[Federal Register Volume 88, Number 144 (Friday, July 28, 2023)]
[Notices]
[Pages 48878-48881]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15909]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2023-N-2895]


Outsourcing Facility Fee Rates for Fiscal Year 2024

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the 
fiscal year (FY) 2024 rates for the establishment and reinspection fees 
related to entities that compound human drugs and elect to register as 
outsourcing facilities under the Federal Food, Drug, and Cosmetic Act 
(FD&C Act). The FD&C Act authorizes FDA to assess and collect an annual 
establishment fee from outsourcing facilities, as well as a 
reinspection fee for each reinspection of an outsourcing facility. This 
document establishes the FY 2024 rates for the small business 
establishment fee ($6,196), the non-small business establishment fee 
($20,036), and the reinspection fee ($18,588) for outsourcing 
facilities; provides information on how the fees for FY 2024 were 
determined; and describes the payment procedures outsourcing facilities 
should follow.

DATES: These fee rates are effective October 1, 2023, and will remain 
in effect through September 30, 2024.

ADDRESSES: Office of Financial Management, Food and Drug 
Administration, 4041 Powder Mill Rd., Rm. 61075, Beltsville, MD 20705-
4304.

FOR FURTHER INFORMATION CONTACT: For more information on human drug 
compounding and outsourcing facility fees, visit FDA's website at: 
https://www.fda.gov/drugs/guidance-compliance-regulatory-information/human-drug-compounding.
    For questions relating to this notice: Olufunmilayo Ariyo, Office 
of Financial Management, Food and Drug Administration, 4041 Powder Mill 
Rd., Beltsville, MD 20705-4304, 240-402-4989; or the User Fee Support 
Staff at [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background

    Under section 503B of the FD&C Act (21 U.S.C. 353b), a human drug 
compounder can register with FDA as an ``outsourcing facility.'' 
Outsourcing facilities, as defined in section 503B(d)(4), are 
facilities that meet all the conditions described in section 503B(a), 
including registering with FDA as an outsourcing facility and paying an 
annual establishment fee. If the conditions of section 503B are met, a 
drug compounded by or under the direct supervision of a licensed 
pharmacist in an outsourcing facility is exempt from three sections of 
the FD&C Act: (1) section 502(f)(1) (21 U.S.C. 352(f)(1)), concerning 
the labeling of drugs with adequate directions for use; (2) section 505 
(21 U.S.C. 355), concerning the approval of human drug products under 
new drug applications or abbreviated new drug applications; and (3) 
section 582 (21 U.S.C. 360eee-1), concerning drug supply chain security 
requirements. Drugs compounded in outsourcing facilities are not exempt 
from the requirements of section 501(a)(2)(B) of the FD&C Act (21 
U.S.C. 351(a)(2)(B)), concerning current good manufacturing practice 
requirements for drugs.
    Section 744K of the FD&C Act (21 U.S.C. 379j-62) authorizes FDA to 
assess and collect the following fees associated with outsourcing 
facilities: (1) an annual establishment fee from each outsourcing 
facility and (2) a reinspection fee from each outsourcing facility 
subject to a reinspection (see section 744K(a)(1) of the FD&C Act). 
Under statutorily defined conditions, a qualified applicant may pay a 
reduced

[[Page 48879]]

small business establishment fee (see section 744K(c)(4) of the FD&C 
Act).
    FDA announced in the Federal Register of November 24, 2014 (79 FR 
69856), the availability of a final guidance for industry entitled 
``Fees for Human Drug Compounding Outsourcing Facilities Under Sections 
503B and 744K of the FD&C Act.'' The guidance provides additional 
information on the annual fees for outsourcing facilities and 
adjustments required by law, reinspection fees, how to submit payment, 
the effect of failure to pay fees, and how to qualify as a small 
business to obtain a reduction of the annual establishment fee. This 
guidance can be accessed on FDA's website at: https://www.fda.gov/media/136683/download.

II. Fees for FY 2024

A. Methodology for Calculating FY 2024 Adjustment Factors

1. Inflation Adjustment Factor
    Section 744K(c)(2) of the FD&C Act specifies the annual inflation 
adjustment for outsourcing facility fees. The inflation adjustment has 
two components: one based on FDA's payroll costs and one based on FDA's 
non-payroll costs for the first 3 of the 4 previous fiscal years. The 
payroll component of the annual inflation adjustment is calculated by 
taking the average change in FDA's per full-time equivalent (FTE) 
personnel compensation and benefits (PC&B) in the first 3 of the 4 
previous fiscal years (see section 744K(c)(2)(A)(ii) of the FD&C Act). 
FDA's total annual spending on PC&B is divided by the total number of 
FTEs per fiscal year to determine the average PC&B per FTE.
    Table 1 summarizes the actual cost and FTE data for the specified 
fiscal years and provides the percent change from the previous fiscal 
year and the average percent change over the first 3 of the 4 fiscal 
years preceding FY 2024. The 3-year average is 3.9280 percent.

                                 Table 1--FDA PC&Bs Each Year and Percent Change
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                                               FY 2020           FY 2021           FY 2022       3-Year average
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Total PC&B..............................    $2,875,592,000    $3,039,513,000    $3,165,477,000  ................
Total FTE...............................           $17,535           $18,501           $18,474  ................
PC&B per FTE............................          $163,992          $164,289          $171,348  ................
Percent Change From Previous Year.......           7.3063%           0.1811%           4.2967%           3.9280%
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    Section 744K(c)(2)(A)(ii) of the FD&C Act specifies that this 
3.9280 percent should be multiplied by the proportion of PC&B to total 
costs of an average FDA FTE for the same 3 fiscal years.

                      Table 2--FDA PC&Bs as a Percent of FDA Total Costs of an Average FTE
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                                               FY 2020           FY 2021           FY 2022       3-Year average
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Total PC&B..............................    $2,875,592,000    $3,039,513,000    $3,165,477,000  ................
Total Costs.............................    $6,039,320,747    $6,105,480,000    $6,251,981,000  ................
PC&B Percent............................          47.6145%          49.7834%          50.6316%          49.3432%
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    The payroll adjustment is 3.9280 percent multiplied by 49.3432 
percent, or 1.9382 percent.
    Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that the 
portion of the inflation adjustment for non-payroll costs for FY 2024 
is equal to the average annual percent change in the Consumer Price 
Index (CPI) for urban consumers (U.S. City Average; Not Seasonally 
Adjusted; All items; Annual Index) for the first 3 years of the 
preceding 4 years of available data, multiplied by the proportion of 
all non-PC&B costs to total costs of an average FDA FTE for the same 
period.
    Table 2 provides the summary data for the percent change in the 
specified CPI for U.S. cities. These data are published by the Bureau 
of Labor Statistics and can be found on its website: https://data.bls.gov/cgi-bin/surveymost?cu. The data can be viewed by checking 
the box marked ``U.S. city average, All items--CUUR0000SA0'' and then 
selecting ``Retrieve Data.''

                   Table 3--Annual and 3-Year Average Percent Change in U.S. City Average CPI
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                                               FY 2020           FY 2021           FY 2022       3-Year average
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Annual CPI..............................            258.81            270.97            292.66  ................
Annual Percent Change...................           1.2337%           4.6980%           8.0027%           4.6448%
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    Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that this 
4.6448 percent should be multiplied by the proportion of all non-PC&B 
costs to total costs of an average FTE for the same 3 fiscal years. The 
proportion of all non-PC&B costs to total costs of an average FDA FTE 
for FYs 2019 to 2021 is 50.6568 percent (100 percent minus 49.3432 
percent equals 50.6568 percent). Therefore, the non-pay adjustment is 
4.6448 percent times 50.6568 percent, or 2.3529 percent.
    The PC&B component (1.9382 percent) is added to the non-PC&B 
component (2.3529 percent), for a total inflation adjustment of 4.2911 
percent (rounded). Section 744K(c)(2)(A)(i) of the FD&C Act specifies 
that one is added to that figure, making the inflation adjustment 
1.042911.
    Section 744K(c)(2)(B) of the FD&C Act provides for this inflation 
adjustment to be compounded after FY 2015. This factor for FY 2024 
(4.2911 percent) is compounded by adding one to it, and then 
multiplying it by one plus the inflation adjustment factor for FY 2023 
(18.8227 percent), as published in the

[[Page 48880]]

Federal Register on July 28, 2022 (87 FR 45335). The result of this 
multiplication of the inflation factors for the 8 years since FY 2015 
(1.042922 x 1.239215) becomes the inflation adjustment for FY 2024. For 
FY 2024, the inflation adjustment is 12.39215 percent (rounded). We 
then add one, making the FY 2024 inflation adjustment factor 1.1239215.
2. Small Business Adjustment Factor
    Section 744K(c)(3) of the FD&C Act specifies that in addition to 
the inflation adjustment factor, the establishment fee for non-small 
businesses is to be further adjusted for a small business adjustment 
factor. Section 744K(c)(3)(B) of the FD&C Act provides that the small 
business adjustment factor is the adjustment to the establishment fee 
for non-small businesses that is necessary to achieve total fees 
equaling the amount that FDA would have collected if no entity 
qualified for the small business exception in section 744K(c)(4) of the 
FD&C Act. Additionally, section 744K(c)(5)(A) states that in 
establishing the small business adjustment factor for a fiscal year, 
FDA shall provide for the crediting of fees from the previous year to 
the next year if FDA overestimated the amount of the small business 
adjustment factor for such previous fiscal year.
    Therefore, to calculate the small business adjustment to the 
establishment fee for non-small businesses for FY 2024, FDA must 
estimate: (1) the number of outsourcing facilities that will pay the 
reduced fee for small businesses for FY 2024 and (2) the total fee 
revenue it would have collected if no entity had qualified for the 
small business exception (i.e., if each entity that registers as an 
outsourcing facility for FY 2024 were to pay the inflation-adjusted fee 
amount of $18,588).
    With respect to (1), FDA estimates that 10 entities will qualify 
for small business exceptions and will pay the reduced fee for FY 2024. 
With respect to (2), to estimate the total number of entities that will 
register as outsourcing facilities for FY 2024, FDA used data submitted 
by outsourcing facilities through the voluntary registration process, 
which began in December 2013. Accordingly, FDA estimates that 79 
outsourcing facilities, including 10 small businesses, will be 
registered with FDA in FY 2024.
    If the projected 79 outsourcing facilities paid the full inflation-
adjusted fee of $18,588, this would result in total revenue of 
$1,468,452 in FY 2024 ($18,588 x 79). However, 10 of the entities that 
are expected to register as outsourcing facilities for FY 2024 are 
projected to qualify for the small business exception and to pay one-
third of the full fee ($6,196 x 10), totaling $61,960 instead of paying 
the full fee ($18,588 x 10), which would total $185,880. This would 
leave a potential shortfall of $123,920 ($185,880 minus $61,960).
    Additionally, section 744K(c)(5)(A) of the FD&C Act states that in 
establishing the small business adjustment factor for a fiscal year, 
FDA shall provide for the crediting of fees from the previous year to 
the next year if FDA overestimated the amount of the small business 
adjustment factor for such previous fiscal year. FDA has determined 
that it is appropriate to credit excess fees collected from the last 
completed fiscal year, due to the inability to conclusively determine 
the amount of excess fees from the fiscal year that is in progress at 
the time this calculation is made. This crediting is done by comparing 
the small business adjustment factor for the last completed fiscal 
year, FY 2022 ($2,056), to what would have been the small business 
adjustment factor for FY 2022 ($1,731) if FDA had estimated perfectly.
    The calculation for what the small business adjustment would have 
been if FDA had estimated perfectly begins by determining the total 
target collections (15,000 x [inflation adjustment factor] x [number of 
registrants]). For the most recent complete fiscal year, FY 2022, this 
was $1,485,120 ($17,472 x 85). The actual FY 2022 revenue from the 85 
total registrants (i.e., 74 registrants paying FY 2022 non-small 
business establishment fee and 11 small business registrants) paying 
establishment fees is $1,356,992. $1,356,992 is calculated as follows: 
(FY 2022 Non-Small Business Establishment Fee adjusted for inflation 
only) x (total number of registrants in FY 2022 paying Non-Small 
Business Establishment Fee) + (FY 2022 Small Business Establishment 
Fee) x (total number of small business registrants in FY 2022 paying 
Small Business Establishment Fee). $17,472 x 74 + $5,824 x 11 = 
$1,356,992. This left a shortfall of $128,128 from the estimated total 
target collection amount ($1,485,120 minus $1,356,992). This amount 
($128,128) divided by the total number of registrants in FY 2022 paying 
Standard Establishment Fee (74) equals $1,731.
    The difference between the small business adjustment factor used in 
FY 2022 and the small business adjustment factor that would have been 
used had FDA estimated perfectly is $325 ($2,056 minus $1,731). The 
$325 (rounded to the nearest dollar) is then multiplied by the number 
of actual registrants who paid the standard fee for FY 2022 (74), which 
provides us a total excess collection of $24,050 in FY 2022.
    Therefore, to calculate the small business adjustment factor for FY 
2024, FDA subtracts $24,050 from the projected shortfall of $123,920 
for FY 2024 to arrive at the numerator for the small business 
adjustment amount, which equals $99,870. This number divided by 69 (the 
number of expected non-small businesses for FY 2024) is the small 
business adjustment amount for FY 2024, which is $1,447 (rounded to the 
nearest dollar).

B. FY 2024 Rates for Small Business Establishment Fee, Non-Small 
Business Establishment Fee, and Reinspection Fee

1. Establishment Fee for Qualified Small Businesses \1\
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    \1\ To qualify for a small business reduction of the FY 2024 
establishment fee, entities had to submit their exception requests 
by April 30, 2023. See section 744K(c)(4)(B) of the FD&C Act. The 
time for requesting a small business exception for FY 2024 has now 
passed. An entity that wishes to request a small business exception 
for FY 2025 should consult section 744K(c)(4) of the FD& C Act and 
section III.D of FDA's guidance for industry entitled ``Fees for 
Human Drug Compounding Outsourcing Facilities Under Sections 503B 
and 744K of the FD&C Act,'' which can be accessed on FDA's website 
at https://www.fda.gov/media/136683/download.
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    The amount of the establishment fee for a qualified small business 
is equal to $15,000 multiplied by the inflation adjustment factor for 
that fiscal year, divided by 3 (see section 744K(c)(4)(A) and (c)(1)(A) 
of the FD&C Act). The inflation adjustment factor for FY 2024 is 
1.239215. See section II.A.1 of this document for the methodology used 
to calculate the FY 2024 inflation adjustment factor. Therefore, the 
establishment fee for a qualified small business for FY 2024 is one 
third of $18,588, which equals $6,196 (rounded to the nearest dollar).
2. Establishment Fee for Non-Small Businesses
    Under section 744K(c) of the FD&C Act, the amount of the 
establishment fee for a non-small business is equal to $15,000 
multiplied by the inflation adjustment factor for that fiscal year, 
plus the small business adjustment factor for that fiscal year, and 
plus or minus an adjustment factor to account for over or under 
collections due to the small business adjustment factor in the prior 
year. The inflation adjustment factor for FY 2024 is 1.239215. The 
small business adjustment amount for FY 2024 is $1,447. See section 
II.A.2 of this document for the methodology used

[[Page 48881]]

to calculate the small business adjustment factor for FY 2024. 
Therefore, the establishment fee for a non-small business for FY 2024 
is $15,000 multiplied by 1.239215 plus $1,447, which equals $20,036 
(rounded to the nearest dollar).
3. Reinspection Fee
    Section 744K(c)(1)(B) of the FD&C Act provides that the amount of 
the FY 2024 reinspection fee is equal to $15,000, multiplied by the 
inflation adjustment factor for that fiscal year. The inflation 
adjustment factor for FY 2024 is 1.239215. Therefore, the reinspection 
fee for FY 2024 is $15,000 multiplied by 1.239215, which equals $18,588 
(rounded to the nearest dollar). There is no reduction in this fee for 
small businesses.

C. Summary of FY 2024 Fee Rates

                   Table 4--Outsourcing Facility Fees
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Qualified Small Business Establishment Fee..................   $6,196.00
Non-Small Business Establishment Fee........................   20,036.00
Reinspection Fee............................................   18,588.00
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III. Fee Payment Options and Procedures

A. Establishment Fee

    Once an entity submits registration information and FDA has 
determined that the information is complete, the entity will incur the 
annual establishment fee. FDA will send an invoice to the entity, via 
email to the email address indicated in the registration file. The 
invoice will contain information regarding the obligation incurred, the 
amount owed, and payment procedures. A facility will not be registered 
as an outsourcing facility until it has paid the annual establishment 
fee under section 744K of the FD&C Act. Accordingly, it is important 
that facilities seeking to operate as outsourcing facilities pay all 
fees immediately upon receiving an invoice. If an entity does not pay 
the full invoiced amount within 15 calendar days after FDA issues the 
invoice, FDA will consider the submission of registration information 
to have been withdrawn and adjust the invoice to reflect that no fee is 
due.
    Outsourcing facilities that registered in FY 2023 and wish to 
maintain their status as an outsourcing facility in FY 2024 must 
register during the annual registration period that lasts from October 
1, 2023, to December 31, 2023. Failure to register and complete payment 
by December 31, 2023, will result in a loss of status as an outsourcing 
facility on January 1, 2024. Entities should submit their registration 
information no later than December 10, 2023, to allow enough time for 
review of the registration information, invoicing, and payment of fees 
before the end of the registration period.

B. Reinspection Fee

    FDA will issue invoices for each reinspection after the conclusion 
of the reinspection, via email to the email address indicated in the 
registration file or via regular mail if email is not an option. 
Payments must be made within 30 days of the invoice date.

C. Fee Payment Procedures

    1. The preferred payment method is online using electronic check 
(Automated Clearing House (ACH) also known as eCheck) or credit card 
(Discover, VISA, MasterCard, American Express). Secure electronic 
payments can be submitted using the User Fees Payment Portal at https://userfees.fda.gov/pay. (Note: only full payments are accepted. No 
partial payments can be made online.) Once you search for your invoice, 
click ``Pay Now'' to be redirected to Pay.gov. Electronic payment 
options are based on the balance due. Payment by credit card is 
available for balances less than $25,000. If the balance exceeds this 
amount, only the ACH option is available. Payments must be made using 
U.S. bank accounts as well as U.S. credit cards.
    2. If a check, bank draft, or postal money order is submitted, make 
it payable to the order of the Food and Drug Administration and include 
the user fee ID number to ensure that the payment is applied to the 
correct fee(s). Payments can be mailed to: Food and Drug 
Administration, P.O. Box 979107, St. Louis, MO 63197-9000. If a check, 
bank draft, or money order is to be sent by a courier that requests a 
street address, the courier should deliver your payment to: U.S. Bank, 
Attention: Government Lockbox 979107, 1005 Convention Plaza, St. Louis, 
MO 63101. (Note: This U.S. Bank address is for courier delivery only. 
If you have any questions concerning courier delivery, contact the U.S. 
Bank at 314-418-4013. This telephone number is only for questions about 
courier delivery.) Please make sure that the FDA post office box number 
(P.O. Box 979107) is written on the check, bank draft, or postal money 
order.
    3. For payments made by wire transfer, the invoice number must be 
included. Without the invoice number the payment may not be applied. 
Regarding reinspection fees, if the payment amount is not applied, the 
invoice amount will be referred to collections. The originating 
financial institution may charge a wire transfer fee. If the financial 
institution charges a wire transfer fee, it is required that the 
outsourcing facility add that amount to the payment to ensure that the 
invoice is paid in full. Use the following account information when 
sending a wire transfer: U.S. Dept of the Treasury, TREAS NYC, 33 
Liberty St., New York, NY 10045, Acct. No. 75060099, Routing No. 
021030004, SWIFT: FRNYUS33. If needed, FDA's tax identification number 
is 53-0196965.

    Dated: July 24, 2023.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2023-15909 Filed 7-27-23; 8:45 am]
BILLING CODE 4164-01-P


