Good manufacturing practice compliance becomes more critical for dietary supplement firms as FDA sets the first user fees to cover agency costs for follow-up inspections of facilities and imports and work on mandatory recalls.

In an Aug. 1 Federal Register notice, FDA proposed hourly rates of $224 for work in the U.S. and $335 when foreign travel is required. The rates take effect Oct. 1, the start of fiscal 2012.

The user fees should remind supplement firms to “make sure their company is compliant and ready when the FDA comes in for the initial GMP inspection,” says Natural Products Association Scientific and Regulatory Affairs VP Cara Welch.

The Food Safety Modernization Act gave FDA additional enforcement authorities, including mandatory recall, and created user fees charged to manufacturers across food product industries for:

re-inspections after inspections that FDA classifies as “Official Action Indicated,” where non-compliance is related materially to food safety.
import re-inspections or re-examinations after a product is refused entry for food safety reasons.
recall activities FDA conducts as result of a firm’s noncompliance with a recall order.

Welcome To User Fees

While FSMA excluded supplement firms from manufacturing requirements redundant with the 2007 GMP final rule for supplements, the law subjects all food firms to the user fees, which previously were not imposed on the food industry.

The initial proponents of food safety enforcement reform, House Democrats, sought to charge the industry annual registration fees as well as fees for all inspections, initial and follow-up. But in the Senate, supplement industry allies and other members insisted on targeted, rather than general, user fees, to be imposed only for re-inspections and for FDA’s costs related to mandatory recalls (Also see "Food Safety Legislation Shows Signs Of Life In Senate" - Pink Sheet, 16 August, 2010.).

The absence of general user fees from FSMA was a positive for the supplement industry, but FDA’s proposed rates for the targeted fees still could spike some firms’ expenses.

In addition to what seems like steep hourly rates, the agency’s method for calculating the number of hours used for the relevant work could push up the fees.

“I think it comes down to what re-inspection means to FDA. The law was pretty clear that FDA should not abuse this user fee,” said Mike Greene, the Council for Responsible Nutrition’s VP of government relations.

Inspections Just Part Of The Tab

The user fee notice explains that not all of FDA’s costs related to the relevant activities are for “direct work such as inspecting or re-inspecting facilities, examining imports, or monitoring recalls.”

Other agency costs that factor into the user fee rates are in program areas including budget, facilities, human resources, information technology, planning, security, administrative support, legislative liaison, legal counsel and program management, the notice says.

FSMA-authorized user fees were not something FDA was "going to be using at the drop of a hat and certainly not for mild infractions or minor infractions."

– CRN exec Mike Greene

In addition to work done in FDA offices not directly connected to inspections, the rates reflect the work of agency officials while they are not at an inspection site: travel time and time for preparing reports or conducting tests with samples from target facilities.

“That could take up a lot of time. It’s not just the time that they’re out of the office, but it’s all the time they spend working on a re-inspection,” Welch said.

“That can add up and … it can be a pretty big bill.”

Greene pointed out that user fees for re-inspections related to “minor infractions” were not what supplement firms and other food industry businesses expected in FDA’s implementation of FSMA.

“There was always an understanding within FSMA, when we were working in it as a stakeholder with other groups, that [user fees were] something that FDA would use with the egregious bad actors. This was not something that they were going to be using at the drop of a hat, and certainly not for mild infractions or minor infractions,” he observed.

Welch said FDA likely will receive comments asking for clarification on how the agency will add up the hours its staff devotes to a user fee-covered activity. Efficiency should be the guide, she said.

NPA would suggest that when FDA officials need to return to a facility, “they’re not turning their re-inspection into an entire facility review, they’re looking for the one object and they’re looking at the one area of concern – getting in, getting out, analyzing and preparing their report and really working expediently.”

Both Welch and Greene pointed out the user fees particularly could damage small businesses, which make up the majority of the supplement industry.

In a separate Aug. 1 notice, FDA seeks comments on the impact on small businesses from FSMA.

Funding A Broad Swath Of Work

In the user fees notice, FDA explained that calculating the hourly rate starts with estimating salary costs linked to the relevant activity. This cost is “most reasonably” determined by dividing the total funds allocated to FDA offices primarily responsible for work the fees are collected to cover by the total full-time equivalent hours needed for the work, the agency said.

“It’s all the time [FDA officials] spend working on a re-inspection. That can add up and … it can be a pretty big bill.”

– NPA exec Cara Welch

The agency said primary responsibility for the relevant work is in the Office of Regulatory Affairs, which conducts inspections and other field activities for the Center of Food Safety and Applied Nutrition and FDA’s other centers.

Although FDA describes the user fees as going to direct and indirect re-inspection costs, supplement firms required to pay the fees might not see those payments as helping cover the agency’s regulation of the supplement industry.

The user fees pharmaceutical and medical device manufacturers pay go directly to the agency’s oversight of each of those industries, but the FSMA user fees will be spread across all of CFSAN as well as go into the Center for Veterinary Medicine budget.

“While this is being called a user fee, it’s not necessarily a user fee in the traditional sense,” Greene said.

“At a time when FDA is strapped for funds, they’re going to be looking at various ways to raise money. This is a way where they can raise money, at least from our subsector of the food industry, where they don’t necessarily have to put the funds back into dietary supplement enforcement,” he added.

FDA likely will receive comments on the user fees suggesting the agency lower its rates.

“FDA, particularly CFSAN, is always working under a tight budget, but I wonder if we couldn’t tighten the belt a bit more with the estimated fees,” Welch said.

The fiscal 2012 budget the House passed for FDA includes user fees of nearly $50 million for CFSAN out of a total budget of $799.8 million for the center (Also see "House FDA Budget Bill Boosts User Fees, Trims Direct Appropriations" - Pink Sheet, 30 May, 2011.).

The bill estimates CFSAN would receive $14.7 million from re-inspection fees and $12.4 million from mandatory recall charges. The bill also calls for $36 million the center would receive from the voluntary qualified importer program, an additional user fee authorized by FSMA.

By contrast, more than half of the Center for Drug Evaluation and Research’s $1.03 billion fiscal 2012 budget the House bill recommends would come from fees. The bill estimates $856 million for CDER in prescription drug user fees, including those paid by firms sponsoring Rx-to-OTC switches, and a $416 million direct appropriation.

For FDA’s Center for Devices and Radiological Health in fiscal 2012, the House bill recommends $281 million in direct appropriations and user fees of $67.1 million.

Even though they are dwarfed by the fees CDER and CDRH receive, the FSMA-authorized user fees still will affect the bottom line of many supplement industry firms.

In addition to the rates, FDA likely will receive numerous comments from trade groups and firms across food product industries that address the agency’s calculations, the definition of costs the user fees should cover and other components of the notice.

Just as the pharmaceutical and medical device user fees are determined through interaction with industry, FDA should expect the food industry to engage in setting the FSMA fees, Greene noted.

“We have to remember that this is a notice of rulemaking and there is an opportunity to comment. I’m sure they’ll look at this and there will be opportunities for possibly even reduced hourly rates,” he said.

“I think there is a lot of room here. … This is all part of the process.”

Comments on the user fee notice are due by Oct. 31 and on the small business impact notice by Oct. 17.

By Malcolm Spicer

Supplement Industry Questions FDA's Calculations For Food Safety User Fees

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