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