[Federal Register Volume 85, Number 228 (Wednesday, November 25, 2020)]
[Notices]
[Pages 75331-75334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26133]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration


Termination of the Food and Drug Administration's Unapproved 
Drugs Initiative; Request for Information Regarding Drugs Potentially 
Generally Recognized as Safe and Effective

AGENCY: Food and Drug Administration (FDA), Department of Health and 
Human Services (HHS).

ACTION: Notice; request for information.

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SUMMARY: The Department of Health and Human Services is issuing this 
Notice to withdraw FDA's Marketed Unapproved Drugs--Compliance Policy 
Guide, Sec. 440.100, Marketed New Drugs Without Approved NDAs or ANDAs, 
and to request information from the public regarding drugs that may be 
grandfathered or generally recognized as safe and effective.

DATES: Part I of this Notice shall be effective thirty days from the 
date of publication in the Federal Register. To be considered, 
responses and comments related to Part II of this Notice must be 
received electronically at the email

[[Page 75332]]

address listed below. The Department will consider information 
submitted by the public in response to Part II of this Notice on a 
rolling basis, and until further notice.

ADDRESSES: Responses to Part II must be submitted electronically, and 
should be addressed to [email protected]. In the subject line of the email 
message, submissions should include ``GRASE RFI Response.''

FOR FURTHER INFORMATION CONTACT: Nick Uehlecke, 200 Independence Ave. 
SW, Washington, DC 20201; or by email at [email protected]; or by 
telephone at 1-877-696-6775.

SUPPLEMENTARY INFORMATION: The Trump Administration, through the 
Department of Health and Human Services (HHS), is continuing its 
efforts to reduce the price of prescription drugs. This Notice 
addresses two related but distinct issues: (1) The Food and Drug 
Administration's (FDA) Unapproved Drugs Initiative (UDI) and (2) the 
construction of the statutory exemptions from the definition of ``new 
drugs'' subject to FDA approval under the federal Food, Drug, and 
Cosmetic Act (FD&C Act), namely so-called pre-1938 grandfathered drugs 
and drugs that are ``generally recognized as safe and effective'' or 
``GRASE.''

I. Unapproved Drugs Initiative

    In 1938, Congress created the modern scheme for federal regulation 
of drugs. Before 1938, there was no requirement under federal law for a 
manufacturer to obtain FDA approval before marketing a drug. Today, as 
a general rule, under the FD&C Act, a ``new drug'' must be approved by 
the FDA for safety and efficacy pursuant to an approved New Drug 
Application (NDA) or Abbreviated New Drug Application (ANDA) before the 
drug is introduced into interstate commerce. See FD&C Act 201(p), 21 
U.S.C. 321(p) (defining ``new drug'' under the Act); FD&C Act 505(a), 
21 U.S.C. 355(a) (``No person shall introduce or deliver for 
introduction into interstate commerce any new drug, unless an approval 
of an application . . . is effective with respect to such drug.''). A 
``person'' that introduces a ``new drug'' into interstate commerce is 
subject to, among other sanctions, injunctions and/or having the 
subject product seized in an ex parte proceeding under admiralty rules. 
See FD&C Act 302, 21 U.S.C. 332 (injunction authority); FD&C Act 304, 
21 U.S.C. 334 (seizure authority).
    Not all drugs are ``new drugs'' which require FDA approval. There 
are two primary carve-outs from the FD&C Act's definition of ``new 
drug.'' \1\ First, when Congress enacted the modern FD&C Act in 1938, 
it exempted from the definition of ``new drug'' all drugs ``subject to 
the Food and Drugs Act of June 30, 1906, as amended, and if at such 
time its labeling contained the same representations concerning the 
conditions of its use.'' FD&C Act 201(p)(1), 21 U.S.C. 321(p)(1). 
Second, drugs that are generally recognized as safe and effective which 
have also ``been used to a material extent or for a material time'' are 
not ``new drugs.'' FD&C Act 201(p)(1) and (2), 21 U.S.C. 321(p)(1) and 
(2). Drugs that meet either of these exceptions may be legally marketed 
without FDA pre-approval for safety and efficacy, subject to the 
agency's other regulatory authorities.
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    \1\ There is a third, related exemption which relieves 
manufacturers from the obligation of showing their drugs are 
effective prior to marketing. In section 107(c)(4) of the Drug 
Amendments of 1962, Public Law 87-81, 76 Stat. 780, 789 (Oct. 10, 
1962), Congress exempted from the efficacy requirement ``product[s] 
that, on the day before the 1962 amendments became effective, (A) 
[were] used or sold commercially in the United States, (B) [were] 
generally recognized by the experts as safe; and (C) [were] not 
`covered' by an `effective' application.'' USV Pharmaceutical Corp. 
v. Weinberger, 412 U.S. 655, 653 (1973). In Weinberger, the Supreme 
Court held that so-called ``me-too drugs,'' i.e., drugs that were 
copies of NDA drugs, were effectively ``covered'' by an effective 
application and thus subject to the efficacy requirement just like 
drugs covered by NDAs. Id. at 664-65. Practically, Weinberger left 
as the lone remaining candidates for this exemption from the 
efficacy requirement drugs (a) on the market prior to 1962, (b) 
generally recognized as safe, and (c) not themselves subject to a 
1938-1962 ``effective'' NDA.
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    Through a guidance document issued in 2006 and later revised in 
2011, and without conducting notice-and-comment rulemaking, FDA 
launched a program called the Unapproved Drugs Initiative (UDI).\2\ The 
UDI sprang from a laudable objective, namely to reduce the number of 
unapproved drugs on the market. To achieve this end, FDA provided in 
its 2011 UDI Guidance that ``the first company to obtain an approval 
[of a previously unapproved drug] will have a period of de facto market 
exclusivity before other products obtain approval.'' \3\ The agency 
``hope[d] that this period of market exclusivity will provide an 
incentive to firms to be the first to obtain approval to market a 
previously unapproved drug.'' \4\ Ultimately, manufacturers of older 
drugs previously thought to be exempt from the FDA approval requirement 
obtained market exclusivity for those products after FDA took 
unapproved versions off the market. An unintended consequence of the 
``period of de facto market exclusivity'' provided by the UDI allowed 
manufacturers an opportunity to raise prices in an environment largely 
insulated from market competition.
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    \2\ FDA, Marketed Unapproved Drugs--Compliance Policy Guide Sec. 
440.100, Marketed New Drugs Without Approved NDAs or ANDAs (June 
2006) (hereinafter the 2006 Guidance); FDA, Marketed Unapproved 
Drugs--Compliance Policy Guide Sec. 440.100, Marketed New Drugs 
Without Approved NDAs or ANDAs (Sept. 19, 2011) (hereinafter the 
2011 Guidance).
    \3\ 2011 Guidance at 8.
    \4\ Id.
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    Based on its ongoing review of FDA regulatory programs, the 
Department has decided to withdraw the 2006 and 2011 Guidance, 
effective thirty days after the date of publication of this Notice in 
the Federal Register. All compliance manuals, website statements, and 
other informal issuances with respect to the 2006 and 2011 Guidance are 
also hereby withdrawn. The withdrawal of the 2006 and 2011 Guidance 
Documents complies with FDA's current Good Guidance Practices 
regulation, which allows for ``periodic[ ] review of [of] existing 
guidance documents to determine whether they need to be changed or 
withdrawn.'' 21 CFR 10.115(k)(1). Nothing in this Notice otherwise 
limits FDA's authority to take action against manufacturers of 
unapproved drugs that meet the statutory definition of a ``new drug'' 
(such as, for example, an unapproved drug that claims to mitigate, 
treat, or cure COVID-19) or violate the FD&C Act in other ways. 
Further, nothing in this Notice limits FDA's grant of regulatory 
exclusivities authorized by statute, such as a new chemical entity 
exclusivity, orphan drug exclusivity, or pediatric exclusivity. This 
Notice does not apply to drugs subject to (1) Investigational New Drug 
applications (IND) that are in effect as of the effective date of this 
Notice, (2) any subsequent NDA based on new clinical trial 
investigations (other than bioavailability studies) derived under such 
IND, and (3) existing approved NDAs.
    The Department is withdrawing the 2006 and 2011 Guidances for 
several evidence-based reasons. After the UDI began, reports emerged 
that Americans were paying significantly more for prescription drugs 
approved by FDA through the UDI than they had paid previously. One 
report noted that a drug approved through the UDI ``sells for about 
$4.50 a tablet--nearly 50 times the price of the unapproved version.'' 
\5\ Another report asserted that ``[t]hanks at least partially to the 
FDA program, the price of vasopressin . . . has risen 10-fold'' and the 
cost of ``a vial of

[[Page 75333]]

neostigimine . . . has gone from less than $5 to $90.'' \6\
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    \5\ Harris Meyer, The High Price of FDA Approval, Kaiser Health 
News, Dec. 29, 2009, https://khn.org/news/fda-approval/.
    \6\ Michael Hiltzik, The little-known FDA program that's driving 
drug prices higher, L.A. Times (Sept. 23, 2015), https://www.latimes.com/business/hiltzik/la-fi-mh-the-little-known-fda-program-20150923-column.html.
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    In 2017, scholars from the Yale School of Medicine and the 
University of Utah published a peer-reviewed study corroborating the 
previous reports.\7\ The study reviewed 34 drugs subject to the UDI 
between 2006 and 2015. The scholars found the average wholesale unit 
price of 26 of the 34 drugs for which pricing data was available 
increased by a median of 37% (interquartile range of 23%-204%).\8\ The 
average wholesale unit price of 11 of the drugs surveyed in the study 
increased by more than 128%.\9\
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    \7\ Ravi Gupta et al., The FDA Unapproved Drugs Initiative: An 
Observational Study of the Consequences for Drug Prices and 
Shortages in the United States, 23 J. of Man. Care & Specialty 
Pharm. 1066 (Oct. 2017).
    \8\ Id. at 1071.
    \9\ See id. at 1072.
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    The study also linked the UDI to drug shortages, which the authors 
defined as ``a supply issue that affects how a pharmacy prepares or 
dispenses a drug product that influences patient care when prescribers 
must use an alternative agent.'' \10\ In this regard, the scholars 
found that 24 of the 34 drugs experienced shortages after FDA took 
enforcement action after an entity obtained FDA approval of a 
previously unapproved drug. The median shortage was 217 days.\11\
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    \10\ Id. at 1068.
    \11\ Id. at 1073.
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    Finally, the authors considered whether the UDI generated new 
clinical data evidence for older drugs. The authors found that, of the 
nineteen drugs that obtained FDA approval during the study period, only 
two were supported by ``new clinical trial evidence.'' \12\ The other 
seventeen drugs ``were supported by literature reviews and 
bioequivalence to older drug products.'' \13\
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    \12\ Id.
    \13\ Id.; see also Aaron S. Kesselheim and Daniel H. Solomon, 
Incentives for Drug Development--The Curious Case of Colchicine, N. 
Engl. J. Med. 362;22 at 2046 (noting the dramatic rise in the price 
of Colchicine after implementation of the UDI, but that ``there is 
no evidence of any meaningful improvement to the public health'' 
from the regulatory changes).
    \13\ 36 FR 14662, 14662-63 (Aug. 7, 1971).
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    Therefore, the Department has concluded that while the UDI began 
with laudable goals, it has had numerous negative, unintended 
consequences on Americans' access to prescription drugs and generated 
very limited benefits.
    Moreover, the fact that the program was initiated through guidance, 
as opposed to notice-and-comment rulemaking, further supports the 
Department's decision to withdraw the 2006 and 2011 Guidances, because 
the Department has serious legal concerns about whether the UDI was 
implemented through legally permissible procedures.\14\ The Department 
recognizes that some persons might contend that they have reliance 
interests in the 2011 Guidance remaining in effect. In Dep't of 
Homeland Sec. v. Regents of the Univ. of California, 140 S. Ct. 1891 
(2020), the Supreme Court struck down the Department of Homeland 
Security's rescission of the Deferred Action for Childhood Arrivals 
(DACA) immigration program, in part based on the reliance interests of 
persons eligible to obtain the benefits of the program. Notably, in 
that case, immigration authorities ``solicited applications from 
eligible aliens, instituted a standardized review process, and sent 
formal notices indicating whether the alien would receive the two-year 
forbearance.'' Id. As the Court explained, DACA ``created a program for 
conferring affirmative immigration relief.'' Id.
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    \14\ See, e.g., 5 U.S.C. 553. The Department also has concerns 
regarding whether the issuance of the 2011 Guidance complied with 
FDA's good guidance practices regulation, 21 CFR 10.115, in effect 
at the time. FDA issued the 2011 Guidance ``without public comment 
because the Agency has determined that prior public participation is 
not feasible or appropriate.'' 76 FR 58398 (Sept. 21, 2011).
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    The UDI is distinguishable from the DACA program. Unlike DACA, the 
2011 Guidance described how the FDA intended to exercise its 
enforcement discretion, but stopped short of committing FDA to any 
particular action. FDA stated that it was ``more likely to take 
enforcement action'' against unapproved competitors of newly approved 
drugs under the UDI, but that the agency ``intend[s] to take into 
account the circumstances once the product is approved in determining 
how to exercise our enforcement discretion with regard to the 
unapproved products.'' \15\ Moreover, the 2011 Guidance stated that it 
``does not create or confer any rights for or on any person and does 
not operate to bind FDA or the public.'' \16\ Any reliance interests 
are thus illusory. Furthermore, Congress vested FDA with the sole 
authority to enforce the FD&C Act. FD&C Act 310, 21 U.S.C. 337. Under 
Heckler v. Chaney, 470 U.S. 821 (1985), FDA's decision about the extent 
to which it shall enforce the FD&C Act is unreviewable under the 
Administrative Procedure Act.
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    \15\ 2011 Guidance at 7.
    \16\ Id. at 2.
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    Even if there were cognizable reliance interests in the UDI, the 
Department has ample evidence-based justification for rescinding the 
2006 and 2011 Guidances. After more than fourteen years of experience 
with the program, evidence has emerged that the UDI has caused 
significant prescription drug price increases and drug shortages while 
providing limited new clinical data on older drugs. The Department 
believes these costs imposed on American patients and taxpayers 
outweigh any reliance interests that may exist in the program. The 
Department has also considered the public health effects of withdrawing 
the 2006 and 2011 Guidances. As the 2011 Guidance acknowledges, there 
are ``several thousand'' products on the market that lack FDA 
approval.\17\ To the extent this program has limited patient access to 
important, safe medications due to price increases or drug shortages, 
the withdrawal of the 2006 and 2011 Guidances will have a positive 
impact on public health. Moreover, eliminating this program allows 
FDA's resources to be directed toward monitoring unapproved ``new 
drugs'' that fall squarely within the traditional scope of the 
definition of that term in the FD&C Act. At the same time, the Notice 
allows FDA to use its limited review resources on innovative potential 
therapies, as opposed to older drugs with longstanding use.
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    \17\ Id. at 3.
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    Besides, any reliance interests (if they existed) would be minimal. 
This Notice does not apply to drugs subject to (1) INDs in effect as of 
the effective date of this Notice, (2) any subsequent NDA based on new 
clinical investigations (other than bioavailability studies) derived 
under such IND, and (3) existing approved NDAs.

II. Pre-1938 Grandfathered and GRASE Drugs; Request for Information

    As noted above, when Congress enacted the FD&C Act in 1938 and 
later amended the Act in 1962, it exempted certain drugs from the FDA 
approval requirement. Section 201(p) of the FD&C Act, 21 U.S.C. 321(p), 
excludes from the definition of ``new drug'' certain drugs marketed 
prior to June 25, 1938 and drugs generally recognized as safe and 
effective, or GRASE. In the 2011 Guidance, FDA stated that ``it is not 
likely that any currently marketed prescription drug is grandfathered 
or is otherwise not a new drug,'' though the

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agency stated ``that it is at least theoretically possible.'' \18\
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    \18\ Id. at 12 (emphasis in original).
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    That was not always the case. For many years, FDA acknowledged that 
at least some drugs are not ``new drugs'' subject to FDA approval prior 
to marketing. In a 1980 version of the Orange Book, FDA stated that 
``[t]he law also permits drugs to be legally marketed without such 
fully approved applications under certain circumstances,'' including 
``drugs marketed prior to 1938 that are not subject to the pre-market 
clearance procedures of the law'' and ``drug products marketed between 
1938 and 1962 that were approved for safety but not effectiveness.'' 
\19\ In the same publication, the agency went on to identify specific 
products, noting ``commonly used large volume intravenous products are 
not included on the List [of FDA-approved drugs] (e.g., dextrose 5% 
with water, dextrose 10% with water, sodium chloride 0.9% injection),'' 
since ``all of these drug products came on the market in glass 
containers before 1938 and have not been required to obtain an approved 
new drug application as a condition of marketing.'' \20\ In the 2000 
edition of the Orange Book, FDA cited to the barbiturate 
``Phenobarbital Tablets'' as an example of ``pre-1938 drugs.'' \21\ The 
2011 Guidance, issued absent notice-and-comment rulemaking and without 
prior public comment, contains no acknowledgement of these prior 
positions.\22\
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    \19\ FDA, Approved Prescription Drug Products with Therapeutic 
Equivalence Evaluations (herein the Orange Book), at I-3 (1st ed. 
1980).
    \20\ Id. at I-13.
    \21\ Id. at I-13. FDA, Orange Book, at v (2000); see also FDA, 
Orange Book, at iv (29th ed. 2009) (containing same reference to 
``pre-1938 drugs'' and phenobarbital tablets). FDA included a 
reference to ``pre-1938 drugs'' like phenobarbital tablets in the 
Orange Book as late as 2016, FDA, Orange Book, at iv (36th ed. 
2016), but removed the reference in its 2017 edition and subsequent 
versions.
    \22\ Cf. F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 
515 (2009) (``To be sure, the requirement that an agency provide 
reasoned explanation for its action would ordinarily demand that it 
display awareness that it is changing position.'')
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    This evolution in the agency's thinking has had consequences. Under 
the UDI, FDA required the manufacturer of an epinephrine brand which 
originally came onto the market in 1901 to submit an NDA.\23\ The drug 
colchicine, a product FDA acknowledged ``was available in oral dosage 
form during the 19th century,'' \24\ was also approved through the UDI. 
The interpretation of the definition of ``new drug'' espoused in the 
2011 Guidance essentially foreclosed the possibility that these two 
century-old drugs were pre-1938 grandfathered drugs exempt from the 
approval process. The 2017 study discussed above found that the average 
wholesale unit price of epinephrine and colchicine increased by 58.3% 
and 3,323.5%, respectively,\25\ costs absorbed by American patients and 
taxpayers.
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    \23\ FDA, Ctr. For Drug Evaluation and Research, Application 
Number: 204200Origs1s000, 204200Orig2s000, Summary Review, at 3, 
https://www.accessdata.fda.gov/drugsatfda_docs/nda/2012/204200Orig1Orig2s000SumR.pdf.
    \24\ 75 FR 60768 (Oct. 1, 2010).
    \25\ Gupta, supra note 7, at 1072; see also Aaron S. Kesselheim 
and Daniel H. Solomon, Incentives for Drug Development--The Curious 
Case of Colchicine, N. Engl. J. Med. 362;22 at 2046 (noting the 
dramatic rise in the price of Colchicine after implementation of the 
UDI, but that ``there is no evidence of any meaningful improvement 
to the public health'' from the regulatory changes).
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    The regulatory history of the prescription drug Daraprim raises 
similar issues. FDA originally approved Daraprim (pyrimethamine) for 
safety in 1953, and later deemed the drug effective through the Drug 
Efficacy Study Implementation, or DESI review process.\26\ The drug is 
listed on the World Health Organization's List of Essential 
Medications, ``a list of minimum medicine needs for a basic health-care 
system, listing the most efficacious, safe and cost-effective medicines 
for priority conditions.'' \27\ In 2015, the company Turing 
Pharmaceuticals ``raised the price [of the drug] to $750 a tablet from 
$13.50, bringing the annual cost of treatment for some patients to 
hundreds of thousands of dollars.'' \28\ Turing came by this windfall, 
at least in part, because of FDA's interpretation of the definition of 
``new drug'' in the FD&C Act as articulated in the 2006 and 2011 
Guidances, a view that foreclosed the possibility that Daraprim, a drug 
more than sixty years old, could ever qualify as GRASE. That position 
effectively prevented other manufacturers of generic versions of this 
product from entering the market without an approved abbreviated new 
drug application, allowing Turing to enjoy a single-source position in 
the marketplace while potential competitors went through the regulatory 
process. In February 2016, Congress held a hearing on this widely-
publicized issue. Ultimately, FDA approved a generic competitor for 
this single-source drug in February 2020.
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    \26\ 36 FR 14662, 14662-63 (Aug. 7, 1971).
    \27\ World Health Organization, 20th WHO Model List of Essential 
Medications, at 24 (Mar. 2017).
    \28\ Andrew Pollack, Drug Goes From $13.50 a Tablet to $750, 
Overnight, N.Y. Times, Sept. 20, 2015, https://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-raises-protests.html.
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    The Department wishes to engage with the public on the contours of 
the exceptions to the definition of ``new drug.'' In this regard, HHS 
is reviewing whether certain drugs, including the drug subject to 
Congressional scrutiny in 2016, might qualify as exempt from the FDA 
approval requirement. To aid that effort, HHS asks for input from 
patients, health care providers, industry, and other stakeholders to 
provide information responsive to any of the topics below:
    1. Lists of drugs marketed prior to June 25, 1938 that are 
currently available on the market.
    2. The extent to which drugs marketed prior to June 25, 1938, or 
drugs that might qualify as GRASE, have regulatory approvals in 
countries outside the United States.
    3. Whether there would be adverse clinical or economic consequences 
to deeming as GRASE those drugs previously approved by the FDA for 
which patent and regulatory exclusivity have expired.
    4. Any published literature reviews or clinical studies related to 
any drugs potentially exempt from the new drug approval requirement.

    Dated: November 20, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2020-26133 Filed 11-24-20; 8:45 am]
BILLING CODE 4150-26-P