FDA's estimate of nearly $44 million for the dietary supplement industry to revise labels to comply with the adverse event reporting law may understate the actual burden by leaving out some key costs.

In a Feb. 24 Federal Register notice, FDA's Center for Food Safety and Applied Nutrition estimates the burden of work hours firms will incur to comply. A separate but related same-day notice from the agency's drug center gives a ballpark figure that translates to about $40 million for the OTC drug industry to meet the same law.

FDA acknowledges that, based on comments it received, adding an AER prefatory statement and U.S. street address or phone number to supplement labels, as detailed in its draft guidance for the regulation, would represent "a significant burden to the industry."

CFSAN also says it revised its estimate of the number of supplement stock-keeping units in the U.S. to 55,600 from its previous figure of 29,514. The center says the larger number is similar to the number suggested in comments and to an estimate by the National Institutes of Health's Office of Dietary Supplements.

The approximately 1,460 companies marketing supplements in the U.S. will need 444,800 total hours to make the AER labeling changes, according to the notice. CFSAN submitted the estimates to the Office of Management and Budget.

A CFSAN spokesman said the 444,800 hours translates to a cost of $43,786,112. This figure is derived from multiplying the hours by an hourly wage of $49.22 - equivalent to that of a GS-14 level federal employee - and then doubling the resulting number to account for overhead costs.

The Center for Drug Evaluation and Research says relabeling approximately 100,000 monograph nonprescription drug products to comply with the AER rule will take about 400,000 hours.

Using the same calculation criteria as CFSAN, CDER estimates the drug product relabeling will cost 200 manufacturers $39,376,000.

Both totals are based on burden cost metrics required for OMB review under the Paperwork Reduction Act. The spokesman said OMB is expected to post the dollar estimates soon.

Was Accidental Estimate More Accurate?

Industry stakeholders suggest the PRA-compliance estimate does not reflect the true potential cost. While they say the real burden is difficult for anyone to guess, FDA's estimate does not include some likely real-life costs.

Daniel Fabricant, VP of scientific and regulatory affairs for the Natural Products Association, said the financial implication of revising labels "is very large and very significant and potentially damaging to an industry that's predominantly small business."

Fabricant cited a Federal Register notice that FDA posted and withdrew on the same day in October 2008, which estimated $222.4 million in total AER relabeling costs for the supplement industry - more than five times the official estimate released Feb. 24 (¹ 'The Tan Sheet' Oct. 13, 2008, In Brief).

"That's a huge cost for an industry to incur in a one-year period," he said.

In an interview, an FDA official explained that the $222.4 million figure was posted erroneously and was calculated using a different cost estimate measurement than what PRA requires.

The accidentally published estimate was based on an hour burden of $4,000 and included cost estimates for graphic design, prepress activities and discarding of old inventory - none of which the PRA metric takes into account - according to the withdrawn notice.

Additionally, the dollar figure should have been submitted to OMB in a supporting statement, rather than posted in a public notice. The official blamed human error for the inadvertent posting.

The agency official acknowledged that the $222.4 million figure ultimately could reflect real-life relabeling costs, but simply was based on calculations not meant for OMB review.

Many in the industry object to FDA's interpretation of labeling requirements from the Dietary Supplement and Nonprescription Drug Consumer Protection Act of 2006. In a December 2007 draft guidance on compliance with the act, CFSAN asked that supplement product labels include a full street address or phone number, and a statement telling consumers to use the information for reporting AEs (² Also see "Return To Sender, Industry Groups Say Of AER Address Guidance" - Pink Sheet, 7 January, 2008., p. 3).

CFSAN has yet to finalize its labeling guidance, but gave supplement and OTC drug firms until January 2010 to revise their labels. The most recent draft retains the address and prefatory statement requirements (³ Also see "AER Label Guidance Holds To Requiring Full Addresses For OTCs, Supplements" - Pink Sheet, 15 December, 2008., p. 9).

Stakeholders criticized FDA for imposing the label changes in a guidance, rather than proposing new requirements in a notice and comment rulemaking (⁴ Also see "SBA Advocacy Office Joins Industry In Opposing AER Labeling Guidance" - Pink Sheet, 10 March, 2008., p. 6).

Andrew Shao, VP of scientific and regulatory affairs for the Council for Responsible Nutrition, said it is impossible for FDA to estimate accurately industry-wide relabeling costs.

"No one - not even the trade associations - knows which companies will plan to revise their label to add the prefatory language and which will not," he said in an e-mail.

"That is a decision each company makes internally through consultation with its own counsel."

Concern that FDA will strictly enforce label language also could lead firms to incur increased legal costs, said Rick Kingston, senior clinical toxicologist with AER consulting firm SafetyCall International.

"If it's perceived as a standard of practice or a regulation on the FDA's part, then it may have some litigation overtones to it that may be difficult for some companies to deal with," he said.

If there is some enforcement discretion on the agency's part, however, Kingston foresees a "smooth transition" to the new label scheme.

CDER predicts that with the majority of OTC product labels already including companies' phone numbers, "many manufacturers will opt not to adopt the guidance's recommendation" to include an explanatory statement also.

The Consumer Healthcare Products Association said it does not consider an explanatory statement necessary "given consumers can (and should) contact the company for any number of reasons beyond potential adverse events."

- Dan Schiff (d.schiff@elsevier.com)

FDA Estimates Dollar Costs For Adverse Event Labeling But Doubts Persist

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