for the purpose of 
receiving reports of adverse events regarding drugs, and (2) a 
statement that the number is to be used for reporting purposes only, 
not to seek or obtain medical advice. The BPCA states that the final 
rule must implement the labeling requirement so as to reach the 
broadest consumer audience and minimize the cost to the pharmacy 
profession.

B. MedWatch

    FDA already has an adverse drug events reporting program. FDA's 
existing MedWatch safety information and adverse event reporting 
program (MedWatch program) includes a toll-free number to facilitate 
the reporting of adverse events directly to the agency by both health 
care practitioners and consumers.
    Under the existing MedWatch program, consumers and health care 
practitioners may report serious adverse events, side effects, or 
problems they suspect are associated with drug products they use or 
prescribe. To obtain accurate and complete reports of side effects with 
a potential association to drug products, FDA generally recommends that 
consumers advise their health care practitioners to report side effects 
to the drug manufacturer or MedWatch program. However, consumers may 
also report side effects to FDA directly. A postage-paid MedWatch 3500 
form will be mailed or faxed to a consumer who calls 1-800-FDA-1088 and 
requests a form. A completed form can be mailed or submitted to 
MedWatch's fax number, 1-800-FDA-0178. Reporting also may be done 
online at http://www.fda.gov/medwatch. FDA encourages consumers to use 
the MedWatch Website to report adverse events. Consumers who call the 
MedWatch phone number are given the MedWatch Website address and the 
option of completing and submitting the reporting form on the Internet.
    Currently consumers receive an acknowledgement from FDA after their 
report is received. Consumers are personally contacted only if 
additional critically important information is needed. All reports are 
entered into a database and are evaluated by a safety evaluator. All 
information is submitted in confidence and protected to the fullest 
extent of the law.

C. Existing Labeling Requirements

    Section 505 of the act describes requirements for the agency's 
approval of new drug applications (NDAs) and abbreviated new drug 
applications (ANDAs). FDA regulates many forms of drug labeling for 
drug products approved under section 505 of the act. Regulated labeling 
includes: A prescription drug product's approved labeling directed to 
health care practitioners (physician labeling), FDA-approved Medication 
Guides, patient package inserts (PPIs) for certain drug products, and 
over-the-counter (OTC) drug product labeling.

II. Description of the Proposed Rule

A. FDA's Approach to the BPCA Requirements

    FDA is proposing that the MedWatch system should be used to fulfill 
the requirements of the BPCA for providing a toll-free number for the 
purpose of receiving adverse event reports regarding drug products.
    FDA is proposing that the side effects statement be distributed 
with each prescription drug product, both new prescriptions and 
refills, approved under section 505 of the act and dispensed to 
consumers by pharmacies and authorized dispensers in an outpatient 
setting. FDA is proposing a number of options/alternatives to meet this 
proposed requirement. FDA also is proposing to require the side effects 
statement in two categories of drug product labeling: (1) FDA-approved 
Medication Guides for drugs approved under section 505 of the act, and 
(2) the labeling for OTC drug products approved under section 505 of 
the act. Manufacturers may include the side effects statement in PPIs 
or Medication Guides on a voluntary basis for products not approved 
under section 505 of the act. In addition, FDA has proposed adding 
FDA's toll-free MedWatch telephone number to physician labeling in the 
proposed rule entitled ``Requirements on Content and Format of Labeling 
for Human Prescription Drugs and Biologics; Requirements for 
Prescription Drug Product Labels'' (65 FR 81082, December 22, 2000). 
FDA believes that this approach will be most likely to reach the 
broadest consumer audience and minimize the cost to the pharmacy 
profession.

B. Labeling Not Covered Under this Proposed Rule

1. Physician Labeling
    FDA is not proposing to modify the requirements for physician 
labeling at this time. Although consumers have access to physician 
labeling as reprinted in the Physician Desk Reference (PDR), physician 
labeling is not written for the consumer audience. In the Federal 
Register of December 22, 2000, the agency issued a proposed rule to 
revise the physician labeling requirements in 21 CFR 201.56 and 201.57 
(the physician labeling rule). The proposed changes to the labeling 
format included the addition of adverse drug reaction reporting contact 
information for health care practitioners, including FDA's toll-free 
MedWatch telephone number. Because physician labeling is directed to 
health care practitioners, and FDA anticipates that this labeling will 
be updated with the toll-free MedWatch number, the agency is not 
proposing modifications to physician labeling at this time. However, 
FDA is soliciting comments on this issue.
2. PPIs
    PPIs are required by FDA for certain drug products, including oral 
contraceptives and estrogen drug products (Sec. Sec.  310.501 and 
310.515 (21 CFR 310.501 and 310.515)). Some manufacturers also 
voluntarily produce PPIs for drug products. PPIs are an extension of 
physician labeling and are often distributed to consumers when the

[[Page 21780]]

drug product is dispensed. FDA is not proposing to require the side 
effects statement in PPIs at this time because the proposed requirement 
in this rule that pharmacies distribute the side effects statement will 
ensure that a broad consumer audience receives it. FDA believes that 
requiring changes to PPIs in addition is unnecessary; however, FDA is 
soliciting comments on this issue. Manufacturers may provide the side 
effects statement voluntarily in PPIs.

C. Benefits of the Proposed Rule to Public Health

    FDA has determined that this proposed rule will promote the 
agency's mission to protect the public health by informing consumers of 
FDA's adverse event reporting program under MedWatch. Data reported as 
a result of this proposed rule will supplement data currently reported 
and assist the agency in identifying trends in reported adverse events 
for specific drug products. These data may result in a review of the 
safety and/or effectiveness of particular drug products on the market. 
Once an adverse event or product problem is identified, the agency can 
initiate various actions to address the problem, such as labeling 
changes (e.g., boxed warnings), medical or safety alerts to health care 
practitioners, and product withdrawals. For further discussion of the 
benefits of this proposed rule, see the agency's analysis of economic 
impacts in section V.C of this document.

D. Specific Proposed Changes to the Regulations

1. Side Effects Statement
    Section 17 of the BPCA requires that the labeling for each drug 
approved under section 505 of the act include: (1) A toll-free number 
maintained by FDA for the purpose of receiving reports of adverse 
events regarding drug products, and (2) a statement that the number is 
to be used for reporting purposes only, not to seek medical advice. FDA 
has considered these requirements and has developed a conforming 
statement: ``Call your doctor for medical advice about side effects. 
You may report side effects to FDA at 1-800-FDA-1088.'' FDA believes 
this statement comports with the mandate in the BPCA and is brief 
enough to convey the appropriate message and fit on the labeling of 
drug products. However, FDA is soliciting comments on the wording of 
the proposed statements. As stated previously in this document, FDA is 
using the established MedWatch toll-free number for consumer reporting. 
For OTC products, the side effects statement has been modified to 
correspond to the specific requirements for OTC drug product labeling. 
FDA consulted with an agency communications specialist in developing 
the side effects statement.
    FDA is proposing that the side effects statement first direct 
consumers to call their doctor for medical advice. FDA is concerned 
that consumers may misinterpret a statement to report side effects and 
call the agency at the time they or members of their family experience 
a side effect, rather than calling their own doctor for immediate, and 
possibly critical, medical advice. To make it clear that consumers 
experiencing side effects and in need of medical advice should call 
their doctor first, FDA has included the first sentence instructing 
consumers to call their doctor for medical advice.
    FDA is proposing to use the term ``side effects'' rather than 
``adverse events'' because of concern that some consumers may not 
understand the meaning of the term ``adverse event.'' FDA believes the 
term ``side effects'' will be understood by a broader consumer audience 
than would the term ``adverse event.''
    The current MedWatch program distinguishes serious adverse events, 
defined in 21 CFR 314.80, as those where the patient outcome is: death, 
life threatening (real risk of dying), hospitalization (initial or 
prolonged), disability (significant, persistent or permanent), 
congenital anomaly, or required intervention to prevent permanent 
impairment or damage. The BPCA does not qualify the type of adverse 
event reported to the toll-free number. Therefore, FDA is not proposing 
that consumers report only serious adverse events to the MedWatch 
program. This is likely to result in more reports to FDA than under the 
existing system. The agency solicits comments on whether the term 
``side effects'' should be further qualified.
2. Medication Guides
    FDA-approved Medication Guides are required for prescription drug 
products that the agency has determined pose a serious and significant 
public health concern. Because these products have increased risks, FDA 
believes that the side effects statement should be included in 
Medication Guides required for drug products approved under section 505 
of the act.
    Part 208 (21 CFR part 208) sets forth the requirements for this 
type of patient labeling. Medication Guides provide information when 
FDA determines that the information is necessary to patients' safe and 
effective use of drug products. Medication Guides have been approved 
for approximately 18 prescription drug products, only some of which are 
approved under section 505 of the act. Some biological products have 
Medication Guides, but those products are not approved under section 
505 of the act, and therefore are not covered by these BPCA provisions. 
These provisions would apply, however, to any biological products 
approved under section 505 that carry Medication Guides.
    FDA is proposing that manufacturers be required to include the side 
effects statement under the heading, ``What are the possible or 
reasonably likely side effects of (name of drug)?''. Manufacturers who 
ship drug products for which a Medication Guide is required are 
responsible for ensuring that the Medication Guide is available for 
distribution to patients by providing sufficient numbers of Medication 
Guides to authorized dispensers of drug products. Consumers who receive 
the appropriate Medication Guide with their dispensed prescription drug 
product will be made aware of FDA's toll-free number to report side 
effects by reading the appropriate section of the Medication Guide.
    Under Sec.  208.20(a)(4), the letter height or type size for 
Medication Guides must be no smaller than 10 points (1 point = 0.0138 
inches). FDA is not proposing to modify this requirement; therefore, 
the side effects statement in Medication Guides will appear in no 
smaller than 10-point letter height or type size.
    While FDA is not requiring manufacturers to add the side effects 
statement to Medication Guides for those drug products not approved 
under section 505 of the act, manufacturers may do so voluntarily.
3. OTC Labeling
    Because certain OTC drug products are approved under section 505 of 
the act, FDA is proposing that the labeling of those products approved 
under NDAs or ANDAs must also contain the side effects statement as 
mandated by the BPCA. FDA estimates that there are approximately 350 
OTC products approved under an NDA and 172 approved under an ANDA.
    In 1999, FDA published a final rule on the labeling of OTC drug 
products. The final rule was intended to assist consumers in reading 
and understanding OTC drug product labeling and introduced a new format 
(drug facts format). In this proposed rule, FDA has modified the side 
effects statement for OTC products to correspond to the drug facts 
format. Section 201.66 (21 CFR 201.66) addresses format and content

[[Page 21781]]

requirements for OTC drug product labeling. Section 201.66(c) lists the 
content requirements for OTC drug product labeling, and Sec.  201.66(d) 
specifies the format requirements for OTC drug product labeling, 
including the letter height and type size.
    The format and content labeling requirements for OTC drug products 
in Sec.  201.66 include specific subheadings for presenting 
``warnings'' information. The subheading in Sec.  201.66(c)(5)(vii) is 
``Stop use and ask a doctor if''. The agency considers this language 
similar to the language in the first sentence of the side effects 
statement for prescription drug products that advises patients to 
``Call your doctor for medical advice about side effects.'' 
Accordingly, for OTC drug products, the agency is proposing to use the 
existing subheading in Sec.  201.66(c)(5)(vii) and include after it the 
bulleted statement ``side effects occur.'' The second sentence would 
remain the same as for prescription products: ``You may report side 
effects to FDA at 1-800-FDA-1088.'' This approach incorporates the side 
effects statement in OTC product labeling in the appropriate location, 
using existing consumer-friendly language and a minimal amount of 
additional labeling space.
    The letter height or type size for subheadings and all other 
information described in Sec. Sec.  201.66(c)(2) through (c)(9) in OTC 
labeling is no smaller than 6-point letter height or type size (Sec.  
201.66(d)(2)). Therefore, the OTC side effects statement would appear 
in a minimum 6-point letter height or type size. Consistent with Sec.  
201.66(c)(9), the telephone number would appear in a minimum 6-point 
bold letter height or type size. This requirement is repeated in the 
revisions to Sec.  201.66(c)(5)(vii).
4. Pharmacy Provisions
    FDA is proposing to add new part 209 (21 CFR part 209) to the 
regulations to require pharmacies and authorized dispensers to 
distribute the side effects statement to consumers with each 
prescription drug product approved under section 505 of the act. Under 
this part, the term ``pharmacies'' includes, but is not limited to, 
retail, mail-order, hospital, university, or clinic pharmacies, as well 
as public health agencies that dispense prescription drugs. The term 
``authorized dispenser'' means an individual licensed, registered, or 
otherwise permitted by the jurisdiction in which the individual 
practices to provide drug products on prescription in the course of 
professional practice. The term includes health care practitioners who 
dispense prescription drug products from their offices, but does not 
include the dispensing of drug samples. FDA does not intend that part 
209 apply to health care practitioners administering medication to 
inpatients in a hospital or health care facility under an order of a 
licensed practitioner, or as part of supervised home health care. FDA 
believes that patients receiving drugs under these circumstances will 
rely on their health care practitioners to monitor and report adverse 
events.
    While section 17 of the BPCA requires FDA to reach the broadest 
consumer audience, it also requires FDA to minimize costs to the 
pharmacy profession. To minimize the cost of the requirement for 
pharmacists to distribute the side effects statement, FDA is proposing 
to provide a range of options from which pharmacists may choose. These 
options are included in proposed Sec.  209.11(b). FDA invites comments 
on other options pharmacies might use to distribute the side effects 
statement.
    Proposed Sec.  209.11(b) provides that pharmacies and authorized 
dispensers may choose one of the following methods, or any combination 
of the following methods, to distribute the side effects statement to 
consumers: (1) Attach a standard-size sticker (1 1/2 by 7/16 inches) 
containing the side effects statement to the vial, package, or 
container of the prescription drug product; (2) use a pharmacy 
prescription vial cap preprinted with the side effects statement; (3) 
distribute a separate sheet of paper containing the side effects 
statement; (4) distribute consumer medication information such as that 
provided by pharmacy software and third party data processing vendors 
that contains the side effects statement; or (5) distribute the 
appropriate FDA-approved Medication Guide that contains the side 
effects statement.
    a. Option 1--sticker. The first option for distribution of the side 
effects statement by pharmacies and authorized dispensers is to attach 
a standard-size pharmacy sticker to the unit package, vial, or 
container of the prescription drug product dispensed to the consumer. 
FDA is proposing that the letter height or type size of the side 
effects statement on any sticker attached to the unit package, vial, or 
container of a prescription drug product be no smaller than 6 points. 
The side effects statement should be printed in any single, clear, 
easy-to-read type style. To minimize the cost of this option for 
pharmacies, FDA has determined that the proposed side effects statement 
will fit on a standard-size (1 1/2- by 7/16-inch) pharmacy sticker.
    FDA recognizes there may be reasons that the sticker option is not 
practicable for some drug products, e.g., the packaging of the drug 
product is too small to accommodate a sticker, or there are stickers 
already necessary that preclude adding another. FDA is not proposing to 
require this option. Therefore, a pharmacy or authorized dispenser may 
choose any other option.
    b. Option 2--preprinted vial cap. The second option for 
distribution of the side effects statement by pharmacies and authorized 
dispensers is to use a pharmacy prescription vial cap preprinted with 
the side effects statement. As with the sticker option, FDA is 
proposing that the letter height or type size of the side effects 
statement be no smaller than 6 points. The side effects statement 
should be printed on the vial cap in any single, clear, easy-to-read 
type style. Use of a preprinted vial cap should be useful when the 
necessary number of stickers on a prescription vial precludes the 
addition of another sticker.
    c. Option 3--separate sheet of paper. The third possible method of 
distribution is to provide a separate sheet of paper with the side 
effects statement to consumers. FDA is proposing that the letter height 
or type size of the side effects statement be no smaller than 10 points 
to ensure readability. The side effects statement should be in a 
single, clear, easy-to-read type style. FDA is not proposing any 
further requirements on how this information is presented. The agency 
believes that this flexibility will allow pharmacies and authorized 
dispensers who choose this option to use existing systems to meet this 
requirement.
    d. Option 4--consumer medication information. Some pharmacies 
voluntarily distribute written information about prescription drug 
products to consumers as part of patient medication counseling 
activities (consumer medication information). This information is often 
attached to or placed in the bag into which the pharmacist puts the 
prescription drug product prior to providing it to the consumer. 
Consumer medication information is often produced by third party data 
processing vendors. Therefore, FDA is providing pharmacies and 
authorized dispensers with the option of complying with this regulation 
by providing the consumer with consumer medication information updated 
to include the side effects statement. FDA is proposing that the letter 
height or type size of the side effects statement be no smaller than 10 
points to ensure readability. Distributing this consumer medication 
information

[[Page 21782]]

with each original and refill prescription dispensed to consumers will 
satisfy the requirements of this part.
    e. Option 5--FDA-approved medication guides. FDA is proposing that 
manufacturers include the side effects statement in FDA-approved 
Medication Guides for drug products approved under section 505 of the 
act. Medication Guides are typically produced by the manufacturer of 
the drug product. By regulation manufacturers are required to provide 
Medication Guides or the means to produce them to authorized dispensers 
for distribution to the patient (Sec.  208.24). Medication Guides are 
required to be printed in no smaller than 10-point letter height or 
type size. Pharmacists and other authorized dispensers may comply with 
this regulation by distributing Medication Guides that include the side 
effects statement for those drug products approved under section 505. 
Pharmacists and other authorized dispensers will need to choose a 
different compliance option if an FDA-approved Medication Guide for a 
drug product approved under section 505 of the act has not yet been 
updated with the side effects statement, or if the prescription drug 
product they are dispensing does not have a Medication Guide.

III. Legal Authority

    Section 17 of the BPCA requires the agency to issue a final rule 
mandating that the labeling of each drug approved under section 505 of 
the act include the toll-free number for reporting adverse events 
regarding drugs and a statement that the number is for reporting 
purposes only, not to seek medical advice. The legislation gives FDA 
broad discretion in designing the rule, requiring only that the 
labeling requirement be implemented so as to reach the broadest 
consumer audience and minimize the cost of the rule on the pharmacy 
profession.
    The proposed rule satisfies these two statutory requirements. The 
proposed rule covers prescription and OTC drugs approved under section 
505 of the act, and would require manufacturers, authorized dispensers, 
and pharmacies to include the side effects statement on certain drug 
product labeling. The scope of the proposed rule includes these 
individuals and entities because they all participate in labeling drug 
products approved under section 505 of the act. Drug manufacturers are 
subject to comprehensive regulation of drug product labeling under the 
act and its implementing regulations (e.g., 21 U.S.C. 352, 21 CFR part 
201), and section 17 of the BPCA explicitly extends FDA's authority to 
the side effects statement. Likewise, authorized dispensers (including 
pharmacists) and pharmacies are subject to statutory labeling 
requirements under section 503(b)(2) of the act, and the BPCA 
contemplates that pharmacies and authorized dispensers will distribute 
the side effects statement with prescription drug products approved 
under section 505. Including manufacturers, authorized dispensers, and 
pharmacies within the scope of the proposed rule will ensure that the 
side effects statement reaches the broadest consumer audience.
    FDA is proposing several compliance options for authorized 
dispensers and pharmacies in order to minimize the cost of the rule on 
the pharmacy profession. Of these options, authorized dispensers and 
pharmacies may choose the least costly means to distribute the side 
effects statement with prescription drug products. FDA recognizes that 
some pharmacists voluntarily provide consumer medication information to 
patients. Those who do so may put the side effects statement in that 
voluntarily provided information, or they may choose to comply using 
one or more of the other options the agency has proposed. The other 
options include distributing the side effects statement on: (1) A 
sticker attached to the unit package, vial, or container of the drug 
product; (2) a preprinted pharmacy prescription vial cap; (3) a 
separate sheet of paper; or (4) an FDA-approved Medication Guide, if 
appropriate.

IV. Proposed Effective Date

    FDA considered issuing this rule as an interim final rule to be 
effective 30 days after the date of its publication in the Federal 
Register. The BPCA directs FDA to issue a final rule within 1 year of 
the date of the BPCA's enactment on January 4, 2002. FDA is issuing 
this rule as a proposal, however, to allow the affected entities, 
including manufacturers and pharmacies, to comment on the proposed 
changes to the regulations.
    FDA is proposing that the final rule be effective 30 days after it 
is published in the Federal Register. FDA is proposing that all 
manufacturers of drug products, authorized dispensers, and pharmacies 
be in compliance not more than 1 year after the effective date of any 
final rule published in the Federal Register. FDA anticipates that 
manufacturers of drug products, authorized dispensers, and pharmacies 
will require time to update labeling and systems to comply with the new 
requirements.
    Manufacturers of drug products that require FDA-approved Medication 
Guides will need time to update these Medication Guides with the side 
effects statement and to distribute them to distributors, packers, and 
authorized dispensers. Manufacturers who make changes to FDA-approved 
Medication Guides can submit labeling changes in annual reports as 
described in Sec.  314.70(d) (21 CFR 314.70(d)) as a minor change in 
labeling and need not submit a supplemental application to the agency 
for preapproval.
    Manufacturers of OTC drug products will require time to update OTC 
labeling to make it available to consumers. Manufacturers of OTC drug 
products approved under an NDA can submit their labeling changes in 
their annual reports according to Sec.  314.70(d)(3) and need not 
submit a supplemental application to the agency for preapproval. 
Manufacturers of OTC drug products approved under an ANDA may also 
submit these changes in their annual reports according to Sec.  
314.70(d)(3) and Sec.  314.97 (21 CFR 314.97) and need not submit a 
supplemental application to the agency for preapproval.
    Pharmacies will require adequate time to make decisions about their 
least-cost option to comply with the rule and either implement new 
systems or update established systems. To decrease the burden of this 
rule on pharmacies and authorized dispensers, as required by the BPCA, 
FDA is proposing that 1 year should provide adequate time to comply 
with this rule. However, FDA is soliciting comments on this proposed 
compliance date.
    Manufacturers of products with Medication Guides not approved under 
section 505 of the act who voluntarily make changes to Medication 
Guides to include the side effects statement can submit labeling 
changes in annual reports as described in Sec.  601.12(f)(3)(i)(A) as a 
minor change in labeling and need not submit a supplemental application 
to the agency for preapproval. Manufacturers who voluntarily make 
changes to PPIs required under Sec. Sec.  310.501 and 310.515 can 
submit labeling changes in annual reports as described in Sec.  
314.70(d) as a minor change in labeling and need not submit a 
supplemental application to the agency for preapproval.

V. Analysis of Economic Impacts

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the 
Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive 
Order 12866 directs agencies to assess all costs and benefits of 
available regulatory

[[Page 21783]]

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 economic impact on a substantial 
number of small entities, an agency must consider alternatives that 
would minimize the economic impact of the rule on small entities. 
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that agencies prepare a written statement of anticipated costs and 
benefits before proposing any rule that may result in an expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million in any one year (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 proposed rule would require 
pharmacies and authorized dispensers to provide patients with the side 
effects statement and require drug manufacturers to include the 
statement on labeling of certain drug products. Potential one-time 
costs of the proposed rule are projected to range from $1.3 million to 
$3.7 million with annual compliance costs from $9.2 million to $22.1 
million. Annualized for 10 years, total compliance costs would be 
approximately $9.3 million to $22.6 million at 3 percent discount rate, 
and $9.4 million to $22.6 million at 7 percent discount rate. Although 
the agency is unable to quantify the potential benefits of the proposed 
rule at this time, improved awareness of drug safety reporting may 
increase the number of serious adverse drug reactions reported by 
consumers and health care practitioners to the MedWatch program. 
Potential benefits of the proposed rule are discussed in section V.B of 
this document. Furthermore, the agency has determined that the proposed 
rule is not an economically significant rule as described in the 
Executive order, because annual impacts on the economy are 
substantially below $100 million. Because 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 one year of $100 million or 
more, FDA is not required to perform a cost-benefit analysis according 
to the Unfunded Mandates Reform Act. The current inflation-adjusted 
statutory threshold is about $110 million. With respect to the 
Regulatory Flexibility Act, the agency believes it is unlikely that 
this proposed rule will result in a significant economic impact on a 
substantial number of small entities.
    The proposed rule would fulfill the BPCA's statutory requirement to 
provide consumers with a toll-free telephone number that can be used to 
report adverse drug events to FDA. The agency believes it receives 
reports for only a portion of the adverse drug events that occur. 
Providing consumers with this telephone number is expected to increase 
public awareness of, and participation in, the agency's voluntary 
adverse drug events reporting program. To ensure that the side effects 
statement would cover all drug products approved under section 505 of 
the act and reach a wide consumer audience as specified in the statute, 
FDA proposes that labeling of OTC drug products and any required 
Medication Guide for a drug product approved under section 505 must 
include the side effects statement, and the side effects statement must 
accompany each prescription dispensed for outpatient use. The agency 
also proposes to exercise its discretion to give affected pharmacies 
flexibility to select a method of compliance from among five options 
that would minimize the impact of the proposed rule. For a discussion 
of the alternatives FDA considered in drafting this proposed rule, see 
section V.C of this document. The rule FDA proposes is the least-
expensive alternative that meets the requirements set forth in section 
17 of the BPCA.

A. Costs of Regulation

1. Pharmacy Industry
    Both retail and nonretail pharmacies may dispense prescription 
drugs to patients. Retail channels include independent drug stores, 
chain drug stores, mass merchants, grocery stores with pharmacies, and 
mail/Internet services. Nonretail channels include health maintenance 
organizations (HMOs), hospital outpatient pharmacies, offices of health 
care practitioners, and ambulatory care clinics. Although several 
sources of information about the retail pharmacy sector exist, data on 
the number of ambulatory care centers or hospital outpatient 
departments dispensing prescription drugs are limited.
    a. Number of affected pharmacies. The proposed rule may affect all 
locations where an authorized dispenser distributes prescription drug 
products for outpatient use. According to the NACDS, in 2001 there were 
55,581 retail pharmacies, excluding mail order businesses (Ref. 1). 
Census data from 1997 show there were 314 mail order or electronic 
shopping establishments with merchandise sales from prescriptions (Ref. 
2). In addition, the agency tallied the number of establishments with 
receipts or revenue from drug products in Health Care and Social 
Assistance sectors using 1997 Economic Census data (Ref. 3). The Health 
Care sector data use a single revenue code for nonprescription and 
prescription drugs. Businesses with receipts or revenues from drug 
products that would not be licensed to dispense prescriptions (e.g., 
chiropractors) or would be administering drugs directly to patients 
(e.g., supervised home health care) were excluded from the analysis.
    A study conducted for FDA found that, on average, 89 percent of 
retail pharmacies currently give patients some type of written consumer 
medication information (Ref. 4). It is uncertain whether this 
percentage also represents nonretail pharmacies. Nevertheless, for this 
analysis we assume that clinics and HMOs are similar to retail 
pharmacies, distributing consumer medication information with 89 
percent of the dispensed prescriptions. In addition, hospital 
outpatient services and health care practitioners' offices are assumed 
currently to provide no written drug information. The agency solicits 
comment on these assumptions.
    Whether provided by a third party vendor or prepared in-house, it 
is anticipated that the side effects statement can be added to existing 
databases at a negligible one-time cost. Since the statement is not 
expected to increase the length of existing documents, the agency has 
assumed that only pharmacies and authorized dispensers not currently 
providing written consumer medication information will incur compliance 
costs and be affected by the rule. FDA requests comment on this 
assumption. Table 1 of this document shows the total number of 
establishments dispensing prescriptions and the number anticipated to 
be affected by the proposed rule.

[[Page 21784]]



 Table 1.--Estimated Number of Affected Retail and Nonretail Pharmacies
------------------------------------------------------------------------
                                    Percentage Not
    Type of        Total No. of    Providing Written    No. of Affected
    Pharmacy        Pharmacies     Drug Information       Pharmacies
------------------------------------------------------------------------
Retail Outlets   ...............  ..................  ..................
  Grocery        8,531                          11%                 938
   Store\1\
  Independent    20,647                         21%               4,336
   Pharmacy\1\
  Mail Order/    314                            11%                  35
   Electronic
   Shopping\2\
  Mass           5,910                           2%                 118
   Merchant\1\
  Traditional    20,493                          2%                 410
   Chain
   Store\1\
------------------------------------------------------------------------
Nonretail        ...............  ..................  ..................
 Outlets:
  HMO Medical    209                            11%                  23
   Center\3,4\
  Hospital       5,878                         100%               5,878
   Outpatient
   Service\3,5\
  Office of      7,867                         100%               7,867
   Health Care
   Practitioner
   \3,6\
  Outpatient     1,881                          11%                 207
   Care Center,
   except
   HMO\3,7\
------------------------------------------------------------------------
Total of all     71,730           ..................             19,812
 Affected
 Outlets
------------------------------------------------------------------------
\1\ Source: Ref. 1.
\2\ Source: Ref. 2, Table 2. Includes number of establishments in North
  American Industry Classification System (NAICS) code 454110 with
  merchandise sales for code 0161.
\3\ Source: Ref. 3, Tables 1a and 1b.
\4\ Includes number of establishments in NAICS 621491 with receipts or
  revenue from code 8619. Excludes nonemployer statistics.
\5\ Includes number of establishments in NAICS 622 with receipts or
  revenue from outpatient services (code 5250). Excludes nonemployer
  statistics.
\6\ Includes number of establishments in NAICS 62111, 62121, 62132,
  62139, with receipts or revenue from code 8619. Excludes nonemployer
  statistics.
\7\ Includes number of establishments in NAICS 62141, 62142, 621492,
  621493, 621498, with receipts or revenue from code 8619. Excludes
  nonemployer statistics.

    b. Prescriptions dispensed. For those pharmacies not providing 
written consumer medication information, the compliance costs of the 
proposed rule would be proportional to the number of outpatient 
prescriptions that affected pharmacies dispense annually. Consequently, 
smaller pharmacies dispensing fewer prescriptions than larger 
pharmacies would incur lower costs. Moreover, the proposed rule 
requires distributing the side effects statement with both new and 
refill prescriptions. Since individuals with multiple chronic 
conditions could potentially receive the side effects statement many 
times each year, the agency solicits comment on whether the statement 
could be distributed less frequently to this subset of individuals 
without increasing the burden on pharmacies.
    IMS Health collects data on the number of prescriptions dispensed 
as well as the number of pharmaceutical products purchased by the 
retail channels. In contrast, only data on the number of products 
purchased by nonretail channels are available. Because the types of 
drugs and dosage forms dispensed to outpatients are expected to be 
similar for retail and nonretail channels, the agency uses IMS data 
from both channels to derive estimates of the number of prescriptions 
dispensed annually by nonretail pharmacies (IMS Health, National 
Prescription Audit Plus, Provider Perspective, Retail Perspective, see 
appendix for details). Based on volume from 2001, pharmacies are 
estimated to dispense between 3.28 billion and 3.64 billion 
prescriptions to outpatients each year (table 2 of this document). 
However, this number is expected to increase over time. Estimates from 
NACDS predict that future drug use will increase approximately 26 
percent by the year 2005 (Ref. 1). The agency requests comment on these 
estimates.
BILLING CODE 4160-01-S

[[Page 21785]]

[GRAPHIC] [TIFF OMITTED] TP22AP04.002

BILLING CODE 4160-01-C

[[Page 21786]]

    c. Compliance costs for pharmacies. The proposed rule provides 
several compliance options, allowing pharmacies and authorized 
dispensers flexibility to select the least costly compliance method. 
The proposed rule describes five ways pharmacies and authorized 
dispensers can distribute the side effects statement to patients. These 
methods may be used individually or together in any combination, and 
include: (1) Attaching a standard-size sticker to the prescription 
container, (2) distributing a separate sheet of paper, (3) distributing 
consumer medication information containing the side effects statement, 
(4) using an imprinted vial cap, or (5) distributing the appropriate 
FDA-approved Medication Guide. Moreover, the widespread and growing use 
of electronic communication presents the opportunity to innovatively 
inform consumers about public health. FDA solicits suggestions on 
possible electronic methods to distribute the side effects statement 
that would comply with the BPCA's statutory mandate, and comment on 
what burden such solutions might impose on pharmacies and drug 
manufacturers. FDA also requests comment on whether electronic means of 
distributing the side effects statement would be consistent with the 
statutory definition of ``labeling.''
    The magnitude of the compliance costs will depend on whether a 
pharmacy is currently using one or more of these methods. For example, 
although third party vendors of consumer medication information 
software would incur negligible one-time costs modifying their 
databases to include the side effects statement, FDA believes that 
pharmacies using this type of software will incur no additional costs. 
Similarly, if a drug information database is managed in-house and the 
pharmacy is already handing out consumer medication information to 
patients, only a negligible one-time cost to add the statement may be 
incurred. For prescription drug products with Medication Guides, 
pharmacies and authorized dispensers will incur no additional costs 
since they are already required to distribute Medication Guides with 
those products. Outlets already using imprinted vial caps that elect to 
add the statement to the cap may incur negligible one-time costs to 
prepare a new stamping template. In contrast, switching from a non-
imprinted vial cap to one imprinted with the side effects statement 
might increase the cost of each vial cap by an estimated 15 percent.
    Some pharmacies, however, might incur new costs for each 
prescription they dispense. To illustrate the potential impact, the 
agency calculates the associated costs to affix a sticker, preprinted 
with the statement, on the prescription container. The agency believes 
that this option reflects the highest potential cost of the proposed 
rule to pharmacies and authorized dispensers. A box of series 1 
preprinted stickers contains 1,000 stickers at a cost of $2.90, or 
$0.003 per sticker. In addition to the cost of the sticker, pharmacy 
personnel may spend about 5 minutes per 1,000 stickers for ordering and 
inventory control and 5 seconds to affix each sticker to the container. 
Although in some small establishments a pharmacist may perform these 
tasks, a pharmacy technician or pharmacy school intern would probably 
perform these actions. Therefore, a range of labor costs are calculated 
with a pharmacy technician's mean and 90 percentile loaded hourly wage 
rates of $14.53 and $20.38, respectively, including 40 percent for 
benefits (Ref. 5). The annual costs of the proposed rule for affected 
retail pharmacies may range from $6.4 million to $8.7 million, and from 
$2.8 million to $11.5 million for nonretail pharmacies. If the entire 
affected pharmacy industry complied using this option, the proposed 
rule may cost from $9.2 to $20.2 million annually (table 3 of this 
document).
    Pharmacies could also elect to hand out a piece of paper printed 
with the side effects statement. Costs for this option depend on the 
size and quality of the paper. However, based on retail prices, a 
single sheet of paper and the ink to print the side effects statement 
cost approximately $0.013. A sheet of paper can comfortably accommodate 
from 8 to 20 statements in 10-point font, depending on the spacing 
between statements. Thus, the per statement cost of materials for this 
option ranges from about $0.001 to $0.002, substantially less than the 
sticker option. However, because the time required to cut up a piece of 
paper and distribute it with the prescription may exceed the time 
needed to affix a sticker, the average total cost to distribute a piece 
of paper is anticipated to be similar to the average total cost of the 
sticker option.

                             Table 3.--Potential Compliance Costs for Pharmacies\1\
----------------------------------------------------------------------------------------------------------------
                                                                   Cost of
    Type of Pharmacy        No. of Affected    Average No. of    Stickers  ($   Labor Costs  ($   Total Cost  ($
                                Outlets       Dispensed Rx\2\        mil)             mil)             mil)
----------------------------------------------------------------------------------------------------------------
Retail Outlets:           ..................  ...............  ...............  ...............  ...............
  Grocery Store                         938           49,997            $0.14   $1.00 to $1.41   $1.14 to $1.54
  Independent Pharmacy                4,336           37,714            $0.47    $3.50 to $4.91   $3.97 to $5.38
  Mail Order or                          35          520,732            $0.05   $0.38 to $0.54   $0.44 to $0.59
   Electronic Shopping
  Mass Merchant                         118           52,623            $0.02    $0.13 to $0.19  $0.15 to $0.20
  Traditional Chain                     410           69,194            $0.08   $0.61 to $0.85   $0.69 to $0.93
   Store
----------------------------------------------------------------------------------------------------------------
Retail Subtotal                       5,837   ...............           $0.76   $5.63 to $7.89   $6.39 to $8.66
----------------------------------------------------------------------------------------------------------------
Nonretail Outlets:        ..................  ...............  ...............  ...............  ...............
  HMO Medical Center                     23        79,244 to   $0.01 to $0.01   $0.04 to $0.08   $0.04 to $0.09
                                                     121,688
  Hospital Outpatient                 5,878        16,704 to   $0.28 to $0.92   $2.10 to $9.52   $2.39 to $10.44
   Service                                            53,947
  Offices of Health Care              7,867   1,042 to 1,171   $0.02 to $0.03   $0.18 to $0.28   $0.20 to $0.30
   Practitioner
  Outpatient Care                       207        33,262 to   $0.02 to $0.06   $0.15 to $0.64   $0.17 to $0.70
   Center, except HMO                                103,126
----------------------------------------------------------------------------------------------------------------
Nonretail Subtotal                   13,975   ...............  $0.33 to $1.02   $2.46 to $10.52  $2.80 to $11.53
----------------------------------------------------------------------------------------------------------------

[[Page 21787]]

 
Industry Total                       19,812   ...............  $1.10 to $1.78   $8.09 to $18.41  $9.19 to $20.19
----------------------------------------------------------------------------------------------------------------
\1\ Totals may not sum due to rounding.
\2\ Average number of dispensed Rx calculated by dividing the number of prescriptions dispensed in Table 2 of
  this document by the total number of pharmacies in Table 1 of this document.

2. Drug Manufacturers
    a. Number of affected products. The proposed rule requires that, 
within 1 year of the effective date of the final rule, manufacturers of 
OTC drugs approved under section 505 of the act add the side effects 
statement to drug product labeling, and manufacturers of any 
prescription drug product with an FDA-approved Medication Guide add the 
side effects statement to that Medication Guide. The agency estimates 
that the rule may affect approximately 522 OTC products, including 350 
branded and 172 private label products, and up to 18 prescription drug 
products with Medication Guides.
    b. Cost to modify product labeling. The proposed rule requires that 
the side effects statement be included in the ``Warning(s)'' section of 
the ``Drug Facts'' box, adding 101 characters to drug product labeling. 
Because of the brevity of the statement, the agency anticipates that 
manufacturers of the affected products may incur a one-time cost to 
modify labeling, but no additional incremental printing or packaging 
modification costs. The agency solicits comment on this assumption. OTC 
products marketed under NDAs or ANDAs usually have 2 to 3 stockkeeping 
units (SKUs), suggesting that up to 1,050 branded packages and 520 
private label packages might be affected by the final rule. Revising 
labeling of branded OTC products may cost about $3,000 for each branded 
SKU and $1,000 for each private label SKU. Because nonprescription drug 
manufacturers often use the packaging of OTC products to market their 
products and change labeling frequently, some labeling costs of the 
proposed rule would be incurred in the normal course of business. Thus, 
the per SKU cost estimates are an upper bound. New compliance costs for 
nonprescription drug manufacturers may range from $1.2 million with one 
SKU per affected product to $3.7 million with three SKUs per affected 
product. The agency solicits comment on the number of SKUs affected by 
the proposed rule and the potential new compliance costs to revise the 
product labeling of these SKUs.
    Manufacturers of prescription drug products change labeling less 
frequently than OTC manufacturers and therefore may also incur some 
excess inventory loss because of the 12-month implementation period. 
Including excess inventory loss and scrap of $1,463, adding the 
statement to Medication Guides may cost manufacturers an average of 
$4,177 per product. Within the first year, OTC and prescription drug 
manufacturers together might incur one-time costs from $1.3 million to 
$3.7 million to comply with the proposed rule. Annualized for 10 years, 
compliance costs would range from $0.2 million to $0.4 million at 3 
percent discount rate, and from $0.2 million to $0.5 million at 7 
percent discount rate.
3. Burden on FDA
    Approximately 100 calls are received each week by the MedWatch 
program. When a consumer contacts the agency directly by telephone, a 
MedWatch 3500 form and instructions are mailed. Because some questions 
on the MedWatch 3500 form request clinical information, the 
instructions recommend that patients work with their health care 
practitioner to complete the form. However, the confidential nature of 
the reporting program makes it difficult to track the number of forms 
consumers return to the agency. In 2001, consumers submitted 1,788 
direct reports. This suggests that roughly one-third of the mailed 
forms are returned.
    It is uncertain if receiving the side effects statement with 
dispensed prescriptions will cause more consumers to call the MedWatch 
program and report their drug side effects. According to an agency 
communications specialist, it is likely that some consumers may call 
the toll-free number with questions or comments unrelated to the 
intended purpose of safety reporting. Moreover, health care 
practitioners can report serious adverse drug events to the agency by 
telephone. From 1998 to 2001, an average of 718 such telephone reports 
were submitted annually. Even though health care practitioners are not 
the direct focus of the proposed rule, it is possible that the rule may 
cause an increase in direct reporting from health care practitioners. 
Although the agency cannot predict the additional number of calls and 
reports that might result from the proposed rule, the impact on the 
agency could be substantial.
    It costs the agency an average of $5.60 for each consumer call to 
the MedWatch program to answer the telephone, process the call, and 
mail the MedWatch form. Once the MedWatch form is returned, the agency 
may spend up to $25.00 processing the form and entering the data in the 
Adverse Events Reporting System (AERS). If only one-third of the calls 
to MedWatch produce an adverse drug event report, each consumer report 
would cost the agency about $41.80. However, if every telephone call 
produces a consumer report, the per report cost decreases to $30.60. 
Furthermore, reports submitted directly to the MedWatch Website would 
only cost $25 since there are not additional costs to answer and 
process the telephone call. Moreover, if there is a substantial 
increase in the number of telephone calls, the agency might also incur 
fixed costs for additional telephone and computer equipment.
    MedWatch data suggest that telephone reports from practitioners 
account for approximately 5 percent of the direct reports submitted by 
mail, facsimile, or telephone. In contrast to consumer reports, 
telephone reports from health care practitioners may take up to 1.25 
hours to process, costing the agency an estimated $67.31 ($53.85 per 
hour x 1.25 hours). However, the agency does not know the number and 
source of new direct calls and reports it might receive in response to 
this rule. Therefore, table 4 presents five scenarios to illustrate the 
possible impact of the proposed rule on the agency if the volume of 
consumer calls increased by approximately 0.05 percent, 1 percent, 50 
percent, 500 percent, or 1,000 percent over current levels. Because the 
3-to-1 relationship of calls to reports could vary, each

[[Page 21788]]

scenario shows the impacts on the agency with a range of 1 to 3 calls 
for each direct report submitted to MedWatch by consumers. Variable 
costs for FDA could range from $42 to $1,923,308 annually. The agency 
solicits comments from industry on their experience with consumer 
telephone calls to toll-free numbers and the proportion of the calls 
related to safety issues.

       Table 4.--Potential Annual Cost of Increased Direct Calls and Reports to FDA's MedWatch Program\1\
----------------------------------------------------------------------------------------------------------------
                                                              Potential Scenarios\2\
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
No. of Additional Calls Received               3              60           3,000          30,000          60,000
----------------------------------------------------------------------------------------------------------------
No. of Additional Reports                 1 to 3        20 to 60  1,000 to 3,000       10,000 to       20,000 to
 Returned by Mail or Fax                                                                  30,000          60,000
----------------------------------------------------------------------------------------------------------------
Potential Cost for Additional         $42 to $92  $836 to $1,836      $41,800 to     $418,000 to     $836,000 to
 Calls and Direct Reports\3\                                             $91,800        $918,000      $1,836,000
----------------------------------------------------------------------------------------------------------------
No. of Telephone Reports from                  0               1              50             500           1,000
 Health Care Practitioners\4\
----------------------------------------------------------------------------------------------------------------
Potential Cost for Telephone                  $0             $87          $4,365         $43,654         $87,308
 Reports from Practitioners
----------------------------------------------------------------------------------------------------------------
Total Potential Annual Cost           $42 to $92  $923 to $1,923      $46,165 to     $461,654 to     $923,308 to
                                                                         $96,165        $961,654      $1,923,308
----------------------------------------------------------------------------------------------------------------
\1\ Roughly one-third of the MedWatch calls from consumers result in a completed report being returned to FDA.
  However, calls from other sources may have better yields than calls from consumers. A new telephone call might
  yield between one and three new reports. Because of this uncertainty, each scenario presents a range of
  potential costs that could be associated with an increase in the number of telephone calls to MedWatch.
\2\ Totals may not sum or multiply due to rounding.
\3\ This estimate assumes that all direct consumer reports would be initiated by telephone calls to the MedWatch
  program and may overstate the potential costs if a substantial number of reports are submitted via the
  Internet.
\4\ Based on FDA data, approximately 5 percent of direct reports received from sources other than the Internet
  are telephone reports from health care providers. Estimate corresponds to 5 percent of the lower limit of the
  potential number of new reports.

4. Total Potential Costs of Proposed Rule
    As illustrated previously, affected pharmacies and authorized 
dispensers may incur negligible one-time costs or increased annual 
costs, FDA may incur increased annual costs, and affected drug 
manufacturers and third party vendors of consumer medication 
information may incur one-time costs in the 12 months following the 
effective date. Table 5 summarizes the range of potential costs of the 
rule. The agency requests comment on these estimates.

                            Table 5.--Summary of Compliance Costs of Proposed Rule\1\
----------------------------------------------------------------------------------------------------------------
                                                                                        Annualized Costs ($mil)
         Affected Sector           One-Time Costs ($ mil)     Annual Costs ($ mil)   ---------------------------
                                                                                        3 percent     7 percent
----------------------------------------------------------------------------------------------------------------
Retail Pharmacies                 ........................                $6.4-$8.7     $6.4-$8.7     $6.4-$8.7
----------------------------------------------------------------------------------------------------------------
Nonretail Pharmacies              ........................               $2.8-$11.5    $2.8-$11.5    $2.8-$11.5
----------------------------------------------------------------------------------------------------------------
Drug Manufacturers                              $1.3-$3.7   ........................    $0.2-$0.4     $0.2-$0.5
----------------------------------------------------------------------------------------------------------------
PPI Vendors                                          $0.0   ........................         $0.0          $0.0
----------------------------------------------------------------------------------------------------------------
FDA                               ........................                $0.0-$1.9     $0.0-$1.9     $0.0-$1.9
----------------------------------------------------------------------------------------------------------------
Total                                           $1.3-$3.7                $9.2-$22.1    $9.3-$22.6    $9.4-$22.6
----------------------------------------------------------------------------------------------------------------
\1\Totals may not sum due to rounding.

B. Benefits of Regulation

    The proposed rule would alert patients receiving prescription 
products to contact their doctor for medical advice about drug side 
effects and would provide a toll-free telephone number to report side 
effects to FDA.
    All drug products have risks as well as benefits. Every year over 
100 NDAs, including about 30 for new molecular entities, are approved 
in the United States (Ref. 6). Initial approval is based on the risks 
and benefits identified during the clinical trial phase of drug 
development. Although designed to detect common serious adverse drug 
reactions, premarketing clinical trials are not sufficiently large to 
detect very rare adverse events. Some uncertainty about the risks of 
approved drugs will always exist, requiring a system of postmarketing 
surveillance. In the United States, the agency's MedWatch program 
provides the mechanism for health care professionals and patients to 
voluntarily report serious adverse events and product problems.
    Many adverse drug events in the outpatient setting are not 
systematically tracked and recorded. The agency

[[Page 21789]]

estimates it receives reports of between 1 and 10 percent of the actual 
adverse drug events that occur (Ref. 7). While drug manufacturers are 
required to notify FDA of certain adverse drug events, reports from 
individuals and health care professionals are voluntary. Consumers 
submitted only 8 percent of the 22,645 voluntary (i.e., direct) reports 
received by the agency in 2001. Increasing patient awareness of the 
MedWatch program may enhance patient participation. Moreover, since the 
agency encourages patients to report serious side effects through their 
provider, the proposed rule may also increase reporting from health 
care practitioners.
    Drug-related illness costs society billions of dollars in direct 
medical care and lost productivity every year. Results of a large study 
of hospital discharge records conducted in Utah and Colorado suggest 
that adverse drug events cost society at least $42.5 billion each year 
of which only $18.5 billion would be considered preventable medication 
errors (Ref. 8). A recent revision of the 1995 Johnson and Bootman 
cost-of-illness model predicts that drug-related morbidity and 
mortality occurring in ambulatory care settings cost about $177.4 
billion each year (Ref. 9).
    The agency has no quantitative information about the value of 
additional drug safety reports that it might receive once the toll-free 
number is widely distributed to the public. Reports of adverse drug 
events provide the agency with ``signals'' that a drug product might 
have previously unidentified risks. Once a signal is detected, the 
agency can decide whether further action is necessary to protect public 
health. The proposed rule has the potential to increase the number of 
direct reports being submitted, thereby providing the agency with more 
data about potential serious adverse drug events. Having more data may 
make it easier for the agency to detect signals about previously 
unknown risks of drugs. However, it is also possible that the toll-free 
number will encourage calls unrelated to drug product safety. Because 
the number and nature of calls that will be generated by the toll-free 
number are unknown, the agency cannot quantify the potential benefits 
of this rule. Moreover, findings of studies on the effectiveness of 
warning labels suggest that adding an additional sticker to an 
overcrowded prescription vial could dilute the impact of existing 
warnings (Ref. 10). Therefore, the agency solicits comment on the 
potential effects that could be anticipated from this rule.

C. Impact on Small Entities

1. The Need for the Proposed Rule
    The Regulatory Flexibility Act requires the agency justify the need 
for the proposed rule. As described previously, the proposed rule 
fulfills the statutory requirement of the BPCA to provide consumers 
with a toll-free telephone number to report adverse drug events to FDA, 
along with a statement that the number is not to seek or obtain medical 
advice.
2. Description of the Affected Small Entities
    a. The pharmacy industry. The proposed rule will affect pharmacies 
and authorized dispensers in both the Retail Trade sector and the 
Health Care and Social Assistance sector that dispense prescriptions to 
outpatients. For the purposes of this initial regulatory flexibility 
analysis, affected firms are considered small if they are: (1) A for-
profit firm that meets the definition of small according to the current 
Small Business Administration (SBA) industry size standards; (2) an 
independently owned and operated, not-for-profit enterprise that is not 
dominant in its field; or (3) operated by a small governmental 
jurisdiction with a population of less than 50,000 individuals. Since 
SBA size standards differ from Census size categories, in the retail 
sector, all for-profit firms with receipts less than the Census size 
shown in table 6 of this document are considered small. Using Census 
data will slightly overestimate the number of small entities.
    Although the agency knows of no data on the number of small retail 
entities dispensing pharmaceutical drugs, the Census Bureau reports the 
number of establishments with prescription drugs as a merchandise line, 
and the number of firms by annual sales categories. If the proportion 
of establishments with merchandise sales from prescription drugs is 
uniform across all size firms, approximately 26,621 small entities may 
dispense prescriptions. Furthermore, if the proportions in Table 1 of 
this document also apply equally to small entities (i.e., the 
proportion not currently distributing written drug information), 
approximately 4,879 small retail firms would be affected by the 
proposed rule (table 6 of this document). FDA solicits comment on these 
assumptions.

                     Table 6.--Estimated Number of Affected Small Retail For-Profit Entities
----------------------------------------------------------------------------------------------------------------
                                                                                            No. of     Estimated
                                           Census     SBA Size      No. of    Share With     Small      No. of
 Description of Business and NAICS Code   Size  ($    Standard      Small     Sales From   Entities    Affected
                                            mil)       ($ mil)   Entities\1\     Rx\2\    With Sales     Small
                                                                                            From Rx    Entities
----------------------------------------------------------------------------------------------------------------
Supermarkets and other grocery stores,       $25.0       $23.0       36,728       17.8%       6,543         720
 except convenience (445110)
----------------------------------------------------------------------------------------------------------------
Convenience stores (445120)                  $25.0       $23.0       17,159        1.9%         320          35
----------------------------------------------------------------------------------------------------------------
Pharmacies and drug stores (4461101)         $10.0        $6.0       19,516      100.0%      19,516       4,098
----------------------------------------------------------------------------------------------------------------
Discount or mass merchandising               $25.0       $23.0           28       47.6%          13           0
 department stores, excluding leased
 (4521102)
----------------------------------------------------------------------------------------------------------------
Electronic shopping and mail-order           $25.0       $21.0        7,314        3.1%         229          25
 houses (454110)
----------------------------------------------------------------------------------------------------------------
    Total                                ..........  ..........      80,745   ..........     26,621       4,879
----------------------------------------------------------------------------------------------------------------
\1\ Source: Table 4 in Ref. 11. May include small entities that do not dispense pharmaceutical drugs.
\2\ Equals the percent of all establishments in the NAICS with sales from merchandise line code 0161 (i.e.,
  prescriptions). Source: Table 2 in Ref. 2.


[[Page 21790]]

    In the Health Care and Social Assistance sector, both for-profit 
and not-for-profit entities may dispense prescriptions for outpatient 
use and would therefore be affected by the proposed rule. Census data 
exist on the number of establishments with receipts and revenues from 
prescription or nonprescription drugs as well as on firm size data. 
Table 7 of this document summarizes the estimated number of small for-
profit firms with receipts from prescription or nonprescription drugs, 
and firms anticipated to be affected by the rule. Based on the Census 
receipt size most closely matching the SBA size standard and the share 
of for-profit establishments with receipts from prescription or 
nonprescription drugs (i.e., Receipt Line (RL) code 8619), there are 
approximately 6,855 small for-profit entities in this sector. (Again, 
using Census data slightly overestimates the number of small entities.) 
Applying the proportion of affected firms from table 1 of this 
document, an estimated 6,577 small for-profit firms may be affected by 
the rule.

                      Table 7.--The Number of Affected Small For-Profit Nonretail Entities
----------------------------------------------------------------------------------------------------------------
                                                                               Share of
                                                                                  All       No. of     Estimated
                                           Census     SBA Size      No. of     Nonretail     Small      No. of
 Description of Business and NAICS Code    Size ($    Standard      Small       Outlets    Entities    Affected
                                            mil)       ($ mil)   Entities\1\     With        With        Small
                                                                               Receipts    Receipts    Entities
                                                                              From Rx\2\    From Rx
----------------------------------------------------------------------------------------------------------------
Offices of physicians (62111)                $10.0       $8.50      151,479        2.8%       4,177       4,177
----------------------------------------------------------------------------------------------------------------
Offices of dentists (62121)                  $10.0       $6.00      101,932        1.3%       1,280       1,280
----------------------------------------------------------------------------------------------------------------
Offices of optometrists (62132)              $10.0       $6.00       14,570        3.0%         441         441
----------------------------------------------------------------------------------------------------------------
Offices of other health care                 $10.0       $6.00       11,678        3.5%         404         404
 practitioners (62139)
----------------------------------------------------------------------------------------------------------------
Family planning centers (62141)              $10.0       $8.50          273        9.0%          25           3
----------------------------------------------------------------------------------------------------------------
Outpatient mental health & substance         $10.0       $8.50        1,507        2.3%          35           4
 abuse centers (62142)
----------------------------------------------------------------------------------------------------------------
HMO medical centers (621491)                 $10.0       $8.50           14       19.8%           3           0
----------------------------------------------------------------------------------------------------------------
Kidney dialysis centers (621492)             $50.0      $29.00          355       25.9%          92          10
----------------------------------------------------------------------------------------------------------------
Free-standing ambulatory surgical &          $10.0       $8.50        1,235        9.5%         117          13
 emergency centers (621493)
----------------------------------------------------------------------------------------------------------------
Other outpatient care centers (621498)       $10.0       $8.50        1,891        2.2%          42           5
----------------------------------------------------------------------------------------------------------------
Hospital outpatient services (622)           $50.0      $29.00          282       85.0%         240         240
----------------------------------------------------------------------------------------------------------------
    Total                                ..........  ..........     285,216   ..........      6,855       6,577
----------------------------------------------------------------------------------------------------------------
\1\ Source: Table 4a in Ref. 12. May include small entities that do not dispense prescription drugs.
\2\ Equals the percent of all establishments in the NAICS with receipts from code 8619 (i.e., prescription and
  nonprescription drugs). Source: Table 1a in Ref. 3.

    Similar to the table on the number of for-profit small entities in 
the Health Care sector, table 8 of this document summarizes the 
estimated number of small not-for-profit firms. For this analysis, 
single-unit firms exempt from Federal income tax are treated as small. 
This definition of a small entity may overstate the number of small, 
government, hospital-based outpatient clinics since some single-unit 
hospitals are located in jurisdictions with populations larger than 
50,000. Similar to other outlets in the Health Care sector, not-for-
profit firms dispensing drugs are assumed to be equally distributed 
across all firm sizes. Therefore, based on the 1997 Economic Census 
data, about 2,085 small not-for-profit entities may dispense drugs 
(i.e., have revenues from RL code 8619). Applying the Table 1 
proportions, the proposed rule is estimated to affect 1,834 of these 
small entities.

                    Table 8.--The Number of Affected Small Not-for-Profit Nonretail Entities
----------------------------------------------------------------------------------------------------------------
                                                                 Share of All     No. of Small
                                                                Not-for-Profit   Not-for-Profit   Estimated No.
   Description of Business and NAICS Code       No. of Small     Outlets With    Entities With     of Affected
                                                Entities\1\     Revenues From    Revenues From    Small Not-for-
                                                                    Rx\2\              Rx        Profit Entities
----------------------------------------------------------------------------------------------------------------
Family planning centers (62141)                          454              39%              176               19
----------------------------------------------------------------------------------------------------------------
Outpatient mental health & substance abuse               698               1%                5                1
 centers (62142)
----------------------------------------------------------------------------------------------------------------
HMO medical center (621491)                                2              31%                1                0
----------------------------------------------------------------------------------------------------------------
Kidney dialysis centers (621492)                           9               8%                1                0
----------------------------------------------------------------------------------------------------------------
Freestanding ambulatory surgical & emergency              55               6%                3                0
 centers (621493)
----------------------------------------------------------------------------------------------------------------

[[Page 21791]]

 
Other outpatient care centers (621498)                   984              10%               96               11
----------------------------------------------------------------------------------------------------------------
Hospital outpatient services (622)                     2,033              89%            1,803            1,803
----------------------------------------------------------------------------------------------------------------
    Total                                              4,235   ...............           2,085            1,834
----------------------------------------------------------------------------------------------------------------
\1\ Source: Table 3b in Ref. 12. May include small single unit firms that do not dispense prescription drugs.
\2\ Equals the percent of all establishments in the NAICS with revenues from code 8619 (i.e., prescription and
  nonprescription drugs). Source: Table 1b in Ref. 3.

    Most pharmacies and authorized dispensers currently distribute 
information to patients using at least one of the five proposed 
compliance methods. These small entities would incur only negligible 
one-time costs to add the side effects statement and would not require 
any additional skills. The agency requests comment on these 
assumptions. Although pharmacies can choose the least-cost compliance 
method from among five options, about 11 percent of pharmacies that 
currently do not distribute consumer medication information to patients 
could incur new annual costs to comply with the proposed rule. These 
costs would be proportional to the number of prescriptions dispensed. 
Because all options involve tasks normally performed in a pharmacy, no 
additional skills would be required. FDA believes adding a preprinted 
sticker with the side effects statement would likely be the most costly 
means of compliance. The agency estimates that adding a preprinted 
sticker with the statement to a prescription container would cost up to 
$0.03 per prescription. NACDS reports that in 2001, retailer pharmacies 
received approximately $10.57 for the average prescription costing 
$50.17 (Ref. 1). Adding a sticker might reduce affected retail pharmacy 
revenues by 0.3 percent. FDA believes this would not result in a 
significant economic impact on a substantial number of small retail 
pharmacies.
    b. Drug manufacturers. The proposed rule will also affect drug 
manufacturers of products with Medication Guides or OTC products 
approved under section 505 of the act. According to the SBA size 
standards, Pharmaceutical Preparation Manufacturing firms (NAICS 
325412) with fewer than 750 employees are considered small. Since the 
Census Bureau uses different employment size categories than the SBA, 
the number of small entities is based on the percentage of 
establishments with less than 1,000 employees. According to this 
definition, 97 percent of all establishments operating in 1997 were 
small (Ref. 13). If a similar share of firms in this sector are small, 
1999 data suggest there could be up to 730 small entities in this 
sector (Ref. 14).
    Small manufacturers of drug products with FDA-approved Medication 
Guides may incur an average of $3,165 in one-time costs to revise 
labeling of each affected product. Table 9 of this document illustrates 
the possible impacts on these manufacturers. Depending on production 
volume, the annualized costs of the proposed rule will add between 
$0.005 and $0.45 per unit sold. Moreover, NACDS reports that 
manufacturers receive $37.93 of the average $50.17 cost of a 
prescription (Ref. 1). If this figure is representative for the small 
entities affected by the rule, the additional annualized cost might 
reduce average receipts by less than 1.25 percent. FDA requests 
comments on these estimates from affected small entities.
    Manufacturers of affected OTC products may spend between $1,000 and 
$3,000 to change their labeling. The effect on individual firms will 
vary with the number of products the firm must modify. The agency 
cannot assess the economic impact of the proposed rule on the small OTC 
manufacturers because Census does not report sales data for OTC 
products sold through all markets. However, most small firms 
manufacture few affected stock keeping units and might not incur 
significant regulatory costs. The agency requests comment from affected 
small entities.

   Table 9.--Estimated Cost for Small Entities with Three Alternative
                          Levels of Production
------------------------------------------------------------------------
                  No. of Units, With Medication Guides, Sold Annually
             -----------------------------------------------------------
                     1,000              10,000              100,000
------------------------------------------------------------------------
Annualized              $450.58             $450.58             $450.58
 cost to
 revise
 labeling\1\
------------------------------------------------------------------------
Additional                $0.45               $0.05              $0.005
 cost per
 unit sold
------------------------------------------------------------------------
Additional                1.19%               0.12%               0.01%
 cost per
 unit sold
 as a
 percentage
 of average
 manufacture
 r's share
 of retail
 prescriptio
 n cost\2\
------------------------------------------------------------------------
\1\ $450.58 equals the $3,164.71 one-time cost, annualized at 7% for 10
  years.
\2\ Based on an average share of $37.93 (Ref. 1).

    As a result of this analysis, FDA believes that this proposed rule 
would not have a significant economic impact on a substantial number of 
small entities.
    c. Alternatives considered.
    Alternative implementation schedule
    Because of the requirements of the BPCA, FDA considered a shorter 
implementation schedule, requiring compliance within 6 months of the 
effective date of the rule. However, the BPCA also mandates action that 
minimizes the cost on pharmacies and reaches the broadest consumer

[[Page 21792]]

audience. To address all of these requirements, the agency selected a 
1-year implementation plan. This longer period will provide adequate 
time for all affected establishments to comply with the rule and 
specifically reduce the cost burden on small entities.
    Require side effects statement for all drug labeling
    The agency considered, but rejected, requiring that the side 
effects statement be added to the ``physician labeling'' of all 
prescription drug products. The BPCA requires that the statement reach 
the broadest consumer audience possible. Physician labeling is targeted 
to health care practitioners and pharmacists. Although consumers may 
have access to this labeling, it is not intended for the consumer 
audience. Thus, adding the statement to physician labeling would cause 
firms of all sizes to incur costs that would not be necessary to 
achieve the goal of reaching a broad consumer audience.
    Furthermore, the agency has proposed changes to physician labeling 
that will require drug manufacturers to include contact information, 
including the MedWatch telephone number, so that health care 
practitioners may report serious adverse drug reactions. These proposed 
changes will inform consumers who do access physician labeling how to 
report adverse events to FDA. If the proposed rule also required that 
firms add the side effects statement to physician labeling, many firms 
might be required to change labeling twice in a short period of time. 
This could be especially burdensome on small entities.
    The one-time cost of this alternative would be approximately $15.6 
million, including any excess inventory losses with a 1-year 
implementation schedule. However, allowing firms additional time to 
change labeling would reduce the costs of this alternative. For 
example, following a schedule staggered over 7 years after the 
effective date, similar to that proposed for the physician labeling 
rule, reduces the one-time cost of this alternative to $12.7 million 
with a present value of $8.0 million. Moreover, with a longer 
implementation schedule, some firms could avoid these compliance costs 
by adding the side effects statement when they revise drug product 
labeling for other reasons.
    The agency also considered, but rejected, requiring the side 
effects statement to be included in PPIs. However, because not all 
prescription drug products carry PPIs, FDA determined that it was not 
the most effective way to reach a broad consumer audience, and would be 
duplicative of other methods the agency is proposing to distribute the 
side effects statement.
    Alternative statement
    FDA considered but rejected several alternatives for the proposed 
side effects statement. The agency considered a more comprehensive side 
effects statement to clarify when consumers should call FDA. The agency 
also considered requiring that the side effects statement be formatted 
in a larger type size than currently proposed for the sticker and vial 
cap options. The agency determined that these alternatives would 
require pharmacies to use larger, nonstandard stickers, thereby 
increasing compliance costs. The agency is proposing a more succinct 
side effects statement and smaller type size for the sticker and vial 
cap options in order to reduce the burden on small entities.
    Options for pharmacies and authorized dispensers
    FDA considered several options pharmacies and authorized dispensers 
could use to satisfy the requirements of the proposed rule. FDA has 
included all of these options in its proposal in order to minimize the 
effects of the rule on the pharmacy profession.

VI. Paperwork Reduction Act

    FDA tentatively concludes that this proposed rule contains no 
collections of information. Therefore, clearance by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1995 
(the PRA) (Public Law 104-13) is not required. FDA is proposing to 
amend its regulations to require a labeling statement be added to 
certain categories of drug product labeling. The proposed labeling 
statement for prescription drugs products is, ``Call your doctor for 
medical advice about side effects. You may report side effects to FDA 
at 1-800-FDA-1088.'' For OTC drug products approved under section 505 
of the act, the agency is proposing to use the existing subheading in 
Sec.  201.66(c)(5)(vii) that states, ``Stop use and ask a doctor if,'' 
followed by the bulleted statement ``side effects occur.'' The second 
sentence would remain the same as for prescription products: ``You may 
report side effects to FDA at 1-800-FDA-1088.'' These labeling 
statements are not subject to review by OMB because they are 
``originally supplied by the Federal Government to the recipient for 
the purpose of disclosure to the public'' (5 CFR 1320.3(c)(2)) and are 
not considered a collection of information under the PRA.

VII. Environmental Impact

    The agency has considered the environmental effects of this 
proposed rule and has determined under 21 CFR 25.30(h) that this action 
is of a type that does not individually or cumulatively have a 
significant effect on the human environment. Therefore, neither an 
environmental assessment nor an environmental impact statement is 
required.

VIII. Federalism

    FDA has analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. FDA has determined that 
the proposed rule does not contain policies that have substantial 
direct effects on the States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Accordingly, 
the agency has concluded that the proposed rule does not contain 
policies that have federalism implications as defined in the Executive 
order and, consequently, a federalism summary impact statement is not 
required.

IX. Request for Comments

    Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES). Two paper copies of any written comments are to be 
submitted, except that individuals submitting written comments or 
anyone submitting electronic copies may submit one paper copy. Comments 
are to be identified with the docket number found in brackets in the 
heading of this document. Received comments may be seen in the Division 
of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

X. References

    The following references have been placed on display in the 
Division of Dockets Management and may be seen by interested persons 
between 9 a.m. and 4 p.m., Monday through Friday. (FDA has verified the 
Web site address, but FDA is not responsible for any subsequent changes 
to the Web site after this document publishes in the Federal Register.)
    1. ``2001 Industry Facts-at-a-Glance,'' National Association of 
Chain Drug Stores, http://www.nacds.org (last viewed October 24, 
2002).
    2. ``Summary 1997 Economic Census, Retail Trade,'' U.S. 
Department of Commerce, U.S. Census Bureau, Publication No. 
EC97R44S-SM, January 2001, pp. 55, 57, 69, 122, 151.
    3. ``Sources of Receipts or Revenue, 1997 Economic Census, 
Health Care and Social Assistance, Subject Series,'' U.S. Department 
of Commerce, U.S. Census Bureau, Publication No. EC97S62S-LS, August 
2000, pp. 7-9, 11-13, 16, 24-27, 29.

[[Page 21793]]

    4. Svarstad, B. et al., ``Evaluation of Written Prescription 
Information Provided in Community Pharmacies, 2001,'' Final report 
to FDA, December 21, 2001, presented at the FDA Drug Safety and Risk 
Management Advisory Committee Meeting, July 17, 2002, http://www.fda.gov/cder/reports/prescriptionInfo/default.htm (last viewed 
October 21, 2002).
    5. 2000 National Occupational Employment and Wage Estimates,'' 
U.S. Department of Labor, Bureau of Labor Statistics, http://www.bls.gov.oes/2000/oes292052.htm (last viewed April 28, 2003).
    6. Friedman, M. A. et al., ``The Safety of Newly Approved 
Medicines: Do Recent Market Removals Mean There Is a Problem?'' 
Journal of American Medical Association, 281(18):1728-34, 1999.
    7. ``Adverse Drug Events: The Magnitude of Health Risks Is 
Uncertain Because of Limited Incidence Data,'' U.S. General 
Accounting Office, Report No. GAO/HEHS-0021, January 2000, p. 10.
    8. Thomas, E. J. et al., ``Costs of Medical Injuries in Utah and 
Colorado,'' Inquiry, 36:255-64, 1999.
    9. Ernst, F. R., and A. J. Grizzle, ``Drug-Related Morbidity and 
Mortality: Updating the Cost-of-Illness Model,'' Journal of the 
American Pharmaceutical Association, 41(2):192-199, 2001.
    10. Viscusi, W. K., ``Individual Rationality, Hazard Warnings, 
and the Foundations of Tort Law,'' Rutgers Law Review, 48:625-671, 
1996.
    11. ``Establishment and Firm Size, 1997 Economic Census, Retail 
Trade,'' U.S. Department of Commerce, U.S. Census Bureau, 
Publication No. EC97R44S-SZ, October 2000, pp. 135, 139, 152, 160.
    12. ``Establishment and Firm Size, 1997 Economic Census, Health 
Care and Social Assistance, Subject Series,'' U.S. Department of 
Commerce, U.S. Census Bureau, publication EC97S62S-SZ, October 2000, 
pp. 88-90, 97-103, and 106.
    13. ``Pharmaceutical Preparation Manufacturing, 1997 Economic 
Census, Manufacturing, Industry Series,'' U.S. Department of 
Commerce, U.S. Census Bureau, Publication No. EC97M-3254B, November 
1999, p. 9.
    14. ``Statistics of U.S. Businesses: 1999, Pharmaceutical 
Preparation Manufacturing, United States,'' U.S. Department of 
Commerce, U.S. Census Bureau, http://www.census.gov/epcd/susb/1999/us/US325412.htm (last viewed September 12, 2002).

List of Subjects

21 CFR Part 201

    Drugs, Labeling, Reporting and recordkeeping requirements.

21 CFR Part 208

    Labeling, Prescription drugs, Reporting and recordkeeping 
requirements.

21 CFR Part 209

    Authorized dispensers, Drugs, Pharmacies, Prescription drugs.
    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, it is 
proposed that 21 CFR parts 201 and 208 be amended and part 209 be added 
as follows:

PART 201--LABELING

    1. The authority citation for 21 CFR part 201 continues to read as 
follows:

    Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 358, 360, 
360b, 360gg-360ss, 371, 374, 379e; 42 U.S.C. 216, 241, 262, 264.
    2. Amend Sec.  201.66 by adding two sentences at the end of 
paragraph (c)(5)(vii) to read as follows:


Sec.  201.66  Format and content requirements for over-the-counter 
(OTC) drug product labeling.

* * * * *
    (c) * * *
    (5) * * *
    (vii) * * * For all OTC drug products under an approved drug 
application, the following text shall immediately follow the 
subheading: ``[Bullet] side effects occur. You may report side effects 
to FDA at 1-800-FDA-1088.'' The telephone number must appear in a 
minimum 6-point bold letter height or type size.
* * * * *

PART 208--MEDICATION GUIDES FOR PRESCRIPTION DRUG PRODUCTS

    3. The authority citation for 21 CFR part 208 continues to read as 
follows:

    Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 356, 357, 
360, 371, 374; 42 U.S.C. 262.
    4. Amend Sec.  208.20 by adding paragraph (b)(7)(iii) to read as 
follows:


Sec.  208.20  Content and format of a Medication Guide.

* * * * *
    (b) * * *
    (7) * * *
    (iii) For drug products approved under section 505 of the act, the 
following verbatim statement: ``Call your doctor for medical advice 
about side effects. You may report side effects to FDA at 1-800-FDA-
1088.''
* * * * *
    5. Add part 209 to read as follows:

PART 209--REQUIREMENT FOR AUTHORIZED DISPENSERS AND PHARMACIES TO 
DISTRIBUTE A SIDE EFFECTS STATEMENT

Subpart A--General Provisions

Sec.
209.1 Scope and purpose.
209.2 Definitions.

Subpart B--Requirements

209.10 Content and format of the side effects statement.
209.11 Dispensing and distributing the side effects statement.

    Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 360, 371; 42 
U.S.C. 241.

Subpart A--General Provisions


Sec.  209.1  Scope and purpose.

    (a) This part sets forth requirements for human prescription drug 
products approved under section 505 of the Federal Food, Drug, and 
Cosmetic Act and dispensed by authorized dispensers and pharmacies to 
consumers. This part requires distribution of a side effects statement 
and applies to new and refill prescriptions. This part is not intended 
to apply to authorized dispensers dispensing or administering 
prescription drug products to inpatients in a hospital or health care 
facility under an order of a licensed practitioner, or as part of 
supervised home health care.
    (b) The purpose of providing the side effects statement is to 
enable consumers to report side effects of prescription drug products 
to FDA.


Sec.  209.2  Definitions.

    For the purposes of this part, the following definitions apply:
    Act means the Federal Food, Drug, and Cosmetic Act (sections 201-
907 (21 U.S.C. 301-397)).
    Authorized dispenser means an individual licensed, registered, or 
otherwise permitted by the jurisdiction in which the individual 
practices to provide drug products on prescription in the course of 
professional practice.
    Consumer medication information means written information 
voluntarily provided to consumers by dispensing pharmacists as part of 
patient medication counseling activities.
    Medication Guide means FDA-approved patient labeling conforming to 
the specifications set forth in part 208 of this chapter and other 
applicable regulations.
    Pharmacy includes, but is not limited to, a retail, mail order, 
Internet, hospital, university, or clinic pharmacy, or a public health 
agency, regularly and lawfully engaged in dispensing prescription 
drugs.
    Side effects statement means the following verbatim statement: 
``Call your doctor for medical advice about side effects. You may 
report side effects to FDA at 1-800-FDA-1088.''

[[Page 21794]]

Subpart B--Requirements


Sec.  209.10  Content and format of the side effects statement.

    (a) Content. The side effects statement provided with each 
prescription drug product approved under section 505 of the act must 
read: ``Call your doctor for medical advice about side effects. You may 
report side effects to FDA at 1-800-FDA-1088.''
    (b) Format. The side effects statement must be in a single, clear, 
easy-to-read type style. The letter height or type size used for the 
side effects statement in accordance with paragraphs (b)(1) and (b)(2) 
of Sec.  209.11 must be no smaller than 6 points (1 point = 0.0138 
inches). The letter height or type size for the side effects statement 
under paragraphs (b)(3), (b)(4), and (b)(5) of Sec.  209.11 must be no 
smaller than 10 points.


Sec.  209.11  Dispensing and distributing the side effects statement.

    (a) Each authorized dispenser or pharmacy must distribute the side 
effects statement with each prescription drug product approved under 
section 505 of the act and dispensed. The side effects statement must 
be distributed with new and refill prescriptions.
    (b) An authorized dispenser or pharmacy must choose one or more of 
the following options to distribute the side effects statement:
    (1) Distribute the side effects statement on a sticker attached to 
the unit package, vial, or container of the drug product;
    (2) Distribute the side effects statement on a preprinted pharmacy 
prescription vial cap;
    (3) Distribute the side effects statement on a separate sheet of 
paper;
    (4) Distribute the side effects statement in consumer medication 
information; or
    (5) Distribute the appropriate FDA-approved Medication Guide that 
contains the side effects statement.

    Dated: December 30, 2004.
Mark B. McClellan,
Commissioner of Food and Drugs.

    Dated: December 30, 2004.
Tommy G. Thompson,
Secretary of Health and Human Services.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix

    IMS Health collects data on the quantity of products purchased 
by retail and nonretail pharmacies. Data may be reported three ways, 
by ``extended units'' (EUs), ``eaches'' (EAs), and ``units'' (UNs). 
IMS defines ``extended units'' as the individual tablet or capsule 
for solid dosage forms and the weight or volume (i.e., grams or 
milliliters) for other dosage forms, ``eaches'' as individual 
product packages (e.g., a vial, bottle or packet of pills), and 
``units'' as individual shipping packages. None of these definitions 
correlates directly to the number of prescriptions dispensed. 
However, comparing retail prescription volume to the number of 
products purchased by the sector provides a rough estimate of the 
average number of EUs, EAs or UNs per prescription. Applying these 
three averages to the number of drug products purchased by the 
nonretail pharmacy sector yields rough estimates of the number of 
prescriptions dispensed by these outlets. Although uncertain, the 
range of prescriptions derived by this method is used to estimate 
the impact of the proposed rule on the nonretail pharmacy sector. 
These estimates were derived by FDA using IMS data. Although they 
were reviewed by IMS, they do not necessarily represent IMS views. 
The agency requests comments from nonretail outlets on its 
derivation of prescription volume.
    The number of prescriptions dispensed, and the number of UNs, 
EAs and EUs purchased for different types of retail pharmacies are 
shown in Table A-1 of this appendix. In addition, the average number 
of products purchased per prescription dispensed is calculated for 
each of the three definitions of purchased products.

  Table A-1.--Number of Prescription Drugs Dispensed, Number of Pharmaceutical Products Purchased, and Average
                  Number of Pharmaceutical Products per Prescription in 2001 by Retail Channel
----------------------------------------------------------------------------------------------------------------
                             No. of            No. of Products Purchased       Average No. of Products Purchased
                         Prescriptions                 (million)                 per Prescription Dispensed\1\
    Retail Channel         Dispensed     -----------------------------------------------------------------------
                           (million)          UNs         EAs         EUs         UNs         EAs         EUs
----------------------------------------------------------------------------------------------------------------
Mail Order                        163.51      275.47      459.75   24,451.36        1.68        2.81      149.54
----------------------------------------------------------------------------------------------------------------
Independents                      778.68      519.59      860.84   67,534.84        0.67        1.11       86.73
----------------------------------------------------------------------------------------------------------------
Food Stores                       426.52      755.80    1,031.86  156,898.89        1.77        2.42      367.86
----------------------------------------------------------------------------------------------------------------
Chain Stores\2\                 1,715.60    2,159.40    3,089.18  265,991.78        1.26        1.80      155.04
----------------------------------------------------------------------------------------------------------------
Sources: IMS Health, National Prescription Audit Plus, Year 2001, data extracted June 2002; IMS Health, Retail
  Perspective, Year 2001, data extracted June 2002.
\1\ Averages equal the number of UNs, EAs or EUs, divided by the number of prescriptions.
\2\ Includes traditional chain stores and mass merchants.

    Table A-2 of this appendix displays IMS data for the number of 
UNs, EAs and EUs shipped to each nonretail channel with outpatient 
services. Data for clinics and HMOs may include drugs administered 
to inpatients of these facilities. For this analysis, the agency 
conservatively assumes that clinics and HMOs dispense all their 
products to outpatients. Similar to clinics and HMOs, hospital data 
include pharmaceutical products purchased for both outpatient and 
inpatient use. Unlike the other health care facilities listed, 
hospitals administer most drugs to inpatients. Thus the data for 
hospitals are adjusted by the share of revenue from outpatient 
services reported in the 1997 Economic Census (Ref. 3).
    Although most nonretail channels defined by IMS Health agree 
closely with NAICS codes, according to Census data, 9,720 offices of 
health care practitioners reported revenue from pharmaceutical 
products in 1997. Because the number of products purchased by these 
offices is minor compared to other nonretail channels, they are not 
reported separately in the IMS data and would be included with data 
on other miscellaneous outlets. Therefore, for this analysis, other 
miscellaneous outlets are considered equivalent to offices of health 
care practitioners.

[[Page 21795]]



            Table A-2.--Number of Pharmaceutical Products Purchased by Nonretail Channels in 2001\1\
----------------------------------------------------------------------------------------------------------------
                                                           No. Purchased by Quantity Measure (million)
               Nonretail Channel               -----------------------------------------------------------------
                                                         UNs                   EAs                   EUs
----------------------------------------------------------------------------------------------------------------
Miscellaneous other, excluding prisons and                      9.86                 16.26              1,422.93
 universities
----------------------------------------------------------------------------------------------------------------
Clinics, including universities                               121.78                342.24             10,444.36
----------------------------------------------------------------------------------------------------------------
HMOs                                                           26.79                 44.87              2,764.78
----------------------------------------------------------------------------------------------------------------
Federal and non-Federal hospitals                             446.09              2,112.93             81,395.52
----------------------------------------------------------------------------------------------------------------
Hospitals adjusted by share of revenue from                   118.11                559.46             21,551.76
 outpatient services\2\
----------------------------------------------------------------------------------------------------------------
\1\ Source: IMS Health, Provider Perspective, Year 2001, data extracted June 2002.
\2\ The weighted average share of revenue from outpatient services for NAICS 622 equals 26.5% (Ref. 3).

    Three weighted averages were calculated based on the retail 
sector data in Table A-1 of this appendix and vary from 1.20 UNs per 
prescription to 166.93 EU per prescription (see Table A-3 of this 
appendix). To derive an estimate of the number of prescriptions 
dispensed by nonretail channels, the weighted average number of 
products per prescription shown in Table A-3 of this appendix is 
applied to the nonretail sector purchase data. This yields estimates 
that range from approximately 217 million to 546 million 
prescriptions per year (Table A-4 of this appendix).

              Table A-3.--Per Prescription Weighted Average by Quantity Type and Retail Channel\1\
----------------------------------------------------------------------------------------------------------------
                                                                     Weighted Average No. Per Prescription  by
                                            Share of Dispensed                     Quantity Type
             Retail Channel                   Prescriptions      -----------------------------------------------
                                                                        UNs             EAs             EUs
----------------------------------------------------------------------------------------------------------------
Mail Order                                                    5%            0.09            0.15            7.93
----------------------------------------------------------------------------------------------------------------
Independents                                                 25%            0.17            0.28           21.90
----------------------------------------------------------------------------------------------------------------
Food Stores                                                  14%            0.25            0.33           50.87
----------------------------------------------------------------------------------------------------------------
Chain Stores\2\                                              56%            0.70            1.00           86.24
----------------------------------------------------------------------------------------------------------------
    Total Weighted Average                                  100%            1.20            1.76          166.93
----------------------------------------------------------------------------------------------------------------
Sources: IMS Health, National Prescription Audit Plus, Year 2001, data extracted June 2002, IMS Health, Retail
  Perspective, Year 2001, data extracted June 2002.
\1\ Each channel's weighted average equals the share of retail prescriptions for the channel, multiplied by the
  corresponding average in Table A-1. The total weighted average for UNs, EAs, or EUs is the sum of the
  individual channel's weighted average in the column. Totals may not sum or multiply due to rounding.
\2\ Includes traditional chain stores and mass merchants.


            Table A-4.--Estimated Number of Outpatient Prescriptions Dispensed by Nonretail Channels
----------------------------------------------------------------------------------------------------------------
                                        Estimated No. of Outpatient Prescriptions Dispensed (millions)
 Nonretail Channel by NAICS ------------------------------------------------------------------------------------
            Code                         Based on UNs\1\                 Based on EAs\1\       Based on EUs\1\
----------------------------------------------------------------------------------------------------------------
NAICS 6211, 6212 and 6213:                                       8.2                   9.2                   8.5
 Offices of Health Care
 Practitioners\2\
----------------------------------------------------------------------------------------------------------------
NAICS 6214, except NAICS                                       101.2                 194.0                  62.6
 621491: Outpatient Care
 Centers, except HMOs\3\
----------------------------------------------------------------------------------------------------------------
NAICS 621491: HMO Medical                                       22.3                  25.4                  16.6
 Centers\4\
----------------------------------------------------------------------------------------------------------------
NAICS 622: Hospital                                             98.2                 317.1                 129.1
 Outpatient Services\5\
----------------------------------------------------------------------------------------------------------------
    Total                                                      229.9                 545.7                 216.8
----------------------------------------------------------------------------------------------------------------
Sources: IMS Health, National Prescription Audit Plus, Year 2001, data extracted June 2002; IMS Health, Provider
  Perspective, Year 2001, data extracted June 2002; IMS Health, Retail Perspective, Year 2001, data extracted
  June 2002.
\1\ Weighted average quantity/script from Table A-3: UNs/Prescription = 1.20, EAs/Prescription = 1.76, EUs/
  Prescription = 166.93.
\2\ Corresponds to IMS data for miscellaneous-other, excluding prisons and universities.
\3\ Corresponds to IMS data for clinics including miscellaneous-universities.
\4\ Corresponds to IMS data for HMOs.
\5\ Corresponds to IMS data for Federal and non-Federal hospitals adjusted for share of revenue from outpatient
  services.


[[Page 21796]]

[FR Doc. 04-9069 Filed 4-21-04; 8:45 am]
BILLING CODE 4160-01-S