OTC Drug Monograph Reform Disproportionately Hurts Small MFG Facilities

The CARES Act was passed on March 27, 2020 and was intended to help people in the midst of a global pandemic but Division A of the CARES Act includes an important legislative initiative that has negative implications for small OTC drug manufacturing facilities. Special interest groups (specifically the Consumer Healthcare Products Association) lobbied to have this provision added to the bill (detailed in subtitle F of title III), that essentially allows the FDA to implement a new User Fee Program (OMUFA), requiring all OTC drug manufacturers to pay a yearly User Fee (for 5 years) beginning in 2021. The FDA is claiming this reform will help modernize their outdated system but in doing so wipes out small business and restricts future start ups from innovating new products. The same User Fee is being applied to all OTC drug manufacturers across the board but disproportionately hurts small to medium size facilities. This is not a nominal fee, and small to medium size facilities were billed $20,322 with a due date of May 10, 2021. Based on the current FY 2021 OMOR Fee Rates, OTC drug manufacturers are expected to pay the FDA $20,000 every year for 5 years for a grand total of $100,000 for those in Tier 2. Manufacturers who fall under Tier 1 of the fee schedule are expected to pay as much as $500,000. Why are small to medium size facilities being charged the same User Fee Rate as mega corporations? Due to the global pandemic and challenges small businesses faced last year, paying such an inflated arbitrary fee is not economically feasible for smaller facilities and start ups. Currently registered companies who can't afford to comply risk bankruptcy and losing their businesses. In the United States of America there should be a path forward for small business in the OTC drug industry and this recent reform stifles small business and innovation while claiming to do the opposite. It also allows bigger players in the OTC drug industry to continue to monopolize OTC drug products in the marketplace.

It's critical to point out that the Board of Directors at the Consumer Healthcare Products Association (the group who lobbied for this legislation) is comprised of company heads for the Procter and Gamble Company, Johnson and Johnson Consumer Inc., Blistex Inc., Colgate-Palmolive Company, and other mega corporations. This is a concerted effort on the part of big business and big pharma to eliminate competition and monopolize the OTC drug industry under the veil of providing consumers with more OTC drug options. What this does is allow for mega corporations to be exclusive players in the OTC drug industry and consumers will be left with less product alternatives. This is not about OTC Drug Monograph Reform, this is about big business creating ruse associations compromised of high figure heads who are actively lobbying for legislation that hurts small business and furthers their own agendas.

Currently, there are hundreds of operating unregistered small OTC drug companies in the USA because it is already an expensive endeavor to register with the FDA. There’s virtually no road map or way forward for small businesses hoping to bring innovative products to the market. This recent change referred to by the FDA as the OMUFA fee is a nail in the coffin for a lot of registered small to medium size OTC drug manufacturers across the country. For the hundreds of other small facilities who were hoping to legitimize their products through FDA registration, they now have more financial hurtles to jump through as a result of these arbitrary fees.

Small OTC drug manufacturers play a vital role in our society and economy. They manufacture and bring to market products that are deemed essential items and they need immediate support to rectify this injustice. I am writing this today on behalf of all small businesses who have gone through great lengths to register with the FDA as well as the hundreds of other small businesses across the country who were aiming to do the same before this reform took place. This decision stifles small business, the very group of people who are so often at the forefront of innovation, and that’s what our country needs right now. America needs innovation, sustainable products, and for small businesses to thrive as they are the real backbone of the country. OTC drug manufacturers are comprised of more than just mega corporations, they are also family run businesses making products that push big business to do better and they have been disproportionately hurt by this legislation. Our elected officials should not allow the passing of laws that wipe out entrepreneurs while allowing those with more capital to monopolize an entire industry.

Please rescind or reassess the OTC Drug Monograph Reform as it has direct negative implications for small OTC drug manufacturers. This legislation will have lasting impacts on the industry as many small OTC drug manufacturers will close as a result, creating a ripple effect that will ultimately hurt contract laboratories and other ancillary small businesses they work with.