[Federal Register Volume 89, Number 106 (Friday, May 31, 2024)]
[Rules and Regulations]
[Pages 47074-47080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-11564]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 1
[Docket No. FDA-2021-N-1348]
RIN 0910-AI59
Administrative Destruction
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
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SUMMARY: The Food and Drug Administration (FDA, Agency, or we) is
issuing a regulation to implement our authority to destroy a device
valued at $2,500 or less (or such higher amount as the Secretary of the
Treasury may set by regulation) that has been refused admission into
the United States by providing to the owner or consignee notice and an
opportunity to appear and introduce testimony prior to the destruction.
We are finalizing the change to our internal procedures for
administrative destruction of drugs and devices. The notice of proposed
rule making (NPRM) published in the Federal Register (October 7, 2022).
DATES: This rule is effective July 1, 2024.
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,
240-402-7500.
FOR FURTHER INFORMATION CONTACT: Ann M. Metayer, Office of Regulatory
Affairs, Food and Drug Administration, 10903 New Hampshire Ave., Bldg.
32, Rm. 4375, Silver Spring, MD 20993-0002, 301-796-3324.
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. Need for the Regulation/History of This Rulemaking
B. Summary of Comments to the Proposed Rule
IV. Legal Authority
V. Comments on the Proposed Rule and FDA Response
[[Page 47075]]
A. Introduction
B. Summary of General Comments to the Proposed Rule
C. Specific Comments and FDA Response
VI. Comments on FDA Procedures for Administrative Destruction and
FDA Response
VII. Effective Date
VIII. Economic Analysis of Impacts
A. Introduction
B. Overview of Benefits and Costs
IX. Analysis of Environmental Impact
X. Paperwork Reduction Act of 1995
XI. Federalism
XII. Consultation and Coordination With Indian Tribal Governments
XIII. Reference
I. Executive Summary
A. Purpose of the Final Rule
The final rule provides to an owner or consignee notice and an
opportunity to present testimony when the Agency intends to
administratively destroy a device valued at $2,500 or less (or such
higher amount as the Secretary of the Treasury may set by regulation)
that has been refused admission into the United States. The
Safeguarding Therapeutics Act (STA) (Pub. L. 116-304), signed into law
on January 5, 2021, amended section 801(a) of the Federal Food, Drug,
and Cosmetic Act (FD&C Act) (21 U.S.C. 381(a)) to provide FDA with the
authority to administratively destroy certain refused devices without
providing the owner or consignee with the opportunity for export. FDA
is amending Sec. 1.94 (21 CFR 1.94) to provide to the owner or
consignee of a refused device valued at $2,500 or less (or such higher
amount as the Secretary of the Treasury may set by regulation) notice
and an opportunity to present testimony to the Agency prior to
destruction of the device.
B. Summary of the Major Provisions of the Final Rule
The final rule provides to an owner or consignee notice and an
opportunity to present testimony when the Agency intends to
administratively destroy a device valued at $2,500 or less (or such
higher amount as the Secretary of the Treasury may set by regulation)
that has been refused admission into the United States under section
801(a) of the FD&C Act.
FDA is amending part 1 (21 CFR part 1) by expanding the scope of
Sec. 1.94, which provides to the owner or consignee notice and
opportunity to present testimony prior to the refusal and destruction
of certain refused drugs, to also include notice and opportunity to
present testimony prior to the refusal and destruction of certain
refused devices.
C. Legal Authority
We are issuing this final rule under sections 701 and 801 of the
FD&C Act (21 U.S.C. 371 and 381, respectively).
D. Costs and Benefits
The primary public health benefit of the final rule will be the
value of preventing additional illnesses or deaths by destroying,
rather than returning, refused devices valued at $2,500 or less, which
may pose a public health risk. This benefit will accrue whenever FDA's
existing enforcement tools would not have prevented the violative
device from entering the U.S. market. The estimated primary costs of
the final rule include the additional costs to destroy, rather than
return, refused devices valued at $2,500 or less, and the additional
costs to store these devices at International Mail Facilities (IMFs)
prior to destruction. There will also be one-time costs to FDA to
update its electronic Operational and Administrative System for Import
Support (OASIS) and System for Entry Review and Import Operations
(SERIO); revise its Regulatory Procedures Manual (RPM), Investigations
Operations Manual (IOM), and additional FDA and inter-Agency
procedures; and train employees on the new procedures. Express couriers
will incur one-time costs to read and understand the rule. We estimate
that the annualized benefits over 10 years will range from $148,000 to
$750,000 at a 7 percent discount rate and a 3 percent discount rate,
with a primary estimate of $317,000. The annualized costs will range
from $68,000 to $1.59 million at a 7 percent discount rate, with a
primary estimate of $475,000, and from $63,000 to $1.58 million at a 3
percent discount rate, with a primary estimate of $470,000.
II. Table of Abbreviations/Commonly Used Acronyms in This Document
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Abbreviation/acronym What it means
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Agency....................... U.S. Food and Drug Administration.
CBP.......................... U.S. Customs and Border Protection.
COVID-19..................... Disease caused by the severe acute
respiratory syndrome coronavirus 2 (SARS-
CoV-2).
FDA.......................... U.S. Food and Drug Administration.
FDASIA....................... Food and Drug Administration Safety and
Innovation Act.
FD&C Act..................... Federal Food, Drug, and Cosmetic Act.
IMFs......................... International Mail Facilities.
IOM.......................... Investigations Operations Manual.
NPRM......................... Notice of Proposed Rule Making.
OASIS........................ FDA's Operational and Administrative
System for Import Support.
RPM.......................... Regulatory Procedures Manual.
SERIO........................ FDA's System for Entry Review and Import
Operations.
STA.......................... Safeguarding Therapeutics Act.
TBT Agreement................ Technical Barriers to Trade Agreement.
USPS......................... U.S. Postal Service.
We, Our, Us.................. U.S. Food and Drug Administration.
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III. Background
A. Need for the Regulation/History of This Rulemaking
Section 708 in the Food and Drug Administration Safety and
Innovation Act (FDASIA) (Pub. L. 112-144), enacted in 2012, gave FDA
the authority in section 801(a) of the FD&C Act to destroy, without
providing an opportunity for export, any refused drug valued at $2,500
or less (or such higher amount as the Secretary of the Treasury may set
by regulation). Section 801(a) of the FD&C Act, as amended by FDASIA,
allows the Agency to combine the notice and opportunity to introduce
testimony on the admissibility of the drug under section 801(a) of the
FD&C Act with the notice and opportunity to introduce testimony on the
destruction of the drug, as long as appropriate notice is provided to
the owner or consignee.
To implement that authority, FDA published a final rule in the
Federal Register on September 15, 2015 (80 FR 55237) that revised Sec.
1.94 to provide notice and an opportunity for the owner
[[Page 47076]]
or consignee to appear before the Agency and introduce testimony prior
to the destruction of a drug.
The STA expanded FDA's administrative destruction authority to
include any refused device valued at $2,500 or less (or such higher
amount as the Secretary of the Treasury may set by regulation). To
implement this authority, we issued a proposed rule to amend Sec. 1.94
to provide to the owner or consignee of any refused device valued at
$2,500 or less (or such higher amount as the Secretary of the Treasury
may set by regulation) notice and an opportunity to appear and
introduce testimony prior to the destruction. An NPRM was published in
the Federal Register on October 7, 2022 (87 FR 60947).
As discussed in the preamble to the proposed rule, FDA has refused
devices, including those valued at $2,500 or less, sent to the United
States via international mail or express couriers, including illegal
devices that are being imported to diagnose, prevent, or treat COVID-19
such as test kits, respirators, and face masks. Examples of other
devices that pose significant public health concerns if counterfeit,
unapproved, or unauthorized, or otherwise misbranded or adulterated,
include contact lenses and blood glucose test strips.
There is currently little deterrence against sellers shipping
illegal devices or re-sending previously refused devices to the United
States via international mail or an express courier. Devices that have
been refused admission into the United States might be subsequently
offered for re-importation by unscrupulous sellers who attempt to
circumvent U.S. import regulatory systems. Under the final rule, FDA
will be better able to deter such shipments by having an administrative
mechanism for destroying a device valued at $2,500 or less (or such
higher amount as the Secretary of the Treasury may set by regulation)
that has been refused admission into the United States.
For further information on the need for this regulation, see
section III.B. (Need for the Regulation) of the NPRM (87 FR 60947 at
60949-60951). The need for this regulation as discussed in the preamble
to the proposed rule applies to the final rule.
B. Summary of Comments to the Proposed Rule
We received approximately 10 comment letters on the proposed rule
by the close of the 60-day public comment period, each containing 1 or
more comments on 1 or more issues. We received comments from
individuals, an association, a business, medical personnel, and a
foreign government. Some comments were submitted anonymously. The
majority of the comments supported the proposed rule.
IV. Legal Authority
FDA has the legal authority under section 801(a) of the FD&C Act,
as amended by the STA, to administratively destroy, without providing
opportunity for export, any device valued at $2,500 or less (or such
higher amount as the Secretary of the Treasury may set by regulation)
that has been refused admission into the United States. A device that
is imported or offered for import is subject to refusal of admission
under section 801(a) of the FD&C Act if, among other reasons, it
appears to be adulterated or misbranded in violation of section 501 or
502 of the FD&C Act (21 U.S.C. 351 or 352).
Section 801(a) of the FD&C Act directs FDA to issue regulations
that provide the owner or consignee of a device designated by the
Agency for administrative destruction with notice and an opportunity to
introduce testimony to us prior to the destruction of the device.
Section 801(a) of the FD&C Act further states that this process may be
combined with the notice and opportunity to appear before FDA and
introduce testimony on the admissibility of the device under section
801(a) of the FD&C Act, as long as appropriate notice is provided to
the owner or consignee.
Additionally, section 701(a) of the FD&C Act authorizes the Agency
to issue regulations for the efficient enforcement of the FD&C Act.
As used throughout, the term ``device'' means those articles
meeting the definition of device in section 201(h) of the FD&C Act (21
U.S.C. 321(h)), which includes devices intended for human or animal
use. Section 201(h) of the FD&C Act defines the term ``device,'' in
part, as an instrument, apparatus, implement, machine, contrivance,
implant, in vitro reagent, or other similar or related article,
including any component, part, or accessory, intended for use in the
diagnosis of a disease or other condition or in the cure, mitigation,
treatment, or prevention of a disease or intended to affect the
structure or any function of the body, and that does not achieve its
primary intended purposes through chemical action within or on the body
of man or other animals or by being metabolized.
V. Comments on the Proposed Rule and FDA Response
A. Introduction
We describe and respond to the comments received in the public
docket in sections V.B., V.C., and VI of this document. 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
importance or the order in which comments were received.
The Agency also received a number of comments that were not
responsive to the content of the proposed rule and therefore were not
considered in its final development.
After considering the comments responsive to the proposed rule, the
Agency is not making any changes to the text of the regulation included
in the proposed rule.
B. Summary of General Comments to the Proposed Rule
Several commenters made general remarks supporting or opposing the
proposed rule without focusing on a particular proposed provision. In
the following paragraphs, we discuss and respond to such general
comments.
(Comment 1) Some commenters recommended that FDA consider granting
greater reciprocity for foreign manufactured diagnostic devices rather
than expand administrative destruction because the Agency had not
documented those products' adverse effects and suggested that the
Agency should assume that the product is suitable for the U.S. market
if cleared by a foreign regulatory agency. One commenter recommended
that FDA should return products cleared by a foreign regulatory agency
so that they can be used in that foreign country.
(Response 1) We decline to follow the suggestion that FDA rely on
the findings of a foreign regulatory agency rather than effectuate the
authority granted to FDA by Congress in the STA. Section 801(a) of the
FD&C Act, as amended by the STA, authorizes FDA to administratively
destroy certain devices that are refused admission into the United
States, and directs FDA to issue regulations that provide the owner or
consignee of a device designated by the Agency for administrative
destruction
[[Page 47077]]
with notice and an opportunity to introduce testimony to us prior to
the destruction of the device. The devices subject to administrative
destruction are governed by the FD&C Act and its implementing
regulations to protect public health. FDA generally plans to take risk
and other factors into account in determining whether to seek
destruction of a particular device. In addition, we disagree with the
suggestion to return devices that meet the criteria for administrative
destruction to the country where they have been ``cleared'' as this may
be difficult due to an exporter not being located in that country and
any such return could result in those products being reimported to the
United States.
(Comment 2) Some commenters asserted that device manufacturers are
more compliant than drug manufacturers so there is no need to expand
administrative destruction to devices. Other commenters noted the
influx of ``faulty'' and ``fake'' devices such as COVID-19 tests,
respirators, face masks, and other personal protective equipment during
the COVID-19 pandemic.
(Response 2) By passing the STA, Congress determined that expanding
administrative destruction to devices was appropriate. Additionally, in
the preamble to the proposed rule, we discussed numerous examples of
illegal devices that were imported or offered for import, the public
health risk associated with such illegal devices, and the lack of
deterrence without administrative destruction (87 FR 60947 at 60949-
60951). As discussed above and in the preamble to the proposed rule, we
believe administrative destruction of illegal devices that are imported
or offered for import is appropriate.
C. Specific Comments and FDA Response
(Comment 3) One commenter expressed concern that the proposed rule
states that section 801(a) of the FD&C Act would apply to ``certain
devices'' without clarification as to the identity of those devices and
another commenter asked what the selection process is for
administrative destruction of devices under the rule.
(Response 3) As stated in the preamble to the proposed rule, the
term ``device'' means those articles meeting the definition of device
in section 201(h) of the FD&C Act, which includes devices intended for
human or animal use (87 FR 60947 at 60951). When we use the term
``certain devices'', we mean those devices that meet the criteria for
administrative destruction as provided in section 801(a) of the FD&C
Act: a device that is valued at $2,500 or less (or such higher amount
as the Secretary of the Treasury may set by regulation) that is refused
admission into the United States (e.g., because it appears to be
adulterated or misbranded) and is not brought into compliance as
described under section 801(b) of the FD&C Act.
Any device that is reviewed by FDA for admissibility and meets the
criteria for administrative destruction may initially be selected for
destruction. FDA staff will then determine, taking into account any
applicable policies and the circumstances regarding the device and
importation, whether to seek destruction. If the decision is made to
select the device for destruction, FDA will give notice to the owner or
consignee of FDA's intent to refuse and destroy the device.
(Comment 4) One comment asked whether the owner or consignee would
have the option of having the shipment returned to its origin rather
than destroyed as part of the notice and opportunity to offer testimony
process.
(Response 4) An owner or consignee has an opportunity to contest
the destruction of a device by providing testimony at an informal
hearing before the Agency. FDA, not the owner or consignee, makes the
determination whether a refused device will be returned or destroyed.
(Comment 5) One comment suggested that the Agency should include
``the testimony opportunity for the company providing product subject
to this policy'' in the final rule.
(Response 5) We decline to require that the notice and opportunity
for a hearing under Sec. 1.94 be given to the company that provided
the device. Section 801(a) requires that FDA provide to the owner or
consignee of a device notice and an opportunity to provide testimony
prior to the administrative destruction. Owner or consignee is defined
in 21 CFR 1.83. As discussed in the preamble to the proposed rule, if
the article was sent by international mail, FDA generally considers the
addressee of that package to be the owner or consignee (87 FR 60947 at
60951). Consistent with section 801(a) of the FD&C Act and the process
for administrative destruction of certain drugs under Sec. 1.94, FDA
believes that providing the owner or consignee of a device notice and
an opportunity to provide testimony prior to administrative destruction
is sufficient. The owner or consignee can choose to present testimony
from the company providing the product (assuming the owner or consignee
is not the company providing the product) if the owner or consignee
decides to contest the destruction at an informal hearing before the
Agency.
(Comment 6) One comment asked if there is a way for the public to
be informed of the devices that are destroyed by FDA so that consumers
can get rid of the item if it's in their possession.
(Response 6) We decline to provide such notice in this rule. As
discussed in our response to comment 5, the notice required in section
801(a) of the FD&C Act and Sec. 1.94 is for the purpose of allowing
the owner or consignee of the device to contest the administrative
destruction.
FDA currently provides on its website public notice of safety
issues associated with devices through various means, e.g., information
about device recalls, consumer alerts or updates, news releases, and
safety communications. We referenced some of these public notices for
coronavirus tests, vaccines, and treatments, and contact lenses and
glucose test strips in the preamble to the proposed rule (87 FR 60947
at 60954-60955). FDA also provides information about import alerts on
its website to inform the Agency's field staff and the public that the
Agency has enough evidence to allow for detention without physical
examination of FDA-regulated products that appear to be in violation of
FDA's laws and regulations.
To provide the necessary information for consumers to take action
on destroyed devices, FDA would have to expend a significant amount of
our limited resources to identify and publish the name of each
destroyed device, its manufacturer, batch and lot number, and
expiration date. We do not believe that such a large expenditure of FDA
resources to provide that additional information to the public is
warranted.
(Comment 7) A foreign government submitted a comment requesting
that FDA clarify whether ``a device'' is regarded as a single item or a
whole batch of devices of the same device category for the purpose of
applying the $2,500 or less valuation for administrative destruction.
The commenter also requested that the Agency provide a transition
period for their device industry in accordance with Article 2.12 of the
World Trade Organization Technical Barriers to Trade Agreement (TBT
Agreement), stating that the rule will have a profound impact on the
manufacturers or owners in their country.
(Response 7) Section 801(a) of the FD&C Act states that FDA may
destroy ``any drug or device refused admission under [section 801 of
the FD&C Act], if
[[Page 47078]]
such drug or device is valued at an amount that is $2,500 or less (or
such higher amount as the Secretary of the Treasury may set by
regulation . . .)'' and requires the Agency to issue regulations
providing notice and an opportunity to present testimony ``on
destruction of a drug or device.'' FDA interprets this administrative
destruction provision to apply the $2,500 or less valuation to a
singular device rather than to an entire entry or shipment containing
multiple devices of the same type or product code.
We decline to provide an additional transition period beyond that
required by the Administrative Procedure Act. Because this rule does
not meet the definition of a ``technical regulation'' of the TBT
Agreement, as defined in Annex 1 of the Agreement, Article 2.12 of the
TBT Agreement does not apply.
Additionally, we do not think an additional transition period is
necessary, particularly since there is nothing for manufacturers to
implement under this rule. This rule addresses certain illegal devices
that are imported or being offered for import to the United States and
implements the authority under the FD&C Act, as amended by the STA, for
FDA to administratively destroy these devices rather than returning
them.
As noted earlier, the STA was signed into law on January 5, 2021,
over 3 years ago. The proposed rule was published well over a year ago,
on October 7, 2022, and a 60-day period for submission of public
comment followed. The final rule will be effective 30 days from
publication in the Federal Register.
VI. Comments on FDA Procedures for Administrative Destruction and FDA
Response
In the NPRM preamble, FDA explained that the Agency intends to make
a change to the procedures for destroying a refused drug and intends to
use the same procedures for devices that are subject to administrative
destruction. Under our revised procedures for destruction, FDA might
not make a determination that a drug or device subject to
administrative destruction is, in fact, in violation of the FD&C Act if
the owner or consignee has not requested a hearing to contest the
administrative destruction (including the basis for refusal of
admission). We will continue to make a determination that a drug or
device is, in fact, in violation of the FD&C Act when an owner or
consignee timely requests a hearing to contest the administrative
destruction (including the basis for refusal of admission) (87 FR 60947
at 60951-60952).
The majority of the comments on the notice regarding the change to
our internal administrative destruction procedures were supportive. FDA
is finalizing the procedures described in the preamble in the NPRM
published on October 7, 2022 (87 FR 60947 at 60951-60952) and will
implement the procedures at the same time the final rule takes effect.
(Comment 8) One comment stated that there should be data made
available for the counterfeit devices that are the subject of this rule
rather than using the 99 percent rate for drugs that are designated for
destruction and found to be adulterated or misbranded. Another
commenter suggested that we sunset the program to evaluate, sometime
after implementation, to see whether the 99 percent rate is
substantially the same for devices that are subject to destruction. A
different commenter requested that we make a report on the
effectiveness of the program publicly available.
(Response 8) We used the data we have from the administrative
destruction of drugs program that was implemented in April 2016 because
we do not have data on the devices subject to administrative
destruction given that the program for devices has not yet been
implemented. FDA intends to periodically evaluate the effectiveness of
its program and does not see a need to sunset the program while we
perform an evaluation. Finally, at this time, we do not agree that
public reports on the effectiveness of the program are warranted or
would be an optimal use of FDA's limited resources.
VII. Effective Date
The rule is effective 30 days after publication of a final rule in
the Federal Register.
VIII. Economic Analysis of Impacts
A. Introduction
We have examined the impacts of the final rule under Executive
Order 12866, Executive Order 13563, Executive Order 14094, the
Regulatory Flexibility Act (5 U.S.C. 601-612), the Congressional Review
Act/Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801,
Pub. L. 104-121), and the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4).
Executive Orders 12866, 13563, and 14094 direct us to assess all
benefits, costs, and transfers 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). Rules are ``significant'' under Executive Order 12866
Section 3(f)(1) (as amended by Executive Order 14094) if they ``have an
annual effect on the economy of $200 million or more (adjusted every 3
years by the Administrator of [the Office of Information and Regulatory
Affairs (OIRA)] for changes in gross domestic product); or adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, territorial, or tribal governments or
communities.'' OIRA has determined that this final rule is not a
significant regulatory action under Executive Order 12866 section
3(f)(1).
Because this rule is not likely to result in an annual effect on
the economy of $100 million or more or meets other criteria specified
in the Congressional Review Act/Small Business Regulatory Enforcement
Fairness Act, OIRA has determined that this rule does not fall within
the scope of 5 U.S.C. 804(2).
The Regulatory Flexibility Act requires us to analyze regulatory
options that would minimize any significant impact of a rule on small
entities. Because of the number of expected device destructions per
year and the very small value per event, 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 2022 threshold after adjustment for inflation is $177
million, using the 2022 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. Overview of Benefits and Costs
The final rule will implement the authority of FDA to destroy a
device valued at $2,500 or less (or such higher amount as the Secretary
of the Treasury may set by regulation) that has been offered for import
and refused admission into the United States under the FD&C Act by
providing notice and opportunity to the owner or consignee to appear
and introduce testimony to FDA prior to the destruction. Because the
majority of devices offered for import that are valued at $2,500 or
less are shipped via international mail and
[[Page 47079]]
express couriers, FDA currently intends to implement the final rule at
the IMFs and express couriers. We do not, therefore, consider impacts
related to shipments via commercial air, land, and seaports.\1\
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\1\ Based on internal data, the majority of devices that were
offered for import, valued at $2,500 or less, and refused in fiscal
year 2022 were shipped via IMF or express courier.
---------------------------------------------------------------------------
The costs and benefits of the final rule will depend on the number
of administrative destructions that FDA orders each year for refused
devices valued at $2,500 or less. For our primary estimates, we assume
that FDA will order the destruction of 65 percent of refused devices
valued at $2,500 or less. We additionally assume that FDA will contract
out the act of destruction to a private firm and combine the notice and
hearing process for destruction with the notice and hearing process for
refusal. We summarize the costs and benefits of the final rule in table
1.
We estimate that the annualized benefits over 10 years will range
from $148,000 to $750,000 at a 7 percent discount rate and a 3 percent
discount rate, with a primary estimate of $317,000. The annualized
costs will range from $68,000 to $1.59 million at a 7 percent discount
rate, with a primary estimate of $475,000, and from $63,000 to $1.58
million at a 3 percent discount rate, with a primary estimate of
$470,000.
Over 10 years, the present value of total benefits will range from
$1.04 million to $5.27 million at a 7 percent discount rate, with a
primary estimate of $2.22 million, and from $1.27 million to $6.39
million at a 3 percent discount rate, with a primary estimate of $2.70
million. The present value of total costs will range from $474,000 to
$11.14 million at a 7 percent discount rate, with a primary estimate of
$3.33 million, and from $539,000 to $13.49 million at a 3 percent
discount rate, with a primary estimate of $4.01 million.
Table 1--Summary of Benefits, Costs, and Distributional Effects of Final Rule
[Millions of 2022 dollars]
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Units
------------------------------------
Category Primary Low High Period Notes
estimate estimate estimate Year Discount covered
dollars rate (%) (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
Annualized Monetized ($m/y) \1\... $0.317 $0.148 $0.750 2022 7 10 Benefits include cost savings to express
0.317 0.148 0.750 2022 3 10 couriers and USPS.
Annualized Quantified............. .......... .......... .......... .......... 7
3
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Qualitative.......................
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Costs:
Annualized Monetized ($m/y) \1\... 0.475 0.068 1.586 2022 7 10
0.470 0.063 1.582 2022 3 10
Annualized Quantified............. .......... .......... .......... .......... 7
3
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Qualitative....................... Benefits of the final rule include the additional illnesses or deaths
averted from destroying, rather than returning, refused devices valued
at $2,500 or less (or such higher amount as the Secretary of the
Treasury may set by regulation).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transfers:
Federal Annualized Monetized ($m/ .......... .......... .......... .......... 7
y). 3
-----------------------------------------------------------------------------------------------------------------
From/To........................... From:
To:
-----------------------------------------------------------------------------------------------------------------
Other Annualized Monetized ($m/y). .......... .......... .......... .......... 7
3
-----------------------------------------------------------------------------------------------------------------
From/To........................... From:
To:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effects:
State, Local or Tribal Government: No estimated effect..............................................................................................
Small Business: No estimated effect.................................................................................................................
Wages: No estimated effect..........................................................................................................................
Growth: No estimated effect.........................................................................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ When calculating annualized benefits and costs, we assume that payments occur at the end of each period. Throughout our analysis, we use ``year 1''
to represent impacts that occur during the year that the final rule is finalized.
Notwithstanding the quantified estimated benefits described above,
the primary benefit of the final rule will be the unquantified value of
additional illnesses or deaths averted from destroying, rather than
returning, refused devices valued at $2,500 or less (or such higher
amount as the Secretary of the Treasury may set by regulation).
Additionally, if a destroyed device is a counterfeit or an otherwise
falsified version of an approved or cleared device, the owner of the
approved or cleared device may benefit through increased sales, brand
value, or research and development funding. The threat of destruction
additionally may have a deterrent effect, reducing the amount of
adulterated or misbranded (violative) devices that are offered for
import into the United States. These benefits will accrue whenever
FDA's existing enforcement tools would not have prevented the violative
device from entering the U.S. market; the current policy for returning
refused devices does not preclude the re-importation of
[[Page 47080]]
the device into the United States in the future. We do not have enough
information to quantify these benefits.
The destruction of refused devices will lessen the costs incurred
to export and return refused devices to the country of origin (the
current procedure for refused devices valued at $2,500 or less).
Express couriers and the U.S. Postal Service (USPS) will incur
quantified cost savings from exporting and returning fewer refused
devices, respectively.
Quantified costs of the final rule will include the costs to FDA to
destroy, rather than return, refused devices valued at $2,500 or less,
and the additional costs to store these devices at IMFs prior to
destruction. FDA will additionally incur one-time costs to update its
electronic OASIS and SERIO; revise its RPM, IOM, and additional FDA and
inter-Agency procedures; and train employees on the new procedures.
Express couriers will incur one-time costs to read and understand the
rule.
If our assumptions do not hold, FDA may incur additional costs,
including costs to purchase equipment to destroy refused devices, costs
to train employees administering the destruction of refused devices,
costs to notify separately the owners or consignees of refused devices,
and costs to prepare for hearings on destruction that the owners or
consignees of refused devices request. 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 rule (Ref. 1) and at https://www.fda.gov/about-fda/economics-staff/regulatory-impact-analyses-ria.
IX. 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.
X. Paperwork Reduction Act of 1995
This final rule contains no collection of information. Therefore,
clearance by the Office of Management and Budget under the Paperwork
Reduction Act of 1995 is not required.
XI. Federalism
We have analyzed this final rule in accordance with the principles
set forth in Executive Order 13132. FDA has 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.
XII. Consultation and Coordination With Indian Tribal Governments
We have analyzed this rule in accordance with the principles set
forth in Executive Order 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. Accordingly, we
conclude that the rule does not contain policies that have Tribal
implications as defined in the Executive order and, consequently, a
Tribal summary impact statement is not required.
XIII. Reference
The following reference is on display with the Dockets Management
Staff (see ADDRESSES) and is available for viewing by interested
persons between 9 a.m. and 4 p.m., Monday through Friday; it also
available electronically at https://www.regulations.gov. Although FDA
verified the website addresses in this document, please note that
websites are subject to change over time.
1. FDA. Administrative Destruction: Regulatory Impacts Analysis,
Regulatory Flexibility Analysis, Unfunded Mandates Reform Act
Analysis, 2023. https://www.fda.gov/about-fda/reports/economic-impact-analyses-fda-regulations.
List of Subjects in 21 CFR Part 1
Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling,
Reporting, and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, the Food and
Drug Administration amends 21 CFR part 1 as follows:
PART 1--GENERAL ENFORCEMENT REGULATIONS
0
1. The authority citation for part 1 continues to read as follows:
Authority: 15 U.S.C. 1333, 1453, 1454, 1455, 4402; 19 U.S.C.
1490, 1491; 21 U.S.C. 321, 331, 332, 333, 334, 335a, 342, 343, 350c,
350d, 350j, 352, 355, 360b, 360ccc, 360ccc-1, 360ccc-2, 362, 371,
374, 381, 382, 384a, 387, 387a, 387c, 393, and 2223; 42 U.S.C. 216,
241, 243, 262, 264, 271.
0
2. In Sec. 1.94, revise paragraphs (a) and (c) to read as follows:
Sec. 1.94 Hearing on refusal of admission or destruction.
(a) If it appears that the article may be subject to refusal of
admission or that the article is a drug or device that may be subject
to destruction under section 801(a) of the Federal Food, Drug, and
Cosmetic Act, the division director shall give the owner or consignee a
written or electronic notice to that effect, stating the reasons
therefor. The notice shall specify a place and a period of time during
which the owner or consignee shall have an opportunity to introduce
testimony. Upon timely request giving reasonable grounds therefor, such
time and place may be changed. Such testimony shall be confined to
matters relevant to the admissibility or destruction of the article,
and may be introduced orally or in writing.
* * * * *
(c) If the article is a drug or device that may be subject to
destruction under section 801(a) of the Federal Food, Drug, and
Cosmetic Act, the division director may give the owner or consignee a
single written or electronic notice that provides the notice of refusal
of admission and the notice of destruction of an article described in
paragraph (a) of this section. The division director may also combine
the hearing on refusal of admission with the hearing on destruction of
the article described in paragraph (a) of this section into a single
proceeding.
Dated: May 17, 2024.
Robert M. Califf,
Commissioner of Food and Drugs.
[FR Doc. 2024-11564 Filed 5-30-24; 8:45 am]
BILLING CODE 4164-01-P