[Federal Register Volume 85, Number 35 (Friday, February 21, 2020)]
[Rules and Regulations]
[Pages 10057-10063]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03505]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 600

[Docket No. FDA-2018-N-2732]
RIN 0910-AH57


Definition of the Term ``Biological Product''

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA, the Agency, or we) is 
issuing a final rule to amend its regulation that defines ``biological 
product'' to incorporate changes made by the Biologics Price 
Competition and Innovation Act of 2009 (BPCI Act) and the Further 
Consolidated Appropriations Act, 2020 (FCA Act), and to provide its 
interpretation of the statutory term ``protein.'' Under this final 
rule, the term protein means any alpha amino acid polymer with a 
specific, defined sequence that is greater than 40 amino acids in size. 
This final rule is intended to clarify the statutory framework under 
which such products are regulated.

DATES: This rule is effective March 23, 2020.

ADDRESSES: For access to the docket to read background documents or 
comments received, go to https://www.regulations.gov and insert the 
docket number found in brackets in the heading of this final rule into 
the ``Search'' box and follow the prompts, and/or go to the Dockets 
Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Daniel Gottlieb, Center for Drug 
Evaluation and Research, Food and Drug Administration, 10903 New 
Hampshire Ave., Bldg. 51, Rm. 6208, Silver Spring, MD 20993, 301-796-
6650, [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
    A. Purpose of the Final Rule
    B. Summary of the Major Provisions of the Final Rule
    C. Legal Authority
    D. Costs and Benefits
II. Table of Abbreviations/Commonly Used Acronyms in This Document
III. Background
    A. History of this Rulemaking
    B. Summary of Comments on the Proposed Rule
IV. Legal Authority
V. Comments on the Proposed Rule and FDA Response
    A. Introduction
    B. Specific Comments and FDA Response
VI. Effective Date
VII. Economic Analysis of Impacts
    A. Introduction
    B. Summary of Costs and Benefits
    C. Summary of Regulatory Flexibility Analysis
VIII. Analysis of Environmental Impact
IX. Paperwork Reduction Act of 1995
X. Federalism
XI. Consultation and Coordination With Indian Tribal Governments
XII. References

I. Executive Summary

A. Purpose of the Final Rule

    This final rule amends FDA's regulation that defines ``biological 
product'' by making a technical revision and conforming to the 
statutory definition enacted in the BPCI Act, as further amended by 
section 605 of the FCA Act (Pub. L. 116-94). The BPCI Act amended the 
definition of ``biological product'' in section 351(i) of the Public 
Health Service Act (PHS Act) (42 U.S.C. 262(i)) to include a ``protein 
(except any chemically synthesized polypeptide).'' After publication of 
the proposed rule, section 605 of the FCA Act further amended the 
definition of ``biological product'' in section 351(i) of the PHS Act 
to remove the parenthetical ``(except any chemically synthesized 
polypeptide)'' from the statutory category of ``protein.'' The final 
rule makes conforming changes to Sec.  600.3 (21 CFR 600.3) to add 
FDA's interpretation of the statutory term ``protein.''

B. Summary of the Major Provisions of the Final Rule

    Under the final rule, the term protein means any alpha amino acid 
polymer with a specific defined sequence that is greater than 40 amino 
acids in size. This is consistent with the interpretation of this term 
that FDA previously described in the notice of proposed rulemaking 
published in the Federal Register on December 12, 2018 (83 FR 63817) 
and in a final guidance document issued on April 30, 2015 (see 80 FR 
24259 (announcing the availability of a guidance for industry entitled 
``Biosimilars: Questions and Answers Regarding Implementation of the 
Biologics Price Competition and Innovation Act of 2009,'' available at 
https://www.regulations.gov (Docket No. FDA-2011-D-0611) (2015 
Biosimilars Q&A Guidance); see also ``New and Revised Draft Q&As on 
Biosimilar Development and the Biologics Price Competition and 
Innovation Act (Revision 2)'' (December 2018; 83 FR 63898)).

C. Legal Authority

    This final rule amends FDA's regulations to implement certain 
aspects of the BPCI Act and the FCA Act. FDA's authority for this rule 
derives from the biological product provisions in section 351 of the 
PHS Act and the provisions of the Federal Food, Drug, and Cosmetic Act 
(FD&C Act) (21 U.S.C. 321, et seq.) applicable to drugs, as well as 
section 701 of the FD&C Act (21 U.S.C. 371). The rule is necessary to 
clarify the statutory authority under which biological products are 
regulated, to prevent inconsistent regulation of such products, and for 
the efficient enforcement of the FD&C Act.

D. Costs and Benefits

    This final rule codifies FDA's interpretation of the statutory term 
``protein'' in a manner that is consistent with the interpretation of 
this term that FDA previously described in guidance (see 2015 
Biosimilars Q&A Guidance) and the proposed rule. Formalizing this 
interpretation will reduce regulatory uncertainty over whether certain 
products are regulated as drugs or biological products. This reduced 
uncertainty, under the ``bright-line'' approach described in the 
proposed rule, will allow both FDA and private industry to avoid 
spending time and resources on case-by-case determinations for each 
product. The primary estimate of the benefits in 2018 dollars 
annualized over 10 years is $394,562 using a 7 percent discount rate 
and $348,436 using a 3 percent discount rate. We also calculate ranges 
of benefits of $356,775 to $411,345 and $316,116 to $362,792, 
respectively. The estimated annualized costs range from $13,511 to 
$16,889, with a primary estimate of $15,012 using a 7 percent discount 
rate over a 10-year horizon. For a 3 percent discount rate, we estimate 
a range of $12,471 to $15,589, with a primary estimate of $13,857.

II. Table of Abbreviations/Commonly Used Acronyms in This Document

[[Page 10058]]



------------------------------------------------------------------------
          Abbreviation/acronym                    What it means
------------------------------------------------------------------------
BPCI Act...............................  Biologics Price Competition and
                                          Innovation Act of 2009.
CFR....................................  Code of Federal Regulations.
EO.....................................  Executive Order.
FCA Act................................  Further Consolidated
                                          Appropriations Act, 2020.
FD&C Act...............................  Federal Food, Drug, and
                                          Cosmetic Act.
FDA....................................  U.S. Food and Drug
                                          Administration.
PHS Act................................  Public Health Service Act.
U.S....................................  United States.
U.S.C..................................  United States Code.
------------------------------------------------------------------------

III. Background

A. History of This Rulemaking

    The BPCI Act amended the definition of ``biological product'' in 
section 351(i) of the PHS Act to include a ``protein (except any 
chemically synthesized polypeptide).'' After publication of the 
proposed rule, section 605 of the FCA Act further amended the 
definition of ``biological product'' in section 351(i) of the PHS Act 
to remove the parenthetical ``(except any chemically synthesized 
polypeptide)'' from the statutory category of ``protein.'' As amended 
by the BPCI Act and the FCA Act, a ``biological product'' is defined as 
``a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood 
component or derivative, allergenic product, protein, or analogous 
product, or arsphenamine or derivative of arsphenamine (or any other 
trivalent organic arsenic compound), applicable to the prevention, 
treatment, or cure of a disease or condition of human beings'' (see 
section 351(i)(1) of the PHS Act).
    The BPCI Act clarified the statutory authority under which certain 
protein products are to be regulated. Although the majority of 
therapeutic biological products have been licensed under section 351 of 
the PHS Act, some protein products historically have been approved 
under section 505 of the FD&C Act (21 U.S.C. 355). The BPCI Act 
requires that a marketing application for a ``biological product'' 
(that previously would have been submitted under section 505 of the 
FD&C Act) must be submitted under section 351 of the PHS Act, subject 
to certain exceptions during a 10-year transition period ending on 
March 23, 2020 (see section 7002(e)(1) through (3) and (e)(5) of the 
BPCI Act). FDA is adding its interpretation of the term ``protein'' to 
the regulations to clarify the statutory framework under which such 
products are regulated.
    The proposed rule includes a history of this rulemaking and cites 
several scientific resources, including textbooks and dictionaries, to 
illustrate the aspects of the meanings of the terms ``protein,'' 
``polypeptide,'' and ``peptide'' on which there is or is not scientific 
consensus (see 83 FR 63817 at 63819-63820). As discussed in the 
proposed rule, despite the lack of precise, agreed-upon definitions, 
most, if not all, sources agree about certain aspects of the meanings 
of these terms. First, all of the terms (``protein,'' ``polypeptide,'' 
and ``peptide'') refer to amino acid polymers (also referred to as 
``amino acid chains'') made up of alpha amino acids that are linked by 
peptide bonds. Second, ``protein'' refers to chains containing a 
specific, defined sequence of amino acids, generally provided by a 
corresponding DNA or RNA sequence. Finally, the term ``protein'' is 
distinct from and excludes the term ``peptide'' (i.e., amino acid 
chains that are generally shorter and simpler than a protein).
    In the proposed rule, FDA described its proposed interpretation of 
the statutory terms ``protein'' and ``chemically synthesized 
polypeptide,'' which appeared in the definition of ``biological 
product'' in section 351(i) of the PHS Act prior to the enactment of 
the FCA Act. FDA is now finalizing its interpretation of the statutory 
term ``protein'' without change. However, in light of the recently 
enacted FCA Act, which removed the parenthetical exception for ``any 
chemically synthesized polypeptide'' from the category of ``protein'' 
in the statutory definition of ``biological product,'' FDA is not 
finalizing its interpretation of ``chemically synthesized polypeptide'' 
because it is no longer necessary.

B. Summary of Comments on the Proposed Rule

    We received four comments on the proposed rule. Two of the comments 
were general comments supporting FDA's proposed interpretations; one of 
these comments specifically supports FDA's proposal because the 
commenter stated that it enables insulin to be brought into the 
regulatory pathway for biological products, including biosimilar and 
interchangeable products. Two of the comments substantively addressed 
specific aspects of the proposed interpretations of ``protein'' and 
``chemically synthesized polypeptide.''

IV. Legal Authority

    We are issuing this final rule under the biological product 
provisions in section 351 of the PHS Act and the provisions of the FD&C 
Act (21 U.S.C. 321, et seq.) applicable to drugs. See section 351(j) of 
the PHS Act. Under these provisions, FDA has the authority to issue 
regulations designed to ensure, among other things, that biological 
products are safe, pure, and potent and are manufactured in accordance 
with current good manufacturing practices. FDA also has general 
authority to issue regulations for the efficient enforcement of the 
FD&C Act and the PHS Act under section 701 of the FD&C Act and section 
351(j) of the PHS Act.

V. Comments on the Proposed Rule and FDA Response

A. Introduction

    We received four comments on the proposed rule by the close of the 
comment period, two of which contained one or more substantive comments 
on one or more issues. We received comments from trade organizations, a 
patient advocacy group, and a State bar association.
    We describe and respond to the comments in section B of this rule. 
We have numbered each comment to help distinguish between different 
comments. We have grouped similar comments together under the same 
number, and in some cases, we have separated different issues discussed 
in the same comment and designated them as distinct comments for 
purposes of our responses. The number assigned to each comment or 
comment topic is purely for organizational purposes and does not 
signify the comment's value or importance or the order in which 
comments were received.

B. Specific Comments and FDA Response

    We proposed to amend Sec.  600.3(h) to revise the definition of 
``biological product'' in Sec.  600.3(h) by replacing the phrase 
``means any'' with the phrase

[[Page 10059]]

``means a'' to conform to the text of section 351(i)(1) of the PHS Act. 
This proposed technical revision to the definition of ``biological 
product'' was not intended to alter our interpretation of section 
351(i) of the PHS Act. We also proposed to revise the definition of a 
``biological product'' in Sec.  600.3(h) to include a ``protein (except 
any chemically synthesized polypeptide).''
    We received no comments regarding these proposed revisions. 
However, after publication of the proposed rule, section 605 of the FCA 
Act further amended the definition of ``biological product'' in section 
351(i) of the PHS Act to remove the parenthetical ``(except any 
chemically synthesized polypeptide)'' from the statutory category of 
``protein.'' Therefore, we are finalizing these revisions to the 
definition of ``biological product'' in Sec.  600.3(h) with the 
following change: We are defining ``biological product'' in Sec.  
600.3(h) to include a ``protein'' instead of defining ``biological 
product'' in Sec.  600.3(h) to include a ``protein (except any 
chemically synthesized polypeptide).''
    We also proposed to amend Sec.  600.3(h) to add FDA's 
interpretation of the statutory terms ``protein'' and ``chemically 
synthesized polypeptide.'' We proposed to interpret the term 
``protein'' to mean any alpha amino acid polymer with a specific, 
defined sequence that is greater than 40 amino acids in size. We 
proposed to interpret the term ``chemically synthesized polypeptide'' 
to mean any alpha amino acid polymer that is made entirely by chemical 
synthesis and is greater than 40 amino acids but less than 100 amino 
acids in size. We explained that when two or more amino acid chains in 
an amino acid polymer are associated with each other in a manner that 
occurs in nature, the size of the amino acid polymer for purposes of 
our interpretations of the terms ``protein'' and ``chemically 
synthesized polypeptide'' will be based on the total number of amino 
acids in those chains, and will not be limited to the number of amino 
acids in a contiguous sequence.
    In the following paragraphs, we discuss comments on these proposed 
interpretations. After considering these comments, we are finalizing 
our interpretation of ``protein'' without change. We are not finalizing 
our interpretation of ``chemically synthesized polypeptide'' as it is 
no longer necessary because of the change to the statutory definition 
of ``biological product.''
1. Scientific Support for Interpretations of ``Protein'' and 
``Chemically Synthesized Polypeptide''
    (Comment 1) One comment asserts that FDA's interpretations of the 
statutory terms ``protein'' and ``chemically synthesized polypeptide'' 
do not reflect current science and maintains that there is more recent 
evidence that amino acid polymers composed of 40 or fewer amino acids 
are capable of assuming secondary and tertiary structural conformations 
indicative of proteins. For these reasons, the commenter requested that 
we revise and reissue the proposed rule.
    (Response 1) We disagree with the comment's suggestion that FDA's 
interpretation of the term ``protein'' as set forth in the proposed 
rule and the textbooks we cited in the proposed rule no longer reflects 
current science. The textbooks cited in the proposed rule have been in 
use for decades and continue to be in use (e.g., in college 
biochemistry classes). Moreover, the definitions and descriptions in 
these textbooks and dictionaries illustrate the point that there is not 
a scientific consensus on certain aspects of the definitions of the 
terms ``peptide'' and ``protein,'' an observation that is not refuted 
by more recent editions of these textbooks.
    This lack of consensus is also reflected in several of the articles 
cited by the comment. For example, the comment cites two articles to 
support its claim of the existence of ``proteins'' composed of as few 
as 11 amino acids. However, these two articles describe the 11-amino 
acid polymer differently. One describes it as an 11-amino-acid 
``protein'' (see Ref. 1) and the other describes it as an 11-amino-acid 
``peptide'' (see Ref. 2).
    Given the lack of a clear scientific consensus that FDA could 
consider for adoption, the Agency is applying its scientific expertise 
to interpret the statutory term ``protein'' in a manner that 
establishes a scientifically reasonable, bright-line rule that provides 
regulatory clarity and facilitates the implementation of the BPCI Act, 
as further amended by the FCA Act. A clear rule facilitates efficient 
use of time and resources by both FDA and applicants and reduces 
regulatory uncertainty. In deciding where to draw this bright-line 
rule, one of the factors that FDA considered is the number of amino 
acids understood to be generally necessary for an amino acid polymer to 
exhibit characteristics that are generally associated with 
``proteins,'' lending a higher level of complexity to these products.
    FDA considered whether to include structural or functional 
attributes (e.g., folding, provides structural support to cellular 
macrostructures, catalyzes a biochemical reaction, transports other 
molecules, aids in the folding of other proteins) in its interpretation 
of the term ``protein,'' but determined that this would not serve to 
make the line between peptides and proteins any brighter. Among other 
things, relying on a factor such as ``folding'' would not provide 
regulatory certainty because it would raise questions about how much 
folding is sufficient to differentiate between ``peptides'' and 
``proteins,'' as many peptides can arguably be said to exhibit some 
folding. Therefore, adopting this approach would not provide for a 
bright-line rule and would result in regulatory uncertainty and 
inefficiency.
    (Comment 2) One comment asserts that ``proteins'' are a subset of 
``polypeptides,'' yet FDA's interpretation of ``chemically synthesized 
polypeptide'' presumes that ``polypeptides'' are a subset of 
``proteins.''
    (Response 2) With the FCA Act's removal of the parenthetical 
exception for ``any chemically synthesized polypeptide'' from the 
category of ``protein'' in the statutory definition of ``biological 
product'' in section 351(i) of the PHS Act, all amino acid polymers 
that meet FDA's interpretation of the term ``protein'' (including an 
amino acid polymer that previously would have fallen within the term 
``chemically synthesized polypeptide'' as interpreted by FDA) will be 
considered to fall within the statutory definition of ``biological 
product.''
    (Comment 3) Two comments assert that the proposed interpretations 
that we have chosen were not supported by a scientific consensus and 
that there is a lack of scientific consensus for distinguishing between 
``protein,'' ``polypeptide,'' and ``peptide'' based on a particular 
number of amino acids.
    (Response 3) While we agree that there may not be clear scientific 
consensus for a particular number of amino acids to use when 
distinguishing between the terms ``protein'' and ``peptide,'' there is 
strong support in scientific literature for distinguishing between 
types of amino acid polymers based on the number of amino acids they 
contain. Specifically, the definitions cited in the preamble to the 
proposed rule are clear that ``peptides'' are distinct from 
``proteins'' and that the term ``peptide'' generally refers to smaller, 
simpler chains of amino acids, while the term ``protein'' is used to 
refer to longer, more complex chains (83 FR

[[Page 10060]]

63817 at 63819-63820). Moreover, there is scientific support for the 
fact that amino acid polymers greater than 40 amino acids in size 
exhibit at least some of the characteristics that are generally 
associated with proteins (83 FR 63817 at 63820).
    The removal of the parenthetical exception for ``any chemically 
synthesized polypeptide'' from the category of ``protein'' in the 
statutory definition of ``biological product'' has eliminated any need 
to distinguish between these terms.
    (Comment 4) One comment asserts that FDA's example of insulin does 
not support the number of amino acids in FDA's interpretation of 
``chemically synthesized polypeptide'' because insulin is composed of 2 
polypeptide chain subunits, one containing 21 amino acids and the other 
containing 30 amino acids.
    (Response 4) We disagree with the comment because it confuses the 
terms ``polypeptide'' and ``polypeptide chain.'' Even though the need 
to avoid confusion between the terms ``polypeptide'' and ``polypeptide 
chain'' has been eliminated by the removal of the parenthetical 
exception for ``any chemically synthesized polypeptide'' from the 
category of ``protein'' in the statutory definition of ``biological 
product'' in section 351(i) of the PHS Act, we note in passing that our 
interpretation of ``protein'' uses the phrase ``amino acid chain'' 
instead of the phrase ``polypeptide chain.'' In other words, instead of 
describing the two subunits of the insulin protein as polypeptides or 
polypeptide chains like the comment, we describe them as amino acid 
chains. It therefore follows that insulin clearly is a ``protein'' as 
interpreted in the final rule, because the total number of amino acids 
exceeds 40. In particular, insulin is an alpha amino acid polymer with 
a specific, defined sequence consisting of 2 amino acid chain subunits 
with 21 amino acids and 30 amino acids, respectively. As these amino 
acid chain subunits are associated with each other in a manner that 
occurs in nature, we add the number of amino acids in each amino acid 
chain together to determine whether insulin is an alpha amino acid 
polymer with a specific, defined sequence that is greater than 40 amino 
acids in size. Specifically, by adding together the number of amino 
acids in each of the two amino acid chain subunits that comprise 
insulin, we conclude that insulin is an alpha amino acid polymer with a 
specific, defined sequence of 51 amino acids. Therefore, according to 
the interpretation we are finalizing, insulin is a protein because it 
is an alpha amino acid polymer with a specific, defined sequence that 
is greater than 40 amino acids in size.
2. Alternate Proposals
    (Comment 5) One comment requests that FDA adopt functional 
definitions for ``protein'' and ``chemically synthesized polypeptides'' 
that are principally focused on the method of manufacture as well as 
the conformation of the amino acid polymer rather than the size of the 
amino acid polymer, reflecting the comment's view that the method of 
manufacture, not size, should be the determining factor.
    (Response 5) We are not finalizing our interpretation of the term 
``chemically synthesized polypeptide'' because of the removal, by 
section 605 of the FCA Act, of the parenthetical ``(except any 
chemically synthesized polypeptide)'' from the category of ``protein'' 
in the statutory definition of ``biological product.'' Also, we do not 
agree that we should adopt an interpretation of the statutory term 
``protein'' that is principally focused on the method of manufacture 
for the following reasons.
    First, we disagree with the comment's premise that the statutory 
definition of ``biological product,'' which included ``protein (except 
any chemically synthesized polypeptide)'' prior to the enactment of the 
FCA Act, was principally focused on the method of manufacture. We need 
not address whether the fact that the earlier version of the statute 
described the method of manufacture in the parenthetical clause 
(excluding chemically synthesized polypeptides from the scope of the 
term ``protein'') has any bearing on our current interpretation. 
However, we note in passing that, according to basic rules of statutory 
construction, if Congress wanted the term ``protein'' not to include 
any ``chemically synthesized proteins,'' then it seems unlikely that 
the statute would employ two different terms (``protein'' and 
``polypeptide''). Accordingly, we had described the term 
``polypeptide'' as it appeared in section 351(i) of the PHS Act prior 
to the enactment of the FCA Act as referring to a subset of 
``protein.''
    Second, as noted in the response to Comment 1, FDA considered 
whether to include structural or functional attributes in its 
interpretation of the term ``protein,'' but determined that doing so 
would not be appropriate as it would lead to regulatory uncertainty due 
to the lack of a bright-line rule.
    Third, adopting an interpretation that focused on the method of 
manufacture could improperly incentivize product developers to choose a 
suboptimal method of manufacturing a product that may be less efficient 
and/or more costly, based on a perceived regulatory advantage under a 
particular regulatory scheme.
    It is FDA's view that the optimal policy for determining which 
products are subject to regulation under the PHS Act is to apply a 
bright-line rule that provides regulatory certainty. Thus, in order to 
provide regulatory certainty and provide a bright-line interpretation 
of the term ``protein,'' we are focusing on the number of amino acids 
in the amino acid polymer (irrespective of the method of manufacture).
    (Comment 6) One comment urges the Agency to abandon the proposed 
case-by-case approach for determining whether a proposed product 
composed of amino acid chains that are associated with each other in a 
manner not found in nature constitutes a ``biological product.''
    (Response 6) FDA is not persuaded by this comment because there are 
a number of ways in which amino acid chains could be associated with 
each other in a novel manner that is not found in naturally occurring 
proteins and we cannot predict all of these iterations. Although some 
of these combinations may result in amino acid polymers that exhibit 
characteristics generally associated with proteins, some may not.
    We recognize that the application of the fact-specific, case-by-
case analysis for proposed products composed of amino acid chains that 
are associated with each other in a manner not found in nature does not 
provide the same level of certainty that is provided by the other 
criteria in Sec.  600.3(h)(6) (see 83 FR 63817 at 63821), but it 
appears that case-by-case analysis is currently the best means of 
addressing such cases. We encourage sponsors of these proposed products 
to reach out to FDA early in their development program to discuss 
issues related to product classification and the appropriate pathway 
for a marketing application.
3. Relationship to Other Regulatory Provisions
    (Comment 7) One comment asserts that FDA's proposed definitions are 
inconsistent with Sec.  601.2(a)(4) and (c) (21 CFR 601.2(a)(4) and 
(c)).
    (Response 7) We disagree with the comment's assertion that our 
proposed interpretations are inconsistent with our current regulations 
in Sec.  601.2(a)(4) and (c). The comment appears to interpret Sec.  
601.2(a)(4) and (c) to mean that if a product is a therapeutic 
recombinant DNA-derived product, then, regardless of size, the product 
is a biological product subject to licensure and should

[[Page 10061]]

be regulated in accordance with Sec.  601.2(c). However, that 
conclusion seems to be based on a misreading of these provisions. We 
interpret our regulation at Sec.  601.2(a)(4) and (c) to mean that if 
the product meets the definition of ``biological product'' under Sec.  
600.3(h), and also is a therapeutic recombinant DNA-derived product, 
then the application would be regulated in accordance with Sec.  
601.2(c).
    (Comment 8) One comment requests that FDA propose a regulatory 
definition of products that are ``analogous'' to a protein and 
therefore are biological products.
    (Response 8) We appreciate the comment. A definition of products 
that are ``analogous'' to a ``protein'' for purposes of section 
351(i)(1) of the PHS Act is outside the scope of this rulemaking. We 
note, however, that it would not be appropriate for the statutory term 
``analogous product'' to be interpreted in a way that would include 
products that are specifically excluded by this final rule.
    (Comment 9) One comment requests that FDA clarify its approach to 
assessing the appropriate application type for combination products, 
including peptide-protein combination products.
    (Response 9) We appreciate the comment. The Agency's approach for 
determining the appropriate type of marketing application for certain 
combination products is outside the scope of this rulemaking. If a 
sponsor is unsure of the appropriate marketing application for its 
combination product containing a biological constituent part, we 
encourage the sponsor to reach out to FDA at an appropriate time in its 
development program to discuss issues related to product classification 
and the appropriate pathway for a marketing application.

VI. Effective Date

    This final rule will become effective March 23, 2020.

VII. Economic Analysis of Impacts

A. Introduction

    We have examined the impacts of the final rule under Executive 
Order (E.O.) 12866, E.O. 13563, E.O. 13771, the Regulatory Flexibility 
Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 
(Pub. L. 104-4). E.O.s 12866 and 13563 direct us 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). 
E.O. 13771 requires that the costs associated with significant new 
regulations ``shall, to the extent permitted by law, be offset by the 
elimination of existing costs associated with at least two prior 
regulations.'' This final rule is a significant regulatory action under 
sec. 3(f) of E.O. 12866. Based on the cost savings summarized below and 
discussed further in the regulatory impact analysis, this final rule is 
considered a deregulatory action under E.O. 13771.
    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this rule 
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
    The Regulatory Flexibility Act requires us to analyze regulatory 
options that will minimize any significant impact of a rule on small 
entities. Because this rule does not impose new regulatory burden on 
small entities other than administrative costs of reading and 
understanding the rule, we certify that the final rule will not have a 
significant economic impact on a substantial number of small entities.
    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires 
us to prepare a written statement, which includes an assessment of 
anticipated costs and benefits, before issuing ``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 $154 
million, using the most current (2018) Implicit Price Deflator for the 
Gross Domestic Product. This final rule will not result in an 
expenditure in any year that meets or exceeds this amount.

B. Summary of Costs and Benefits

    This final rule codifies FDA's interpretation of the statutory term 
``protein'' that the Agency previously described in guidance (see 2015 
Biosimilars Q&A Guidance). This final rule does not codify the FDA's 
interpretation of the statutory term ``chemically synthesized 
polypeptide'' because section 605 of the FCA Act removed the 
parenthetical ``(except any chemically synthesized polypeptide)'' from 
the category of ``protein'' in the definition of ``biological product'' 
in section 351(i) of the PHS Act. Formalizing this interpretation will 
reduce regulatory uncertainty introduced by the BPCI Act and section 
605 of the FCA Act. Specifically, the rule clarifies the criteria for 
whether certain products will be regulated as drugs or biological 
products. The ``bright-line'' approach under the rule will reduce the 
amount of time spent by FDA staff and industry in support of making 
such determinations.
    In this regulatory impact analysis, we identify the products most 
likely to require a case-by-case determination under the baseline 
scenario. Under the rule, these determinations will be made by FDA 
according to the bright-line standard outlined in the final rule. We 
calculate the cost savings from the amount of time saved by both the 
FDA and industry by avoiding a case-by-case determination. We also 
calculate the incremental costs to industry that are the result of 
reading and understanding the rule.
    The primary estimate of the benefits in 2018 dollars annualized 
over 10 years is $394,562 using a 7 percent discount rate and $348,436 
using a 3 percent discount rate. We also calculate ranges of benefits 
of $356,775 to $411,345 and $316,116 to $362,792, respectively. The 
estimated annualized costs range from $13,511 to $16,889, with a 
primary estimate of $15,012 using a 7 percent discount rate over a 10-
year horizon. For a 3 percent discount rate, we estimate a range of 
$12,471 to $15,589, with a primary estimate of $13,857. These figures 
are shown in table 1.

                                         Table 1--Summary of Benefits, Costs and Distributional Effects of Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Units
                                               Primary        Low          High    ---------------------------------------
                  Category                     estimate     estimate     estimate       Year       Discount      Period                Notes
                                                                                      dollars        rate       covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Annualized Monetized $/year............     $394,562     $356,775     $411,345         2018           7%           10  Cost savings to FDA and
                                                $348,436     $316,116     $362,792         2018            3           10   industry to avoid case-by-
                                                                                                                            case review of applications.

[[Page 10062]]

 
    Annualized Quantified..................  ...........  ...........  ...........  ...........            7  ...........  .............................
                                                                                                           3
    Qualitative............................
Costs:
    Annualized Monetized $/year............      $15,012      $13,511      $16,889         2018            7           10  Costs of reading the rule.
                                                 $13,857      $12,471      $15,589         2018            3           10
    Annualized Quantified..................  ...........  ...........  ...........  ...........            7
                                                                                                           3
    Qualitative............................
Transfers:
    Federal Annualized Monetized $/year....  ...........  ...........  ...........  ...........            7
                                                                                                           3
                                            ------------------------------------------------------------------------------------------------------------
    From/To................................                  From:
                                                              To:
                                            ------------------------------------------------------------------------------------------------------------
    Other Annualized Monetized $/year......  ...........  ...........  ...........  ...........            7
                                                                                                           3
                                            ------------------------------------------------------------------------------------------------------------
    From/To................................                  From:
                                                              To:
                                            ------------------------------------------------------------------------------------------------------------
Effects:
    State, Local, or Tribal Government:....
    Small Business:........................
    Wages:.................................
    Growth:................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In line with E.O. 13771, in table 2 we estimate present and 
annualized values of costs and cost savings over an infinite time 
horizon. With a 7 percent discount rate, the estimated annualized net 
cost-savings equal $170,903 in 2016 dollars over an infinite horizon. 
Based on these cost savings, this final rule is considered a 
deregulatory action under E.O. 13771.

                    Table 2--E.O. 13771 Summary Table
            [In 2016 dollars, over an infinite time horizon]
------------------------------------------------------------------------
                                                              Primary
                                                          estimate  (7%)
------------------------------------------------------------------------
Present Value of Costs..................................         $91,971
Present Value of Cost Savings...........................      $2,533,439
Present Value of Net Costs..............................    ($2,441,468)
Annualized Costs........................................          $6,438
Annualized Cost Savings.................................        $177,341
Annualized Net Costs....................................      ($170,903)
------------------------------------------------------------------------

C. Summary of Regulatory Flexibility Analysis

    To determine the impact of the final rule on small entities, we 
first determined how many firms would be affected. We estimate that at 
least 1,615 firms classified in the Pharmaceutical and Medicine 
Manufacturing industry employ fewer than 1,250 employees and are 
therefore also classified as small businesses. Although a large number 
of small businesses will face costs under the final rule, the costs to 
these firms would be limited to the time burden of reading the final 
rule. We estimate that the time burden of reading the rule would be 
about $79 per firm, with a lower bound of $71 and upper bound of $89. 
This range of costs is unlikely to have a significant adverse impact on 
a substantial number of small entities. We have developed a 
comprehensive Economic Analysis of Impacts that assesses the impacts of 
the final rule. The full analysis of economic impacts is available in 
the docket for this final rule (Ref. 3) and at https://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.

VIII. Analysis of Environmental Impact

    We have 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.

IX. Paperwork Reduction Act of 1995

    This final rule has an influence on previously approved collections 
of information found in FDA regulations. These collections of 
information are subject to review by the Office of Management and 
Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521). The collections of information in 21 CFR parts 601 and 610 for 
submission of BLAs and general biological standards have been approved 
under OMB control number 0910-0338; the collections of information in 
21 CFR 600.80 through 600.90 for reporting of adverse experiences have 
been approved under OMB control number 0910-0308; and the collections 
of information in 21 CFR 201.56, 201.57, and 201.80 for labeling 
requirements of biological products have been approved under OMB 
control number 0910-0572.

X. Federalism

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

XI. Consultation and Coordination With Indian Tribal Governments

    We have analyzed this rule in accordance with the principles set 
forth in E.O. 13175. We have determined that the rule does not contain 
policies that have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes.

[[Page 10063]]

Accordingly, we conclude that the rule does not contain policies that 
have tribal implications as defined in the E.O. and, consequently, a 
tribal summary impact statement is not required.

XII. References

    The following references marked with an asterisk (*) are on display 
at the Dockets Management Staff (see ADDRESSES) and are available for 
viewing by interested persons between 9 a.m. and 4 p.m., Monday through 
Friday; they also are available electronically at https://www.regulations.gov. References without asterisks are not on public 
display at https://www.regulations.gov because they have copyright 
restriction. Some may be available at the website address, if listed. 
References without asterisks are available for viewing only at the 
Dockets Management Staff. FDA has verified the website addresses, as of 
the date this document publishes in the Federal Register, but websites 
are subject to change over time.

    1. Su, M., Y. Ling, J. Yu, et al. ``Small Proteins: Untapped 
Area of Potential Biological Importance,'' Frontiers in Genetics, 
vol. 4, p.286, 2013.
    2. Galindo, M. I., J. I. Pueyo, S. Foux, et al.''Peptides 
Encoded by Short ORFs Control Development and Define a New 
Eukaryotic Gene Family'' PLoS Biology, vol. 5, p. e106, 2007.
    3. *FDA, Regulatory Impact Analysis, ``Definition of the Term 
`Biological Product,''' available at https://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.

List of Subjects in 21 CFR Part 600

    Biologics, Reporting and recordkeeping requirements.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, 21 CFR part 
600 is amended as follows:

PART 600--BIOLOGICAL PRODUCTS: GENERAL

0
1. The authority citation for part 600 continues to read as follows:

    Authority:  21 U.S.C. 321, 351, 352, 353, 355, 356c, 356e, 360, 
360i, 371, 374, 379k-1; 42 U.S.C. 216, 262, 263, 263a, 264.


0
2. Amend Sec.  600.3 by revising paragraph (h) introductory text and 
adding paragraph (h)(6) to read as follows:


Sec.  600.3  Definitions.

* * * * *
    (h) Biological product means a virus, therapeutic serum, toxin, 
antitoxin, vaccine, blood, blood component or derivative, allergenic 
product, protein, or analogous product, or arsphenamine or derivative 
of arsphenamine (or any other trivalent organic arsenic compound), 
applicable to the prevention, treatment, or cure of a disease or 
condition of human beings.
* * * * *
    (6) A protein is any alpha amino acid polymer with a specific, 
defined sequence that is greater than 40 amino acids in size. When two 
or more amino acid chains in an amino acid polymer are associated with 
each other in a manner that occurs in nature, the size of the amino 
acid polymer for purposes of this paragraph (h)(6) will be based on the 
total number of amino acids in those chains, and will not be limited to 
the number of amino acids in a contiguous sequence.
* * * * *

    Dated: February 18, 2020.
Stephen M. Hahn,
Commissioner of Food and Drugs.
[FR Doc. 2020-03505 Filed 2-20-20; 8:45 am]
 BILLING CODE 4164-01-P