User fees could boost FDA oversight of supplement sector

Congress in recent years has shown strong support for comprehensive reform of the OTC (over-the-counter) drug market through legislation that includes user fees. Such a funding mechanism could eventually resonate with the dietary supplement industry as it and FDA ponder legal reform.

But conventional wisdom suggests any detailed conversations about user fees to help FDA better oversee the US$46 billion-a-year supplement industry would commence near the end—rather than the beginning—of a process to reform the Dietary Supplement Health and Education Act of 1994 (DSHEA).

Barbara Kochanowski, Ph.D., is senior vice president of regulatory and scientific affairs with the Consumer Healthcare Products Association (CHPA), a trade association representing manufacturers and marketers of OTC medicines and dietary supplements.

“Our perspective here comes from quite a few years now of experience in trying to reform the system that regulates over-the-counter medicines,” she said in an interview. “It took a long time for all relevant stakeholders to figure out some reforms were needed, and we sat down with FDA and other stakeholders, figured out what the reforms might look like, [and] where would we align.

“And it really wasn’t until the end of that process, and then a discussion of resources that were needed to implement the reforms, that the topic of funding really came up,” Kochanowski explained. “From our perspective, the whole question of user fees is part of a process of reform, but it’s not the start of a process of reform.”

OTC reform sets example

On three occasions in recent years, the House of Representatives passed OTC bills. And in December, by a vote of 91 to 2, the Senate passed the Over-the-Counter Drug Safety, Innovation and Reform Act.

Sen. Lamar Alexander (R-Tennessee), chairman of the Senate Committee on Health, Education, Labor & Pensions, described the bill as “the most important new law affecting the safety, innovation and affordability of over-the-counter drugs since the 1970s.”

If passed by the House and signed by President Donald Trump, S. 2740 would alleviate regulatory burdens, spur innovation and provide regulators additional resources to oversee the OTC market, lawmakers and industry said.

The Senate’s action brought the country “one step closer to having a modern over-the-counter … regulatory framework that will better serve consumers and facilitate a new wave of innovation in OTC medicines,” Scott Melville, president and CEO of CHPA, stated in a Dec. 10, 2019 press release.

While the comprehensive legislation ties user fees to registered facilities, Kochanowski noted many different user-fee models have been adopted in the U.S., including fees tied to products. The supplement industry could explore the advantages and disadvantages of all these models.

“The good thing is there’s a lot of experience out there with different models, and so if you were to go into a pro-con analysis and start looking at things like drugs and devices, veterinary medicine—all the places where you have fees—there’s plenty of experience to start to draw from,” she said.

Fee possibilities for supplement industry

Mark LeDoux is chairman and CEO of Natural Alternatives International Inc. (NAI), a manufacturer of nutritional supplements. Asked about the concept of supplement user fees, he said he has long been a proponent of reasonable fees for inspections and other office activities, including such things as cooperation with U.S. Customs and Border Protection, judicial actions and enforcement of new dietary ingredients (NDIs).

However, he pointed out FDA’s Office of Dietary Supplement Programs (ODSP) recently obtained an additional $3 million in annual funding after the industry lobbied for additional resources.

“Given the paucity of staff, I would assume that a lot of this money would go to beefing up some staffing, as well as embarking on other initiatives,” LeDoux, chairman of the board of directors of the Natural Products Association (NPA), said in an email.

He suggested it’s “prudent” to determine ODSP’s “action plan before revisiting the concept of user fees.”

Attorney Robert Durkin, who previously served as deputy director of ODSP, said a mandatory dietary product listing could be tied to product fees. FDA and others have expressed support for a mandatory listing of dietary supplement products, and FDA is said to be drafting legislation for Congress’s consideration.

Assuming, for example, there are 40,000 individual stock keeping units (SKUs) on the supplement market, and each product is assessed a $50 annual fee, the government could raise $2 million, noted Durkin, of counsel in Washington in the FDA and healthcare practices of Arnall Golden Gregory LLP.

That money could be used to hire eight to 10 full-time employees at ODSP, he said in an interview.

“That’s only going to matter if you … lower the agency’s burden when they try to hold accountable bad players in industry that don’t sufficiently meet their premarket obligations,” Durkin added.

The leader of one trade association emphasized any user fees must be tied to specific activities.

“User fees work on the drug side because you get a faster review,” said Daniel Fabricant, Ph.D., president and CEO of NPA, in an interview. “Is that what we want? We want a faster review or do we make sure all facilities are inspected? What’s the big ask?”

Fabricant, who previously led FDA’s Division of Dietary Supplement Programs, seemed more open to the concept of user fees tied to facilities based on their size, for example, rather than fees tied to products.

“If it’s tied to product, you may have one product with 50 claims, and you may have 50 products with one claim,” he said.

He also remarked a product fee wouldn’t necessarily apply to a segment of the industry subject to regulatory oversight: importers. For example, a holding company in Southeast Asia importing hundreds of metric tons of finished dietary supplements annually may not have an SKU, Fabricant said.

“However, I’m a significant part of the industry and one that certainly has to have oversight,” the former FDA official explained. Customs agents, for example, may need to check the containers coming into the U.S., and FDA may need to inspect the facilities where the supplements are manufactured, he added.

A partner in Denver with Greenberg Traurig LLP, James (“Jim”) Prochnow counsels clients on regulatory matters involving dietary supplements, OTC drugs and other products. He suggested FDA’s supplement office may need additional funding beyond that coming from taxpayer dollars amid calls for the agency to step up its enforcement and incorporate artificial intelligence to help with reviews of NDI notifications and other work.

“Because if we’re going to ask for an upgrade in their computer systems and for more enforcement, it’s got to be paid for, and it probably won’t be paid for out of the general budget just because of all the issues we normally have,” he said in an interview.

Counselor Todd Harrison is a partner in Washington with Venable LLP. He described user fees as an “interesting concept” that would function as a “barrier to entry” to the supplement industry. While such a low barrier to entry has helped promote wide access to supplements, it also has opened the door to companies with modest resources and unsophisticated operations that may endanger public health.

Kochanowski said CHPA doesn’t have a specific proposal for user fees in the supplement industry and believes it would be premature to recommend something today.

“We know that the industry can use more attention and FDA can use more help, but if you want to look at a total reform package, I think that’s the place to start,” she said.

Kochanowski added “there will be wide opinions” on such matters on how much money is needed and how it can be most effectively spent.

In the OTC industry, an FDA draft document associated with the legislation passed by the Senate outlines performance goals and procedures for an OTC monograph drug user fee program.

“It was a very painstaking process, but we sat down with FDA and went through … all the things that could be measured,” Kochanowski said, referencing the goals program. “Ideally, at the end of five years, you’re going to have metrics. You’ve going to have a set of data that says, ‘Here’s how we did against the dollars that were invested.’”