Federal Register, Volume 73 Issue 209 (Tuesday, October 28, 2008)

[Federal Register Volume 73, Number 209 (Tuesday, October 28, 2008)]
[Rules and Regulations]
[Pages 63886-63897]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-25670]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 201, 208, and 209

[Docket No. FDA-2003-N-0313] (formerly Docket No. 2003N-0342)
RIN 0910-AC35

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

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is issuing a final rule
that confirms the interim final rule entitled ``Toll-Free Number for
Reporting Adverse Events on Labeling for Human Drug Products'' (73 FR
402, January 3, 2008) (interim final rule) and responds to comments
submitted in response to the request for comments in the proposed rule
of the same title (69 FR 21778, April 22, 2004) (proposed rule). This
final rule affirms the interim final rule's requirement for the
addition of a statement to the labeling for certain human drug products
for which an application is approved under section 505 of the Federal
Food, Drug, and Cosmetic Act (the act). The statement 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). This final rule also affirms the interim final
rule's addition of new part 209 to the regulations requiring
distribution of the side effects statement. This final rule implements
provisions of the Best Pharmaceuticals for Children Act (the BPCA) and
the Food and Drug Administration Amendments Act of 2007 (FDAAA).

DATES: Effective Date: This final rule is effective November 28, 2008.
Compliance Date: The compliance date for this final rule is July 1,
2009. For more information on the compliance date see section II of the
SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Carol Drew, Center for Drug Evaluation
and Research, Food and Drug Administration, 10903 New Hampshire Ave.,
Bldg. 51, rm. 6306, Silver Spring, MD 20993-0002, 301-796-3601.

SUPPLEMENTARY INFORMATION:

I. Background

A. BPCA and Proposed Rule

The BPCA (Public Law 107-109) directed 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
receive medical advice. Collectively, we refer to the toll-free number
and reporting statement as the ``side effects statement.'' The BPCA
stated that the final rule must implement the labeling requirement to
reach the broadest consumer audience and minimize the cost to the
pharmacy profession.
On April 22, 2004 (69 FR 21778), FDA published a proposed rule
entitled ``Toll-Free Number for Reporting Adverse Events on Labeling
for Human Drug Products.'' FDA received 22 comments on the proposed
rule.

B. FDAAA Requirements and Interim Final Rule

On September 27, 2007, the President signed into law FDAAA (Public
Law 110-85). Among other things, FDAAA reauthorized the BPCA. Section
502(f) of FDAAA stated that ``the proposed rule * * * `Toll-Free Number
for Reporting Adverse Events on Labeling for Human Drug Products' * * *
shall take effect on January 1, 2008,'' unless FDA issues a final rule
before that date. FDA was in the process of analyzing the comments on
the proposed rule and conducting research on consumer comprehension of
the proposed side effects statements when FDAAA was enacted. FDA did
not issue a final rule prior to January 1, 2008. Therefore, by
operation of law, the proposed rule took effect on January 1, 2008.
FDAAA mandated one change to the proposed rule. Section 502(f)(2)
of

[[Page 63887]]

FDAAA states that the proposed rule shall not apply to over-the-counter
(OTC) drugs marketed with an application approved under section 505 of
the act (application OTC drug products) if these application OTC drug
products meet certain labeling requirements.
On January 3, 2008 (73 FR 402), FDA published an interim final rule
to: (1) Codify the modifications made by FDAAA to the proposed rule,
(2) notify the public that the agency planned to complete the ongoing
research testing the proposed side effects statements for consumer
comprehension, and (3) establish a compliance date of January 1, 2009.
The interim final rule stated that the agency did not intend to take
enforcement action prior to January 1, 2009, and that the agency would
complete the research on the side effects statements and either
finalize the interim final rule as published or publish a final rule
that amends the interim final rule.

II. Highlights of the Final Rule

The preamble to the proposed rule described the provisions of this
rule in detail. In the preamble to the interim final rule we described
the changes to the proposed rule required by FDAAA. In this final rule
we respond to comments received on the proposed rule and finalize the
regulations. No comments were received on the interim final rule.
As described in the interim final rule, one substantive change has
been made to the regulatory provisions published in the proposed rule:
Section 201.66(c)(5)(vii) (21 CFR 201.66(c)(5)(vii)) has been modified
to require that only approved application OTC drug products whose
packaging does not include a toll-free number through which consumers
can report complaints to the manufacturer or distributor of the drug
product are required to include the side effects statement in labeling.
As discussed previously in this document, this modification was
mandated by FDAAA.
In the interim final rule, FDA established a compliance date of
January 1, 2009, and notified the public that we intended to exercise
enforcement discretion and not take enforcement actions with regard to
the effective regulations until January 1, 2009. In the interim final
rule we stated that the effective date and implementation schedule for
the final rule would be designed to minimize the burden of any
additional regulatory changes for affected entities who must comply
with the final rule. Since the publication of the interim final rule,
we have received several inquiries about specific provisions of the
interim final rule. Given the short time interval between the
publication date of this final rule and the original compliance date of
January 1, 2009, we are delaying the compliance date by six months to
July 1, 2009. We believe this brief delay is appropriate because we
have made no changes to the codified. All affected entities are
required to be in compliance by July 1, 2009.

III. Comments and Agency Response

The agency received 22 comments on the proposed rule. Comments were
received from prescription and nonprescription drug manufacturers;
trade organizations representing drug manufacturers; pharmacists,
pharmacies, and pharmacy-related interests; consumer organizations;
professional associations and organizations; one member of Congress;
one agency of a foreign government; and others.
To make it easier to identify comments and our responses, the word
``Comment,'' in parentheses, appears before the comment's description,
and the word ``Response,'' in parentheses, appears before our response.
We have numbered each comment to help distinguish between different
comments. Similar comments are grouped together under the same number.
The number assigned to each comment is purely for organizational
purposes and does not signify the comment's value or importance or the
order in which it was received. A summary of the comments received and
our responses follow.

A. Scope of the Rule

(Comment 1) The agency received 7 comments opposing the proposed
requirement that the labeling for application OTC drug products contain
the toll-free number and statement mandated by the BPCA. These comments
argued that Congress did not intend the BPCA requirements to apply to
application OTC drug products.
(Comment 2) Two comments suggested that FDA limit the applicability
of the regulatory provisions to new drugs that have been approved for
marketing within 5 years of the date of the final rule, and that the
regulation's requirements attach for only 5 years following a new
drug's approval. These comments requested that FDA limit the regulatory
provisions to the approximately 30 new molecular entities (NMEs) that
are approved each year for the 5-year period after they are approved
and suggested that reporting should be targeted to encourage consumer
reporting of adverse reactions from newer drugs.
(Response) Section 17 of the BPCA required that the labeling of
each drug for which an application is approved under section 505 of the
act include the toll-free number and statement. Because OTC drug
products may be approved under section 505 of the act, we proposed that
the labeling for all application OTC drug products contain the BPCA
mandated requirements. However, in section 502(f)(2) of FDAAA, Congress
stated that the proposed rule shall not apply to OTC drugs marketed
with an application approved under section 505 of the act if these
application OTC drug products meet certain labeling requirements.
Specifically, section 505(f)(2) of the act states that the proposed
rule shall not apply to a drug: (1) For which an application is
approved under section 505 of the act; (2) that is not described under
section 503(b)(1) of the act (21 U.S.C. 353(b)(1)); and (3) the
packaging of which includes a toll-free number through which consumers
can report complaints to the manufacturer or distributor of the drug.
In the interim final rule, we stated that this provision means that the
proposed provisions do not apply to application OTC drug products if
the product's packaging includes a manufacturer's or distributor's
toll-free number for reporting complaints. Accordingly, this final rule
includes a modified Sec. 201.66(c)(5)(vii) reflecting the changes to
the proposed rule required by FDAAA.
As to the comments suggesting that we limit the scope of the rule
to a specific subset of NMEs or for a specific number of years for
specific products, we note that neither the BPCA nor FDAAA gives FDA
the legal authority to limit the scope of the rule in this way. The
BPCA requires that the labeling of each drug product approved under
section 505 of the act, regardless of the date on which approved,
include the side effects statement.

B. Wording of the Side Effects Statement

As stated in the preamble to the proposed rule, 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 considered
these requirements and proposed a conforming statement for prescription
drug products: ``Call your doctor for

[[Page 63888]]

medical advice about side effects. You may report side effects to FDA
at 1-800-FDA-1088.''
As stated in the preamble to the proposed rule, the drug facts
labeling format for OTC drug products required us to modify the side
effects statement to correspond to the drug facts format (Sec.
201.66). The OTC requirement was included in the specific subheadings
for presenting warnings in the drug facts format (Sec.
201.66(c)(5)(vii)). In combination with the requirements of Sec.
201.66(c)(5)(vii), the labeling provision for the application OTC drug
products was proposed to read: ``Stop use and ask a doctor if
side effects occur. You may report side effects to FDA at 1-800-FDA-
1088.''
We solicited comments on the proposed wording of the side effects
statements and on whether the term ``side effects'' should be further
qualified.
(Comment 3) We received several comments suggesting that we test on
consumers the proposed language for the side effects statements, as
well as alternatives, to evaluate consumer comprehension and determine
the best and most precise terminology for the statement.
(Comment 4) Among the comments we received on the proposed wording
of the side effects statement, one comment asserted that the proposed
statement is concise and makes it clear that the number is not for
medical advice. Several comments suggested specific additions to the
wording of the statements, including: Using the term ``health care
professional'' instead of, or in addition to, the term ``doctor'';
adding the term ``pharmacist'' to the statement to suggest that
consumers call either their doctor or pharmacist for medical advice
about side effects; adding wording to clarify that FDA does not give
medical advice and is not offering medical consultation; and/or adding
wording to clarify that FDA should not be called in case of medical
emergency and that FDA should only be called once any medical emergency
is resolved.
(Comment 5) Of the six comments we received on whether to use the
term ``side effects'' or ``adverse event,'' five supported use of the
term ``side effects'' as more consumer friendly. Of those comments, two
suggested qualifying the term with ``serious'' and one opposed adding
any qualifications to the term. Those suggesting qualifying the term
were concerned about FDA receiving numerous unnecessary reports about
side effects that are well-known and expected, not serious; the comment
opposed to qualifying the term was concerned that qualifying the
statement would limit the types of events reported, discourage
consumers from reporting, and hinder the agency's ability to identify
trends from reporting. One comment suggested that use of the term
``side effects'' would have a negative effect on drug marketing.
(Comment 6) Among the comments we received on the wording of the
side effects statement for application OTC drug products were comments
opposing the inclusion of the statement in the ``warnings'' section of
the drug facts format and the specific ``stop use'' language that
section requires. One comment suggested placing the side effects
statement under the ``when using this product'' subheading as the last
bullet, so that the labeled adverse events precede the side effects
statement. Comments opposed the ``stop use'' language on the grounds
that stopping use of an OTC drug product may be inappropriate. Comments
also stated that the ``stop use'' language has a greater impact on OTC
drug products than it does on prescription drug products, i.e., there
is no corresponding requirement telling consumers using prescription
drug products to stop using the product if they experience a side
effect. Several comments also stated that because the drug facts format
requires a telephone number for consumers to call to get answers to
questions, there would be confusion caused by having more than one
phone number in the labeling for consumers to call.
(Response) After reviewing the comments received on the proposed
rule, FDA initiated a two-part study to test consumer comprehension of
the wording of the proposed side effects statements. Part one of the
study consisted of focus groups held to narrow the field of potential
statement alternatives. When describing the side effects statement for
prescription drug products, participants in the focus groups were asked
whether they preferred the use of ``doctor'' or ``health care
provider,'' ``doctor'' or ``doctor or pharmacist,'' ``serious side
effects'' or ``side effects,'' and ``adverse events'' or ``side
effects,'' in the statement, as well as other language variations. The
focus groups were completed in 2006 (OMB Control No. 0910-0497).
The second part of this research was a labeling comprehension
experimental study conducted over the Internet (OMB Control No. 0910-
0603). Nine statements were tested as informed by the prior focus group
testing. A total of 1,674 men and women ranging in age from 21 to 95
with varying levels of education completed the study. Five different
versions of the side effects statement for prescription drug products
and four different versions of the side effects statement proposed for
application OTC drug products were tested. Approximately 40 percent of
the sample of consumers saw one of the four OTC side effects statements
and the other 60 percent of the sample saw one of the five prescription
drug side effects statements. FDA's final report on the study was
completed in 2008 and is available in the docket for this rule.
In answer to questions about the best wording for the side effects
statement, only one of the statements tested was significantly less
clear than the others. We eliminated this statement from consideration.
All other statements were rated very similarly by participants.
Participants who responded to the side effects statements for
prescription drugs responded nearly identically to participants who
responded to the side effects statements for OTC drug products. Given
these results, FDA concluded that in choosing among the statements,
considerations such as length, readability, and other factors could be
used to select among the remaining side effects statements. Taking into
account the results from the labeling comprehension study and other
factors, we have chosen to finalize the side effects statements as
originally proposed.
Additionally, to address comments received indicating concern that
consumers would call FDA for medical advice and suggested language
changes to prevent this, we queried participants in the study about
whether they would choose to call FDA or their doctor in certain
circumstances. Participants did not show an inclination to call FDA for
medical advice. Among those that indicated a willingness to call FDA at
all, the majority appropriately indicated that FDA was for reporting
side effects and their doctors were for personal medical advice. Most
individuals indicated that they would contact their doctor first
regardless of the particular side effect they experienced. We conclude
from this finding that the language proposed for the side effects
statement is sufficient to convey the intention of the BPCA requirement
that the statement is to be used for reporting purposes only, not to
receive medical advice.
Similarly, with regard to concerns that we should qualify the type
of side effect that should be reported to FDA by adding the word
``serious'' to ``side effect'' because FDA would receive numerous
unnecessary reports, our research indicates that consumers are able to
distinguish between serious and non-serious side effects and would

[[Page 63889]]

contact their doctor or hospital emergency room in the case of a
``serious side effect.'' A doctor who determines that a patient has had
a serious side effect from a drug product may then report the side
effect to FDA.
Regarding the comments we received on the specific language of the
OTC side effects statement and its placement in the ``warnings''
section of the drug facts format, we disagree that placement in the
``warnings'' section is inappropriate or that the ``stop use'' language
is inappropriate. The warnings section of the drug facts format label
for OTC drug products may include several statements about possible
side effects, telling consumers when to consult a doctor, pharmacist,
or other health care professional in the use of the product. Consumers
using OTC drug products most likely are not under the direct care of a
health care practitioner, whereas consumers using prescription drug
products are under the care of a health care practitioner. We believe
it is appropriate for the side effects statement to instruct consumers
using an OTC drug product who believe they are experiencing a side
effect to stop using the drug product and consult their doctor before
continuing use of the product.
We do not agree that having more than one phone number in the drug
facts format labeling would be confusing to consumers. The agency's
toll-free number clearly indicates it is an FDA phone number for
reporting side effects. Our research indicates that the OTC side
effects statement is understood by consumers. Moreover, section
502(f)(2) of FDAAA states that application OTC drug products that
include a toll-free number through which consumers can report
complaints to the manufacturer or distributor of the drug product are
not required to include the side effects statement. In all likelihood
this means that fewer application OTC drug products will have FDA's
side effects statement in their labeling. Therefore, we anticipate that
the majority of application OTC drug products will not have more than
one phone number in their labeling for reporting side effects, reducing
any potential for confusion.

C. Location of the Side Effects Statement in FDA-Approved Labeling

We proposed 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
application OTC drug products. We stated that manufacturers voluntarily
may include the side effects statement in Medication Guides for
products not approved under section 505 of the act or in patient
package inserts (PPIs). For reasons stated in the proposed rule, we did
not propose requiring the side effects statement in physician labeling
or PPIs, but we solicited comments on those two issues. In addition, we
proposed that the side effects statement be distributed with each
prescription drug product, both new and refills, approved under section
505 of the act and dispensed to consumers by pharmacies and authorized
dispensers in an outpatient setting.
(Comment 7) We received one comment stating that the side effects
statement should be on all package labeling, including refills, to
ensure maximum consumer exposure so that when consumers experience a
side effect, they will find the side effects statement wherever they
turn first for information.
(Comment 8) One comment suggested that instead of putting the side
effects statement in drug product labeling, FDA's MedWatch telephone
number appear in public telephone books next to the Poison Control
phone number.
(Comment 9) Another comment suggested that consumers be given small
magnets with FDA's MedWatch phone number obviating the need for
repeated dispensing of this information each time a patient visits a
pharmacy.
(Response) We believe that the requirements of this final rule will
ensure that the side effects statement reaches a broad consumer
audience while minimizing the burden on the pharmacy profession, as
required by the BPCA. We require that the side effects statement appear
in Medication Guides for drug products approved under section 505 of
the act and in the labeling for certain application OTC drug products,
and that pharmacies distribute the statement with all new prescriptions
and refills for drug products approved under section 505 of the act.
Under the BPCA, Congress required that FDA include the side effects
statement in the labeling of each drug product approved under section
505 of the act. Placing the number in public telephone books or on
magnets given to consumers would not satisfy the legal requirements of
the BPCA.
(Comment 10) We received three comments supporting the inclusion of
the side effects statement in approved Medication Guides. One comment
suggested that this be the exclusive place for the labeling
requirement. We do not agree that requiring the side effects statement
exclusively in Medication Guides would satisfy the requirements of the
BPCA. FDA-approved Medication Guides are prepared by manufacturers for
a limited number of drug products that FDA determines pose a ``serious
and significant public health concern'' (21 CFR 208.1). Given the
limited number of drug products that have FDA-approved Medication
Guides, only requiring the side effects statement in Medication Guides
would not satisfy the BPCA requirement to reach the broadest consumer
audience.
(Response) We did not propose including the side effects statement
in physician labeling. In the proposed rule we stated that while
consumers have access to physician labeling reprinted in the Physician
Desk Reference (PDR), physician labeling is not written for the
consumer audience. We solicited comments on this issue.
(Comment 11) We received one comment supporting our decision not to
include the side effects statement in physician labeling. This comment
agreed that physician labeling is not intended or written for a
consumer audience and that it is not necessary to include both a
manufacturer's name and telephone number and FDA's telephone number in
physician labeling.
(Comment 12) We received three comments suggesting we require the
side effect statement in physician labeling. These comments argued that
some consumers may obtain physician labeling either over the Internet
or upon request from their pharmacist and that FDA's toll-free number
should be in all FDA-approved prescription labeling to ensure its
widest exposure.
(Response) At the time the proposed rule was written, the agency's
proposed rule to revise the physician labeling requirements in
Sec. Sec. 201.56 and 201.57 (21 CFR 201.56 and 201.57) was under
review (the physician labeling rule). On January 24, 2006, the agency
published the final physician labeling rule (71 FR 3922). Section
201.57 of the physician labeling rule requires that the following
verbatim statement appear in the highlights section of the prescribing
information under ``adverse reactions'' (Sec. 201.57(a)(11)(ii)): ``To
report SUSPECTED ADVERSE REACTIONS, contact (insert name of
manufacturer) at (insert manufacturer's phone number) or FDA at (insert
current FDA phone number and Web address for voluntary reporting of
adverse reactions).'' As physician labeling is written for the medical
profession, the term ``adverse reactions'' was selected for this
statement instead of the more consumer-friendly term ``side effects.''
While placing this newly required statement in the highlights section
of physician labeling will alert consumers who

[[Page 63890]]

consult or refer to physician labeling that they can report adverse
reactions directly to FDA at the MedWatch telephone number or Web site,
the agency concludes that pharmacies' distribution of only the
physician labeling containing this statement would not be sufficient to
satisfy the requirement of the BPCA to reach the broadest consumer
audience. In addition, the statement required under the physician
labeling rule does not include the statement required by the BPCA that
the phone number be used only for reporting side effects and not to
obtain medical advice. Therefore, while the MedWatch phone number for
reporting side effects has been added to physician labeling through the
physician labeling rule, distributing physician labeling has not been
added to this rule as a means for pharmacies to meet the requirements
of distributing the side effects statement.
The proposed rule did not include the side effects statement in
PPIs. PPIs are required by FDA for certain drug products, including
oral contraceptives and estrogen drug products (21 CFR 310.501 and
310.515) and, in addition, some manufacturers also voluntarily produce
PPIs for drug products. PPIs are based on physician labeling and are
often distributed to consumers when the drug product is dispensed. In
the preamble to the proposed rule, we stated that manufacturers may
voluntarily include the side effects statement in PPIs. We solicited
comments on this issue.
(Comment 13) We received five comments suggesting that we
reconsider our decision not to include the side effects statement in
PPIs. Of these four comments, one suggested that the PPI could be the
first source of information consumers turn to when they experience a
side effect; one suggested that it may be beneficial for consumers to
see the statement more than once; one stated that including the
statement in PPIs was a viable option; and two stated that requiring
the side effects statement in PPIs would be a way to minimize the
impact of the rule on pharmacies.
(Response) We have considered these comments and have concluded
that, in consideration of the other requirements in this rule,
requiring manufacturers to include the side effects statement in PPIs
would have a minimal impact on meeting the goals of the BPCA.
Furthermore, since drug products with FDA-approved PPIs are a subset of
all prescription drug products, requiring the side effects statement in
PPIs would most likely require pharmacies to maintain a tracking system
to identify which drug products have a compliant PPI in order for
pharmacies to know whether they had distributed the side effects
statement through the PPI in compliance with this rule. Therefore we
conclude that it is unlikely that adding the statement to PPIs would
minimize the burden of this rule on pharmacies, and it is more likely
that pharmacies would choose one of the other proposed five methods of
distributing the side effects statement. As stated in the preamble to
the proposed rule, manufacturers may voluntarily add the side effects
statement to PPIs, however we are not adding the distribution of a PPI
to the list of options available to authorized dispensers or pharmacies
for compliance with this rule.
(Comment 14) We did not require manufacturers to provide the side
effects statement on labeling for unit-of-use drug products. We
received three comments stating that FDA could minimize the impact of
the rule on pharmacies by requiring manufacturers of unit-of-use drug
products to provide the side effects statement on the labeling of the
exterior package.
(Response) We have considered these comments and have concluded
that the proposed provisions are adequate to address the goals of the
BPCA to reach a broad consumer audience; therefore we are not requiring
that manufacturers add the side effects statement to unit-of-use
labeling. In addition, requiring the side effects statement in the
labeling for unit-of-use drug products is unlikely to decrease the
burden of this rule on pharmacies, since pharmacies would most likely
have to maintain a tracking system to know whether they had distributed
the side effects statement through dispensing a unit-of-use drug
product in compliance with this rule. We believe it is more likely that
pharmacies would choose one of the other five proposed methods of
distributing the side effects statement. Consumers will receive the
side effects statement when the unit-of-use drug product is dispensed
by an authorized dispenser or pharmacy using one of the five
distribution methods proposed.
(Comment 15) We did not require health care practitioners who
dispense drug samples in the course of their professional practice to
distribute the side effects statement. The proposed rule stated that
patients receiving drug products in these circumstances will rely on
their health care practitioners to monitor and report adverse events.
We received two comments asking us to require distribution of the side
effects statement with drug samples.
(Response) Drug samples generally are given to consumers in
conjunction with a new prescription. Patients who initially receive
drug samples are under the care of their doctor or health care
practitioner and generally use them in the short term and followup by
filling a new prescription. For a drug product approved under section
505 of the act, consumers will receive the side effects statement upon
filling the new prescription for the drug product for which they
initially received a sample. We recognize that there may be situations
in which health care practitioners provide drug samples to patients on
an ongoing basis, such as in clinics for low-income patients. However
such patients should be instructed by the health care practitioner
providing the drug sample as to its directions for use and possible
side effects. We do not believe that the benefit of requiring that the
side effects statement be distributed with drug samples would be
balanced by the burden such a requirement would impose on health care
practitioners.

D. Distribution of Side Effects Statement by Pharmacies and Authorized
Dispensers

We proposed that the side effects statement be distributed with
each prescription drug product, both new and refills, approved under
section 505 of the act and dispensed to consumers by pharmacies and
authorized dispensers in an outpatient setting. We proposed five
options through which pharmacies and authorized dispensers could
distribute the side effects statement, including the following: (1) On
a sticker attached to the package, vial, or container of the drug
product; (2) on a preprinted pharmacy prescription vial cap; (3) on a
separate sheet of paper; (4) in consumer medication information (CMI);
or (5) by distributing the appropriate FDA-approved Medication Guide
that contains the side effects statement. We solicited comments on
other options pharmacies might use for distribution.
(Comment 16) We received one comment opposing a requirement to
place the side effects statement directly on the label of the
prescription vial or container. This comment stated that in many cases
the vials or containers are already too crowded, and requiring another
sticker on the container could crowd out more important labels and
reduce the importance consumers ascribe to these labels both because of
the number of stickers and because of the placement of secondary
information in the stickers. We received one comment supporting the
placement of the side effects statement on an auxiliary label. We
received another comment stating that the most logical

[[Page 63891]]

place for the side effects statement to appear is in the CMI for the
drug product. Another comment suggested that CMI not be the only means
of communicating the toll-free number, as some pharmacies may not
dispense CMI for refill prescriptions.
(Comment 17) We received several comments supporting our proposal
to provide multiple options for pharmacies and authorized dispensers to
distribute the side effects statement. We received two comments stating
that while we indicated we exercised discretion in giving affected
pharmacies flexibility in complying with the law by providing options,
we failed to impose a proportionate burden on manufacturers. One
comment stated that it is entirely feasible for manufacturers to adhere
multiple copies of printed leaflets onto bulk containers of drug
products that pharmacy personnel can then remove from bulk containers
and dispense with each prescription filled.
(Comment 18) We received two comments expressing concern about the
potential for consumers to lose or dispose of paper messages (e.g., the
consumer medication information option or the separate sheet of paper
option). One of these comments requested that we require manufacturers
and pharmacists to work together to include the side effects statement
on either the sticker or preprinted vial cap with any separate printed
materials provided as a supplement. This comment stated that if the
package has no cap, if there is no room on a package for a sticker, or
if the product already requires a sticker for a different reason, they
would suggest that the sticker be included inside the package so that
consumers can affix the sticker in a place useful to them, such as a
medicine chest or pill caddy. Another comment requested that we allow
pharmacies the option to distribute the side effects statement by
printing it directly on the bag in which the pharmacy puts prescription
drugs before handing them to consumers.
(Comment 19) Two comments requested that pharmacies be allowed the
option to e-mail the side effects statement to consumers along with
notice to these consumers that their prescriptions are ready. These
comments stated that this would obviate the need for the pharmacy to
provide the patient with a paper version of the statement when the
prescription is picked up. We received two comments requesting that we
allow pharmacists to exercise their judgment and discretion in
distributing the statement to a consumer if a pharmacist is reasonably
sure that a consumer already knows about the agency's toll-free number.
(Response) We have considered the comments received and conclude
that the range of options provided to pharmacies to distribute the side
effects statement is adequate to meet the requirements of the BPCA. We
disagree that placing the side effects statement on the pharmacy bag,
sending the side effects statement by e-mail when a consumer is
notified their prescription is ready, or providing the side effects
statement on a separate sticker that consumers could then affix to
their medicine chest or pill caddy would effectively reach the broadest
consumer audience. While we recognize that a consumer may throw away
any attachment a pharmacist provides when dispensing a drug product,
including the CMI or a separate sheet of paper, there is an even
greater likelihood that a consumer would throw away the pharmacy bag
that the prescription came in or a small separate sticker, and thus
would not have the side effects statement in proximity to the drug
product when needed. Similarly, e-mail is easily deleted, and including
the side effects statement in an e-mail notifying consumers when their
prescription is ready makes it likely that the consumers will delete
the e-mail before they even pick up the prescription.
Pharmacies may provide voluntarily a separate sticker to consumers
with the side effects statement for attachment in the home as a public
service if they choose; however, distribution of such a separate
sticker would not meet the distribution requirements of this rule.
Similarly, pharmacies may provide the side effects statement
voluntarily on pharmacy bags or via e-mail, but distribution of the
side effects statement using these methods likewise would not meet the
distribution requirements of this rule. Also, we note that there is no
provision in the BPCA or FDAAA that would allow us to grant pharmacists
the right to exercise their judgment or discretion in deciding whether
or not to distribute the side effects statement to an individual
consumer.

E. Use of MedWatch System for Consumer Reporting

As stated in the preamble to the proposed rule, we proposed that
FDA's existing MedWatch system 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. While we received
comments supporting the use of the MedWatch system to capture
consumer's postmarket safety information, we received several comments
suggesting changes to the MedWatch system. These comments are beyond
the scope of this rule. This rule does not make specific changes to the
MedWatch system.

F. Postmarketing Safety Reporting

While the proposed rule suggested no changes to FDA's postmarketing
safety reporting system, we received several comments about our
postmarketing safety reporting system and how data received from the
side effects statement would affect the system. These comments are
beyond the scope of this rule. This rule does not make specific changes
to FDA's postmarketing safety reporting system.

G. Implementation of Regulation

(Comment 20) We received one comment expressing dissatisfaction
with the agency for not implementing the rule in a timelier manner.
This comment also stated that the compliance date FDA proposed was too
long and suggested a bifurcated compliance structure whereby pharmacies
would notify consumers immediately of the toll-free number, and
manufacturers would have 1 year to make any required labeling changes.
We also received comments supporting the 1-year compliance period from
both pharmacy interests and drug manufacturing interests. These
comments noted that pharmacies and drug manufacturers need time to
integrate any printing/labeling changes into existing systems.
(Response) In implementing the requirements of the BPCA and FDAAA,
we believe it is important to work with stakeholders and provide time
for updating labels and systems so that we reach the best possible
outcome for constituent groups, including consumers, pharmacists and
other health care professionals, drug manufacturers, and the agency.
With the publication of this final rule, we believe we have implemented
the provisions of the BPCA and FDAAA effectively.
(Comment 21) Two comments suggested that, after full implementation
of the laws and all necessary modifications to the MedWatch system, FDA
undertake extensive consumer outreach, educating the public about the
right to report under the new provisions. One comment suggested that
FDA, in cooperation with the OTC drug manufacturers, implement a public
relations program to raise consumer awareness of the necessity of
reporting unexpected adverse events to the product manufacturer. These
comments stated that FDA should work with consumer educators and health

[[Page 63892]]

professionals to provide clear information and educational materials on
how, what, and when to report. Another comment suggested the agency add
specific questions to the ongoing National Survey of Prescription
Medicine Information Received by Consumers (at the physician's office
and pharmacy) to track awareness of the side effects statement and to
determine to what extent consumers contact FDA to report a side effect.
(Response) The agency is in the process of implementing numerous
safety initiatives under FDAAA that will benefit consumers. Section
906(a) of FDAAA requires published direct-to-consumer advertisements to
include a statement encouraging reporting of negative side effects to
FDA and providing the MedWatch Web site and phone number. Given that
section 502(f)(2) of FDAAA likely will reduce the number of voluntary
reports FDA receives on application OTC drug products as a result of
this rule, we do not believe it is necessary to undertake an extensive
educational campaign targeted at voluntary reporting for application
OTC drug products at this time. However, should our experience with
reporting under these new provisions indicate otherwise, we will
consider whether educational efforts for the general public would be
beneficial.
In addition, we note that the National Survey of Prescription
Medicine Information Received by Consumers is not currently ongoing. If
this survey is reinstated at a future date, we will consider adding
specific questions relevant to the side effects statement at that time
as suggested by the comment.

IV. Analysis of Impacts

FDA has examined the impacts of the final rule under Executive
Order 12866 and 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 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). The agency believes that
this final rule is not an economically significant regulatory action
under the Executive order.
The Regulatory Flexibility Act requires agencies to analyze
regulatory options that would minimize any significant impact of a rule
on small entities. Because the impact of the final rule will be
proportional to sales volumes, the agency concludes that this final
rule will not have a significant economic impact on a substantial
number of small entities.
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before proposing ``any rule that
includes any Federal mandate that may result in the expenditure by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100,000,000 or more (adjusted annually for
inflation) in any one year.'' The current threshold after adjustment
for inflation is $127 million, using the most current (2006) Implicit
Price Deflator for the Gross Domestic Product. FDA does not expect this
final rule to result in any 1-year expenditure that would meet or
exceed this amount.
In accordance with Executive Order 12866, FDA has previously
analyzed the potential economic effects of this final rule. We
estimated that annualized costs of the proposed rule would be $9.3
million to $22.6 million (69 FR 21778 at 21783). For the final rule, we
project that one-time costs will range from approximately $38.0 million
to $49.6 million and annual costs will range from $12.4 million to
$46.3 million. The total annualized impact of the final rule will range
from $16.9 million to $52.2 million with a 3-percent discount rate and
from $17.8 million to $53.4 million with a 7-percent discount rate. We
are unable to quantify the benefits of the final rule. Although the
estimated costs of this final rule are higher than the estimated costs
of the preliminary regulatory impact analysis, the agency has
determined that the rule is not an economically significant regulatory
action as defined by the order.

A. Need for Regulation

The BPCA required that the labeling of each drug approved under
section 505 of the act be accompanied by a toll-free number and
statement that the number is for reporting adverse events, not to
receive medical advice. Because OTC drug products may be approved under
section 505 of the act, we proposed that the labeling for all
application OTC drug products include the side effects statement.
Subsequently, FDAAA exempted any application OTC drug products whose
packaging includes a toll-free number that consumers can call to report
complaints to the manufacturer or distributor of the product.
Consequently, to fulfill these statutory requirements, the final rule
will require pharmacies and authorized dispensers to provide patients
with the side effects statement with each dispensed prescription drug,
and will require drug manufacturers to include the side effects
statement in FDA-approved Medication Guides for drugs approved under
section 505 of the act and in the labeling of application OTC drug
products not subject to the exclusion in section 502(f)(2) of FDAAA.

B. Costs of Regulation

(Comment 22) Most comments on the costs of the proposed rule
asserted that we understated the number of affected OTC drug products
and the costs to modify OTC drug product labeling.
(Response) In most cases, however, changes under FDAAA made many of
these comments irrelevant. As noted in this final analysis, we have
updated the initial analysis with current numbers whenever possible.
1. Pharmacy Industry
a. Number of affected pharmacies. We received no comments on our
initial estimate of the number of pharmacies affected by the
requirement to include the side effects statement with each dispensed
prescription drug. For the final analysis, we update the number of
affected outlets with data from the 2002 Economic Census on the number
of establishments that have merchandise sales from prescription drugs
(table 1 of this document). 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 or Internet services. Nonretail
channels include health maintenance organizations (HMOs), hospital
outpatient pharmacies, offices of health care practitioners, and
ambulatory care clinics.
The agency solicited comment on its assumptions about the
percentages of affected dispensing locations currently distributing
some form of printed CMI (69 FR 21783). Because no comments were
received and the agency has no other information about pharmacy
practices, we continue to assume that printed CMI accompanies: (1) 89
percent of the prescriptions dispensed by retail pharmacies, (2) 89
percent of prescriptions dispensed in ambulatory outpatient settings,
and (3) 0 percent of prescriptions dispensed in other health care
settings. Table 1 of this document shows the estimated number of
affected outlets distributing CMI.
b. Prescriptions dispensed. Although information on the number of
prescriptions dispensed by retail

[[Page 63893]]

channels is publicly available, it is difficult to estimate the number
of prescriptions dispensed by nonretail channels. For the initial
analysis of impacts, we used 2001 data from IMS Health to approximate
the volume of prescriptions from nonretail channels. Based on the IMS
data, nonretail channels dispensed from 6 percent to 18 percent of the
prescription volume dispensed from retail channels (69 FR 21778 at
21784). Although we solicited comment on our estimate, we received no
additional information. Thus, we assume that the percentage of
prescriptions dispensed by retail and nonretail outlets remains similar
to our initial estimate. In 2007, IMS Health estimated that retail
channels dispensed approximately 3.8 billion prescriptions (http://imshealth.com/vgn/images/portal/CIT_40000873/39/53/834329692007%20Channel%20Distribution%20by%20RXs.pdf). We estimate that
nonretail channels dispensed from 228 million (6 percent of 3.8
billion) to 671 million (18 percent of 3.8 billion) prescriptions, for
a total volume of prescriptions in 2007 ranging from 4.0 billion (= 3.8
billion + 0.2 billion) to 4.5 billion (= 3.8 billion + 0.7 billion).
c. Compliance costs for pharmacies. For the initial analysis of
impacts, we assumed that pharmacies currently distributing printed CMI
would choose to comply with the requirements of the proposed rule by
distributing the side effects statement in the CMI. We anticipated that
the side effects statement could be added to existing pharmaceutical
information databases used to produce CMI at a negligible one-time
cost. Moreover, we assumed that periodic updates of other drug labeling
information included in pharmaceutical databases required pharmacies or
their computer system vendors to test the printing of the CMI on a
regular basis. Because most pharmacies distribute printed CMI, we
assumed that only pharmacies and authorized dispensers not currently
providing printed CMI would incur incremental costs to comply with the
requirements of the proposed rule.

Table 1--Number of Pharmacy Outlets With Sales of Prescription Drugs and Distributing Printed Consumer
Medication Information (CMI)
----------------------------------------------------------------------------------------------------------------
Number of Outlets
Type of Outlet Number of Outlets\1\ Distributing CMI
----------------------------------------------------------------------------------------------------------------
Retail outlets: ....................... .......................
Pharmacy, drug, and health care stores 39,159 34,711
Food and beverage stores 20,227 18,002
Warehouse clubs and supercenters 2,553 2,502
Other general merchandise stores 5,469 4,867
Electronic shopping 88 78
Mail-order houses 365 325
Other direct selling establishments 26 23
----------------------------------------------------------------------------------------------------------------
Nonretail outlets: ....................... .......................
Offices of health practitioners 7,424 0
Hospital outpatient services 5,506 0
Clinics 3,117 2,774
HMOs 162 144
----------------------------------------------------------------------------------------------------------------
Total outlets 84,096 63,427
----------------------------------------------------------------------------------------------------------------
Sources: Retail outlets from table 1 of 2002 Economic Census, Retail Trade, Subject Series, publication number
EC02-44SL-LS issued October 2005; Nonretail outlets from 2002 Economic Census, Health Care of Social
Assistance, Subject Series, publication number EC02-62SL-LS issued October 2005.
\1\ Includes establishments in the 2000 North American Industry Classification System (NAICS) industry codes
445, 446, 452, 454, 621, 622 that had sales from product line code 20161 (Prescriptions).

(Comment 23) We received one comment from a professional
organization representing pharmacists that supported our assumption
that most pharmacies will adopt the CMI option. One comment from a
provider of pharmaceutical databases stated that it will not be
difficult to include the side effects statement in the CMI. Two
comments noted that in our initial analysis we did not take into
account the one-time effort required to modify and test computer
programs controlling the printing of the CMI and auxiliary labels, but
provided no detailed information about these costs.
(Response) We agree that pharmacies choosing to distribute revised
CMI (i.e., CMI with the side effects statement) will need to ensure
proper printing of the side effects statement if they choose this
option. Pharmacies that choose to print their own labels to affix on
the dispensing container will incur costs to modify and test the
computer programs that control the printing of auxiliary labels.
However, we lack sufficient information about the percentage of
pharmacies that would choose in-house printing of auxiliary labels to
modify our initial estimate.
To illustrate the potential costs of the proposed rule, we
estimated the level of effort required by a pharmacy to manually affix
a sticker preprinted with the side effects statement on each
prescription container. Because this option would cause a pharmacy to
incur additional costs for each prescription drug dispensed, the agency
believes that this would be a higher cost option for pharmacies and
authorized dispensers that currently distribute printed CMI with
prescription drugs.
(Comment 24) Two comments on the proposed rule stated that FDA
failed to understand the workflow in a modern pharmacy and that
manually affixing stickers would be more costly than we estimated.
(Response) We acknowledge that manually affixing a sticker in a
highly automated system might cause disruptions in workflow that were
not captured in our initial analysis. However, we have no other
information that we could use to modify our estimate. Nevertheless, we
have increased our cost estimate in the proposed rule by 35 percent to
account for the following: (1) A 23-percent increase in the number of
prescriptions and (2) a 12-percent increase in costs

[[Page 63894]]

since 2003.\1\ For pharmacies, the potential annual costs of the final
rule in 2007 dollars will range from $12.4 million to $27.3 million.
Similar to the range in the proposed rule, this range reflects
uncertainty about the costs to affix the sticker to the prescription
drug container, and the average number of prescriptions dispensed by
affected pharmacy outlets.
---------------------------------------------------------------------------

\1\ U.S. Department of Labor, Bureau of Economic Analysis,
National Economic Accounts (http://www.bea.gov/nationalnipaweb/SelectTable.asp?Selected=Y).
---------------------------------------------------------------------------

2. Drug Manufacturers
We proposed to require that the labeling of application OTC drug
products not subject to the exclusion in section 502(f)(2) of FDAAA
include the OTC side effects statement in the warnings section of the
drug facts format labeling. For the analysis of the proposed rule, we
predicted that manufacturers would spend $3,000 per shelf-keeping unit
(SKU) to modify the labeling of a new drug application (NDA) OTC drug
product or $1,000 per SKU to modify the labeling of an abbreviated new
drug application (ANDA) OTC drug product. We assumed that each affected
OTC drug product would have, on average, up to 3 SKUs. For the proposed
rule, we estimated that approximately 1,570 OTC drug packages would
need to be revised to add the side effects statement. Furthermore, we
estimated manufacturers would need to add the side effects statement to
about 18 Medication Guides.
a. Number of affected products. Although we received no comments on
our estimate of the number of Medication Guides that would be revised,
more prescription drugs have added Medication Guides since our initial
estimate. Based on current agency information, we have increased our
estimate from 18 to 370 Medication Guides.
(Comment 25) Comments from the drug industry and a member of
Congress stated that FDA should not have included application OTC drug
products in the proposed rule. Some comments expressed concern that
because the labeling of most NDA OTC drug products includes a
manufacturer's toll-free telephone number, addition of the MedWatch
telephone number could confuse consumers. It was suggested that FDA
exempt from the requirements of the proposed rule any OTC drug product
whose labeling contains a toll-free number for the manufacturer or
distributor.
(Response) The proposed rule would have required the same side
effects statement on all application OTC drug products. As discussed
previously in this preamble, the interim final rule codified section
502(f)(2) of FDAAA, which states that the requirement to include the
side effects statement does not apply to any OTC drug product approved
under section 505 of the act if the product's packaging contains a
toll-free telephone number through which consumers can report
complaints to the manufacturer or distributor of the drug. Section
502(f)(2) of FDAAA thus creates a situation in which manufacturers and
distributors of affected application OTC drug products will choose to
either add the side effects statement or their own toll-free telephone
number to OTC drug product labeling. Therefore, under the rule, the
drug facts format labeling of application OTC drug products could vary
depending on whether the affected manufacturer or distributor uses the
side effects statement or its own toll-free number.
The agency previously estimated that certain retailers with more
than 10 establishments would have some private label OTC drug products
(62 FR 9046, February 27, 1997). Depending on the size of the firm,
each private label OTC drug product could have numerous SKUs. Agency
records indicate that there are about 60 unique application OTC
products (i.e., a unique combination of active ingredient, dosage form,
and strength). An informal convenience survey of stores in the
Washington, DC, area and in northern New England looked at whether
affected private label OTC drug product labeling contains a toll-free
telephone number. We found that the packaging of most private label OTC
drug products does not include a toll-free number for complaints.\2\ It
appears that most private label OTC drug product labeling will need to
be modified to comply with the final rule. However, because most
national brand OTC drug products affected by the rule already have a
toll-free telephone number for complaints, current packaging for most
national brand OTC drug products will conform to the requirements of
the final rule without any further change.
---------------------------------------------------------------------------

\2\ FDA employees visited three mass merchants, three chain
grocery stores, and four chain drug stores to roughly estimate the
following: (1) The number of SKUs per private label OTC product for
categories of products with high sales volumes and (2) the
proportion of the labeling of these products including a toll-free
telephone number. At each site, at least one private label ANDA OTC
drug product from the following categories was examined to determine
the number of SKUs for the product and the percentage of SKUs with a
toll-free telephone number--allergy and asthma, antifungal, feminine
hygiene, pain, stomach-diarrhea, and stomach-digestion. In addition,
at some locations, employees examined private label ANDA OTC drug
products for smoking cessation, lice control, hair restoration, and
cold and sinus. We examined over 300 packages and found that the
labeling of smoking cessation products and allergy and asthma eye
drops already appear to include a toll-free telephone number.
Excluding these products, only about 20 percent of the labeling of
private label ANDA OTC products would conform to the requirements of
the final rule without change. Finally, to estimate a range of
products whose labeling would need to be modified, we adjusted the
average number of SKUs for each product (i.e., active ingredient,
dosage form, and strength) by the proportion of SKUs with labeling
including a toll-free telephone number.
---------------------------------------------------------------------------

For this final analysis, we assume that distributors of private
label OTC drug products (i.e., the unique combination of active
ingredient, dosage form, and strength) would not carry identical SKUs
from different manufacturers. Although uncertain, the findings from our
informal survey give us an idea of the number of private label OTC drug
product SKUs that might be affected by the final rule. For the final
analysis, therefore, we anticipate that any firm with 10 to 99
establishments will need to change the packaging of between 40 to 55
affected private label OTC drug products and any firm with 100 or more
establishments will need to change the packaging of between 110 to 135
private label OTC drug products. Table 2 of this document illustrates
the number of possible firms that could have private label OTC drug
products.

Table 2--Estimate of the Number of Private Label Distributors
----------------------------------------------------------------------------------------------------------------
Number of Firms With 10-99 Number of Firms With 100 or
Kind of Business Establishments More Establishments
----------------------------------------------------------------------------------------------------------------
Supermarket and other grocery 194 37
----------------------------------------------------------------------------------------------------------------
Pharmacy, drug, and proprietary stores 59 16
----------------------------------------------------------------------------------------------------------------

[[Page 63895]]

Warehouse clubs and supercenters 3 6
----------------------------------------------------------------------------------------------------------------
Total 256 59
----------------------------------------------------------------------------------------------------------------
Source: Data for NAICS numbers 445110, 4461101, 4461102, and 45291 from table 3 of 2002 Economic Census, Retail
Trade, Subject Series, Establishment and Firm Size (Including Legal Form of Organization), publication number
EC02-44SS-SZ issued November 2005.

b. Cost to modify product labeling.
(Comment 26) We received three detailed comments that included
alternative estimates of the cost to revise NDA OTC drug product
labeling. No comments were submitted on our estimate of the cost to
revise ANDA or private label OTC drug product labeling or Medication
Guides.
(Response) To account for inflation, we updated our estimate of the
cost to revise a Medication Guide from $4,177 to $4,500 (2007 dollars)
for an NDA prescription drug and from $1,580 to $1,800 (2007 dollars)
for an ANDA prescription drug. The total one-time cost to add the side
effects statement to Medication Guides will be $990,000 (= 120
Medication Guides x $4,500 + 250 Medication Guides x $1,800).
In recent years some large retailers have developed a single
nationwide private label brand for all of their private label OTC drug
products.\3\ When comparing like OTC drug products, consumers could
perceive a difference in the safety of the private label OTC drug
products if the private label OTC drug product packaging displays the
side effects statement instead of a manufacturer's toll-free number,
such as is found on most innovators' branded products. Economic theory
predicts that any labeling change which signals a decrease in product
quality will be balanced by a decrease in the demand for the product.
Large retailers will weigh the additional costs associated with the
addition of their toll-free number on their OTC drug product packaging
against the monetary value of the perceived decrease in product quality
that could be signaled by the addition of the side effects statement.
Private label retailers will choose to include their own toll-free
telephone number instead of the side effects statement if they believe
that the side effects statement will decrease the perceived quality of
their products more than the cost to add the toll-free telephone
number.
---------------------------------------------------------------------------

\3\ ``Consolidated Medicine,'' January/February 2005, Private
Label Magazine, at http://www.privatelabelmag.com.
---------------------------------------------------------------------------

We have increased our estimate of the cost to modify the labeling
of private label OTC drug products from $1,000 per SKU to $2,140 per
SKU. As shown in table 3 of this document, private label distributors
might spend from $36.4 million to $47.9 million in one-time costs to
modify drug labeling to include a telephone number or side effects
statement. In addition, each distributor might spend up to 40 hours
deciding whether to include its own toll-free telephone number at a
one-time cost of $640,000 (= 320 distributors x $50 per hour x 40
hours), for total one-time costs ranging from $37.0 million to $48.6
million.
We expect that there would be some impact of the toll-free
telephone number on the workload of private label distributors who
choose to add their own toll-free telephone number. Although this
impact is uncertain, distributors may need to hire up to one full-time
employee (FTE) at a cost of about $53,500\4\ to answer additional
telephone calls generated by the addition of their toll-free telephone
number on private label OTC drug product packaging. If the incremental
increase in telephone calls is minimal, distributors will not incur
these costs. However, if all 320 distributors incurred this incremental
expense, it will cost the pharmacy industry an additional $17.1 million
dollars annually. In total, the final rule will cost drug manufacturers
or private label distributors from $4.5 million to $22.9 million
annualized at a 3-percent discount rate and from $5.4 million to $24.2
million annualized at a 7-percent discount rate.
---------------------------------------------------------------------------

\4\ U.S. Department of Labor, Bureau of Labor Statistics,
Occupational Employment and Wages, May 2007 (http://www.bls.gov/oes/current/oes292052.htm).
---------------------------------------------------------------------------

3. Burden on FDA
(Comment 27) Several comments stated that the side effects
statement would increase the volume of non-serious calls to MedWatch
and potentially dilute the value of direct adverse event reports.
(Response) In our initial analysis, we were uncertain about the
burden this rule would place on FDA. Although we are still uncertain
about the burden of the final rule, the results of our Internet study
are encouraging. Most people understood the meaning of the side effects
statement and understood that the FDA toll-free number was intended
only to report serious side effects. Participants in the study showed
little inclination to use the FDA toll-free number and would be more
likely to expect their health care provider to report side effects.
Without other information, we leave our initial analysis of the FDA
burden unchanged.
4. Summary of the Impacts of the Final Rule
Table 4 of this document summarizes the costs of the final rule.
The total annualized impact of the final rule will range from $16.9
million to $52.2 million with a 3-percent discount rate and from $17.8
million to $53.4 million with a 7-percent discount rate. Most of this
cost will likely be passed on to consumers. Even though the total
annualized costs are uncertain, they are significantly below the
threshold of an economically significant rule. Moreover, the final rule
gives pharmacies flexibility to select the option that is least
burdensome for their individual business situation and fulfills the
statutory requirements of the BPCA and FDAAA. Finally, these costs
represent a small proportion of affected product sales.

[[Page 63896]]

Table 3--Estimated Cost to Modify Private Label OTC Labeling
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimate of the Number Number of Affected SKUs Cost to Revise OTC Labeling ($
Number of of Private Label SKUs -------------------------------- million)
Type of Distributor Distributors -------------------------- ---------------------------------
Low High Low High Low High
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small 260 40 55 10,400 14,300 22.3 30.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Large 60 110 135 6,600 8,100 14.1 17.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 320 ........... ........... 17,000 22,400 36.4 47.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table 4--Cost Summary
----------------------------------------------------------------------------------------------------------------
One-Time Cost ($ mil) Annual Costs ($ mil) Annualized at 3% ($ mil) Annualized at 7% ($ mil)
Affected -------------------------------------------------------------------------------------------------------
Sector low high low high low high low high
----------------------------------------------------------------------------------------------------------------
Retail ........... ........... 12.4 27.3 12.4 27.3 12.4 27.3
and
nonreta
il
pharmac
ies
----------------------------------------------------------------------------------------------------------------
Drug 38.0 49.6 0.0 17.1 4.5 22.9 5.4 24.2
manufac
turers
and
private
label
distrib
utors
----------------------------------------------------------------------------------------------------------------
FDA ........... ........... 0.0 1.9 0.0 1.9 0.0 1.9
----------------------------------------------------------------------------------------------------------------
Total 38.0 49.6 12.4 46.3 16.9 52.2 17.8 53.4
----------------------------------------------------------------------------------------------------------------

C. Benefits of Regulation

(Comment 28) One comment from an organization representing drug
manufacturers stated that the proposed rule had no obvious benefits and
in contrast could have a detrimental effect on adverse event reporting
and detection.
(Response) The agency agrees that the benefits of this rule are
uncertain. As described elsewhere in this preamble, the results of our
Internet labeling comprehension study suggest that most consumers
understand the side effects statement and would be unlikely to call
FDA. Even if they experienced a serious side effect, most participants
indicated that they would contact their health care provider and would
assume that he or she would report their side effect to FDA. If the
final rule increases reports of serious side effects by health care
providers, it might aid the agency's efforts to monitor the postmarket
safety of drug products.

D. Final Regulatory Flexibility Analysis

We received no comments that would change our initial analysis of
the impacts on small entities. Most impacts on small entities represent
a small proportion of sales and the rule would probably have a minimal
effect on even the smallest entities. For our initial analysis, we
estimated that adding a preprinted sticker to each prescription
container would cost about $.03 per prescription and could reduce a
retail pharmacy's average revenues by about 0.3 percent. For the final
analysis, we adjust the per prescription cost of the sticker option by
12 percent, increasing the cost of this option to approximately $0.04
per prescription. The National Association of Chain Drug Stores (NACDS)
reports that in 2007 the average cost of a retail prescription was
$69.91. Retail pharmacies received about 17 percent or an average of
$13.17 for each prescription.\5\ At current revenue levels, the average
cost for small pharmacies to comply with the final rule will still be
about 0.3 percent of the average per-prescription revenue.
---------------------------------------------------------------------------

\5\ http://www.nacds.org/wmspage.cfm?parm1=507#pharmpricing.
---------------------------------------------------------------------------

The costs for private label distributors were not included in the
initial analysis. However, all distributors large enough to maintain
private labels have annual sales above the SBA size standards. Because
many of the impacts of the final rule are uncertain, we are not able to
certify that the final rule will not have a significant economic impact
on a substantial number of small entities.

VI. Paperwork Reduction Act of 1995

This regulation imposes no new collection of information.
Therefore, clearance by the Office of Management and Budget under the
Paperwork Reduction Act of 1995 is not required.

VII. Environmental Impact

The agency 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 final rule in accordance with the principles
set forth in Executive Order 13132. FDA has determined that the rule
will have a preemptive effect on State law. Section 4(a) of the
Executive order requires agencies to ``construe * * * a Federal statute
to preempt State law only where the statute contains an express
preemption provision or there is some other clear evidence that the
Congress intended preemption of State law, or where the exercise of
State authority conflicts with the exercise of Federal authority under
the Federal statute.'' Section 751 of the act (21 U.S.C. 379r) is an
express preemption provision. Section 751(a) of the act provides that
``* * * no State or political subdivision of a State may establish or
continue in effect any requirement--(1) that relates to the regulation
of a drug that is not subject to the requirements of section 503(b)(1)
or 503(f)(1)(A); and (2) that is different from or in addition to, or
that is otherwise not identical with, a requirement under this act, the
Poison Prevention Packaging Act of 1970 (15 U.S.C. 1471 et seq.), or
the Fair Packaging and Labeling Act (15 U.S.C. 1451 et seq.).''
Currently, this provision operates to preempt States from imposing
requirements related to the regulation of nonprescription drug
products. Section 751(b) through (e) of the act outlines the scope of
the express

[[Page 63897]]

preemption provision, the exemption procedures, and the exceptions to
the provision.
Even where the express preemption provision is not applicable,
implied preemption may arise. See Geier v. American Honda Co. 529 U.S.
861 (2000). Under the principles of implied conflict preemption, courts
have found State law preempted where it is impossible to comply with
both Federal and State law or where the State law ``stands as an
obstacle to the accomplishment and execution of the full purposes and
objectives of Congress.'' See English v. General Electric Co., 496 U.S.
72, 79 (1990); Florida Lime & Avocado Growers, Inc., 373 U.S. 132, 142-
43 (1963); Hines v. Davidowitz, 312 U.S. 52, 67 (1941).
This rule amends the labeling requirements for certain application
OTC drug products to require the addition of a side effects statement,
and to require pharmacies and authorized dispensers to distribute the
side effects statement with each prescription drug approved under
section 505 of the act and dispensed. This rule would have a preemptive
effect to the extent that a State requires labeling that directly
conflicts with, is different from, or is in addition to, the side
effects statement required by this rule for certain application OTC
drug products. This preemptive effect is consistent with what Congress
set forth in section 751 of the act. Section 751(a) of the act
displaces both State legislative requirements and State common law
duties. The rule would also have a preemptive effect to the extent that
a State imposes requirements on pharmacies or authorized dispensers
that conflict with the requirements of this rule or frustrate the
federal purpose with respect to distribution of the side effects
statement. Preemption with respect to these requirements is consistent
with the doctrine of implied conflict preemption. FDA believes that the
preemptive effect of the final rule, if finalized as proposed, would be
consistent with Executive Order 13132. Section 4(e) of the Executive
order provides that ``when an agency proposes to act through
adjudication or rulemaking to preempt State law, the agency shall
provide all affected State and local officials notice and an
opportunity for appropriate participation in the proceedings.'' FDA
provided the States with an opportunity for appropriate participation
in this rulemaking when it sought input from all stakeholders through
publication of the proposed rule (69 FR 21778). FDA received no
comments from any States on the proposed rulemaking. On January 3,
2008, FDA published an interim final rule codifying the proposed rule
which, under FDAAA, became effective by operation of law on January 1,
2008 (73 FR 402). FDA received no comments from any State on the
interim final rule.
In addition, on July 31, 2008, the FDA Division of Federal and
State Relations provided notice via fax and e-mail transmission to
elected officials of State governments and their representatives of
national organizations. The notice provided the States with further
opportunity for comment on the rule. It advised the States of the
publication of the proposed rule and interim final rule and encouraged
State and local governments to review the notice and interim final rule
to provide any comments to Docket No. FDA-2003-N-0313 (formerly Docket
No. 2003N-0342) opened in the April 22, 2004, Federal Register proposed
rule, by a date 30 days from the date of the notice (i.e., by August
31, 2008, or to contact certain named individuals. FDA received no
comments in response to this notice. The notice has been filed in
Docket No. FDA-2003-N-0313.
In conclusion, FDA believes that it has complied with all of the
applicable requirements under the Executive order and has determined
that the preemptive effects of this rule are consistent with Executive
Order 13132.
(FDA has verified all Web site addresses, but FDA is not
responsible for any subsequent changes to the Web sites after this
document publishes in the Federal Register.)
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, the interim
final rule amending 21 CFR parts 201 and 208 and adding 21 CFR part
209, which was published at 73 FR 402 (January 3, 2008), is adopted as
a final rule without change.

Dated: October 21, 2008.
Jeffrey Shuren,
Associate Commissioner for Policy and Planning.
[FR Doc. E8-25670 Filed 10-27-08; 8:45 am]
BILLING CODE 4160-01-S