FDA's low-ball estimate of costs its final OTC sunscreen monograph will impose on industry - a quarter of the amount anticipated by manufacturers - relieved the agency from having to submit a full account of its rulemaking to the Office of Management and Budget, Energizer Holdings suggests.

In a presentation to OMB Sept. 9, the marketer of Banana Boat and Hawaiian Tropic sunscreens said expenses incurred by industry in connection with the final sunscreen rule are likely to be in excess of $200 million, a figure that dwarfs FDA's estimate.

According to Energizer, FDA's projection of $53 million in incremental costs is based "almost solely on costs of UVA testing and labeling." The agency underestimates the number of products that will require testing under the final monograph and the investment that will be necessary to educate consumers about the changes, among other considerations, the firm said.

In fact, Energizer said, the cost burden on industry is likely to be considerably more than $100 million, the amount which, according to an executive order (E.O. 12,866), constitutes "significant" regulation (¹ Also see "Congress Urged To Address OMB’s Expanded Role In Regulations, Guidance" - Pink Sheet, 12 March, 2007.).

Signed by President Bill Clinton in 1993 and amended by President George W. Bush in 2007, E.O. 12,866 requires an agency proposing a "significant" regulation to notify the OMB's Office of Information and Regulatory Affairs before publishing the regulation so there is an opportunity for review.

The issuing agency is required to conduct a detailed assessment of the potential costs stemming from the regulatory action, including "an explanation of the manner in which the regulatory action is consistent with a statutory mandate and ... promotes the President's priorities."

It also must provide an explanation of anticipated benefits from the regulation, such as "promotion of the efficient functioning of the economy and private markets, the enhancement of health and safety [and] the protection of the natural environment."

Based on what it considers a more realistic cost projection, Energizer is requesting that OMB require FDA to do such an assessment of the final monograph prior to publishing the rule. FDA has said it expects to publish its long-awaited final sunscreen monograph in the next several months, having pushed the release back again from its October target (² 'The Rose Sheet' Nov. 1, 2010, In Brief).

Education Costly; UVA Rating System Doesn't Help

Energizer's $200 million cost projection is higher than industry groups anticipated in comments to FDA just two years ago. In 2008, the Personal Care Products Council and the Consumer Healthcare Products Association estimated that testing and labeling costs associated with the rule would be around $124 million (³ Also see "Industry Groups Burned About Proposed Sunscreen Labeling Requirements" - HBW Insight, 14 January, 2008.).

Now, Energizer and other companies believe testing and labeling alone will cost at least $124 million and possibly as much as $190 million, the firm reported to OMB. Furthermore, reformulated products will require testing that FDA did not consider - for example, to substantiate hypoallergenic and "tear-free" claims, Energizer said.

Industry also is factoring in the cost of educating consumers and health-care personnel on the sunscreen rule's four-star rating system for UVA protection, as they will be confronted by it on product packaging. Energizer maintains that without "significant" education, the system will not work.

The firm points out that the system could be confusing for consumers when products with high SPFs have a low rating on the star scale or products with low SPFs have a high number of stars. "Which product offers the best protection?" the company asked, adding that "industry and government will incur costs to address this confusion."

The Personal Care Products Council has urged the agency to drop the star system in favor of simple UVA level descriptors - low, medium, high and highest.

Industry also estimates that there will be "inventory transition" costs of $112 million. Though the rule currently plans for "no one-time costs associated with disposing of sunscreens already on the market," allowing marketers an 18- to 24-month implementation period, Energizer does not believe the market will wait. "Retail customers will want compliance at the start of next season, regardless of [the] phase-in period," allowed by FDA, the firm says.

Energizer gained the Banana Boat and Hawaiian Tropic sunscreen brands when it acquired Playtex in 2007 (⁴ Also see "Energizer Grows Personal Care With Acquisition Of Leading Sun-Care Brands" - HBW Insight, 23 July, 2007.).

- Eileen Francis

Sunscreen Rule Will Cost Four Times What FDA Predicted, Industry Tells OMB

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