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<p>[Federal Register: April 4, 2005 (Volume 70, Number 63)]  <br>[Rules and Regulations]  <br>[Page 17167-17192] <br>From the Federal Register Online via GPO Access [wais.access.gpo.gov] <br>[DOCID:fr04ap05-15] <br>[[Page 17167]]</p><p>Monday, April 4, 2005  </p>
<p>Part III  <br>
</p>
<p>Department of Health and  Human Services  <br>
  Food and Drug  Administration  <br>
  21 CFR Part 2 Use of  Ozone-Depleting Substances; Removal of Essential-Use Designations; Final Rule  <br>
  DEPARTMENT OF HEALTH AND HUMAN  SERVICES  <br>
  Food and Drug Administration  <br>
  21 CFR Part 2  <br>
  [Docket No. 2003P–0029]  <br>
  RIN 0910–AF18  <br>
    <strong>Use of Ozone-Depleting Substances;  Removal of Essential-Use Designations </strong> </p>
<p><strong>AGENCY</strong><strong>: </strong>Food and Drug  Administration, HHS. </p>
<p><strong>ACTION</strong><strong>: </strong>Final rule.</p>
<p><strong>SUMMARY</strong><strong>: </strong>The Food and Drug  Administration (FDA) is amending its regulation on the use of ozone-depleting  substances (ODSs) in self-pressurized containers to remove the essential-use  designations for albuterol used in oral pressurized metered-dose inhalers  (MDIs). Under the Clean Air Act, FDA, in consultation with the Environmental  Protection Agency (EPA), is required to determine whether an FDA-regulated  product that releases an ODS is an essential use of the ODS. Two albuterol MDIs  that do not use an ODS have been marketed for more than 3 years. FDA has  determined that the two non-ODS MDIs will be satisfactory alternatives to  albuterol MDIs containing ODSs and is removing the essential-use designation  for albuterol MDIs as of December 31, 2008. Albuterol MDIs containing an ODS  cannot be marketed after this date. </p>
<p><strong>DATES</strong><strong>: </strong>This rule is  effective December 
31, 2008.</p>
<p> <strong>ADDRESSES</strong><strong>: </strong>Received  comments, a transcript of, and material submitted for, the Pulmonary-Allergy  Advisory Committee meeting held on June 10, 2004, the environmental assessment,  and the finding of no significant impact may be seen in the Division of Dockets  Management, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 <br>
a.m. and 4 p.m., Monday through Friday. </p>
<p><strong>FOR FURTHER INFORMATION CONTACT</strong><strong>: </strong> <br>
  Wayne H. Mitchell, Center for Drug Evaluation  and Research (HFD–7), Food and Drug Administration, 5600 Fishers Lane,  Rockville, MD 20857,301–594– 2041. <br>
</p>
<p><strong>SUPPLEMENTARY INFORMATION</strong><strong>: </strong> </p>
<p><strong>Table of Contents </strong> <br>
  I. Introduction and Highlights of the  Rule <br>
  II. Background <br>
  A. Albuterol <br>
  B. CFCs <br>
  C. Regulation of ODSs <br>
  1.The 1978 Rules <br>
  2. The Montreal  Protocol <br>
  3.The 1990 Amendments to the Clean Air Act <br>
  4. EPA’s Implementing Regulations <br>
  5. FDA’s 2002 Regulation <br>
  III. Comments on the 2004 Proposed Rule <br>
  A. General Comments <br>
  B. The Same Active Moiety with the Same  Route of Administration, for the Same Indication, and With Approximately the  Same Level of Convenience of Use <br>
  1. The Same Active Moiety with the Same Route of  Administration, for the Same Indication <br>
2. Approximately the Same Level of Convenience of  Use <br>
C. Supplies and Production Capacity for  the Non-ODS Products Will Exist at Levels Sufficient to Meet Patient Need <br>
  D. Adequate U.S. Postmarketing Use Data  is Available for the Non-ODS Products <br>
  E. Patients Are Adequately Served by  the Non-ODS Products <br>
  F. Effective Date <br>
  G. CFCs and the Environment <br>
  H. Comments on the Analysis of Impacts <br>
  I. Other Comments <br>
  IV. Environmental Impact <br>
  V. Analysis of Impacts<br>
  A. Introduction <br>
  B. Need for Regulation and the  Objective of this Rule <br>
  C. Background <br>
  1. CFCs and Stratospheric Ozone <br>
  2. The Montreal  Protocol <br>
  3. Benefits of the Montreal Protocol <br>
  4. Characteristics of COPD <br>
  5. Characteristics of Asthma <br>
  6. Current U.S. Albuterol MDI Market <br>
  D. Benefits and Costs of the Final Rule <br>
  1. Baseline Conditions <br>
  2. Benefits of the Final Rule <br>
  3. Costs of the Final Rule <br>
  4. Effects on Medicare and Medicaid <br>
  E. Alternative Phaseout Dates <br>
  F. Sensitivity Analyses <br>
  G. Small Business Impact <br>
  1. Affected Sector and Nature of Impacts <br>
  2. Outreach <br>
  H. Conclusion <br>
  VI. The Paperwork Reduction Act of 1995 <br>
  VII. Federalism <br>
  VIII. References </p>
<p><strong> I. Introduction and Highlights of the Rule </strong> </p>
<p>We published a proposed rule in the <strong>Federal  Register </strong>of June 16, 2004 (69 FR 33602) (the  2004 proposed rule), proposing to remove the essential-use designation for  albuterol MDIs. <br>
  Albuterol MDIs containing  chlorofluorocarbons (CFCs) or other ODSs cannot be marketed without an  essential-use designation. We have determined that the following four criteria  for removing an essential use have been met or will be met by the effective  date of the final rule: </p>
<ul>
  <li> More than one non-ODS product with the  same active moiety is marketed with the same route of administration, for the  same indication, and with approximately the same level of convenience of use as  the ODS product containing that active moiety; </li>
  <li> Supplies and production capacity for  the non-ODS products will exist at levels sufficient to meet patient need; </li>
  <li> Adequate U.S. postmarketing use data is  available for the non-ODS products; and </li>
  <li> Patients who medically required the ODS  product will be adequately served by the non-ODS products containing that  active moiety and other available products. </li></ul>
  <p>We have also determined that the  appropriate effective date for the removal of the essential-use designation for  albuterol MDIs is December 31, 2008. </p>
  <p>    We will discuss our determinations on  the criteria and the effective date in section V of this document ‘‘Comments on  the 2004 Proposed Rule.’’ </p>
  <p><strong>II. Background  </strong></p>
  <p><em> A. Albuterol </em></p>
<p>Albuterol is a relatively selective  beta2–adrenergic  agonist used in the treatment of bronchospasm associated with asthma and  chronic obstructive pulmonary disease (COPD). Albuterol has the molecular  formula C13H21NO3.  Albuterol is the name established for the drug by the U.S. Pharmacopeia and the 
  U.S.  Adopted Names Council. FDA uses the name albuterol, and it is the name commonly  used in the United States.  In most of the rest of the world, the drug is called salbutamol, which is the  International Nonproprietary Name for the drug (the name recommended by the  World Health Organization). Albuterol is widely used in its sulfate salt form,  which has the molecular formula (C13H21NO3) 2H2SO4.  We will use ‘‘albuterol’’ to refer to both albuterol base and albuterol  sulfate, unless otherwise indicated. </p>
<p>  Albuterol is available in many dosage  forms for the treatment of asthma and COPD. Syrups and tablets may be taken by  mouth to be absorbed into the blood through the digestive tract. Albuterol drug  products are marketed in various forms for inhalational use. Albuterol is  available in inhalation solutions for use 
  in nebulizers, and was previously  marketed in the United    States in a compact dry-powder inhaler. Most  important for purposes of this document, albuterol is marketed in MDIs, which  are small, pressurized aerosol devices that deliver a measured dose of an  aerosolized drug into a patient’s mouth for inhalation into the lungs. </p>
<p>  Albuterol MDIs were first approved for  use in the United States  in 1981, when the new drug applications (NDAs) for VENTOLIN (NDA 18–473) and  PROVENTIL (NDA 17–559) albuterol MDIs were approved by FDA. The first generic  albuterol MDI was approved in 1995. Albuterol MDIs have historically used the  CFCs trichlorofluoromethane (CFC–11) and dichlorodifluoromethane (CFC–12) as  propellants. </p>
<p>  Albuterol MDIs are among the most  widely used drug products for the treatment of asthma and COPD. Because of  albuterol’s relatively rapid onset of action, albuterol MDIs are frequently  used as ‘‘rescue’’ inhalers for treatment of bronchospasm during acute  episodes. Albuterol MDIs can be considered lifesaving for some patients at  certain times; they are very important for controlling symptoms in many more  patients who suffer from asthma or COPD. We recognize and take very seriously  our obligation to examine with particular care any action that could affect the  availability of these important drugs. </p>
<p><em>B. CFCs </em> </p>
<p>  CFCs are organic compounds that contain  carbon, chlorine, and fluorine atoms. CFCs were first used commercially in the  early 1930s as a replacement for hazardous materials then used in  refrigeration, such as sulfur dioxide and ammonia. Subsequently, CFCs were  found to have a large number of uses, including as solvents and as propellants  in self-pressurized aerosol products, such as MDIs. </p>
<p>  CFCs are very stable in the  troposphere, the lowest part of the atmosphere. They move to the stratosphere,  a region that begins about 10 to 16 kilometers (km) (6 to 10 miles) above  Earth’s surface and extends up to about 50 km (31 miles) altitude. Within the  stratosphere, there is a zone about 15 to 40 km (10 to 25 miles) above the  Earth’s surface in which ozone is relatively highly concentrated. This zone in  the stratosphere is generally called the ozone layer. Once in the stratosphere,  CFCs are gradually broken down by strong ultraviolet light, where they release  chlorine atoms that then deplete stratospheric ozone. Depletion of  stratospheric ozone by CFCs and 
  other ODSs allows more ultraviolet-B  (UV–B) radiation to reach the Earth’s surface, where it increases skin cancers  and cataracts, and damages some marine organisms, plants, and plastics. </p>
<p><em>C. Regulation of ODSs </em> </p>
<p>  The link between CFCs and the depletion  of stratospheric ozone was discovered in the mid-1970s. Since 1978, the U.S.  Government has pursued a vigorous and consistent policy, through the enactment  of laws and regulations, of limiting the production, use, and importation of  ODSs, including CFCs. </p>
<p>1. The 1978 Rules</p>
<p>In the <strong>Federal  Register </strong>of March 17, 1978 (43 FR 11301 at  11318), FDA and EPA published rules banning, with a few exceptions, the use of  CFCs as propellants in aerosol containers. These rules were issued under  authority of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 321 <em>et  seq.</em>) and the Toxic Substances Control Act  (15 U.S.C. 2601 <em>et seq.</em>),  respectively. FDA’s rule (the 1978 rule) was codified as Section 2.125 (21 CFR  2.125). The rules issued by FDA and EPA had been preceded by rules issued by  FDA and the Consumer Product Safety Commission requiring products that contain  CFC propellants to bear warning statements on their labeling (42 FR 22018,  April 29, 1977; 42 FR 42780, August 24, 1977). </p>
<p>The 1978 rule prohibited the use  of CFCs as propellants in self-pressurized containers in any food, drug,  medical device, or cosmetic. As originally published, the rule listed five  essential uses that were exempt from the ban. The third listed essential use  was for ‘‘[m]etered-dose adrenergic bronchodilator human drugs for oral  inhalation.’’ This language describes albuterol MDIs, so the list of essential  uses did not have to be amended in 1981 when VENTOLIN and PROVENTIL albuterol  MDIs were approved by FDA. </p>
<p>The 1978 rule provided criteria for adding new  essential uses, and several uses were added to the list, the last one in 1996.  The 1978 rule did not provide any mechanism for removing essential uses from  the list as alternative products were developed or CFC-containing products were  removed from the market. The absence of a removal procedure came to be viewed  as a deficiency in the 1978 rule, and was addressed in a later rulemaking, discussed in section II.C.5 of this  document. </p>
<p>2. The Montreal Protocol </p>
<p>On January 1, 1989, the United States  became a party to the Montreal Protocol 
  on Substances that Deplete the Ozone  Layer (Montreal Protocol) (September 16, 1987, 26 I.L.M. 1541 (1987)), available at <a href="http://www.unep.org/ozone/pdfs/Montreal-Protocol2000.pdf"><em>http://www.unep.org/ozone/pdfs/Montreal-Protocol2000.pdf</em></a>. <a href="#ftn1">1</a> The  United States played a leading role in the  negotiations of the Montreal Protocol, believing that internationally coordinated  control of ozone-depleting substances would best protect both the 
  U.S.  and global public health and the environment from potential adverse effects of  depletion of stratospheric ozone. Currently, there are 188 parties to this  treaty. <a href="#ftn2">2</a> When it joined the treaty, the United  States committed to reducing production and consumption of certain CFCs to 50  percent of 1986 levels by 1998 (Article 2(4) of the Montreal Protocol). It also  agreed to accept an ‘‘adjustment’’ procedure, whereby, following assessment of  the existing control measures, the Parties could adjust the scope, amount, and  timing of those control measures for substances already subject to the Montreal  Protocol. As the evidence regarding the impact of ODSs on the ozone layer  became stronger, the Parties used this adjustment procedure to accelerate the  phaseout of ODSs. At the fourth meeting of the Parties to the Montreal  Protocol, held at Copenhagen in November 1992, the Parties adjusted Article 2  of the Montreal Protocol to eliminate the production and importation of CFCs by  Parties that are developed countries by January 1, 1996 (Decision IV/2). <a href="#ftn3">3</a>  The  adjustment also indicated that it would apply ‘‘save to the extent that the  Parties decide to permit the level of production or consumption that is  necessary to satisfy uses agreed by them to be essential’’ (Article 2A(4)).  Under the treaty’s rules of procedure, the Parties may make such an  essential-use decision by a two-thirds majority vote, 
although, to date, all such decisions  have been made by consensus.</p>
<p>  To produce or import CFCs for an  essential use under the Montreal Protocol, a Party must request and obtain  approval for an exemption at a meeting of the Parties. One of the most  important essential uses of CFCs under the Montreal Protocol is their use in  MDIs for the treatment of asthma and COPD. The decision on whether the use of  CFCs in MDIs is ‘‘essential’’ for purposes of the Montreal Protocol turns on  whether: ‘‘(1) It is necessary for the health, safety, or is critical for the  functioning of society (encompassing cultural and intellectual aspects) and (2)  there are no available technically and economically feasible alternatives or  substitutes that are acceptable from the standpoint of environment and health’’  (Decision IV/25). Each request and any subsequent exemption is for only 1  year’s duration (Decision V/18). Since 1994 the United States and some other  Parties to the Montreal Protocol have annually requested, and been granted,  essential-use exemptions for the production or importation of CFCs for their  use in MDIs for the treatment of asthma and COPD (see, among others, Decisions  VI/9 and VII/28). The exemptions have been consistent with the criteria  established by the Parties, which make the grant of an exemption contingent on  a finding that the use for which the exemption is being requested is essential  for health, safety, or the functioning of society, and that there are no  available technically and economically feasible alternatives or substitutes  that are acceptable from the standpoint of health or the environment (Decision  IV/25). </p>
<p>  Phasing out the use of CFCs in MDIs for  the treatment of asthma and COPD has been an issue of particular interest to  the Parties to the Montreal Protocol. Several decisions of the Parties have  dealt with the transition to CFC-free MDIs, including the following decisions: </p>
<ul>
  <li> Decision VIII/10 stated that the  Parties that are developed countries would take various actions to promote  industry’s participation in a smooth and efficient transition away from  CFC-based MDIs (San Jose, Costa Rica, 1996). </li>
  <li> Decision IX/19 required the Parties  that are developed countries to present an initial national or regional  transition strategy by January 31, 1999 (Montreal, Canada, 1997). </li>
  <li> Decision XII/2 elaborated on the  content of national or regional transition strategies required under Decision  IX/19 and indicated that any MDI for the treatment of asthma or COPD approved  for marketing after 2000 would not be an ‘‘essential use’’ unless it met the  criteria laid out by the Parties for essential uses (Ouagadougou, Burkina Faso,  2000). </li>
  <li> Decision XIV/5 requested that each  Party report annually the quantities of CFC and non-CFC MDIs and dry-powder  inhalers sold or distributed within that country and the approval and marketing  status of non-CFC MDIs and dry-powder inhalers. Decision XIV/5 also noted ‘‘with  concern the slow transition to CFC-free metered-dose inhalers in some Parties’’  (Rome, Italy, 2002). </li>
  <li> Decision XV/5 states that no essential  uses of CFCs will be authorized for Parties that are developed countries at the  17th meeting of the Parties (in autumn 2005), or thereafter, unless the Party  requesting the essential-use allocation has submitted an action plan. Among  other items, the action plan should include a specific date by which the Party  plans to cease requesting essential-use allocations of CFCs for albuterol MDIs  to be sold or distributed in developed countries. The action plan must be  submitted before the 25th meeting of the Open-Ended Working Group <a href="#ftn4">4</a> in  the summer of 2005 (Nairobi,   Kenya, 2003). </li>
</ul>
<p>In addition to fulfilling our obligations  under the Clean Air Act and other provisions of the Montreal Protocol, this  rule is intended to provide, for purposes of Decision XV/5, the specific date  after which the United    States will not request essential-use  allocations of CFCs for albuterol MDIs. </p>
<p>  3. The 1990 Amendments to the Clean Air  Act </p>
<p>  In 1990, Congress amended the Clean Air  Act to, among other things, better protect stratospheric ozone (Public Law  101–549, November 15, 1990) (the 1990 amendments). The 1990 amendments were  drafted to complement, and be consistent with, our obligations under the  Montreal Protocol (see section 614 of the Clean Air Act (42 U.S.C. 7671m)).  Section 614(b) of the Clean Air Act provides that in the case of a conflict  between any provision of the Clean Air Act and any provision of the Montreal  Protocol, the more stringent provision will govern. Section 604 of the Clean  Air Act requires the phaseout of the production of CFCs by 2000 (42 U.S.C. 
  7671c),<a href="#ftn5">5</a> while  section 610 of the Clean Air Act (42 U.S.C. 7671i) required EPA to issue  regulations banning the sale or distribution in interstate commerce of  nonessential products containing CFCs. Sections 604 and 610 provide exceptions  for ‘‘medical devices.’’ Section 601(8) (42 U.S.C. 7671(8)) of the Clean Air  Act defines ‘‘medical device’’ as </p>
<p>  any device (as defined in the Federal  Food, Drug, and Cosmetic Act (21 U.S.C. 321)), diagnostic product, drug (as  defined in the Federal Food, Drug, and Cosmetic Act), or drug delivery system­</p>
<p>(A) if such device, product, drug, or  drug delivery system utilizes a class I or class II substance for which no safe  and effective alternative has been developed, and where necessary, approved by  the Commissioner [of Food and Drugs]; and </p>
<p>(B) if such device, product, drug, or  drug delivery system, has, after notice and opportunity for public comment,  been approved and determined to be essential by the Commissioner [of Food and  Drugs] in consultation with the Administrator [of EPA].’’ </p>
<p>4. EPA’s Implementing Regulations </p>
<p>  EPA regulations implementing the  Montreal Protocol and the stratospheric ozone protection provisions of the 1990  amendments are codified in part 82 of title 40 of the Code of Federal  Regulations (40 CFR part 82). (See 40 CFR 82.1 for a statement of intent.) Like  the 1990 amendments, EPA’s implementing regulations contain two separate  prohibitions, one on the production and import of CFCs (subpart A of 40 CFR  part 82) and the other on the sale or distribution of products containing CFCs  (40 CFR 82.66). </p>
<p>  The prohibition on production and  import of CFCs contains an exception for essential uses and, more specifically,  for essential MDIs. The definition of essential MDI at 40 CFR 82.3 requires  that the MDI be intended for the treatment of asthma or COPD, be essential  under the Montreal Protocol, and if the MDI is for sale in the United States,  be approved by FDA and listed as essential in FDA’s regulations at Section 2.125. </p>
<p>  The prohibition on the sale of products  containing CFCs includes a specific prohibition on aerosol products and other  pressurized dispensers. The aerosol product ban contains an exception for  medical devices listed in Section 2.125(e). The term ‘‘medical device’’ is used with  the same meaning it was given in the 1990 amendments and  
  includes drugs as well as medical  devices. </p>
<p>  5. FDA’s 2002 Regulation </p>
<p>In the 1990s,  we decided that Section 2.125 required revision to better reflect our obligations  under the Montreal Protocol, the 1990 amendments, and EPA’s regulations, and to  encourage the development of ozone-friendly alternatives to medical products  containing CFCs. In particular, as acceptable alternatives that did not contain  CFCs or other ODSs came on the market, there was a need to provide a mechanism  for removing essential uses from the list in Section 2.125(e). In the <strong>Federal  Register </strong>of March 6, 1997 (62 FR 10242), we  published an advance notice of proposed rulemaking (the 1997 ANPRM) in which we  outlined our then-current thinking on the content of an appropriate rule  regarding ODSs in products FDA regulates. We received almost 10,000 comments on  the 1997 ANPRM. In response to the comments, we revised our approach and  drafted a proposed rule published in the <strong>Federal  Register </strong>of September 1, 1999 (64 FR 47719) (the  1999 proposed rule). We received 22 comments on the 1999 proposed rule. After  minor revisions in response to these comments, we published a final rule in the <strong>Federal Register </strong>of  July 24, 2002 (67 FR 48370) (the 2002 final rule) (corrected in 67 FR 49396,  July 30, 2002, and 67 FR 58678, September 17, 2002). </p>
<p>Among other changes, the  2002 final rule, in revised Section 2.125(g)(3), set standards that FDA would use for  determining whether the use of an ODS in a medical product is no longer  essential. The 2002 final rule provided 
  that to remove an essential-use  designation, FDA must find that: </p>
<ul>
  <li> At least one non-ODS product with the  same active moiety is marketed with the same route of administration, for the  same indication, and with approximately the same level of convenience of use as  the ODS product containing that active moiety;</li>
  <li> Supplies and production capacity for  the non-ODS product(s) exist or will exist at levels sufficient to meet patient  need; </li>
  <li> Adequate U.S. postmarketing use data is  available for the non-ODS product(s); and</li>
  <li> Patients who medically required the ODS  product are adequately served by the non-ODS product(s) containing that active  moiety and other available products. </li></ul>
  <p>To remove the essential-use designation  of an active moiety marketed in an ODS product represented by one NDA, there  must be 
at least one acceptable alternative,  while for an active moiety marketed in ODS products and represented by two or  more NDAs, there must be at least two acceptable alternatives. </p>
  <p>    Because there are multiple NDAs for  albuterol MDIs containing an ODS, the rule requires that there must be at least  two acceptable alternatives available for us to remove the essential-use  designation for albuterol. We have determined that there are two acceptable  alternatives for albuterol MDIs containing an ODS. </p>
  <p>    FDA approved the NDA for PROVENTIL HFA,  albuterol sulfate MDI, on August 15, 1996 (NDA 20–503), and the product was  introduced into the 
    U.S.  market later that year. PROVENTIL HFA is manufactured by 3M Co. (3M) and  marketed by Schering-Plough Corp. (Schering). VENTOLIN HFA, albuterol sulfate  MDI, was approved on April 19, 2001 (NDA 20–983), and it was introduced into  the U.S.  market in February 2002. VENTOLIN HFA is manufactured and marketed by  GlaxoSmithKline (GSK). Both of these products use the hydrofluoroalkane  HFA–134a as a replacement for ODSs. HFA–134a does not affect stratospheric  ozone. We will use the phrase ‘‘albuterol HFA MDIs’’ to refer to both of these  products in this document. IVAX Corp. (IVAX) has recently begun marketing an  albuterol HFA MDI, but the short period of time that the IVAX MDI has been on  the market prevents us from considering the drug an alternative to albuterol  CFC MDIs for purposes of this rulemaking (see our response to comment 14 of  this document). Albuterol HFA MDIs are the subject of patents, listed in our  publication <br>
    <em>Approved Drug Products with Therapeutic  Equivalence Evaluations </em> 
(the Orange Book), which will,  presumably, block the marketing of generic albuterol HFA MDIs until they  expire. See our response to comment 36 of this document for a discussion of the  patent issues that were raised in this rulemaking. </p>
  <p>    There is a separate essential-use  designation for metered-dose ipratropium bromide and albuterol sulfate, in  combination, administered by oral inhalation for human use, Section  2.125(e)(2)(viii). This essential use was added to the list of essential uses  (Section 2.125(e)), even though albuterol and ipratropium bromide were already  separately included in the list of essential uses. (See 60 FR 53725, October  17, 1995, and 61 FR 15699, April 9, 1996.) The only drug product marketed under  the essential-use designation for metered-dose ipratropium bromide and  albuterol <br>
    sulfate, in combination, is Boehringer  Ingelheim Phamaceuticals’ product COMBIVENT. Because COMBIVENT has two active  ingredients, it is not subject to Decision XV/5, which concerns MDIs with  albuterol as the sole active ingredient. This rule will not affect the essential-use  status of COMBIVENT.        </p>
<p><strong>III. Comments on the 2004 Proposed Rule </strong> </p>
<p>  On June 10, 2004, we held a meeting of  the Pulmonary-Allergy Drug Advisory Committee (the PADAC meeting) to discuss  the issues involved in removing the essential-use designation for albuterol  MDIs (see the <strong>Federal Registers </strong>of  May 11, 2004 (69 FR 26169), and June 2, 2004 (69 FR 31126)). Presentations were  made by 13 speakers representing patient advocacy groups, medical professional  organizations, an industry organization, an environmental advocacy group, an  economics consulting firm, GSK, Schering, Honeywell Chemicals (Honeywell), and  IVAX. We address the comments made in written material submitted to the  committee and oral comments made during the open public hearing and committee  discussion portions of the meeting in addition to the written and electronic  comments submitted to the docket in response to the 2004 proposed rule. <a href="#ftn6">6</a> </p>
<p>  We received over 75 written and  electronic comments in response to the 2004 proposed rule. They were submitted  by patients, health care providers, patient advocacy groups, professional  groups, manufacturers, a law firm, an economics consulting firm, and industry  organizations. Most of the parties who spoke at the PADAC meeting also  submitted written comments. </p>
<p><em>A. General Comments </em> </p>
<p>  (Comment 1) We received several  comments that expressed general approval for the 2004 proposed rule. </p>
<p>  We appreciate the effort that the  people who submitted these comments, and all other comments, made in expressing  their opinions on this important rulemaking. </p>
<p>  (Comment 2) We received several  comments that expressed a general opposition to the phaseout of albuterol CFC  MDIs, without giving any reasons for the opposition. </p>
<p>  We cannot address these general  comments. Comments that gave specific reasons why the person submitting the  comment opposes the elimination of the essential-use designation for albuterol  CFC MDIs will be discussed in the appropriate sections of this document. </p>
<p>  (Comment 3) A few comments seemed to be  based on a perception that this rulemaking would remove all albuterol MDIs from  the market. </p>
<p>  The perception is inaccurate. This  rulemaking is based on the fact that there will be at least two different  albuterol MDIs that are acceptable alternatives under Section 2.125(g) available  after the rule goes into effect. </p>
<p>  (Comment 4) Several comments were made  advocating an expeditious phaseout of albuterol CFC MDIs. A few comments  recommended we proceed slowly and cautiously.</p>
<p>  We believe this final rule provides for  the phaseout of albuterol CFC MDIs with a speed that is consistent with our  duty to protect the public health and our legal obligations. </p>
<p>  (Comment 5) One comment requested we  publish this rule by December 31, 2004. </p>
<p>  We did not publish this rule by  December 31, 2004, because it involves complicated and sensitive issues that  required extensive consultation and deliberation within FDA and the Department  of Health and Human Services (HHS), and with EPA and other Federal agencies. We  have issued this rule in the most expeditious manner, consistent with the  complexities and sensitivity of the issues involved. </p>
<p>  (Comment 6) One comment asked that we  consider in this rulemaking the availability of CFC drug products that do not  have a non-CFC substitute, the availability of generic albuterol MDIs, and the  impact that higher priced drugs may have on the public health. </p>
<p>  As we discuss in several places in the  2004 proposed rule and this document, issues of price and generic competition  were major concerns to us. However, because this rulemaking deals exclusively  with the essential-use designation for albuterol MDIs, we did not examine the  availability of non-CFC substitutes for drug products other than albuterol CFC  MDIs. </p>
<p>  (Comment 7) One comment stated we did  not adequately communicate to the medical community the details of our policy  regarding CFC MDIs. The comment expressed concern that we did not give a  timeframe for the phaseout of albuterol CFC MDIs. </p>
<p>  We believe we have done a good job of  keeping the public and the medical community informed on our policy regarding  the elimination of essential-use designations for medical products. We first  discussed our general policy on the issue in the 1997 ANPRM. We received nearly  10,000 comments in response to the 1997 ANPRM, which demonstrates that this  document received wide publicity. We received additional comments in response  to the 1999 proposed rule, which proposed changes in Section 2.125 to provide a  mechanism for eliminating essential uses. A citizen petition was submitted on  behalf of the U.S. Stakeholders Group on MDI Transition (stakeholders group) on  January 29, 2003 (Docket No. 2003P–0029/CP1), essentially requesting that we  initiate this rulemaking. This stakeholders group consists of both patient  advocacy and professional organizations. These groups were aware of our  policies. FDA staff has spoken several times before professional medical  organizations, patient advocacy groups, and the National Asthma Education and  Prevention Program Coordinating Committee of the National Institutes of Health.  FDA staff have also answered countless telephone calls and correspondence on  the subject. We have provided press releases and opportunities for interviews  to the general, trade, and professional media. We believe we have done what can  be reasonably expected to inform the public and the medical profession.  However, we were not able to provide a timeframe for eliminating the  essential-use designation for albuterol MDIs. We specifically solicited  comments on an appropriate effective date for the elimination of the  essential-use designation for albuterol MDIs. The effective date could not be  established until we had finished our evaluation of the comments submitted in  response to the 2004 proposed rule, prepared a draft of this document, and  consulted with EPA and other Federal agencies. </p>
<p><em>B. The Same Active Moiety with the Same  Route of Administration, for the Same Indication, and With Approximately the  Same Level of Convenience of Use </em> </p>
<p>1. The Same Active Moiety with the Same  Route of Administration, for the Same Indication </p>
<p>We did not receive any comments  disagreeing with our tentative conclusions stated in the 2004 proposed rule, or  addressing the conclusions in any substantive way, that albuterol HFA MDIs have  the same active moiety with the same route of administration for the same  indications as albuterol CFC MDIs. We therefore finalize our tentative  conclusion that albuterol HFA MDIs have the same active moiety with the same  route of administration for the same indications as albuterol CFC MDIs. </p>
<p>2. Approximately the Same Level of  Convenience of Use </p>
<p>(Comment 8) One comment asserted that  the VENTOLIN HFA MDIs were not an adequate alternative for albuterol CFC MDIs  because the VENTOLIN HFA MDI requires more force to operate. </p>
<p>  Although we do have some data on the  force needed to operate the various albuterol MDIs, because that information  comes from different sources using different measuring techniques and  apparatus, we are not able to meaningfully compare the amounts of force needed  to operate albuterol HFA MDIs compared to the force needed for albuterol CFC  MDIs. However, of the approximately 20 comments we received that indicated that  the person submitting the comment had some experience using albuterol HFA MDIs,  only one complained that the albuterol HFA MDIs required excessive effort to  operate. None of the thirteen comments from health care providers indicated  that their patients had problems operating the albuterol HFA MDIs. The  PROVENTIL HFA MDI is somewhat shorter and wider than the VENTOLIN HFA MDI.  Patients who find it difficult to apply adequate pressure to the VENTOLIN HFA  MDI may wish to try the shorter PROVENTIL HFA MDI or other albuterol HFA MDIs  that may come onto the market. </p>
<p>  (Comment 9) One comment said that the  VENTOLIN HFA MDIs were not an adequate alternative for albuterol CFC MDIs  because the VENTOLIN HFA MDI needs to be primed before use. </p>
<p>  The approved labeling for both  PROVENTIL HFA and VENTOLIN HFA recommend that patients prime the MDI before  using it for the first time and in cases where the MDI has not been used for  more than 2 weeks by releasing four 
  test sprays into the air, away from the  face. The approved labeling for PROVENTIL CFC MDIs and Warwick brand albuterol  CFC MDIs contain a similar instruction about priming, but recommend priming if  the MDI has not been used for 4 days, as opposed to the more convenient 2 weeks  for the albuterol HFA MDIs. The approved labeling for VENTOLIN CFC MDIs, and  for the generic albuterol CFC MDIs which refer to the VENTOLIN CFC MDI, contain  an essentially identical recommendation, but refer to the operation as ‘‘test  sprays’’ rather than priming. These test sprays are recommended if these  albuterol CFC MDIs have not been used for more than 4 weeks. Therefore, priming  is recommended for all of the albuterol CFC MDI products affected by this  rulemaking. The only difference between albuterol CFC MDIs and albuterol HFA  MDIs that would inconvenience patients is the shorter period of non-use before  priming is recommended for the albuterol HFA MDIs compared to VENTOLIN CFC MDIs  and the generic albuterol CFC MDIs which refer to the VENTOLIN CFC MDI. We  consider this difference to be at most a minor inconvenience, and not a  ‘‘significant [variation] in convenience that materially impede[s] patient  compliance.’’ (See the 2002 final rule (67 FR 48370 at 48377).) When we compare  the albuterol HFA MDIs to PROVENTIL CFC MDIs and Warwick brand albuterol CFC MDIs, the  albuterol HFA MDIs are actually more convenient, because of the longer period  of non-use before priming is recommended. </p>
<p>  (Comment 10) One comment stated that  the VENTOLIN HFA MDIs were not an adequate alternative for albuterol CFC MDIs  because the float test cannot be used to determine whether the VENTOLIN HFA MDI  is empty. <br>
  The float test is a widely described,  but inaccurate, method of ascertaining whether an MDI is empty by seeing if it  floats. In addition to being an inaccurate method to ascertain whether an MDI  still contains usable quantities of the drug, the float test can damage the MDI  (See Refs. 1 and 2). The float test is not recommended in the approved labeling  of any albuterol CFC MDI. The only accurate way to determine whether an MDI  still contains usable quantities of the drug is to keep track of the number of  actuations. This is true for both albuterol CFC and HFA MDIs. Therefore we  cannot view the inability to perform the float test on the albuterol HFA MDIs  as a ‘‘significant [variation] in convenience that materially impede 
  patient compliance.’’ (See the 2002  final rule (67 FR 48370 at 48377).) </p>
<p>  We find that albuterol HFA MDIs have  approximately the same level of convenience of use as albuterol CFC MDIs. </p>
<p><em>C. Supplies and Production Capacity for  the Non-ODS Products Will Exist at Levels Sufficient to Meet Patient Need </em> </p>
<p>  (Comment 11) At the PADAC meeting a  representative of GSK stated GSK was currently producing approximately 300,000  albuterol HFA MDIs annually at their Zebulon, NC, plant. She further stated the  current installed capacity at Zebulon is 15 million albuterol HFA MDIs  annually, but that it would take GSK 6 to 12 months after a final decision on an  effective date in this rulemaking to hire staff and reconfigure existing space  to take full advantage of the installed capacity. She stated it would take GSK  12 to 18 months after a final decision on an effective date in this rulemaking  to install additional manufacturing equipment and secure required component  supplies to enable GSK to manufacture 30 to 33 million albuterol MDIs. </p>
<p>  A representative of Schering stated at  the PADAC meeting that 3M would be able to manufacture enough albuterol MDIs to  meet Schering’s ‘‘share of the expected demand’’ for approximately 50 million  albuterol HFA MDIs (transcript of PADAC meeting at p. 130). </p>
<p>Answering a  question from a committee member, the Schering representative clarified that  his statement regarding Schering’s and 3M’s share of the manufacturing capacity  was consistent with the earlier statements made on behalf of GSK. </p>
<p>  In a subsequent written comment  (2003P–0029/C20), GSK revised its production estimates and stated they would  begin increasing production before the publication of this rule, and that they  currently anticipated having the capacity to produce 30 million albuterol HFA  MDIs annually by December 31, 2005. GSK further said they will also begin  building up their inventory at least 3 months before the effective date of this  rule. GSK also said they would reevaluate their expansion plans if the  effective date of this rule were substantially beyond December 31, 2005. <br>
  Schering also revised their projections  on increasing production capacity in a written comment submitted after the  PADAC meeting (2003P–0029/C31). Schering said they will have adequate  production available to meet demand for albuterol HFA MDIs by December 2005.  Schering also said they would reevaluate their expansion plans if the <br>
  effective date of this rule were  substantially beyond December 2005. 3M, which produces the albuterol HFA MDIs  Schering markets, confirmed Schering’s comment by stating that they will have  the capacity to manufacture 30 million albuterol HFA MDIs annually by December 31,  2005. </p>
<p>  These projections were major  considerations we took into account in establishing the effective date for this  rule. We discuss our rationale for setting a December 31, 2008, effective date  in our response to comment 32 of this document. </p>
<p>  (Comment 12) A comment from a  manufacturer of HFA–134a stated there would be more than adequate supplies of  HFA–134a for albuterol MDIs if the essential-use designation is removed. </p>
<p>  We appreciate this confirmation that  adequate supplies of HFA–134a will exist to meet the increased demand for the  propellant. </p>
<p>  (Comment 13) A few comments from  patients expressed concerns that shortages of albuterol MDIs may result from  the elimination of the essential-use status of albuterol MDIs. Comments from a  trade organization and a chain drug store expressed concerns about whether  production capacity for albuterol HFA MDIs would be in place as quickly as had  been discussed in the 2004 proposed rule. </p>
<p>  The issue of adequate supply and  production capacity has been key to this rulemaking. We regard the statements  by GSK, Schering, and 3M that they will have adequate production in place as  the best evidence on the availability of production capacity. When we chose  December 31, 2008, as the effective date of this rule, we did so with every  reasonable expectation that adequate supplies and production capacity would be  in place by December 31, 2008. </p>
<p>  (Comment 14) A representative of IVAX  stated at the PADAC meeting that IVAX had submitted an NDA for an albuterol HFA  MDI in January 2003, and received an approvable letter <a href="#ftn7">7</a> from  FDA for the NDA on November 28, 2003. He also said IVAX had submitted a  separate NDA for an albuterol HFA breath-actuated inhaler in August 2003. He  said he expected the products to be on the market in the near future. He stated  that IVAX would soon have the capacity to manufacture 50 to 60 million HFA MDIs  a year at IVAX’s Waterford, 
  Ireland,  plant, although he did not specify what proportion of that capacity would be  allocated to albuterol HFA products or to products for the U.S. market. </p>
<p>  We did not consider this information in  making our decision on the essential-use designation for albuterol MDIs. The  IVAX albuterol HFA MDI was approved on October 29, 2004, and introduced into  the market in December 2004. Because this product has been on the market for  such a short time, the available U.S. postmarketing use data is inadequate for  purposes of Section 2.125(g)(3)(iii). IVAX’s albuterol HFA breath-actuated inhaler  has not been approved or marketed. Section 2.125(g)(4)(i) requires alternative  products to be marketed. In addition, because the product has not been  marketed, there can be no U.S.  postmarketing use data available to allow us to evaluate whether the  breath-actuated inhaler will be an acceptable alternative to albuterol CFC  MDIs. </p>
<p>  (Comment 15) One comment asserted the  entire supply of albuterol HFA MDIs for the United States would be produced at  one GSK facility and one 3M facility. The comment concluded that adequate  supplies of albuterol HFA MDIs were insufficient because it was unclear whether  one facility could supply the entire market if the other facility were forced  to close. </p>
<p>  We appreciate the concerns expressed in  this comment; however, the factual premise for the comment is misstated. We  believe that a switch to albuterol HFA MDIs will improve the security of the U.S. supply of  albuterol MDIs. Immediately after the phaseout of albuterol CFC MDIs, we will  have one GSK facility and two 3M/Schering facilities supplying the U.S. market for  albuterol MDIs. This compares favorably to the current situation with albuterol  MDIs, where one Schering facility and one IVAX facility supply 95 percent of  the U.S. market for albuterol CFC MDIs (comment from NERA dated August 13, 2004  (2003P–0029/C25)), exhibit 4; and corrected comment from GSK, dated August 25,  2004 (2003P–0029/CR1). IVAX’s recently approved albuterol HFA MDI, although not  considered an alternative product for purposes of this rule (see our response  to comment 14 of this document), gives additional assurance that there will be  adequate supplies of albuterol HFA MDIs if there is an interruption of  production at one of the GSK or 3M approved manufacturing sites. We also would  like to point out that GSK and 3M have overseas production facilities that are  not listed as authorized manufacturing facilities in the approved NDAs for 
  PROVENTIL HFA and Ventolin HFA. These  facilities may be able to export albuterol HFA MDIs to the United States  in an emergency shortage situation. </p>
<p>  In our rulemaking establishing the  criteria for eliminating an essential-use designation, we considered requiring  multiple production sites to ensure a secure supply of non-ODS drug products  (see the 1997 ANPRM (69 FR 10242 at 10245), the 1999 proposed rule (64 FR 47719  at 47723), and the 2002 final rule (67 FR 48370 at 48377)). We chose not to  require multiple production sites for the alternative products as a criterion  for eliminating the essential-use designation. In any case, albuterol HFA MDIs  can be manufactured at three or more sites, which will provide a high degree of  security for continued supplies of albuterol HFA MDIs, compared to the supply  of other drugs intended for treatment of serious or life-threatening diseases,  many of which are only manufactured in one facility. </p>
<p>  (Comment 16) One comment recommended we  delay the effective date for this rule until albuterol MDIs from IVAX and  Sepracor Inc. (Sepracor) are on the market to ensure adequate supplies and  provide price competition. Another comment recommended we establish an earlier  effective date if the albuterol MDIs from IVAX and Sepracor Inc., are approved. </p>
<p>  The IVAX albuterol HFA MDI is already  approved (see our response to comment 14 of this document). Sepracor’s  levalbuterol tartrate <a href="#ftn8">8</a> MDI XOPENEX HFA was approved on March  11, 2005, but has not been marketed by the time this document was published.  Because XOPENEX HFA has not been marketed, we cannot consider it an alternative  to albuterol CFC MDIs (see our response to comment 14 of this document). While  we believe that the presence of additional suppliers of non-ODS albuterol  products would be desirable for the reasons given in the comment, we do not  believe they are necessary for the purposes of this rulemaking. Based on  statements from GSK, Schering, and 3M, we expect that adequate production  capacity for alternative products evaluated under Section 2.125(g) will exist by the  effective date of this rule. As we discuss in our responses to comment 18 and  in section V of this document, we also believe  that anticipated prices for albuterol HFA MDIs will not prevent patients from  being adequately served by the albuterol HFA MDIs, even without the downward  price pressure of additional competition. <br>
  We find that supplies and production  capacity for albuterol HFA MDIs will exist at levels sufficient to meet patient  needs by December 31, 2008.</p>
<p><em>D. Adequate U.S. Postmarketing Use Data is  Available for the Non-ODS Products </em> </p>
<p>  We did not receive any substantive  comments about whether adequate U.S.  postmarketing use data is available for the albuterol HFA MDIs. We therefore  finalize our tentative conclusion that adequate U.S. postmarketing use data is  available for PROVENTIL HFA and VENTOLIN HFA, the albuterol HFA MDIs that we  considered as alternatives in this rulemaking. </p>
<p><em>E. Patients Are Adequately Served by  the Non-ODS Products </em> </p>
<p>  (Comment 17) A representative of GSK  speaking at the PADAC meeting described GSK’s Bridges to Access program.  Bridges to Access provides GSK drugs at very low cost to lower-income individuals  and families. She also mentioned GSK’s Orange Card Program and the Together Rx  program in which GSK participates. Both of these programs allow eligible  Medicare patients to purchase drugs at significantly reduced prices. She added  that GSK intended to annually distribute 2 million VENTOLIN HFA MDIs to  physicians as samples. She also said GSK expected that many physicians would  primarily provide these samples to their lower-income patients. </p>
<p>  A subsequent written comment from GSK  provided additional information on the Bridges to Access, Orange Card, and  Together Rx programs. The comment also describes a Ventolin HFA Savings Check  program which will distribute at least 3 million $10 coupons for use in  purchasing VENTOLIN HFA MDIs. </p>
<p>  A representative of Schering speaking  at the PADAC meeting said Schering’s SP Cares program, which is similar to  GSK’s Bridges to Access program, distributes free drugs, including PROVENTIL  HFA, to low-income uninsured patients. </p>
<p>  A written comment asserted that the  Bridges to Access program provided albuterol HFA MDIs to only approximately 1.4  percent of the uninsured patients who need albuterol MDIs, and that the program  would have to be expanded to an extreme degree to 
  provide meaningful supplies of  albuterol MDIs to all uninsured patients. This comment also asserted that GSK’s  commitment to annually provide 2 million free albuterol HFA MDIs would have a  limited benefit to the uninsured population because large numbers of uninsured  patients receive medical care in the emergency departments of hospitals rather  than in a physician’s office, and it is unlikely that the free albuterol HFA  MDIs will be distributed to the emergency departments. This comment was  submitted before GSK’s comment describing the Ventolin HFA Savings Check program. </p>
<p>  Another comment stated that any patient  assistance program must be targeted to those most in need, particularly  low-income children and minority populations, while yet another comment  stressed the importance of patient assistance programs in the transition to  albuterol HFA MDIs. </p>
<p>  We took these comments into  consideration in determining that patients would be adequately served by  albuterol HFA MDIs. These patient assistance programs have the potential to  alleviate difficulties that lower income patients may have in obtaining the  higher-priced albuterol HFA MDIs. </p>
<p>  We agree with the comment that stated  that these programs must carefully target the populations most in need of  financial assistance in procuring needed albuterol MDIs, and we strongly recommend  that GSK and Schering take all reasonable steps to ensure that their programs  serve patients with the greatest needs, regardless of whether those patients  are treated in a physician’s office, clinic, or hospital emergency department.  This targeting is particularly important in distributing free albuterol HFA  MDIs. </p>
<p>  We believe that many of the concerns  expressed by the comment critical of GSK’s Bridges to Access are valid, but  that the comment underestimates the positive effect that Bridges to Access and  other patient assistance programs can have. The estimate in the comment did not  factor in the 2 million free albuterol HFA MDIs GSK has committed to distribute  to physicians as samples and whatever free albuterol HFA MDIs Schering may  distribute. The comment also could not factor in the effect of GSK’s Ventolin  HFA Savings Check program. With successful targeting, these free albuterol HFA  MDIs and $10 coupons should have a beneficial impact; with less successful  targeting the impact could be very limited (see section VII.D.2 of this  document). The comment also ignores the potential impact of Schering’s SP Cares  program, which is similar to GSK’s Bridges to 
  Access program. We recognize that the  Bridges to Access and SP Cares programs will have to expand to reach all  uninsured low and moderate income patients who will need albuterol HFA MDIs,  but the degree of expansion required would be smaller than that described in  the comment critical of the Bridges to Access program. We also believe that GSK  and Schering understand the need to expand these programs, and that this  understanding was implicit in their testimony at the PADAC meeting and written  comments (see pp. 5–6 of GSK’s corrected comment of August 25, 2004 (2003P–  0029/CR1) and p. 4 of Schering’s comment of August 13, 2004 (2003P– 0029/C31)). </p>
<p>  (Comment 18) A speaker at the PADAC  meeting said because albuterol HFA inhalers retail for $20 more than generic  albuterol CFC MDIs, an early phaseout of albuterol HFA MDIs could result in a  total $5 billion in additional treatment costs until HFA inhalers come off  patent. The speaker also said the economic burden would fall most heavily on  those Americans least able to pay the price, with a disproportionate effect on  minorities, inner-city children, elderly patients on fixed incomes, and the  rural poor. The speaker asserted that eliminating the essential-use designation  before lower-priced generic albuterol HFA MDIs are on the market would force  many lower-income patients to discontinue use of albuterol MDIs. The speaker  also referred to a recent study in <em>JAMA: The  Journal of the American Medical Association </em>indicating  that increasing copayments can reduce prescription drug use up to 32 percent.  She further stated this would result in a cascading increase in total health  care costs, as patients who discontinue their albuterol are admitted to  emergency rooms and hospital wards. </p>
<p>  A speaker representing an economics  consulting firm under contract to GSK stated at the PADAC meeting that patients  would be adequately served by albuterol HFA MDIs. He projected the average  price per MDI would increase by $9.87 and the yearly average cost per patient  would rise by $16.02. He also said adequate programs were in place to minimize  the adverse impact on lower-income patients. </p>
<p>  Several comments from patients, health  care professionals, and other parties stated the elimination of lower-priced  generic albuterol MDIs that would result from this rule would force many  patients to discontinue the use of albuterol MDIs, with significant adverse  impact on their health, increased hospitalizations, loss of time at work, and a  worsening quality of life. Many of 
  these comments recommended the  essential-use status of albuterol MDIs not be removed until after generic  albuterol HFA MDIs are approved and marketed. </p>
<p>  Other comments agreed with our  tentative conclusion stated in the 2004 proposed rule that patients will be  adequately served by albuterol HFA MDIs. </p>
<p>  While we do not agree with the  statement from the speaker from the contract economic consulting firm that the  average price per MDI would only increase by $9.87 and that the yearly average  cost per patient would only rise by $16.02, we do agree with the conclusion of  the speaker that the price of albuterol HFA MDIs will not prevent patients from  being adequately served. As discussed in more detail in section V of this  document, we estimate that the retail cash price per MDI would increase by $27  and the average yearly cost to uninsured patients would rise $95. While higher  drug prices are undesirable, we do not believe that asthma and COPD patients  will be forced to stop using albuterol MDIs because of price increases. We  believe that the programs discussed in comment 17 of this document can, if  properly utilized, provide a safety net for lower-income patients who otherwise  could not afford this very important drug. Section V of this document contains  a fuller discussion of the economic issues presented by this rulemaking. While  we recognize that sales of albuterol MDIs may decline by approximately 1 or 2  percent as a result of this rulemaking, this decline in sales does not  necessarily equate to patients having to forgo appropriate treatment of their  asthma or COPD because of price increases. There are many ways patients may  modify their behavior in order to minimize the impact of elimination of generic  albuterol MDIs, including: increasing their use of other asthma and COPD drugs,  including non-albuterol bronchodilators (and thereby decreasing their need for  albuterol); buying fewer MDIs to keep in different locations because they have  chosen to limit the number of MDIs they have beyond the one patients generally  carry on their person. Patients with infrequent bouts of bronchospasm may also  choose not to purchase albuterol HFA MDIs that the patients believe they might  not use, even though the patients are financially able to do so. </p>
<p>  (Comment 19) A speaker at the PADAC  meeting said an FDA policy that removed lower priced generic drugs from the  market was contrary to the intent of the Drug Price Competition and Patent Term  Restoration Act of 1984 
  (Public Law 98–417) (Hatch-Waxman  amendments). A written comment asserted the real intent of this rulemaking was  to remove generic albuterol MDIs from the market. </p>
<p>  We recognize that one of the  consequences, although not one we desire, of this rulemaking will be the  removal, for a period of time, of generic albuterol MDIs from the market. We  agree with the speaker at the PADAC meeting that one of the general intentions  of the Hatch-Waxman amendments is to encourage the entry of lower-priced  generic drug products into the market. However, another key purpose of the  Hatch-Waxman amendments is to encourage significant innovations in human drugs  (<em>see generally </em>130  Cong. Rec. H9113–14 and H9121–22 (Sept. 6, 1984) (statements of Rep. Waxman)).  The development of HFA inhalers represents large investments of time and money  by innovator firms. This investment resulted in innovative products that  significantly serve the public health by protecting the stratospheric ozone. While  the provisions of the Hatch-Waxman amendments do not directly apply to this  rulemaking, the underlying general policy of encouraging innovation and  protecting investment in research and development does apply as much as the  policy of encouraging the availability of lower-priced generic drugs. Most  importantly, there is no specific provision in the Hatch-Waxman amendments that  prohibits us from removing generic albuterol MDIs from the market. There is,  however, specific language in the Clean Air Act (42 U.S.C. 7671) that requires  us to evaluate whether a use of an ozone-depleting substance in a drug product  is, or remains, an essential use. We are obligated to follow the specific  mandate Congress gave us in the Clean Air Act, rather than one of two general  policies underlying another piece of legislation. </p>
<p>  (Comment 20) One comment suggested we  approve generic albuterol HFA MDIs immediately, to lower expenses incurred by  asthma patients.</p>
<p>  Albuterol HFA MDIs are the subject of  patents that may affect the availability of generic albuterol HFA MDIs until  they expire. FDA’s ability to approve generics is constrained by the patent and  exclusivity protections afforded by the Hatch-Waxman amendments. FDA may not  approve generic albuterol HFA MDIs before permitted by law. </p>
<p>  (Comment 21) One comment expressed  concern that the removal of the essential-use designation for albuterol MDIs  would lead to higher costs to the Federal Government as a result of the  Medicare prescription drug <br>
  benefits that will go into effect on  January 1, 2006 (see Title I of the Medicare Prescription Drug Improvement and  Modernization Act of 2003 (Public Law 108–173, December 8, 2003)). The comment  recommended that the essential-use designation for albuterol not be removed  until generic albuterol HFA MDIs come on the market, to minimize spending by  the Federal Government. </p>
<p>  Although cost to the Federal Government  is not a criterion under Section 2.125(g), the availability of prescription drug  benefits under Medicare does affect whether patients are adequately served by  the non-ODS products. In fact, the prescription drug benefits will reduce the  impact of higher prices for albuterol MDIs on Medicare-eligible patients, who  would not otherwise have prescription drug insurance benefits. This will help ensure  that patients are adequately served by albuterol HFA MDIs. </p>
<p>  (Comment 22) A few comments suggested  that prices for albuterol HFA MDIs would increase after the rulemaking. A GSK  spokesperson at the PADAC meeting stated that GSK had committed to a price freeze  on VENTOLIN HFA until December 31, 2007. The commitment was repeated in GSK’s  subsequent written comments. </p>
<p>  We believe that GSK’s price freeze will  be effective in keeping prices at the current level through much of the  transition period before the effective date of this rule. Although Schering has  not made a similar commitment, it seems unlikely that they will raise their  prices knowing that one of their two competitors is committed to a price  freeze. The presence of both GSK and Schering in the market should provide  downward pressure on prices for albuterol HFA MDIs that will continue after the  effective date of this rule (see pp. 13–20 of the National Economic Associates’  comment of August 13, 2004 (2003P–0029/C25), and section V.D.1 of this document).  Even if this pressure does not result in price decreases, it may prevent price  increases. A representative of IVAX indicated at the PADAC meeting that IVAX’s  albuterol HFA MDI would be priced lower than PROVENTIL HFA and VENTOLIN HFA.  IVAX’s entry into the albuterol HFA MDI market and the potential market entry  of additional albuterol HFA MDIs will provide additional downward pressure on  prices even before the entry of generic albuterol HFA MDIs. </p>
<p>  (Comment 23) One comment objected to  the elimination of the essential-use designation for albuterol MDIs, saying the  price of albuterol HFA MDIs is more than $100 per MDI compared to generic 
  albuterol CFC MDIs, which cost less  than $10 per MDI. </p>
<p>  The issue of the impact of higher  prices for albuterol HFA MDIs is one that we have given a great deal of  thought, but the difference is not nearly as great as this comment states. The  weighted average (across all payer types) of retail prescription price for  generic albuterol CFC MDIs during the first half of 2004 was about $13.50 per  MDI and the weighted average retail prescription price for albuterol HFA MDIs  was about $39.50 per MDI (see section V.C.6 of this document). As we discuss in  our response to comment 18 and section V of this document, we do not believe that  this price difference prevents patients from using albuterol HFA MDIs.</p>
<p>  (Comment 24) One comment recommended  that we perform a cost-benefit analysis using Medical Expenditure Panel Survey  (MEPS) data from the Agency for Healthcare Research and Quality (AHRQ). </p>
<p>  The analysis of impacts described in  section V of this document uses the MEPS data. While the analysis does look at  both the costs and benefits of this rulemaking, we would not characterize the  analysis as a full cost-benefit analysis because we are unable to fully  quantify the public health costs and environmental benefits in dollar terms;  however, we do quantify these costs and benefits to the extent we are able. </p>
<p>  (Comment 25) One comment asserted that,  while our analysis in the 2004 proposed rule of the economic impact of this  rulemaking on patients was appropriate to the extent the analysis focused on  whether higher prices would deter patients from using albuterol MDIs, those  portions of the economic analysis that dealt with more general societal costs  were inappropriate and contrary to the provisions of Section 2.125. </p>
<p>  We are required to examine the broader  societal costs and benefits of any rulemaking. Executive Order 12866 directs us  to assess all costs and benefits of available regulatory alternatives and, when  regulation is necessary, to select regulatory approaches that maximize net  benefits. The Regulatory Flexibility Act (5 U.S.C. 601–612) requires agencies  to analyze regulatory options that would minimize any significant impact of a  rule on small entities. Section 202(a) of the Unfunded Mandates Reform Act of  1995 (Public Law 104–4) requires that agencies prepare a written statement that  includes an assessment of anticipated costs and benefits before proposing any  rule that includes any Federal mandate that may result in significant  expenditure by State, local, 
  and tribal governments, or the private  sector. </p>
<p>  (Comment 26) A few comments stated  albuterol HFA MDIs were unacceptable alternatives because they did not propel  the drug with adequate force into the lungs. Other comments stated that they  had to use an albuterol HFA MDI several times to get the same effect they had  received from significantly fewer uses of an albuterol CFC MDI. Several  comments from patients stated that their experience indicated albuterol HFA  MDIs were less effective than albuterol CFC MDIs, while other comments from  patients stated that they had found albuterol HFA MDIs to be more effective  than albuterol CFC MDIs. One physician commented that she believed HFA MDIs  were better drug delivery systems than CFC MDIs. </p>
<p>  The wording of certain comments leads  us to believe that at least some of people submitting these comments may be  confusing dry powder inhalers (DPIs) or aqueous (AQ) pumps with HFA MDIs. There  are currently no albuterol DPIs or AQ pumps being marketed. We did not consider  any DPI or AQ pump as a potential alternative to albuterol CFC MDIs. Other  comments may reflect the common misperception that MDIs propel drugs into the  lungs. MDIs do not in fact propel any significant amount of drug into the  lungs. MDIs propel the drug into the mouth and the drug is then inhaled into  the lungs. Albuterol CFC MDIs and albuterol HFA MDIs work in same way; both  contain the active ingredient as a very fine powder which is delivered in a  suspension into the patient’s mouth. MDIs that forcefully deliver the drug  suspension may actually be less effective at delivering the drug into the  lungs. In these instances, a significant portion of the drug may be sprayed  onto the surfaces in the back of the mouth, from which they will be swallowed  rather than inhaled into the lungs. An explanation that we believe likely for  some of these perceived differences is the possibility that the albuterol HFA  MDIs that were being used had clogged mouthpieces. Cleaning the mouthpieces as  described in the labeling for PROVENTIL HFA and VENTOLIN HFA should alleviate  these problems. </p>
<p>  Whatever the perceived differences  between albuterol CFC MDIs and albuterol HFA MDIs may be, clinical studies have  shown the albuterol HFA MDIs are as effective as the albuterol CFC MDIs in  treating asthma and COPD. </p>
<p>  (Comment 27) One comment stated we  should not remove the essential-use designation for albuterol MDIs because  members of the person submitting the comment’s family are allergic to the 
  lactose contained in alternative  products. </p>
<p>  Neither VENTOLIN HFA nor PROVENTIL HFA  contains lactose. While other inhaled drug products for the treatment of asthma  and COPD do contain small amounts of lactose, our determination on the essential-use  designation for albuterol MDIs is based exclusively on the suitability of  VENTOLIN HFA and PROVENTIL HFA as alternatives. </p>
<p>  (Comment 28) One person said in his  comment he had an adverse reaction that included tachycardia (elevated heart  rate) after taking PROVENTIL HFA. He attributed the adverse event to ethanol,  which is an inactive ingredient in PROVENTIL HFA and to which he is sensitive. </p>
<p>  Reports of an allergic reaction  attributed to the very small amounts of ethanol contained in PROVENTIL HFA are  extremely rare. <a href="#ftn9">9</a> VENTOLIN HFA, which does not contain  ethanol, should be considered for asthma and COPD patients who may be sensitive  to ethanol. Unlike the albuterol CFC MDIs, VENTOLIN HFA and PROVENTIL HFA do  not contain identical active ingredients, and patients having difficulties with  one product should discuss with their physicians switching to the other. </p>
<p>  (Comment 29) One person said in his  comment he had an asthma attack after his first use of a QVAR (beclomethasone  dipropionate) HFA MDI. He attributed the adverse event to the HFA propellant in  the QVAR MDI and concluded that HFA MDIs would not serve patients who were  sensitive to HFA.</p>
<p>  Another person said in her comment her  use of an albuterol HFA MDI caused irritation and triggered an asthma attack. </p>
<p>  A third comment suggested HFA MDIs  could be less likely to cause paradoxical bronchospasm because of tighter  specifications for the various compounds in the MDIs. </p>
<p>  Bronchospasm may occur after using any  inhaled asthma drug, including both albuterol CFC and HFA MDIs. The approved  labeling for both albuterol CFC and HFA MDIs, as well as QVAR and most other  approved inhaled drugs, describe paradoxical bronchospasm as an adverse event  that can be expected in 
  a small number of patients. Paradoxical  bronchospasm seems to be associated with the first use of an MDI or vial of an  inhaled drug. The warnings about paradoxical bronchospasm represent a general  concern with inhaled drugs, and do not represent a special concern for albuterol  CFC and HFA MDIs or QVAR. Paradoxical bronchospasm is very rare; a study  conducted in the United Kingdom  of 10,472 patients regularly using VENTOLIN EVOHALER (an albuterol HFA MDI  marketed in the United    Kingdom that is substantially similar to  VENTOLIN HFA) over five 3­month observation periods, did not show any incidents  of paradoxical bronchospasm (Ref. 3). We have not seen any evidence from the  clinical studies of various HFA MDIs that this type of adverse event is more or  less common with HFA MDIs than with CFC MDIs. Absent other data, we cannot  assume that the adverse events described in the comments were caused by the HFA  propellant in the MDIs. </p>
<p>  (Comment 30) A few comments stated  albuterol HFA MDIs left a powdery residue at the back of the throat. One person  said in her comment that after using an albuterol HFA MDI she felt the need to  rinse her mouth out. One comment said this tendency to leave a powdery residue  could lead to thrush and other infections. </p>
<p>  A very small number of patients have  reported an unpleasant powdery residue in the oral cavity after use of an  albuterol HFA MDI. Any MDI can leave a residue in the oral cavity. Use of a  spacer can minimize the amount of residue left in the mouth. Patients who  experience this problem may wish to speak to their physicians about using a  spacer with the MDI. We do not consider problems with a powdery residue to be  either prevalent enough or serious enough to prevent patients from being  adequately served by albuterol HFA MDIs. </p>
<p>  Thrush, also known as candidiasis, is  occasionally seen with the use of inhaled corticosteroids. Although thrush may  be seen in patients who are taking both inhaled corticosteroids and inhaled  albuterol, there is no evidence to suggest that use of albuterol or HFA  contributes to the development of thrush. Accordingly, we do not believe thrush  to be a problem with use of albuterol HFA MDIs. </p>
<p>  (Comment 31) One comment stated  albuterol HFA MDIs are not an adequate substitute because they cannot be used  with spacers. </p>
<p>  Commercially available spacers can be  used with both albuterol HFA MDIs. Patients who are having difficulties with  any MDI may wish to speak to their 
  physicians about using a spacer in  conjunction with the MDI. </p>
<p>  We find that patients who medically  require albuterol CFC MDIs are adequately served by albuterol HFA MDIs. </p>
<p><em>F. Effective Date </em> </p>
<p>  (Comment 32) Several speakers at the  PADAC meeting and comments, including comments from Schering, 3M, and GSK,  recommended an effective date of December 31, 2005. </p>
<p>  Schering, 3M, and GSK have all stated  that adequate production capacity and supplies would be in place by December  31, 2005. However, the December 31, 2005, date is merely a projected date, and  neither Schering, 3M, nor GSK provided the basis for their projections. No  timelines, construction and installation schedules, or training goals were  provided to us. We have no descriptions of what new machinery must be procured,  nor any idea when that machinery can be up and running. While we believe that  the projections were made in good faith, unanticipated delays and shortages  could push the date on which adequate production capacity and supplies are in  place significantly beyond December 31, 2005. Due to the lack of underlying  information, we are unable to evaluate the likelihood or length of any possible  delays. </p>
<p>If this rule were to go into effect  before adequate production capacity and supplies were in place, there would not  be a smooth transition from albuterol CFC MDIs to albuterol HFA MDIs. We could  be forced to publish a document postponing the effective date. We could see  resumption of production at albuterol CFC MDI lines that had been closed and  increased production to restock supplies of albuterol CFC MDIs that had been  allowed to dwindle in anticipation of the effective date of this rule. If  needed CFCs, MDI components, or production facilities were unavailable,  shortages of albuterol MDIs could exist. </p>
<p>  Furthermore, if we were forced to push  the effective date of this rule back because of the failure of manufacturers to  have adequate production capacity and supplies in place, it would be very  harmful to any transition education program. Patients and health care providers  would be provided with different dates by which the transition from albuterol  CFC MDIs to albuterol HFA MDIs would be completed. This could lead to  confusion, lack of trust, and the belief that people would not have to think  about the transition because it would probably be postponed again.</p>
<p>  When we consider how serious and life  threatening asthma and COPD are, and how important albuterol MDIs are in  treating asthma and COPD, it becomes apparent that a conservative estimate of  when sufficient supplies and production capacity will exist and a later  effective date will better ensure that shortages do not happen and a smoother  transition will be made. For these reasons we believe that a December 31, 2005,  effective date does not provide an adequate safety margin to ensure that  adequate production capacity and supplies will be in place. Accordingly, we  have determined that December 31, 2008, is a more appropriate effective date  for this rule.</p>
<p>  We arrived at a December 31, 2008,  effective date with the expectation that an orderly transition to albuterol HFA  MDIs would be completed by that date. Although significant production and  supplies may be in place prior to this date, in light of the serious  consequences of inadequate supplies and the need to ensure that vulnerable  patients have adequate access, the date of December 31, 2008, ensures that the  criteria in Section 2.125(g) will be met and that the transition to albuterol HFA  MDIs can be accomplished smoothly. This transition period between the  publication of the final rule and the effective date ensures that new  facilities will be on line, that manufacturers will have successfully  demonstrated their ability to produce necessary supplies of albuterol HFA MDIs,  and patients and health care providers will be adequately educated about the  transition to albuterol HFA MDIs. After the effective date, section 610 of the  Clean Air Act would prohibit the sales of albuterol CFC MDIs in interstate  commerce. As discussed in response to comment 42 of this document, the  transition time under this rule should allow for retailers and their suppliers  to deplete their stock. </p>
<p>  (Comment 33) One comment suggested a  2007 effective date without giving reasons why this date would be more  appropriate than others. </p>
<p>  This comment did not provide any  information or rationale for the date, and our rationale for the December 31,  2008, effective date is set out in our response to comment 32 of this document. </p>
<p>  (Comment 34) A few comments asked that  we set an effective date that will allow patients to try different albuterol  HFA MDIs to see if they perform adequately for individual patients. </p>
<p>  We believe the December 31, 2008,  effective date provides ample opportunity for patients to work with their  healthcare providers to determine the best substitute. </p>
<p>  (Comment 35) Several comments urged us  to set the effective date for this rule late enough to allow lower-priced  generic albuterol HFA MDIs onto the market before the essential-use status of  albuterol MDIs is removed. </p>
<p>  As we discussed in our responses to  comment 18 and in section V of this document, we do not believe that presence  of generic albuterol HFA MDIs is necessary to ensure that patients are  adequately served by albuterol HFA MDIs. </p>
<p>  (Comment 36) In the 2004 proposed rule  we asked for comments ‘‘on when patents may cease to bar the marketing of  generic albuterol HFA MDIs’’ (69 FR 33602 at 33608). We did not receive any  substantive comments on this issue. One comment, while agreeing with us that we  do not have the institutional expertise to evaluate patents, criticized our  statement that ‘‘it seems at least possible that key patents could be  successfully challenged well before 2015 or perhaps even 2010, allowing generic  drugs to enter the market much earlier than anticipated’’ (69 FR 33602 at  33608). The comment asserted it would be irresponsible to base any decision on  the mere possibility that patents may be successfully challenged. The comment  also stated competition would not be blocked because of the ability of firms to  license HFA MDI technology from 3M. It also pointed to IVAX as a potential  source of competition. </p>
<p>  We did not receive any substantive comments  on the validity of the patents listed in the Orange Book for albuterol HFA  MDIs. Because we have determined that, as we discussed in our response to  comment 18 and in section V of this document, the presence of generic albuterol  HFA MDIs in the market is not necessary to ensure that patients are adequately  served by albuterol HFA MDIs, it is not necessary for us to reach a conclusion  on the validity of those patents. We do not believe that IVAX or entrants into  the albuterol HFA MDI market that license HFA MDI technology from 3M will be  priced as low as current generic albuterol CFC MDIs. We base this belief on the  added expense that licenses will entail for manufacturers and the past history  of drug pricing. However, we do believe that IVAX and other, potential,  entrants can exert downward pressure on prices that could result in lower  prices than we currently see for albuterol HFA MDIs. </p>
<p>  (Comment 37) A representative of  Honeywell, speaking at the PADAC meeting, said Honeywell planned to resume  production of CFC propellants at a Louisiana  plant, and gave 
  assurances that Honeywell Chemicals  could supply CFC propellants for years to come, if needed. He also said FDA  should not consider a shortage of CFC propellants in establishing a transition  strategy. Honeywell later provided more details on the subject in a written  comment.</p>
<p>  Another speaker at the PADAC meeting  said Honeywell’s resumption of production at their Baton   Rouge plant would violate U.S. law and the Montreal Protocol.  He further said that according to statements made by Honeywell, current  stockpiles of CFCs coupled with production of CFCs at Honeywell’s Netherlands  facility, which is scheduled to close at the end of 2005, should meet 
  U.S.  demand for CFCs for use in MDIs until 2008. </p>
<p>  Another comment stated it was  appropriate for us to take into account the disruptions in the supply of CFCs  caused by Honeywell ending production of CFCs at their Netherlands facility and the equivocal legal  status of Honeywell’s resumption of production of CFCs at their Baton Rouge facility. It  also said we should carefully scrutinize Honeywell’s ability to manufacture  pharmaceutical grade CFCs at the Baton    Rouge facility. </p>
<p>  Although we discussed Honeywell’s  continued production of CFCs in the 2004 proposed rule (69 FR 33602 at  33607–33608), this issue does not address any of the criteria under which we  are making a determination on the essential-use status of albuterol MDIs. The  criteria in Section 2.125(g) direct us to examine the adequacy of supplies and  capacity for the non-ODS substitutes, but not the supplies and capacity for the  ODS product. </p>
<p>  (Comment 38) Speakers at the PADAC  meeting and written comments stated that the Parties to the Montreal Protocol  were unlikely to continue to approve the United States’ future nominations  for allocations of CFCs for use in MDIs. One comment asked that we carefully  consider the future supply of CFCs in setting an effective date for this rule.  Another comment pointed out that a key raw material in the production of CFCs  is carbon tetrachloride, an ODS that is being phased out under the provisions  of the Montreal Protocol. The comment asserted that this could lead to a  situation where it could be very difficult to obtain the needed raw materials  for the manufacture of CFCs, even if the manufacture itself was allowed under  the Montreal Protocol. Another comment urged us to not allow the fact that  other Parties to the Montreal Protocol have initiated phaseouts of albuterol  CFC MDIs pressure us into a premature action, pointing out that 
  prices for albuterol HFA MDIs are lower  in other countries. </p>
<p>  We are obligated to follow the  procedures and criteria in Section 2.125 in this rulemaking, and the continued supply  of CFCs under the Montreal Protocol or the phaseout strategies in other  countries are not criteria listed in Section 2.125(g) and these issues were not  considered in this rulemaking. </p>
<p>  (Comment 39) Prior to publication of  the 2004 proposed rule, we received a comment from a manufacturer of MDI  components submitted in response to the Stakeholders’ petition. The  manufacturer said it has the ongoing capacity to supply MDI components  necessary for ongoing use of CFC MDIs, including albuterol CFC MDIs, and it  will continue production as long as there is sufficient demand. </p>
<p>  While we appreciate the information  contained in this comment, the continued availability of MDI components  necessary for continuing use of CFC MDIs is also not a criterion under Section  2.125(g) upon which we may base our decision. </p>
<p>  (Comment 40) One speaker at the PADAC  meeting suggested that FDA monitor patient compliance and access to albuterol  HFA MDIs and reserve the right to allow a certain number of albuterol CFC MDIs  to be sold in case of a real emergency. </p>
<p>  Under the Clean Air Act, a use of an  ODS is either essential or it is not. We are currently unaware of any  interpretation of the provisions of the Clean Air Act that would give us the  flexibility to allow emergency sale or distribution of a CFC MDI once its use  is determined to be non-essential.</p>
<p>Comment 41) One comment recommended  that we not set an effective date until we are certain that adequate production  capacity will exist. </p>
<p>  In choosing December 31, 2008, as the  effective date of this rule, we did so with every reasonable expectation that  adequate supplies and production capacity will exist by that time. </p>
<p>  (Comment 42) A comment recommended that  we not establish a date beyond which retail pharmacies are barred from selling  albuterol CFC MDIs, even if we did establish a date beyond which albuterol CFC  MDIs could not be manufactured. </p>
<p>  The sale of remaining stocks of  albuterol CFC MDIs was one of the factors we considered in establishing an  effective date that is well after the date we expect the transition to HFA MDIs  to be substantially completed by manufacturers of albuterol MDIs. This  additional buffer period should give wholesalers and retailers adequate time to  dispose of stocks of albuterol CFC 
  MDIs. That being said, we do not have  the authority to establish an effective dates for wholesalers and retailers  that differs from an effective date for manufacturers. We can only make a  determination on the date by which the criteria set out in Section 2.125(g) will be  met and the use of ODSs in albuterol MDIs is no longer essential. Once a  product is no longer an essential use, the prohibitions in section 610 of the  Clean Air Act automatically come into play. However, section 610 of the Clean  Air Act only applies to sales in interstate commerce. If shipments of albuterol  CFC MDIs by producers have stopped by December 31, 2007, or shortly thereafter,  wholesalers and retailers should not find it difficult to distribute their  stocks by December 31, 2008. </p>
<p><em>G. CFCs and the Environment </em> </p>
<p>  (Comment 43) A few comments asserted  that CFCs used in MDIs do not have an adverse impact on the environment because  the CFCs are inhaled rather than being released into the environment. </p>
<p>  Nearly all of the CFCs inhaled into the  lungs from an MDI are almost immediately exhaled into the environment. The  small amounts of CFCs absorbed into the body are later excreted and exhaled  without being broken down. Essentially all of the CFCs released from an MDI end  up in the atmosphere with resulting harm to the stratospheric ozone layer. </p>
<p>  (Comment 44) A few comments asserted  that the amount of ODSs released from albuterol CFC MDIs is insignificant, and  eliminating their use would not provide any environmental benefit. </p>
<p>  The United States evaluated the  environmental effect of eliminating the use of all CFCs in an environmental  impact statement (EIS) in the 1970s (see 43 FR 11301, March 17, 1978) (the 1978  rule). As part of that evaluation, FDA concluded that the continued use of CFCs  in medical products posed an unreasonable risk of long-term biological and  climatic impacts (see Docket No. 96N–0057). In 1990, Congress enacted Title VI  of the Clean Air Act, which codified the decision to fully phase out the use of  CFCs over time. Congress did not assign us the task of determining what amount  of environmental benefit would result from the removal of CFC-containing  medical devices, diagnostic products, drugs, and drug delivery systems from the  market. Congress did instruct us to determine whether such products are  essential. This rulemaking fulfills that obligation. </p>
<p>  (Comment 45) A comment asserted that  the Montreal Protocol is working well and that according to the Executive  Summary of the ‘‘World Meteorological Organization Global Ozone and Research  Project—Report No. 47: Scientific Assessment of Ozone Depletion: 2002’’  (Executive Summary) (available at <a href="http://www.unep.org/ozone/Publications/6v_science%20assess%20panel.asp"><em>http://www.unep.org/ ozone/Publications/ 6v_science%20assess%20panel.asp</em></a>), the continuing use of CFCs in albuterol MDIs would delay  restoration of the Earth’s ozone layer to its 1980 condition by an insignificant  time past the currently projected date of 2050. The comment quoted the  following passage from page xvii of the Executive Summary: </p>
<p>  The updated, best-estimate scenario for  future halocarbon mixing ratios suggests that the atmospheric burden of  halogens will return to the 1980 pre-Antarctic-ozone-hole levels around the  middle of the 21st century, provided continued adherence to the fully amended  and adjusted Montreal Protocol. Only small improvements would arise from  further reduced production allowances in the future. </p>
<p>  The size of the delay in the date the  ozone layer will be restored to its 1980 condition is not a criterion in  determining which medical devices, diagnostic products, drugs, and drug  delivery systems are essential under the Clean Air Act. These criteria are set  out in Section 2.125 and are discussed previously in this document. However, we note  that the estimate described in the quoted paragraph assumes ‘‘continued  adherence to the fully amended and adjusted Montreal Protocol.’’ As we discussed  in section II.C.2 of this document, Decision IV/2 envisioned elimination of the  production and importation of CFCs by January 1, 1996, by Parties that are  developed countries. Although production and importation of CFCs for use in  albuterol MDIs are permitted, year to year, as an essential use under the  Montreal Protocol, we fail to see how a rule that permits sale and distribution  of albuterol CFC MDIs into 2008 can be characterized as a reduction in  production allowances. The Montreal Protocol is frequently called the most  successful environmental treaty in history, yet its success is based primarily  on voluntary compliance by all of the Parties to the treaty. If the United  States were to continue sale and distribution of ODS products after adequate  alternative products were available, this could lead other Parties to do the  same, eventually threatening the integrity of the Montreal Protocol. In the  words of the Executive Summary cited in the comment, ‘‘Failure to comply with  the Montreal Protocol would delay or could even prevent 
  recovery of the ozone layer.’’  (Executive Summary at xxv.) The continued existence of a strong Montreal  Protocol is in the best interest of the public health of the United States,  and our failure to take timely action on albuterol MDIs could potentially  weaken the Montreal Protocol. </p>
<p>(Comment 46) One comment criticized our  attempts in the 2004 proposed rule to quantify the environmental benefits of  this rulemaking. </p>
<p>  We agree with the comment that  accurately quantifying the direct environmental benefits of this rule is very  difficult and that quantifying the indirect environmental benefits may be  impossible. However, as we discussed in our response to comment 25 of this  document, we are under separate legal obligation to examine the broader  societal costs and benefits of any rulemaking, including the environmental  costs and benefits. Accordingly, the discussion of the environmental costs and  benefits of this rule is separate from the determination as to whether the  criteria in Section 2.125 have been met. </p>
<p>  (Comment 47) One comment stated the  amount of CFCs released by MDIs is negligible compared to naturally occurring  CFCs.</p>
<p>  There are no naturally occurring CFCs. </p>
<p>  (Comment 48) A few comments seemed to  confuse CFCs with other greenhouse gases, such as carbon dioxide and nitrous  oxide, when stating that MDIs were a minor source of CFCs compared to sources  such as power plant and automobile emissions. </p>
<p>  While CFCs are considered to be  greenhouse gases, we are publishing this rule because the criteria in Section 2.125  have been met, rather than any contribution CFCs may be making towards global  warming. </p>
<p>  (Comment 49) A few comments stated that  MDIs were a minor source of CFCs compared to hair spray and deodorants. </p>
<p>  CFCs were banned from deodorants, hair  spray, and other cosmetics by the 1978 rule. Cosmetics containing CFCs have not  been legally marketed in the United    States since April 15, 1979, the effective  date of the 1978 rule. </p>
<p><em>H. Comments on the Analysis of Impacts </em> </p>
<p>  (Comment 50) We received several  comments about our estimates of the price increases that might result from the  proposed rule. </p>
<p>  One comment objected to FDA estimates  of expected price increases based on the price gap between albuterol CFC MDIs  and albuterol HFA 
  MDIs from drugstore.com, because the  Web site’s market share is small and therefore does not accurately represent  market prices. This comment recommended that we use retail cash albuterol MDI  prices from IMS Health Inc. (IMS). Another comment took average wholesale  prices of albuterol MDIs and inflated them according to average retail markups  on albuterol for cash payers of 28.8 percent for branded MDIs and 363.3 percent  for generic MDIs. From this, the comment calculated cash payers will pay on  average $8.61 more per MDI. </p>
<p>  Another comment contended that price  increases are of limited importance, because insurers have an incentive to  maintain lower copayments for albuterol. Lower copayments would minimize the  costs to insurers for emergency department visits, hospitalizations, etc. that  result from poorer compliance with albuterol therapy. </p>
<p>  A few comments said individuals  eligible for Medicare or Medicaid are unlikely to face higher costs for  albuterol as a result of this rule. </p>
<p>  We believe that cash albuterol MDI  prices best reflect prices paid by the uninsured, and, consistent with the  comment, have considered data on retail cash albuterol MDI prices from IMS,  which are generally considered to be the best price data available. Although we  did use prices from drugstore.com in the 2004 proposed rule, <a href="#ftn10">10</a> this  was done primarily because we did not have rights to use the IMS data when the  2004 proposed rule was being prepared. IMS retail price data reflect the impact  on consumers better than other measures such as estimates derived from average  wholesale cash prices inflated by average retail markups for cash payers. </p>
<p>  After reviewing these comments, we  continue to believe that the likely price increase will be approximately the  current difference in price between generic albuterol CFC MDIs and albuterol  HFA MDIs, although competition from IVAX’s approved albuterol HFA MDI and other  albuterol 
  HFA MDIs that enter the market may  lower prices somewhat. </p>
<p>  We believe that price increases are an  important determinant of access for individuals without insurance, who are  likely to pay the full amount of price increases out of their own pockets.  Copayments for albuterol MDIs for privately insured individuals may change when  this rule goes into effect, but such changes will be determined by their  insurers. While copayments are generally higher for branded drugs, they are not  necessarily higher for branded drugs that lack a generic alternative. We are  unable to predict how average copayments may change as a result of the rule. </p>
<p>  We agree with the comments suggesting  that individuals eligible for Medicare or Medicaid are unlikely to face higher  out-of-pocket costs for albuterol as a result of this rule. </p>
<p>  (Comment 51) Comments were submitted  about our use of estimates of consumers’ response to drug price increases taken  from the Goldman article (Ref. 4). One comment noted that elasticity estimates  in the Goldman article were based on a broad range of asthma drugs, many of  which differ from albuterol MDIs in important ways. The comment contended that  these differences prevent us from drawing meaningful conclusions about how  demand for albuterol MDIs will respond to price increases. </p>
<p>  A second comment noted that the  proposed rule failed to make use of estimates in the Goldman article indicating  a price elasticity of demand for asthma drugs as large as -.32. </p>
<p>  We recognize the limitations of  applying results from the Goldman article to the market for albuterol MDIs, and  have sought to characterize fully the associated uncertainty. We believe,  however, that focusing on a range of elasticity estimates from -.05 to -.15 is  reasonable and appropriate given available information. </p>
<p>  We used the Goldman article because it  provides recent estimates of how consumer demand for asthma drugs responds to  price increases. The article finds that among all users of asthma drugs, a  doubling of copayments for asthma drugs reduced drug use by 32 percent. Among  chronic asthma sufferers, use of asthma drugs decreased only 22 percent. To the  extent that asthmatics are more willing to reduce their use of maintenance  drugs, such as steroid inhalers, than to reduce their use of rescue drugs, such  as albuterol MDIs, the true consumer response to albuterol MDI price increases  may be less than the Goldman article suggests. </p>
<p>  We acknowledge the potential  shortcomings of applying estimates from the Goldman article to the market for  albuterol MDIs but, lacking better information upon which to base our  estimates, focus on the range of elasticity estimates from -.05 to -.15, the  same range focused upon in the proposed rule. </p>
<p>  (Comment 52) Several comments sought to  place our analysis of impacts in proper historical context by suggesting that  the reductions in use that we estimate are small compared with historical  variations. One comment noted that introduction of generic albuterol MDIs to  the market for albuterol MDIs in the mid-1990s, and the associated decline in  prices, was not associated with any decrease in asthma morbidity. </p>
<p>  A second comment noted that the  introduction of cheaper generic albuterol MDIs did not result in an increase in  consumption of albuterol MDIs, implying that removal of generic albuterol MDIs  should not result in a decrease in consumption. </p>
<p>  A third comment pointed out that the  introduction of generic albuterol MDIs to the market coincided roughly with the  entry of therapeutic alternatives such as salmeterol xinafoate, ipatropium  bromide, fluticasone propionate, and COMBIVENT, which would have decreased  demand for albuterol MDIs at the time lower priced generics became available. </p>
<p>  A fourth comment noted that year-to­year  fluctuations in demand for albuterol MDIs exceed 1 million units, implying that  estimated decreases in albuterol demand are small relative to the market.</p>
<p>  We believe it is difficult to draw  conclusions about the future albuterol MDI market based on characteristics of  the market from the 1990s. Our projected decrease in albuterol MDI sales  assumes that, apart from price increases, other determinants of albuterol  demand are held constant. In the mid–1990s, several factors that influence  albuterol MDI demand changed including the prevalence and incidence of asthma  and COPD and patterns of medical practice. However, the effects of these  changes cannot easily be estimated with existing data. For example, changes in  asthma prevalence before and after 1997 are complicated by changes in the  design of the National Health Interview Survey in 1997. We believe the comment  stating that introduction of new asthma drugs at this time decreased demand for  albuterol MDIs is probably correct, but we lack the data needed to quantify any  decrease in demand caused by <br>
  introduction of new asthma drugs.  Because important determinants of albuterol MDI demand are not held constant,  the lack of a clear relationship between aggregate albuterol MDI sales and  average prices in the 1990s does not undermine the projection that, all other  factors remaining the same, use of albuterol MDIs will fall as prices rise. </p>
<p>  We agree that a reduction in albuterol  MDI use of several hundred thousand annually is a small percentage of the total  number of albuterol MDIs used in the United States. </p>
<p><em>I. Other Comments </em> </p>
<p>  (Comment 53) Speakers at the PADAC  meeting and written comments said albuterol MDIs were overused and the phaseout  of albuterol CFC MDIs would be an appropriate time for physicians and patients  to reevaluate the patients’ use of asthma medication. The reevaluation would  optimize drug regimens used by asthma patients by emphasizing use of  maintenance drugs and deemphasizing the use of albuterol MDIs as a rescue medication.  One comment suggested we incorporate strategies to encourage these interchanges  into this final rule. Another written comment disagreed with these comments,  and asserted that the elimination of the essential-use designation for  albuterol MDIs should not be viewed as a teachable moment and it would be  inappropriate to force patients to use other longer acting but more expensive  drugs by effectively raising the price of albuterol MDIs. </p>
<p>  While recognizing that many experts  believe that albuterol MDIs are being overused, we do not have any reliable  data that show that there is a significant pattern of overuse. In any case, the  overuse or underuse of a drug product is not a factor that we consider under Section  2.125(g). We do, however, welcome any opportunity for physicians and patients  to reexamine the patients’ drug use and to try to optimize the patients’  treatment regimens. It is also important to remember that we do not regulate  the practice of medicine and, depending on how the strategies are expressed, an  effort on our part to incorporate into our regulation strategies to encourage  these consultations might be construed as the regulation of the practice of  medicine. </p>
<p>  (Comment 54) A comment from an industry  organization stated that educating patients and health care providers about the  transition from albuterol CFC MDIs to albuterol HFA MDIs is very important, and  offered to participate in cooperative education programs with FDA and other  interested parties. GSK has outlined their education plans in their comments. </p>
<p>  Other comments stated the importance of  transition education. </p>
<p>  We agree that educating patients and  health care providers about the transition is very important. Anyone who wishes  to discuss a cooperative educational effort with HHS and FDA should contact FDA  or the Office of the Secretary of HHS. </p>
<p>  (Comment 55) One comment recommended  that, in setting an effective date, we take into consideration the time  necessary to educate patients and health care providers about the transition to  albuterol HFA MDIs, and one comment recommended more time for this education. </p>
<p>  We believe that educating patients and  health care providers about the transition to albuterol HFA MDIs is very  important. From most patients’ perspective, albuterol HFA MDIs are essentially  identical <a href="#ftn11">11</a> to the albuterol CFC MDIs they will be  replacing. An explanation that an albuterol HFA MDI is being substituted for  the albuterol CFC MDI the patient had been receiving and a explanation of the  differences in using the new MDI should be adequate for the vast majority of  patients. This explanation can be given by the patient’s physician, pharmacist,  or other health care provider. While we realize it will take some time to  prepare and distribute educational material, we believe that adequate education  can easily be provided before the final transition to albuterol HFA MDIs. </p>
<p>  (Comment 56) One comment asserted that  ‘‘a premature phaseout would compromise the reward structure for innovation.’’  The comment also asserted that firms that had made substantial investments in  developing albuterol HFA MDIs would be adequately rewarded for the innovation  even if this rule were made effective at a date that would allow generic  albuterol HFA MDIs to enter the market before the removal of the essential-use  designation for albuterol MDIs. The comment stated that GSK had profited  handsomely from sales of its combination fluticasone and salmeterol DPI  products in the United    States and abroad. </p>
<p>  We do not see, nor does the comment  explain, how profits from the sale of combination fluticasone and salmeterol <br>
  </p>
<p>  DPIs could be seen as a reward for  GSK’s albuterol HFA MDI research and development. Even if we assume that GSK’s  sales of other products somehow provide adequate incentives for its innovation,  the comment does not assert how the research and development efforts of 3M, the  manufacturer of the first albuterol HFA MDI marketed in the United States,  have been rewarded. </p>
<p>  The development of ozone-friendly  products is important to achieving the goal of protection of the Earth’s ozone  layer. Accordingly, it is a factor we considered in our analyses of impacts  (see 69 FR 33602 at 33614–33615 and section V of this document). </p>
<p>  (Comment 57) One comment emphasized the  importance of encouraging the development of ozone-friendly products and stated  that, in consideration of the pharmaceutical firms developing ODS free  alternatives, the U.S. Government had committed itself ‘‘to ensure prompt  removal of nonessential CFC MDIs as soon as new and reformulated products  became available.’’ </p>
<p>  As we said previously in this document,  the development of ozone-friendly products is important to achieving the goal  of protection of the Earth’s ozone layer. However, we are unaware of the  commitment described in this comment. The 2002 final rule and this rulemaking  have been undertaken under our obligations under the Clean Air Act and the  Montreal Protocol. </p>
<p>  (Comment 58) A few comments expressed  unfavorable opinions on salmeterol DPIs and combination fluticasone and  salmeterol DPIs. Another comment complained about the high prices of  levalbuterol hydrochloride (HCl) inhalation solution. </p>
<p> We have not considered salmeterol DPIs,  combination fluticasone and salmeterol DPIs, or levalbuterol HCl inhalation  solution to be alternatives to albuterol CFC MDIs. Comments about salmeterol  DPIs, combination fluticasone and salmeterol DPIs, and levalbuterol HCl  inhalation solution are not relevant to this rulemaking. </p>
<p><strong>IV. Environmental Impact </strong> </p>
<p>  We have carefully considered the  potential environmental effects of this action. We have concluded that the  action will not have a significant adverse impact on the human environment, and  that an environmental impact statement is not required. Our finding of no  significant impact, and the evidence supporting that finding, contained in an  environmental assessment, may be seen in the Division of Dockets Management  (see <strong>ADDRESSES</strong>) 
  between 9 a.m. and 4 p.m., Monday  through Friday. </p>
<p><strong>V. Analysis of Impacts </strong> </p>
<p><em>A. Introduction </em> </p>
<p>  We have examined the impacts of the  final rule under Executive Order 12866, the Regulatory Flexibility Act (5  U.S.C. 601–612), the Unfunded Mandates Reform Act of 1995 (Public Law 104–4),  and the Congressional Review Act. Executive Order 12866 directs agencies to  assess all costs and benefits 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). We believe  that this final rule is consistent with the regulatory philosophy and  principles identified in the Executive order. This final rule is considered an  economically significant regulatory action under the Executive order. </p>
<p>  The Regulatory Flexibility Act requires  agencies to analyze regulatory options that would minimize any significant  impact of a rule on small entities. We lack the data to certify that this final  rule will not have a significant economic impact on a substantial number of  small entities. Therefore, we have prepared a Regulatory Flexibility Analysis. </p>
<p>  Section 202(a) of the Unfunded Mandates  Reform Act of 1995 requires that agencies 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 current threshold after adjustment for inflation is $115 million,  using the most current (2003) Implicit Price Deflator for the Gross Domestic  Product. This rule, however, does not contain such a mandate. </p>
<p>  The Congressional Review Act requires  that regulations that have been identified as being major must be submitted to  Congress before taking effect. This rule is major under the Congressional  Review Act. </p>
<p>  Limitations in the available data  prevent us from estimating quantitatively the anticipated costs and benefits to  society, so we focus instead on proxy measures. The costs of this final rule  include the benefits lost by consumers who would have bought albuterol MDIs at  the current price but are unwilling or unable to buy them at 
  a higher price. The price of albuterol  MDIs will rise because this rule, by ending the essential-use designation for  albuterol MDIs, will effectively remove less expensive generic versions of  albuterol MDIs from the market. Consumers and third-party payers, including  Federal and State Governments, will spend more for albuterol MDIs as a result  of the price increase. But this increased spending is not part of social cost  as conventionally defined, because it represents resources that are transferred  from drug buyers (consumers and third-party payers) to drug sellers (drug manufacturers,  wholesalers, pharmacies, etc.). The benefits of this rule include the value of  improvements in the environment and public health that may result from reduced  emissions of ODSs (for example, the reduced future incidence of skin cancers  and cataracts). The benefits also include improved expected returns on  investments in environmental technologies and greater international cooperation  to comply with the Montreal Protocol. As we are unable to estimate the costs  and benefits in dollar terms, we instead focus on the cumulative number of  albuterol MDIs that might not be sold and the changes in CFC emissions as a  result of the rule. </p>
<p>  As a result of this rule, approximately  96 million to 430 million albuterol CFC MDIs will be removed from the market,  depending on whether generic albuterol MDIs become available in 2010 or 2017.  If generic albuterol HFA MDIs enter the market at the end of 2010 (when one of 
  the earlier listed patents for  albuterol HFA MDIs expires) then 96 million albuterol CFC MDIs would have been  sold between the effective date of this rule (December 31, 2008) and the end of  2010, without the rule. If generic albuterol HFA MDIs enter the market at the  end of 2017 (when the last listed patent for albuterol HFA MDIs expires) <a href="#ftn12">12</a> 430  million albuterol CFC MDIs would otherwise have been sold between the effective  date of this rule, and December 2017, without the rule. After generic albuterol  HFA MDIs enter the albuterol MDI market and competition among albuterol HFA MDI  producers determines the price, there would be no rationale related to patient  access to albuterol MDIs for maintaining an essential-use designation for ODSs  for albuterol. </p>
<p>  Assuming generic albuterol HFA MDIs  enter the market at the end of 2010, the removal of albuterol CFC MDIs will eliminate  competition from low-cost generic drugs during the period between December 2008  and December 2010, thereby raising prices and increasing spending on albuterol  MDIs by about $2.1 billion, assuming a 3­percent discount rate, or $1.7  billion, assuming a 7-percent discount rate (present value in 2005). </p>
<p>  Assuming generic albuterol HFA MDIs  enter the market at the end of 2017, the removal of albuterol CFC MDIs will  eliminate competition from low-cost generic drugs during the period between  December 2008 and December 2017, thereby raising prices and increasing spending  on albuterol MDIs 
  by about $8.3 billion, assuming a 3­percent  discount rate, or $6.2 billion, assuming a 7-percent discount rate (present  value in 2005). </p>
<p>  Taking into account GSK’s commitment to  provide free samples and coupons, we estimate that higher prices due to the  elimination of generic competition will reduce the number of albuterol MDIs  sold by between 300,000 and 900,000 per year. This will induce 
  U.S. consumers to use between 600,000  and 1.8 million fewer albuterol MDIs between the removal of albuterol CFC MDIs  on December 31, 2008, and December 2010, or to use 2.7 million and 8.1 million  fewer albuterol MDIs during the years between December 31, 2008, and December  2017. These estimates do not take into account the GSK and Schering patient  assistance programs designed to provide free or low cost drugs to low-income  patients. Should generic albuterol MDIs become available at the end of 2010,  consumers will substitute 96 million albuterol HFA MDIs for albuterol CFC MDIs  between 2008 and December 2010, reducing atmospheric CFC emissions by 2,400  tons in total. If generic albuterol MDIs become available at the end of 2017,  substitution of albuterol HFA MDIs for the 430 million albuterol CFC MDIs that  would have been consumed between 2008 and December 2017 will reduce atmospheric  emissions of CFCs by about 10,800 tons in total. These quantitative estimates  of the effects of this rule are summarized in tables 1 and 2 of this document. </p>

<table border="1" cellspacing="0" cellpadding="5">
 <caption>TABLE 1.—SUMMARY OF QUANTIFIABLE EFFECTS OF THE FINAL RULE  RELATIVE TO HFA PATENT EXPIRATION IN 2010</caption>
  <tr>
    <th width="118" scope="col" rowspan="2" valign="top"><p>Number of Affected Albuterol<br>
      MDIs (millions)</p></th>
    <th scope="col" width="236" colspan="2" valign="top"><p>Increased Expenditures for Albuterol MDIs Present<br>
    Value in 2005 (billions)</p></th>
    <th  scope="col" width="118" rowspan="2" valign="top"><p>Possible Reduction in<br>
    MDI Use (millions)</p></th>
    <th scope="col" width="118" rowspan="2" valign="top"><p>Reduced Aggregate<br>
    Emissions Related to Phaseout (metric tons)</p></th>
  </tr>
  <tr>
    <th scope="col" width="118" valign="top"><p>3–percent discount rate</p></th>
    <th scope="col" width="118" valign="top"><p>7–percent discount rate</p></th>
  </tr>
  <tr>
    <td width="118" valign="top"><p>96 million</p></td>
    <td width="118" valign="top"><p>$2.1</p></td>
    <td width="118" valign="top"><p>$1.7</p></td>
    <td width="118" valign="top"><p>0.6 to 1.8</p></td>
    <td width="118" valign="top"><p>2,400</p></td>
  </tr>
</table>

<table border="1" cellspacing="0" cellpadding="5">
<caption>TABLE 2.—SUMMARY OF QUANTIFIABLE EFFECTS OF THE  FINAL RULE RELATIVE TO HFA PATENT EXPIRATION IN 2017</caption>
  <tr>
    <th scope="col" width="122" rowspan="2" valign="top"><p>Number of CFC Albuterol MDIs<br>
      Removed From the Market</p></th>
    <th scope="col" colspan="2" valign="top"><p>Increased Expenditures for Albuterol MDIs Present<br>
      Value in 2005 (billions)</p></th>
    <th scope="col" width="118" rowspan="2" valign="top"><p>Possible Reduction in<br>
      MDI Use (millions)</p></th>
    <th scope="col" width="118" rowspan="2" valign="top"><p>Reduced Aggregate<br>
      Emissions Related to Phaseout (metric tons)</p></th>
  </tr>
  <tr>
    <th scope="col" width="114" valign="top"><p>3–percent discount rate</p></th>
    <th  scope="col" width="118" valign="top"><p>7–percent discount rate</p></th>
  </tr>
  <tr>
    <td width="122" valign="top"><p>430 million</p></td>
    <td width="114" valign="top"><p>$8.3</p></td>
    <td width="118" valign="top"><p>$6.2</p></td>
    <td width="118" valign="top"><p>2.7 to 8.1</p></td>
    <td width="118" valign="top"><p>10,800</p></td>
  </tr>
</table>
<p>While the agency believes that the  benefits of this regulation justify its costs, we cannot estimate  quantitatively the public health effects of the phaseout. The decreased use of  albuterol MDIs 
  may adversely affect some patients, but  we lack an ability to characterize such effects quantitatively. We also are  unable to estimate quantitatively the reductions in skin cancers, cataracts, 
  and environmental harm that may result  from the reduction in CFC emissions by 10,800 metric tons during these years. </p>
<p>  We state the need for the regulation  and its objective in section V.B of this 
  document. Section V.C of this document  provides background on CFC depletion of stratospheric ozone, the Montreal  Protocol, the albuterol MDI market, and the health conditions that albuterol is  used to treat. We analyze the benefits and costs of the rule, including effects  on government outlays, in section V.D of this document. We assess alternative  phaseout dates in section V.E of this document, and conduct a sensitivity  analysis on entry dates of generic competition in section V.F of this document.  We present an analysis of the effects on small business in a regulatory  flexibility analysis in section V.G of this document. We discuss our  conclusions in section V.H of this document. </p>
<p><em>B. Need for Regulation and the  Objective of this Rule </em> </p>
<p>  This regulation is necessary because  private markets are very unlikely to preserve levels of stratospheric ozone  sufficient to protect the public health. Individual users of albuterol MDIs  have no significant private incentive to switch to non-ozone depleting  albuterol HFA MDIs. In fact, each user would bear all of the costs and  virtually none of the benefits of such a switch, as the environmental and  health benefits would tend to be distributed globally and occur decades in the  future. Thus, the outcome of a private market would be continued use of the  albuterol MDI available at the lowest price, even if the social value of  reducing emissions were clearly much greater than the price premium for  non-ozone depleting albuterol HFA MDIs. </p>
<p>  The objective of this final rule is to  reduce atmospheric emissions of ODSs, specifically CFCs. CFCs and other ODSs  deplete the stratospheric ozone that protects the Earth from ultraviolet solar  radiation. We are ending the essential-use designation for ODSs used in  albuterol MDIs because two acceptable ODS-free albuterol formulations have been  successfully marketed in the United    States for more than 2 years. Removing this  essential-use designation will comply with obligations under the Montreal  Protocol and the Clean Air Act, thereby reducing emissions that deplete  stratospheric ozone, while preserving access to essential drugs by minimizing  adverse effects on affected patient populations. </p>
<p><em>C. Background </em> </p>
<p>  1. CFCs and Stratospheric Ozone </p>
<p>  During the 1970s, scientists became  aware of a relationship between the level of stratospheric ozone and industrial  use of CFCs. Ozone (O3), which  causes respiratory problems 
  when it occurs in elevated  concentrations near the ground, shields the Earth from potentially harmful  solar radiation when in the stratosphere. Excessive exposure to solar radiation  is associated with adverse health effects such as skin cancer and cataracts, as  well as other adverse environmental effects. Emissions of CFCs and other ODSs  reduce stratospheric ozone concentrations through a catalytic reaction, thereby  allowing more solar radiation to reach the Earth’s surface. Because of this,  environmental scientists from the United States and other countries  advocated ending all uses of these chemicals. </p>
<p>  2. The Montreal Protocol </p>
<p>  The international effort to craft a  coordinated response to the global environmental problem of stratospheric ozone  depletion culminated in the Montreal Protocol, an international agreement to  regulate and reduce production of ODSs. The Montreal Protocol is described in  section III.B of this document. One hundred and eighty-six countries have now  ratified the Montreal Protocol, and the overall usage of CFCs has been  dramatically reduced. In 1986, global consumption of CFCs totaled about 1.1  million metric tons annually, and by 2000, total annual consumption had been reduced  to fewer than 0.1 million metric tons (Ref. 5). This decline amounts to about a  90­percent decrease in consumption and is a key measure of the success of the  Montreal Protocol. Within the United    States, consumption of ODSs, and CFCs in  particular, has fallen sharply— consumption of CFC–11 and CFC–12 is about 20  percent of 1990 consumption. <a href="#ftn13">13</a> </p>
<p>  A relevant aspect of the Montreal  Protocol is that production of CFCs in any year by any country is banned after  the phase-out date unless the Parties to the Montreal Protocol agree to  designate the use as ‘‘essential’’ and approve a quantity of new production for  that use. Each year, each Party nominates the amount of CFCs needed for each  essential use and provides the reason why such use is essential. Agreement on  both the essentiality and the amount of CFCs needed for each nominated use has  been reached by consensus at the annual Meeting of the Parties. </p>
<p>  3. Benefits of the Montreal Protocol </p>
<p>  EPA has generated a series of estimates  of the environmental and public health benefits of the Montreal 
  Protocol (Ref. 6). The benefits include  reductions of hundreds of millions of nonfatal skin cancers, 6 million fewer  fatalities due to skin cancer, and 27.5 million cataracts avoided between 1990  and 2165 if the Montreal Protocol were fully implemented. EPA estimates the  value of these and related benefits to equal $4.3 trillion in present value  when discounted at 2 percent over the period of 175 years. This amount is  equivalent to about $6 trillion after adjusting for inflation between 1990 and  2004. This estimate includes all benefits of total global ODS emission reductions  expected from the Montreal Protocol and is based on reductions from a baseline  scenario in which ODS emissions would continue to grow for decades but for the  Montreal Protocol. </p>
<p>  4. Characteristics of COPD </p>
<p>  Albuterol MDIs are used to treat COPD.  While there is some overlap between asthma patients and COPD patients, COPD  encompasses a group of diseases characterized by relatively fixed airway  obstruction associated with breathing-related symptoms (for example, chronic  coughing, expectoration, and wheezing). COPD is generally associated with  cigarette smoking and is extremely rare in persons younger than 25. </p>
<p>  According to the Centers for Disease  Control (CDC), an estimated 10 million 
  U.S.  adults carried the diagnosis of COPD in 2000 (Ref. 7). Because the underlying  surveys depend on patient-reported diagnoses and many affected individuals have  not been formally diagnosed, the National Health Interview Survey (NHIS)  suggests that as many as 24 million Americans may actually be affected by the  disease. The proportion of the U.S.  population with mild or moderate COPD has declined over the last quarter  century, although the rate of COPD in females increased relative to males  between 1980 and 2000. The most effective intervention in modifying the course  of COPD is smoking cessation. Symptoms such as coughing, wheezing, and sputum  production are treated with medication. </p>
<p>  5. Characteristics of Asthma </p>
<p>  Albuterol MDIs are also used to treat  asthma, a chronic respiratory disease characterized by episodes or attacks of  bronchospasm on top of chronic airway inflammation. These attacks can vary from  mild to life-threatening and involve shortness of breath, wheezing, cough, or a  combination of symptoms. Many factors, including allergens, exercise, viral  infections, and others, may trigger an asthma attack. </p>
<p>  According to the 2002 NHIS,  approximately 20 million patients in the United States reported they had  asthma (Ref. 8). The prevalence of asthma decreases with age, with the  prevalence being 92 per 1,000 children ages 0–17 <br>
  (6.1 million children) compared to 83  per 1,000 among adults ages 18–44 (7.4 million), 71 per 1,000 among adults ages  45–64 (4.6 million), and 59 per 1,000 among adults age 65 and over (1.9  million) (Ref. 8). </p>
<p>  The NHIS reported that during 2002,  about 12 million patients reported experiencing an asthma attack during the  previous year (Ref. 8, table 10). According to the National Ambulatory Medical  Care Survey, in 2001 there were <br>
  1.3 million outpatient asthma visits to  physician offices and hospital clinics and 1.9 million emergency room visits  (Ref. 8, table 16). According to the National   Center for Health  Statistics, there were 454,000 hospital admissions for asthma in 2001 (Ref. 8,  table 12), and 4,269 mortalities (Ref. 8, table 1). The estimated direct  medical cost of asthma (hospital services, physician care, and medications) was  $9.4 billion (Ref. 8, table 17). </p>
<p>  While the prevalence of asthma has been  increasing in recent years, CDC 
  reports that the incidence of asthma  (or the rate of new diagnoses) has remained fairly constant since 1997 (Ref.  9). Non-Hispanic blacks, children under 17 years old, and females have higher  incidence rates than the general population and also have higher attack  prevalence. The CDC notes that although numeric increases have occurred in the  numbers and rates of physician office visits, hospital outpatient visits, and  emergency room visits, these increases are accounted for by the increase in  prevalence. This phenomenon might indicate early successes by asthma  intervention programs that include access to medications. </p>
<p>  6. Current U.S. Albuterol MDI Market </p>
<p>Albuterol  is the preferred, and most commonly prescribed, short-acting relief medication  for asthma and is also important in the treatment of COPD. For reasons of cost,  convenience, and effectiveness, MDIs are the preferred, and most commonly  prescribed, route of administration for albuterol. </p>
<p>We estimate that, in the  first two quarters of 2004, U.S.  consumers bought 
  about 22.7 million generic albuterol  MDIs through retail channels. This 
  estimate is based on our analysis of  IMS data (Ref. 10). Total consumption of albuterol MDIs has fluctuated around  approximately 50 million MDIs annually over the last several years (Ref. 11).  Based on retail sales, we estimate approximately 96 percent of albuterol MDIs  sold were generic MDIs or branded MDIs relabeled and sold as generic (Ref. 10)  (all containing CFCs), suggesting a total market for generic albuterol MDIs of  approximately 48 million MDIs. </p>
<p>  IMS provides data on average retail prices  for marketers of albuterol MDIs for each of three payer types (cash customers,  Medicaid recipients, and patients covered by other third-party payers), and the  proportion of each marketer’s sales to each payer type. As described in table 3  of this document, the weighted average (across all payer types) of retail  prescription price for generic albuterol CFC MDIs during the first half of 2004  was about $13.50 per MDI, the weighted average retail prescription price for  branded versions of albuterol CFC MDIs was about $38.90 per MDI, and the  weighted average retail prescription price for albuterol HFA MDIs was about  $39.50 per MDI. </p>
<table border="1" cellspacing="0" cellpadding="5">
<caption>TABLE 3.—SUMMARY OF CURRENT RETAIL PRICES FOR ALBUTEROL CFC AND HFA MDIS <a href="#t3ftn1">1</a>
</caption>
  <tr>
    <th scope="col" width="69" rowspan="2" valign="top"><p>Payer Type</p></th>
    <th scope="col" width="73" rowspan="2" valign="top"><p>Generic Market<br>
      Share (percent)</p></th>
    <th scope="col" width="149" colspan="2" valign="top"><p>Albuterol CFC MDI Prices</p></th>
    <th scope="col" width="77" valign="top"><p>Albuterol HFA<br>
      MDI Prices</p></th>
    <th scope="col" width="143" colspan="2" valign="top"><p>Price Premium: HFA MDI Price<br>
      Relative to Generic Price</p></th>
    <th scope="col" width="78" rowspan="2" valign="top"><p>Estimated<br>
      Units<br>
      (millions) <a href="#t3ftn2">2</a></p></th>
  </tr>
  <tr>
    <th scope="col" width="73" valign="top"><p>Generics</p></th>
    <th scope="col" width="77" valign="top"><p>Weighted Average<br>
      Branded Products</p></th>
    <th scope="col" width="77" valign="top"><p>Weighted<br>
      Average</p></th>
    <th scope="col" width="74" valign="top"><p>Dollars per<br>
      MDI</p></th>
    <th scope="col" width="69" valign="top"><p>Percent</p></th>
  </tr>
  <tr>
    <th scope="row" width="69" valign="top"><p>Cash </p></th>
    <td width="73" valign="top"><p>97.0</p></td>
    <td width="73" valign="top"><p>$19.13</p></td>
    <td width="77" valign="top"><p>$45.90</p></td>
    <td width="77" valign="top"><p>$46.32</p></td>
    <td width="74" valign="top"><p>$27.19</p></td>
    <td width="69" valign="top"><p>142</p></td>
    <td width="78" valign="top"><p>5.2</p></td>
  </tr>
  <tr>
    <th scope="row" width="69" valign="top"><p>Medicaid <a href="#t3ftn3">3</a>   </p></th>
    <td width="73" valign="top"><p>97.3</p></td>
    <td width="73" valign="top"><p>$15.61</p></td>
    <td width="77" valign="top"><p>$37.10</p></td>
    <td width="77" valign="top"><p>$41.14</p></td>
    <td width="74" valign="top"><p>$25.53</p></td>
    <td width="69" valign="top"><p>164</p></td>
    <td width="78" valign="top"><p>8.7</p></td>
  </tr>
  <tr>
    <th scope="row" width="69" valign="top"><p>Third-party </p></th>
    <td width="73" valign="top"><p>95.4</p></td>
    <td width="73" valign="top"><p>$12.03</p></td>
    <td width="77" valign="top"><p>$37.75</p></td>
    <td width="77" valign="top"><p>$38.60</p></td>
    <td width="74" valign="top"><p>$26.57</p></td>
    <td width="69" valign="top"><p>221</p></td>
    <td width="78" valign="top"><p>31.4</p></td>
  </tr>
  <tr>
    <th scope="row" width="69" valign="top"><p>Total Market</p></th>
    <td width="73" valign="top"><p>96.0</p></td>
    <td width="73" valign="top"><p>$13.53</p></td>
    <td width="77" valign="top"><p>$38.87</p></td>
    <td width="77" valign="top"><p>$39.47</p></td>
    <td width="74" valign="top"><p>$25.94</p></td>
    <td width="69" valign="top"><p>192</p></td>
    <td width="78" valign="top"><p>45.3</p></td>
  </tr>
</table>
<p><a name="t3ftn1" id="t3ftn1"></a>1 Source:  (Ref. 10)<br>
  <a name="t3ftn2" id="t3ftn2"></a>2 These  estimates reflect retail sales of generic albuterol MDIs, excluding sales at  Internet and mail-order pharmacies. <br>
  <a name="t3ftn3" id="t3ftn3"></a>3 Medicaid prices do not reflect rebates given directly  to States by drug companies. </p>
<p>  We estimate albuterol CFC MDIs are  responsible for roughly 1,200 metric tons of CFC emissions annually. Each  albuterol CFC MDI contains about 21 grams of CFCs. <a href="#ftn14">14</a> The  estimated 48 million albuterol CFC MDIs sold annually therefore contain about  1,000 metric tons of CFCs. Adding an additional 20 percent to account for use  in production, unusable batches, and other factors (as manufacturers typically 
  do in the process of requesting  essential-use allocations of CFCs for manufacturing) brings the total emissions  to about 1,200 metric tons. To the extent that CFCs used in the production  process are reclaimed and destroyed, this estimate overstates expected  emissions reductions. </p>
<p><em>D. Benefits and Costs of the Final Rule </em> </p>
<p>  The benefits and costs of a government  action are conventionally estimated relative to a baseline scenario that in  this case is a description of the production, use, and access to albuterol MDIs  in the absence of this rule. In this section we first describe such a baseline 
  and then present our analysis of the  benefits of the final rule. Next we turn to the costs of the rule and to an  analysis of the effects on the Medicare and Medicaid programs. </p>
<p>  1. Baseline Conditions </p>
<p>  We developed baseline estimates of  future conditions to estimate the economic effects of prohibiting marketing of  albuterol CFC MDIs after December 31, 2008. It is standard practice to use, as  a baseline, the state of the world absent the rulemaking in question, or where  this implements a legislative requirement, the world absent the statute. </p>
<p>  For the baseline in this analysis, we  assume that access to CFC propellants, and therefore to albuterol CFC MDIs,  continues indefinitely. This assumption focuses our analysis on the impact of  removing less expensive generic albuterol CFC MDIs from the market, until the  date that competition from generic albuterol HFA MDIs lowers prices. As stated  previously in this document, we have identified listed patents on the HFA  technology with expiration dates of 2009, 2010, 2014, 2015, and December 2017.  In performing our analysis, we make two different sets of assumptions. First,  we perform an evaluation based on the assumption that generic versions of  albuterol HFA MDIS will come on the market after patents expire in 2010.  Second, we perform an evaluation based on the assumption that generic albuterol  HFA MDIs will come on the market after the last listed patent expires in 2017.  Without this rule, U.S.  commitments to the Montreal Protocol could limit future access to CFCs and,  therefore, inexpensive generic albuterol CFC MDIs. This observation suggests an  alternative baseline where Parties to the Montreal Protocol stop approving  nominations for the use of CFCs in albuterol MDIs at a particular date. While  the Parties could theoretically take such action for calendar year 2008, it  would be speculative on our part to assume that they would take such action for  that specific date or any other. As a result, we do not pursue a quantitative  analysis with such alternative baselines. </p>
<p>  Throughout our analysis, we assume that  future prices for albuterol CFC and HFA MDIs do not change from current levels.  This assumption overstates prices to the extent that competition from new  entrants reduces future albuterol HFA MDI prices. We assume, however, that  competition among the albuterol HFA MDI manufacturers will leave prices roughly  stable and note that one manufacturer has pledged to freeze prices until at  least the beginning of 2008. </p>
<p>  Throughout this analysis, we assume  that sufficient inventories of CFCs are available to meet demand up to December  31, 2008, and that albuterol HFA MDIs available on and after December 31, 2008,  will be adequate to meet demand. In calculating the present value of increased  expenditures, we discount expected future increases in expenditures by both 7  percent and 3 percent annually for each year after 2005. </p>
<p>  2. Benefits of the Final Rule </p>
<p>  The benefits of the final rule include  environmental and public health 
  improvements from protecting  stratospheric ozone by reducing CFC emissions. Benefits also include  expectations of increased returns on investments in environmentally friendly  technology, reduced risk of unexpected disruption of supply of albuterol MDIs,  and continued international cooperation to comply with the spirit of the  Montreal Protocol, thereby potentially reducing future emissions of ODS  throughout the world. </p>
<p>  a. <em>Reduced  CFC emissions</em>. Market withdrawal of albuterol CFC  MDIs will reduce emissions by approximately 1,200 metric tons of CFCs per year.  We have reviewed current CFC inventories and believe currently available  quantities are likely to be sufficient to supply the albuterol CFC MDI market for  approximately 12 months. Nominations for new CFC production are generally  approved by the Parties to the Montreal Protocol 2 years in advance. The final  rule bans marketing of albuterol CFCs after December 31, 2008. There is  considerable uncertainty with respect to the amount of inventories that will be  available in the future, but we anticipate that utilization of existing  inventory will allow the United    States to avoid requesting a 2008 exemption,  or to significantly reduce the amount requested. Therefore, we estimate the  final regulation will reduce CFC use by 1,200 metric tons per year after the  end of 2008, a benefit that will continue beyond the evaluation period. </p>
<p>  In an evaluation of its program to  administer the Clean Air Act, EPA has estimated that the benefits of  controlling ODSs under the Montreal Protocol are the equivalent of $6 trillion  in current dollars. However, EPA’s report provides no information on the total  tons of reduced emissions or the incremental value per ton of reduced emissions.  EPA derived its benefits estimates from a baseline that included continued  increases in emissions in the absence of the Montreal Protocol. We have  searched for authoritative scientific research that quantifies the marginal  economic benefit of incremental emission reductions under the Montreal  Protocol, but have found none conducted during the last 10 years. As a result,  we are unable to quantify the environmental and human health benefits of  reduced ODS emissions from this regulation. Such benefits, in any event, were  apparently included in EPA’s earlier estimate of benefits. </p>
<p>  As a share of total global emissions,  the reduction associated with the elimination of albuterol CFC MDIs represents  only a small fraction of 1 percent. Current allocations of CFCs for albuterol  MDIs account for about 0.1 <br>
  percent of the total 1986 global  consumption of CFCs (Ref. 5). Furthermore, current U.S. CFC emissions from MDIs  represent a much smaller, but unknown share of the total emissions reduction  associated with EPA’s estimate of $6 trillion in benefits because that estimate  reflects future emissions growth that has not occurred. </p>
<p>  Although the direct benefits of this  regulation are small relative to the overall benefits of the Montreal Protocol,  we believe the reduced exposure to UV–B radiation that will result from these  reduced emissions will help protect public health. However, we are unable to  assess or quantify specific reductions in future skin cancers and cataracts  associated with these reduced emissions. </p>
<p>  b. <em>Returns  on investment for environmental technology</em>.  Establishing a phaseout date prior to the expiration of patents on albuterol  HFA MDIs not only rewards the developers of the HFA technology, but also serves  as a signal to other potential developers of ozone-safe technologies. In  particular, such a phaseout date would preserve expectations that the  government protects incentives to research and develop ozone-safe technologies. <br>
  Newly developed technologies to avoid  ODS emissions have resulted in more environmentally ‘‘friendly’’ air  conditioners, refrigerants, solvents, and propellants, but only after  significant investments. Several manufacturers have claimed development costs  that total between $250 million and $400 million to develop HFA MDIs and new  propellant-free devices for the global market (Ref. 11). </p>
<p>  These investments have resulted in  several innovative products in addition to albuterol HFA MDIs. For example,  breath-activated delivery systems, dose counters, dry powder inhalers, and  mini-nebulizers have also been successfully marketed. This technology could  also affect other drugs used for the treatment of asthma and COPD because of  the likelihood that, eventually, CFCs will not be available for any drug use.  To compare the effect of alternative phaseout dates on these returns to  investment, we compare the ratio of the present value of increased revenues  expected to accrue to innovative firms from a December 31, 2008, phaseout date  and the present value of the future revenue stream of alternative phaseout dates,  using both 7 percent and 3 percent annual discount rates. This ratio can  provide a basis for relative assessments of the returns to investors for  alternative phaseout dates. We present estimates of this ratio in a later  discussion of alternatives. </p>
<p>  Returns on investment are very  sensitive to the current market prices in the United States. The pharmaceutical  markets of other Parties to the Montreal Protocol operate with implicit or  explicit price controls. These controls have depressed the potential returns to  technological innovation. For example, in 2003, the ex-manufacturer prices (the  prices of the drugs when they leave the production facilities) of the albuterol  HFA MDIs most widely sold in France, Germany, and the United Kingdom ranged  between roughly $3.30 and $6.40; in the United States these prices were in the  neighborhood of $29 to $30. <a href="#ftn15">15</a></p>
<p>  c. <em>International  cooperation</em>. The advantages of selecting a date  that maintains international cooperation are substantial because the Montreal  Protocol, like most international environmental treaties, relies primarily on a  system of national self-enforcement, although it also includes a mechanism to  address noncompliance. In addition, compliance with its directives is subject  to differences in national implementation procedures. Economically  less-developed nations, which have slower phaseout schedules than developed  nations, have emphasized that progress in eliminating ODSs in developing  nations is affected by observed progress by developed nations, such as the United States.  If we had adopted a later phaseout date, other Parties could attempt to delay  their own control measures. </p>
<p>  3. Costs of the Final Rule </p>
<p>  The effects of the final rule include  increased spending for needed albuterol medication. The social costs of the  final rule include the lost benefits of albuterol use that may result from the  price increase. We discuss the increased spending and then the social costs in  turn. </p>
<p>  In the absence of this regulation, we  would expect 430 million generic albuterol MDIs to be sold during the entire  period between December 31, 2008, and December 2017, when the last patent  listed in the Orange Book for an albuterol HFA MDI will expire. Of these, 96  million would be sold before 2010, an earlier date when generics might arrive.  These figures are based on the estimate that approximately 96 percent (Ref. 10)  of the approximately 50 million albuterol MDIs sold per year (Ref. 11) are  generic, suggesting thata about 48 million generic albuterol MDIs  are sold annually. </p>
<p>  With this regulation, patients who  would have used generic albuterol CFC MDIs are expected generally to switch to  albuterol HFA MDIs. We estimated in section V.C.6 of this document a weighted  average price difference at retail pharmacies (across all payer types) of about  $26 between these products. If this difference can be applied to future  transactions involving 48 million generic albuterol MDIs annually (less the 2  million free samples promised by GSK and decreased demand of 300,000 to 900,000  MDIs resulting from price increases—as calculated later in this analysis), then  increased expenditures from consumers and private or public third-party payers  would reach about $1.2 billion per year. This estimate is based, in part, on  estimated increases in Medicaid prices that do not take into account rebates  given directly to States by drug companies. To the extent that such rebates are  larger for branded albuterol MDIs, which are more expensive, the increased  expenditures are overestimated. </p>
<p>  The present value of these increased  expenditures in 2005 is about $6.2 billion using a 7 percent annual discount  rate and $8.3 billion using a 3 percent annual discount rate. In estimating  this increased spending, we focus on the period between December 31, 2008, and  December 2017, when the last patent listed in the Orange Book will expire. We  also ignore the fact that after a VENTOLIN HFA MDI is first used, it expires  much more quickly than a PROVENTIL HFA MDI or albuterol CFC MDIs. Although this  change in the usable life of some MDIs may affect the quantity consumed, we are  unable to quantify the magnitude of such an effect. </p>
<p>  These increased expenditures represent  primarily transfers from consumers and third-party payers, including State and  Federal Governments, to branded pharmaceutical manufacturers; they are,  therefore, not net costs to society. Because these estimates are based on average  retail prices, they include additional spending that will go to parties other  than innovative manufacturers, such as distributors and retail pharmacies. We  estimate that about 11 percent of this increase—about $130 million annually—may  be paid by uninsured customers ($130 million) (Ref. 10). We derive these  estimates assuming increased spending is the product of the number of albuterol  MDIs sold for cash and the difference between the average price for generic  albuterol 
  MDIs and the simple mean of the prices  for albuterol HFA MDIs. We estimate that 5 million generic albuterol MDIs are  sold to uninsured patients annually and that retail cash prices for albuterol  MDIs will rise by about $27 per MDI (details of these estimates follow later in  this section of the document.) Taking in to account savings from coupons and  free samples, uninsured albuterol users would therefore spend about $120  million more each year. <a href="#ftn16">16 </a></p>
<p>  According to MEPS, private nongroup and  uninsured individuals used, on average, 3.3 albuterol prescriptions per year  (Ref. 12). Based on IMS data, we estimate the average albuterol prescription is  for 1.2 MDIs (Ref. 10). The average uninsured, or underinsured, albuterol user  would therefore use about 4 MDIs/year. Based on these figures, we estimate that  a population of uninsured albuterol users of about 1.25 million <a href="#ftn17">17</a> would  pay, on average, $95 more per year for albuterol. <a href="#ftn18">18</a> This  estimate does not take in to account the reduced use of albuterol MDIs among  the uninsured that may result from higher prices or the extent to which quicker  expiration of some HFA albuterol MDIs, relative to CFC MDIs, will increase  albuterol MDI demand and expenditures. In the future, some fraction of these  cash payers will likely be covered by Medicare (Ref. 10). </p>
<p>  We expect price increases resulting  from market withdrawal of less expensive generic albuterol MDIs will reduce  albuterol use by several hundred thousand MDIs annually (as explained below),  although there is substantial uncertainty about these estimates. The impact of  this reduction on health outcomes is too uncertain to quantify given available  data. Some patients, however, respond to price increases for medications for  chronic conditions in ways that may adversely affect their health. A recent  article found that: </p>
<p>  ***copayment increases led to increased  use of emergency department visits and hospital days for the sentinel  conditions of diabetes, asthma, and gastric acid disorder: predicted annual  emergency department visits increased by 17 percent and hospital days by 10  percent when copayments doubled * * *. </p>
<p>  However, the article proceeds to  characterize these results as ‘‘not definitive.’’ (Ref. 4) This finding 
  suggests that increased prices for  albuterol may lead to some adverse public health effects among the populations  that would face increased prices. This evidence is insufficient to permit us to  quantify any adverse public health effects. We use expected reductions in  albuterol MDI purchases as a surrogate measure of the impact. </p>
<p>  Our approach to estimating the effects  of the rule assumes that the primary effect of an elimination of albuterol CFC  MDIs from the market would be an increase in the average price of albuterol  MDIs. Given the price increase expected from the elimination of generics and  existing estimates of market responses to price increases, we have projected  how the quantity of albuterol MDIs consumed may decline as a result of this  rule. As in the 2004 proposed rule, we assume that the reduction in the use of  albuterol MDIs attributable to this rule can be calculated as the product of  the sensitivity of use with respect to the price increase, the baseline use of  albuterol MDIs among price—sensitive patients, and the price increase in  percentage terms. We discuss these in turn. </p>
<p>  We have no information about how  consumers react to increases in the price of MDIs per se or to increases in the  price of ‘‘rescue’’ types of MDIs, such as albuterol, in particular. Economists  have researched the response of consumers to higher insurance copayments for  drugs in general. The results appear to indicate price elasticities in the  range of -.1 to -.2, meaning that a 10 percent increase in insurance copayments  appears to lead to a reduction in the number of prescriptions of between 1 and  2 percent (Ref. 13). Some researchers have reported estimates of price  elasticities as great as -.3 for asthma drugs (Ref. 4), but the authors report  that there is wide variance based on the availability of over-the-counter  substitutes. For example, for drugs with no over-the-counter substitute—a set  that presumably includes albuterol—the reported price elasticity was -.15. <a href="#ftn19">19</a> We  have used price elasticities of between -.05 and -.15 to estimate the potential  effect of price increases on demand. We recognize that elasticity estimates  derived from insurance copayment studies may not be specifically applicable to the  effects of average retail 
  price increases on uninsured patients’  demand for albuterol. </p>
<p>  To derive an estimate of the number of  albuterol MDIs not sold as a result of this rule, we need an estimate of the  baseline use of albuterol MDI sales by price-sensitive consumers. From data on  retail sales by payer type from the first half of 2004, we find about 5 million  generic albuterol MDIs are sold to uninsured patients annually. This estimate  includes sales to people over age 65 not covered by Medicaid who we expect will  be covered by Medicare in the future, but it excludes mail order and Internet  sales and sales through hospitals and nursing homes. Alternatively, if  uninsured individuals under age 65 use albuterol MDIs in proportion to their  share of the population (roughly 15 percent) (Ref. 14), then roughly 7 million  of 46 million generic albuterol MDIs would be sold to the uninsured (46 million  = 48 million generic albuterol MDIs - 2 million free samples). </p>
<p>  Finally, to estimate the price increase  from this rule, we first assess IMS data, which indicate that cash payers paid,  on average, $19.10 for generic albuterol MDIs and $46.30 for albuterol HFA  MDIs, a difference that would suggest a price increase of $27.20 per MDI, or  142 percent. However, alternative assumptions about the future market share of  different albuterol HFA MDI manufacturers would result in a smaller price  increase—130 percent. These estimated price differences faced by cash payers  are only a proxy for price differences faced by uninsured patients, because  some people with insurance may pay cash, and some uninsured patients may buy  drugs from mail-order and Internet pharmacies. </p>
<p>  We believe that estimates of the recent  price premium for albuterol HFA MDIs may be a reasonable approximation of the  price increase anticipated from this rule, at least to the extent that patent  protection and the more costly criteria for FDA approval of albuterol HFA MDIs  substantially curb competition. At least one listed patent is expected to  expire in December 2017. While increased competition from new patented  albuterol HFA MDIs may reduce future albuterol HFA MDI prices, such reduction  may be small until generic albuterol MDIs are reintroduced into the market.  Apart from any patents, marketing of new albuterol HFA MDIs before the patents  expire requires FDA approval of a completed NDA. After the patents expire, FDA  can approve generic albuterol HFA MDIs by the abbreviated new drug application  (ANDA) process. The NDA process is more complicated, expensive, and time  consuming than the 
  ANDA process by which new generic drugs  are brought to market. This NDA requirement constitutes a barrier to entry in  the market that will tend to further limit competition until the patents expire  as compared to markets where generic drugs can be marketed. Finally, as noted  previously in this document, one manufacturer has also announced a voluntary  price freeze on its albuterol HFA MDI until 2008. </p>
<p>  We combine different measures of price  elasticities (-.05 to -.15), the size of the uninsured generic albuterol MDI  market (5 to 7 million MDIs), and estimated price increases (130 percent to 140  percent) to estimate the impact of price increases on use. For example,  assuming a price elasticity of .15 and 6 million generic albuterol MDIs sold to  the uninsured annually, a 130 percent price increase would reduce demand for  albuterol MDIs from the uninsured by about 1.2 million MDIs annually (6 million  x -.15 elasticity x 130 percent price increase = 1,200,000 MDIs). These  preliminary estimates do not take into account offsetting increases in  consumption from changes in promotional efforts already announced by GSK. We  also note that the elasticity estimates are based on relatively small price  changes and may not be applicable to large price changes such as these. </p>
<p>  Manufacturers have announced programs  to distribute free samples and coupons to mitigate any adverse effect of higher  prices on utilization. For example, GSK has committed to provide 2 million  albuterol HFA MDIs each year to physician offices in expectation that they  would be distributed to patients in need (2003P–0029/CR1, p. 7). In addition,  GSK has committed to annually providing 3 million coupons worth $10 each in  rebates for VENTOLIN HFA to any patient. Both GSK and Schering currently  operate outreach programs that assist patients to obtain needed medications,  but we are unable to assess how many albuterol MDI users are currently helped  by these programs or how many more would be helped in the future. </p>
<p>  Free samples and coupons help mitigate  adverse impacts on uninsured patients only to the extent that they are  distributed to physicians and other health care professionals who then give  them to uninsured individuals. <a href="#ftn20">20</a> To  assess how free samples and coupons might affect albuterol MDI use, we  conducted a thorough review of the relevant peer-reviewed literature and 
  found two pertinent articles. One found  that, while 54 percent of the free samples were actually distributed to  patients, only 9 percent of the patients who received free samples were  uninsured (Ref. 15). These data suggest that 4.8 percent of the free samples  were actually distributed to uninsured patients. Assuming this estimate is  applicable to the albuterol HFA MDIs distributed by the GSK program, then about  96,000 albuterol HFA MDIs per year would reach the uninsured. The second  article estimated that 71 percent of free samples were given to patients (Ref.  16). As an upper bound, assuming all samples are distributed to patients and  that the uninsured receive them in proportion to their share of the population,  approximately 300,000 MDIs (15 percent of 2 million) would reach the uninsured  each year. </p>
<p>  We expect coupons will do relatively  little to improve access to albuterol among the uninsured. If 150,000 (5  percent (Ref. 15)) to 450,000 (15 percent) of the 3 million coupons reach  uninsured patients each year and 100 percent of them are redeemed, this would  increase albuterol MDI consumption by roughly 2,000 to 15,000 MDIs per year,  based on the range of price elasticities considered. </p>
<p>  Taking into account the offsetting  effect of free samples and coupons, we focus on a range of 300,000 to 900,000  fewer albuterol MDIs sold each year as a result of increased prices stemming  from removal of generic albuterol MDIs from the market. This assessment does  not take into account Schering’s and GSK’s patient assistance programs designed  to provide free or low cost drugs to low-income patients as we are unable to  assess how many albuterol MDI users are currently helped by these programs or  how many more would be helped in the future. Over the course of the evaluation  period, this would equal between 2.7 million and 8.1 million fewer albuterol  MDIs sold. We recognize that due to varying measures of the size of the generic  albuterol MDI market for the uninsured, uncertainty about the magnitude of  price increases, consumers’ response, and the impact of free samples and  coupons, and other factors, the true impact of the rule could fall outside this  range. </p>
<p>  4. Effects on Medicare and Medicaid </p>
<p>In  order to apportion the possible spending increases described previously in this  document to the Medicaid and Medicare programs, FDA and the Centers for  Medicare & Medicaid Services (CMS) have analyzed <br>
  utilization data related to Medicaid  and Medicare, as well as Medicaid program <br>
  spending data. As explained in this  section of the document, these data suggest that, were this rule in effect in  2003, Medicaid spending (including spending by States) would have increased by  approximately $100 million for that year. In addition (based on 2001  utilization and 2004 prices), it would have increased drug spending on Medicare  beneficiaries by roughly $240 million, although this estimate includes  copayments and coinsurance paid by individuals and may be too low because the  estimate does not take into account increases in utilization associated with  the increase in insurance coverage. These data yield the very rough estimate  that the rule would increase Medicare and Medicaid spending by $340 million  annually relative to a situation where access to generic albuterol CFC MDIs  continued. </p>
<p>  a. <em>Medicaid</em>.  Medicaid spending on albuterol MDIs would have been higher by roughly $100  million in 2003—after taking into account rebates from drug companies—if  albuterol CFC MDIs were not available. CMS estimates that 58 percent of this  amount would be paid by the Federal Government and 42 percent by States. </p>
<p>  Deriving this cost estimate required  making some adjustments to available data. Our point of departure is the State Drug Utilization Data, available at <a href="http://www.cms.hhs.gov/medicaid/drugs/drug5.asp"><em>http://www.cms.hhs.gov/medicaid/drugs/ drug5.asp</em></a> for 2003. These data on utilization  and spending on drugs paid for by the Medicaid program suggest that State  reimbursements under Medicaid would have been approximately $127 million higher  in 2003 if no albuterol CFC MDIs were available (that is, if only albuterol HFA  MDIs were available). This estimate assumes substitutes for all albuterol CFC  MDIs were purchased at the weighted average price of albuterol HFA MDIs.  However, it does not take into account the effect of the rebates from drug companies  to States and the Federal Government. CMS estimates that Medicaid program  rebates constitute roughly 20 percent of gross spending on prescription drugs  under the Medicaid program, suggesting that Medicaid spending on albuterol MDIs  after rebates would have been roughly $100 million higher in 2003 if albuterol  CFC MDIs were not available. It is important to note that this is a rough  estimate, as rebates for a specific drug may differ from the 20 percent  estimate. Incomplete data for 2004 suggest that comparable estimates for 2004  are higher but we believe that these are not reliable because of the  incompleteness of the data. </p>
<p>  b. <em>Medicare</em>.  Our analysis of the impacts of this rule on Medicare addresses: (1) The total  utilization of albuterol MDIs, (2) the likely price increase, and (3) the  aggregate spending increase. </p>
<p>  CMS estimates that noninstitutionalized  Medicare beneficiaries not eligible for Medicaid drug coverage filled about 8  million prescriptions for albuterol MDIs (including VENTOLIN and PROVENTIL) in  2001, based on the Medicare Current Beneficiary Survey (MCBS) and with an  adjustment for under-reporting for aggregate analysis purposes. As noted in  this section of the document, this estimate is based on Medicare beneficiaries’  self-reported outpatient prescription drug utilization, including prescriptions  filled at both retail and mail order pharmacies. In addition, the adjustment  for underreporting is normally used for aggregate use or spending data in MCBS  and may not necessarily reflect actual underreporting for albuterol. </p>
<p>  This analysis used data from the 2001  MCBS, a continuous, multipurpose survey of a nationally representative sample  of Medicare beneficiaries. The survey is focused on health care use, cost, and  sources of payment. No ‘‘paid claims’’ data on use of albuterol MDIs exist  because Medicare will pay for albuterol MDIs only after the implementation of  the new Medicare outpatient prescription drug benefit in January 2006. MCBS is  the largest nationally representative set of data available on prescription  drug utilization and spending by Medicare beneficiaries. The MCBS data have  been used by both CMS’s Office of the Actuary and the Congressional Budget  Office to prepare estimates related to the new Medicare prescription drug benefit.  However, because the data are self-reported, there are considerable  limitations, most notably underreporting. CMS has studied the underreporting in  the survey and has developed methods to adjust the data. For purposes of the  estimates done for the Medicare drug benefit, the data on drug spending are  analyzed in the aggregate (that is, for large collections of drugs). Estimates  of individual drug product utilization and spending, however, may be even more  vulnerable to the limitations inherent in self-reported utilization data. </p>
<p>  A reliable assessment of impacts must  avoid double counting of people who are eligible for both Medicaid and  Medicare. With the implementation of the new Medicare prescription drug  benefit, payment for outpatient prescription drugs on behalf of 
  Medicare beneficiaries who are also  eligible for prescription drug benefits under Medicaid will be moved from the  Medicaid program to the Medicare program. For purposes of this analysis, this  population of dually eligible beneficiaries (that is, Medicare beneficiaries  also eligible for full-benefits under Medicaid) is excluded from the analysis  of the MCBS data, since their albuterol MDI utilization is captured within the  Medicaid data. Approximately half of total Medicaid prescription drug spending  is for this dually eligible population. However, the proportion will vary based  on the type of drug involved. It is worth noting that albuterol MDIs are used  to treat asthma in both the aged and disabled in the Medicare/Medicaid dually  eligible population, as well as to treat asthma in children, who make up a  large share of Medicaid beneficiaries. </p>
<p>For purposes of this analysis, we  assess only data for the time periods for which data are available and we do  not make projections for future years. As was noted in the impact analysis for  the proposed rule on the Medicare prescription drug benefit (69 FR 46632,  August 3, 2004), there is considerable uncertainty in making estimates when  there is no program experience from prior years. This uncertainty is  exacerbated in the context of making estimates related to a particular drug.  For example, in the context of preparing aggregate estimates for the Medicare  drug benefit, CMS makes assumptions about how increased coverage induces  greater utilization and, based on the National Health Expenditures, projects  growth in per capita drug spending. But making such calculations for a specific  individual drug would be difficult and not likely reliable. Furthermore, in the  case of albuterol MDIs, the drug is subject to large annual fluctuations in  demand per user and size of population 
using the drug due to the nature of the  conditions being treated, such as asthma where acute episodes may vary by  environmental factors (for example, allergies), prevalence of infectious  diseases (for example, colds), and seasonal weather conditions (for example,  temperature-related bronchial conditions). In addition, analyzing the effect on  Medicare of a change related to one drug is further complicated, for example,  by the need to consider the interactions with beneficiary cost-sharing in the  context of the Medicare drug benefit design and the availability of additional  low-income subsidies for certain populations. Also, the introduction of an  albuterol HFA MDI from IVAX is expected to increase competition in the market  to some extent, potentially dampening anticipated price increases in part. Our  estimates, therefore, apply only to past years. </p>
<p>  We believe that prices paid by private  insurers offer a potentially reasonable approximation of prices negotiated in  the context of a privately administered risk-based insurance program such as  the new Medicare Part D drug plans. Using proprietary data from IMS Health, we  determined that prices for patients with third-party insurance were on average  about $30 more per prescription for albuterol HFA MDIs than for albuterol CFC  MDIs, according to IMS’s National Prescription Audit for the first half of 2004  (Ref. 10). This price estimate reflects transactions in U.S. retail  pharmacies, excluding Internet and mail-order sales. It also reflects both  payments by insurers and copayments or coinsurance payments by patients. We  calculate the average price per prescription for the albuterol HFA MDIs and the  albuterol CFC MDIs, respectively, as the weighted average of the price per  prescription of different firms’ products, where the weights are 
  the firms’ shares of the total  albuterol MDIs sold. Price differences per prescription are larger than price  differences per MDI, because some prescriptions are for more than one MDI. </p>
<p>  Given this estimate of the price  difference that would have existed without CFC albuterol MDIs, spending by, and  on behalf of, Medicare beneficiaries without Medicaid drug coverage could have  been roughly $240 million more in order to fill the 8 million prescriptions  estimated to have been filled in 2001 (based on the MCBS data). This estimate  is quite approximate because it relies on an estimate of albuterol MDI  prescriptions from 2001 and estimates of prescription price differences from the  first half of 2004. In addition, albuterol MDI use may grow as the Medicare  drug benefit reduces the cost to individuals of using albuterol MDIs. </p>
<p><em>E. Alternative Phaseout Dates </em> </p>
<p>  In developing this rule, we considered  removing the essential-use designation for ODSs in albuterol MDIs for different  dates between 12 months after issuance of a final rule and December 31, 2009.  As shown previously in this document, earlier removal would increase consumer  expenditures while increasing environmental benefits. A later date would reduce  the potential health effect from reduced access, but also reduce the  environmental benefit and potentially put at risk international cooperation. We  also considered and rejected small business exemptions as inconsistent with  international commitments. </p>
<p>  Table 4 of this document shows the  effects of selecting December 31, 2005, as the effective date, and Table 5 of  this document shows the effects if we had selected December 31, 2009 (assuming  continued availability of CFCs). <br>
  </p>

<table border="1" cellspacing="0" cellpadding="5">
 <caption>TABLE  4.—EFFECTS OF PHASEOUT AS OF DECEMBER 31, 2005</caption>
  <tr>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Number    of<br>
      Affected    of<br>
      Albuterol    MDIs<br>
      (millions)</p></th>
    <th scope="col" width="169" colspan="2" valign="top"><p>Increased    Expenditures for Albuterol MDIs Present Value in 2005 (billions) </p></th>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Possible<br>
      Reduction    in<br>
      MDI    Use<br>
      (millions)</p></th>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Reduced    Aggregate<br>
      CFC    Emissions<br>
      Related    to Phaseout<br>
      (metric    tons)</p></th>
    <th scope="col" width="169" colspan="2" valign="top"><p>Relative    Return on Investment to New<br>
      Technology    (return for 12/31/08 phaseout = 1)</p></th>
  </tr>
  <tr>
    <th scope="col" width="84" valign="top"><p>3-percent<br>
      discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>7-percent<br>
      discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>3-percent<br>
      discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>7-percent<br>
      discount    rate</p></th>
  </tr>
  <tr>
    <td width="84" valign="top"><p>576</p></td>
    <td width="84" valign="top"><p>$11.6 </p></td>
    <td width="84" valign="top"><p>$9.3 </p></td>
    <td width="84" valign="top"><p>3.6    to 9.8 </p></td>
    <td width="84" valign="top"><p>14,400 </p></td>
    <td width="84" valign="top"><p>1.4 </p></td>
    <td width="84" valign="top"><p>1.5 </p></td>
  </tr>
</table>


<table border="1" cellspacing="0" cellpadding="5">
<caption>TABLE 5.—EFFECTS OF PHASEOUT AS OF DECEMBER 31, 2009</caption>
  <tr>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Number    of<br>
      Affected    of<br>
      Albuterol    MDIs<br>
      (millions)</p></th>
    <th scope="col" width="169" colspan="2" valign="top"><p>Increased    Expenditures for Albuterol MDIs Present Value in 2005 (billions) </p></th>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Possible<br>
      Reduction    in MDI Use<br>
      (millions)</p></th>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Reduced    Aggregate<br>
      CFC    Emissions<br>
      Related    to Phaseout<br>
      (metric    tons)</p></th>
    <th scope="col" width="169" colspan="2" valign="top"><p>Relative    Return on Investment to New<br>
      Technology    (return for 12/31/08 phaseout = 1)</p></th>
  </tr>
  <tr>
    <th scope="col" width="84" valign="top"><p>3-percent<br>
      discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>7-percent<br>
      discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>3-percent<br>
      discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>7-percent<br>
      discount    rate</p></th>
  </tr>
  <tr>
    <td width="84" valign="top"><p>384</p></td>
    <td width="84" valign="top"><p>$7.3</p></td>
    <td width="84" valign="top"><p>$5.3</p></td>
    <td width="84" valign="top"><p>2.4    to 7.2</p></td>
    <td width="84" valign="top"><p>8,400</p></td>
    <td width="84" valign="top"><p>.88</p></td>
    <td width="84" valign="top"><p>.85</p></td>
  </tr>
</table>
<p><em>F. Sensitivity Analyses  </em></p>
<p>We have conducted a sensitivity analysis to address how key sources of  uncertainty  may affect our estimates. Our key focus is the  effect of alternative dates when generic competition for albuterol HFA MDIs may begin. In Table 6 of this document, we present estimates assuming that generic   competition arrives in 2015.  </p>
<table border="1" cellspacing="0" cellpadding="5">
<caption>TABLE 6.—EFFECTS OF PHASEOUT ON DECEMBER 31, 2008—ASSUMING  GENERIC ENTRY IN 2015</caption>
  <tr>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Number    of<br>
      Affected    of<br>
      Albuterol    MDIs<br>
      (millions)</p></th>
    <th scope="col" width="169" colspan="2" valign="top"><p>Increased    Expenditures for Albuterol MDIs Present Value in 2005 (billions) </p></th>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Possible<br>
      Reduction    in MDI Use<br>
    (millions)</p></th>
    <th scope="col" width="84" rowspan="2" valign="top"><p>Reduced    Aggregate<br>
      Emissions<br>
      Related    to Phaseout<br>
    (metric    tons)</p></th>
    <th scope="col" width="169" colspan="2" valign="top"><p>Relative    Return on  Investment to New Technology    (return for 12/31/08 phaseout with generic entry in 017 = 1)</p></th>
  </tr>
  <tr>
    <th scope="col" width="84" valign="top"><p>3-percent<br>
      discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>7-percent<br>
    discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>3-percent<br>
    discount    rate</p></th>
    <th scope="col" width="84" valign="top"><p>7-percent<br>
    discount    rate</p></th>
  </tr>
  <tr>
    <td width="84" valign="top"><p>336</p></td>
    <td width="84" valign="top"><p>$6.7</p></td>
    <td width="84" valign="top"><p>$5.2</p></td>
    <td width="84" valign="top"><p>2.1    to 5.6</p></td>
    <td width="84" valign="top"><p>8,400</p></td>
    <td width="84" valign="top"><p>.81</p></td>
    <td width="84" valign="top"><p>.84</p></td>
  </tr>
</table>
<p>  This analysis suggests that the  eventual date that generic competition arrives will have a substantial effect  on the total reduction in albuterol MDI use and the aggregate reductions in CFC  emissions. Further analysis of the arrival of generic competition would require  an evaluation of the legal merits of the different patents, but such an  evaluation is beyond the expertise of FDA. </p>
<p><em>G. Small Business Impact </em> <br>
  Current HHS guidance (Ref. 17) suggests  that a 3 to 5 percent impact on total costs or revenues of small entities could  constitute a significant regulatory impact. We lack the data to certify that  this final rule will not have a significant economic impact on a substantial  number of small entities. Therefore, this analysis, together with other  relevant sections of this document, serves as FDA’s Regulatory Flexibility  Analysis, as required under the Regulatory Flexibility Act. </p>
<p>  1. Affected Sector and Nature of  Impacts </p>
<p>  The affected industry sector includes  manufacturers of pharmaceutical products (NAICS 32514). We obtained data on  this industry from the 1997 Economic Census and estimated revenues per  establishment. Although other economic measures, such as profitability, may  provide preferable alternatives to revenues as a basis for estimating the  significance of regulatory 
  impacts, we do not believe it would  change the results of this analysis. </p>
<p>  The impact of this rule on generic  manufacturers is the lost revenues currently generated by sales of generic  albuterol CFC MDIs. While ‘‘lost revenues’’ are an imperfect measure, because  production resources could be shifted to alternative markets, they provide a  measure that suggests the magnitude of the impact. </p>
<p>  The Small Business Administration (SBA)  has defined as small any entity in this industry with fewer than 750 employees.  According to Census data, 84 percent of the industry is considered small. The  average annual revenue for a small entity is $26.6 million per entity. However,  the agency does not have revenue information specific to the affected entities.  According to retail sales in the first half of 2004, of the 22.7 million  generic or relabeled annual prescriptions for albuterol, approximately 63  percent (14.3 million MDIs) were distributed by Schering, a large firm, under  the Warrick label. Six different companies marketed the other 
  8.4 million albuterol MDIs, with three  companies accounting for over 99 percent of these 8.4 million (Ref. 10).  According to data collected by the Congressional Budget Office (Ref. 18), the  value of shipments from manufacturers of generic drug products accounts for  approximately 35 percent of the retail price of the product. If so, revenue  from 1.7 million albuterol MDIs <br>
  would approximate $8.0 million per year  (1.7 million prescriptions X $13.50 per generic prescription X 35 percent).  Because we lack company-specific revenue data, we are unable to estimate the  impact of this rule on these small entities. To the extent that generic  albuterol HFA MDIs might become available prior to the removal of the  essential-use designation, any impact on small entities would be mitigated. </p>
<p>  2. Outreach </p>
<p>  The Montreal Protocol and Clean Air Act  have been in place for more than a decade. Manufacturers of albuterol CFC MDIs  have long known that CFCs would eventually lose their essential-use  designations for this purpose. During the proposal stage of this rulemaking, we  specifically solicited comments on the impact on small entities. No comments  were received that explicitly addressed this issue. </p>
<p><em>H. Conclusion </em> </p>
<p>  This final rule could result in  increased health care expenditures of about $1.2 billion for each year between  the removal of the essential-use designation and reintroduction of generic  competition at patent expiration. Taking into account GSK’s commitment to  provide free samples and coupons, we estimate that higher prices due to the  elimination of generic competition will reduce the number of MDIs sold by  between 300,000 and 
  900,000 per year. This estimate does  not take into account Schering’s and GSK’s patient assistance programs designed  to provide free or low cost drugs to low-income patients as we are unable to  assess how many albuterol MDI users are currently helped by these programs or  how many more would be helped in the future. In addition, each year without  using CFCs in albuterol MDIs will reduce atmospheric emissions of ODSs by 1,200  metric tons and provide increased investment returns for environmentally  friendly technology that may induce further gains. Removal of the essential-use  designation is consistent with FDA’s role in determining the essentiality of  MDIs under section 601 of the Clean Air Act, and also meets U.S.  obligations under international agreements. Finally, we lack the data to certify  that this final rule will not have a significant economic impact on a  substantial number of small entities. </p>
<p><strong>VI. The Paperwork Reduction Act of 1995 </strong> </p>
<p>  This final rule contains no collections  of information. Therefore, clearance by the Office of Management and Budget  under the Paperwork Reduction Act of 1995 is not required. </p>
<p><strong>VII. Federalism </strong> </p>
<p>  We have analyzed this final rule in  accordance with the principles set forth in Executive Order 13132. We have  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. While this rule may result in States increasing  spending for albuterol MDIs in programs such as Medicaid, the increased  spending is not a substantial direct compliance cost, as the term is used in  Executive Order 13132. Accordingly, we have concluded 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. </p>
<p><strong>VIII. References </strong> </p>
<p>  The following references have been  placed on display in the Division of 
  Dockets Management (see <strong>ADDRESSES</strong>) and may  be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday. </p>
<p>  1. U.S. Food and Drug Administration,  ‘‘Guidance for Industry: Integration of Dose-Counting Mechanisms into MDI Drug  Products,’’ March 2003. </p>
<p>  2. Penick, T. B. et al., ‘‘Accuracy of  Float Testing for Metered-Dose Inhaler Canisters,’’ <em>Journal  of the American Pharmaceutical Association</em>,  42:582, July/August 2002. </p>
<p>3.    Craig-McFeely, P. M. et al., ‘‘Prospective  Observational Cohort Safety Study to Monitor the Introduction of a Non-CFC  Formulation of Salbutamol with HFA 134a in England,’’ <em>International  Journal of Clinical Pharmacology and Therapeutics</em>,  41:67–76, 2003. </p>
<p>4.    Goldman, D. P. et al., ‘‘Pharmacy Benefits and  the Use of Drugs by the Chronically Ill,’’ <em>The  Journal of the American Medical Association</em>,  291:2344–2350, 2349, May 19, 2004. </p>
<p>5.  United Nations Environmental Programme,  ‘‘Production and Consumption of Ozone-Depleting Substances 1986–2000,’’ 2002. </p>
<p>6.   U.S. Environmental Protection Agency, ‘‘The  Benefits and Costs of the Clean Air Act: <a href="http://www.epa.gov/air/sect812/copy99.html">1990–2010’’ (<em>http://www.epa.gov/air/  sect812/copy99.html</em>). </a></p>
<p>7.    Mannino, D. M. et al., ‘‘Chronic Obstructive  Pulmonary Disease Surveillance—United States, 1971–2000,’’ <em>Morbidity  and Mortality Weekly Report</em>, 51(SS06):1–16,  August 2, 2002. </p>
<p>8.    American Lung Association, ‘‘Trends in Asthma  Morbidity and Mortality,’’ Epidemiology & Statistics Unit, Research and  Scientific Affairs, April 2004. </p>
<p>9.  Mannino, D. M. et al., ‘‘Surveillance for  Asthma—United States, 1980–1999,’’ <em>Morbidity  and Mortality Weekly Report</em>, 51(SS01):1–13,  March 29, 2002. </p>
<p>10.   Analysis completed by FDA based on information  provided by IMS Health, IMS National Prescription AuditTM,  2004; IMS Health, IMS MIDASTM,  Q1/2004—Q2/2004. These data can be purchased from IMS Health. Please send all  inquiries to: IMS Health, Attn: Brian Palumbo, Account Manager, 660 West  Germantown Pike, Plymouth Meeting, PA 19462. </p>
<p>11.   Rozek, R. P., and E. R. Bishko, ‘‘Economics  Issues Raised in the FDA’s Proposed Rule on Removing the Essential-Use  Designation for Albuterol MDIs,’’ National Economic Research Associates, August  13, 2004 (FDA Docket No. 2003P– 0029/C25).</p>
<p>12.   Agency for Healthcare Research and Quality,  ‘‘Albuterol Inhalers: Prescriptions per User, Price per Prescription and  Expenditure Given Use,’’ spreadsheet prepared at FDA’s request for this  rulemaking, 2004. </p>
<p>13.  Ringel, J. S. et al., ‘‘The Elasticity of  Demand for Health Care,’’ National Defense Research Institute, Rand Health,  2002. </p>
<p>14.   U.S. Census Bureau, ‘‘Income, Poverty, and  Health Insurance Coverage in the United States: 2003,’’ Current  Population Reports, U.S.  Department of Commerce, pp. 14–15, August 2004. </p>
<p>15.   Morelli, D., and M. R. Koenigsberg, ‘‘Sample  Medication Dispensing in a Residency Practice,’’ <em>Journal  of Family Practice</em>, 34(1):42–48, 1992. </p>
<p>16.   Peterson, M. C. et al., ‘‘Disposition of  Pharmaceutical Samples from a Private Medical Clinic,’’ <em>Journal  of the American Pharmacists Association</em>,  44(3):397–398, 2004. </p>
<p>17.   U.S. Department of Health & Human Services,  ‘‘Guidance on Proper Consideration of Small Entities in Rulemakings of the U.S. Department  of Health and Human Services,’’ May 2003. </p>
<p>18.   Congressional Budget Office, ‘‘How Increased  Competition from Generic Drugs Has Affected Prices and Returns in the  Pharmaceutical Industry,’’ July 1998. </p>
<p><strong>List of Subjects in 21 CFR Part 2 </strong> <br>
  Administrative practice and procedure,  Cosmetics, Devices, Drugs, Foods. </p>
<p> Therefore,  under the Federal Food, Drug, and Cosmetic Act and the Clean Air Act and under  authority delegated to the Commissioner of Food and Drugs, after consultation  with the Administrator of the Environmental Protection Agency, 21 CFR part 2 is  amended as follows: </p>
<p><strong>PART 2—GENERAL ADMINISTRATIVE  RULINGS AND DECISIONS </strong> </p>
<p> 1.  The authority citation for 21 CFR part 2 continues to read as follows: </p>
<p><strong>Authority: </strong>15  U.S.C. 402, 409; 21 U.S.C. 321, 331, 335, 342, 343, 346a, 348, 351, 352, 355,  360b, 361, 362, 371, 372, 374; 42 U.S.C. 7671 <em>et  seq. </em> </p>
<p><strong>Section 2.125 [Amended] </strong> </p>
<p> 2.  Section 2.125 is amended by removing and reserving paragraph (e)(2)(i). <br>
  Dated: March 29, 2005. </p>
<p><strong>Jeffrey Shuren, </strong> <br>
  <em>Assistant Commissioner for Policy. </em> </p>
<p>  [FR Doc. 05–6599 Filed 3–31–05; 8:45  am] <br>
  <strong>BILLING CODE 4160–01–S </strong></p>
<h2>Footnotes</h2>
<p> <a name="ftn1" id="ftn1"></a>1 FDA has  verified all Web site addresses cited in this document, but FDA is not  responsible for any subsequent changes to the Web sites after this document has  published in the <strong>Federal Register</strong>. </p>
<p>  <a name="ftn2" id="ftn2"></a>2 The  summary descriptions of the Montreal Protocol and decisions of parties to the  Montreal Protocol contained in this document are presented here to help you  understand the background of the action we are taking. These descriptions are  not intended to be formal statements of policy regarding the Montreal Protocol.  Decisions by the parties to the Montreal Protocol are cited in this document in  the conventional format of ‘‘Decision IV/2,’’ which refers to the second  decision recorded in the Report of the Fourth Meeting of the parties to the  Montreal Protocol on Substances That Deplete the Ozone Layer. Reports of meetings  of the parties to the Montreal Protocol may be found on the United Nations  Environment Programme’s Web site at <a href="http://www.unep.org/ozone/mop/mop-reports.shtml"><em>http://www.unep.org/ozone/mop/mop­reports.shtml</em>. </a></p>
<p>  <a name="ftn3" id="ftn3"></a>3 Production  of CFCs in economically less-developed countries is being phased out and is  scheduled to end by January 1, 2010. See Article 2a of the Montreal Protocol. </p>
<p><a name="ftn4" id="ftn4"></a>4 The  Open-Ended Working Group (OEWG) was established in 1989 at the first meeting of  the Parties to the Montreal Protocol held in Helsinki. The OEWG, among other duties,  considers proposals for amendments and adjustments to the Montreal Protocol and  prepares consolidated reports based on the reports of various scientific, technical,  and economic panels. These proposals and reports may subsequently be acted on  by a meeting of the Parties to the Montreal Protocol. </p>
<p> <a name="ftn5" id="ftn5"></a>5 In  conformance with Decision IV/2, EPA issued regulations accelerating the  complete phaseout of CFCs, with exceptions for essential uses, to January 1,  1996 (58 FR 65018, December 10, 1993). </p>
<p><a name="ftn6" id="ftn6"></a>6 Fran Du  Melle, Executive Vice President of the American Lung Association, submitted a  citizen petition on behalf of the U.S. Stakeholders Group on MDI Transition on  January 29, 2003 (Docket No. 2003P–0029/CP1) (Stakeholders’ petition). The  Stakeholders’ petition requested that we initiate rulemaking to remove the  essential-use designation of albuterol MDIs. Several comments were submitted in  response to the petition. All of the opinions and information in those  comments, with one exception (see comment 39 of this document), were also  contained in testimony at the PADAC meeting or in comments on the proposed  rule. In nearly every case, parties submitting comments on the petition also  testified at the PADAC meeting, submitted comments on the proposed rule, or  both. Accordingly, with the exception of comment 39 of this document, we will  not be directly responding in this document to the Stakeholders’ petition or  the comments on the petition. </p>
<p><a name="ftn7" id="ftn7"></a>7 An  ‘‘approvable letter’’ is a written communication to an applicant from FDA  stating that we will approve the NDA if specific additional information or  material is submitted or specific conditions are met. An approvable letter does  not constitute approval of any part of an NDA and does not permit marketing of  the drug that is the subject of the NDA (21 CFR 314.3). <br>
<br>
  <a name="ftn8" id="ftn8"></a>8 Levalbuterol  tartrate is the tartrate salt of levalbuterol, the single R-enantiomer of  albuterol, which is the active ingredient in both CFC and HFA MDIs as a racemic  mixture of the two stereoisomers (R and S) at a 1:1 ratio. We have not  determined whether we will, in the future, consider products whose active  ingredient is a stereoisomer to be alternatives to drug products whose active  ingredient is the corresponding racemic mixture. <br>
<br>
<a name="ftn9" id="ftn9"></a>9 We are  only aware of one report in our MedWatch system of an allergic reaction  attributed to the very small amounts of ethanol contained in PROVENTIL HFA.  VENTOLIN HFA, which does not contain ethanol, should be considered for asthma  and COPD patients who may be sensitive to ethanol. MedWatch is the FDA safety  information and adverse event reporting program, which allows health care  professionals and consumers to report serious problems that they suspect are  associated with the drugs and medical devices they prescribe, dispense, or use. </p>
<p><a name="ftn10" id="ftn10"></a>10 Although  the prices derived from IMS data give us much greater assurance than the prices  found on drugstore.com that the numbers we use accurately reflect market  prices, in the case of albuterol MDIs the differences in prices are not very  significant. The drugstore.com price for generic albuterol CFC MDIs is $13.99,  while the weighted average retail price derived from IMS data is approximately  $13.50. The drugstore.com prices for VENTOLIN HFA and PROVENTIL HFA are $39.61  and $38.99 respectively, while the weighted average retail price derived from  IMS data for albuterol HFA MDIs is $39.50. The drugstore.com prices are those  posted on February 10, 2005. See section V.C.6 of this document for more  information on the prices derived from IMS data.</p>
<p> <a name="ftn11" id="ftn11"></a>11 While  PROVENTIL HFA and VENTOLIN HFA can be substituted for albuterol CFC MDIs, they  are not therapeutic equivalents to albuterol CFC MDIs, or to each other, as  that term is defined in the Orange Book. There are minor differences between  the formulations of VENTOLIN HFA and PROVENTIL HFA that might be significant  for some small patient subpopulations (see our response to comment 28 of this  document), but for the vast majority of patients these differences should not  be significant.</p>
<p>  <a name="ftn12" id="ftn12"></a>12 Since  publication of the 2004 proposed rule, two patents that expire in 2017 have  been listed in the Orange Book for VENTOLIN HFA.</p>
<p><a name="ftn13" id="ftn13"></a>13 The ozone  depleting potentials of CFC–11 and CFC–12 are  equal. See <a href="http://www.epa.gov/ozone/ods.html"><em>http://www.epa.gov/ozone/  ods.html</em></a>. </p>
<p> <a name="ftn14" id="ftn14"></a>14 CFC MDI  manufacturers disclose the CFC content of their MDIs to EPA as part of the  process of requesting essential-use allocations; however, the CFC content of  any particular MDI is considered confidential business information and may not  be disclosed without the manufacturer’s consent. </p>
<p><a name="ftn15" id="ftn15"></a>15 Analysis  completed by FDA based on information provided by IMS Health, IMS MIDASTM,  United States, Germany, France and the United Kingdom, 2003. </p>
<p><a name="ftn16" id="ftn16"></a>16 (5  million MDIs - 300,000 free sample MDIs) x ($25/MDI) - (450,000 coupons) x  ($10) = $117,500,000. Here, we assume coupons and free samples reach uninsured  albuterol users in proportion to estimates of the uninsured fraction of the  overall population (15 percent). </p>
<p>  <a name="ftn17" id="ftn17"></a>17 (5  million MDIs) / 4 MDIs per uninsured user = 1.25 million uninsured users. </p>
<p>  <a name="ftn18" id="ftn18"></a>18 ($117,500,000)  / (1.25 million uninsured users) = $94.00 per uninsured user. </p>
<p><a name="ftn19" id="ftn19"></a>19 Some  patients may view PRIMATENE, an epinephrine MDI available over the counter, as  a substitute for prescription albuterol MDIs. If this view is widespread, the  decline in albuterol MDI use may be greater than that estimated here. However,  insofar as PRIMATENE is effective in treating asthma, the adverse health  effects would not be greater. We lack data to evaluate patients’ willingness to  substitute PRIMATENE for albuterol MDIs. </p>
<p><a name="ftn20" id="ftn20"></a>20 We found  no information addressing how pharmaceutical companies distribute free samples  among physicians and clinics, but assume that GSK will not systematically  channel free samples away from low-income areas. <br>
</p>
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