### United States

Department of Agriculture Animal and Plant Health Inspection Service January 201 3 **Regulatory Impact Analysis &**

**Initial Regulatory Flexibility Analysis**  **Proposed Rule 2011**  **- 0049**  **RIN 0579 -** **AD64 Viruses, Serums, Toxins, and Analogous**  **Products; Single Label Claim for Veterinary Biological Products** 

Policy & Program Development Policy Analysis & Developmenti



### Summary
APHI S is proposing to amend the Virus

- Serum

- Toxin Act regulations to require the use of a simpler labeling format. This simpler uniform format would allow biologics licensees and permittees to more clearly communicate produ ct performance to the user . Biologics licensees and permittees would also be required to provide a standardized summary of the efficacy

and safety data that are submitted to APHI S in support of the issuance of a full product license or conditional product license. The summary of efficacy

and safety

data would be made available to the public on the APHIS Center for Veterinary Biologics (CVB) Web site. We believe that the benefits of this rule justify the costs. A simpler, uniform format would allow biolog ics licensees and permittees to more clearl y communicate product performance information to the end user. Veterinarians, the largest group of consumers of veterinary biologics, often find labeling indications statements based on the current guidance to be confusing, and have expressed a desire for indications statements to provide insight into the actual performance of the product, including summaries of safety and efficacy data. In addition, the rule would simplify the evaluation of efficacy studies, foc using on a basic claim of effectiveness compared to the more complex, tiered approach historically used by APHIS
. T he proposed rule would reduce the amount of time required by CVB to evaluat e study data

. . A novel veterinary biological product can generate revenue in the neighborhood of $5 to $ 10 million per year. Therefore, increased efficiencies in the generation and evaluation of efficacy data should result in fewer delays in bringing a product to market. Inaddition, a simpler label may benefi t those manufacturers , both large and small , who export their products, as foreign manufacturers do not use a tiered approach to label claims.ii

This rule would affect all veterinary biologics licensees and permittees. Currentl y, there are approximately 98 veterinary biological establishments, including permittees. These companies produce about 1,900 different products, and there are about 11,700 active approved labels for veterinary

biologics. There were about 3,100 labels submitted for approval in the la st 12 months by

about two
- thirds of the companies

. Costs for licensees and permittees of the proposed rule are not expected to be significant, whether the affected entity is small or large. APHIS anticipates that the only costs associated with the propo sed labeling format would be one - time costs incurred b y licensees and permittees in having labels for existing licensed products reformatted in accordance with the proposed rule. Most biologics companies, in the course of normal business, use a just

- in

- ti me method for producing new labels and readil y alter their content and those labels are computer generated

. Labels are regularl y altered, for example, to enhance marketing through changes in design. Products that are not yet licensed but are within 6 months of licensure at the time these proposed regulations may become effective would be expected to be full y compliant no later than 1 year after licensure. Products that are more than 6 months away from licensure at the time these proposed regulations may become effective would be expected to be fully compliant at the time of licensure. For products that are currently licensed , the standardized summary of e fficacy and safety data and the revised labels would have to be submitted to APHI S within 4 years of the time these proposed regulations may become effective. CVB would consider written requests to extend the time period for submitting the summaries by an additional 2 years if necessary

. In man y instances manufacturers would not have to produce new labeling materials before they

would do so in the normal course of business , and would only incur additional administrative costs to track the changes

. Costs incurred for minor label changes that areiii

coordinated with planned label changes are estimated to range between $ 99 and $ 500 per product with label s needing to be changed. We estimate that there are about 6,200 labels associated with about 1,000 products for which there would be this ty pe of coordinated change. For these label changes, the total cost is estimated to range between $ 99 ,000 and $50 0 ,000
. We expect that about 5,500 of the active labels , associated with 900 products , would be changed other than in conjunction with a planned change. In these cases, manufacturers would incur costs for prepress, graphic design, and printing in addition to administrative costs. All labels for a specific product would be changed at the same time. Based o n these activities, the cost s of minor label changes that are not coordinated with planned label changes could range from $ 465 to $ 1,613 in administrative and labor costs for each product with label s needing to be changed and from $ 100 to $275 per new labe l i n material s cost
. Because veterinary biologics manufacturers are likel y to make changes for groups of products, all cattle products for example, there are likel y to be savings in administrative and labor costs for those grouped changes. However, based on the above ranges, the total cost for these uncoordinated label changes is estimated to be between $ 968,000 and $ 3 million

. M inor costs may

be incurred in producing the standardized summaries of efficacy and safety data for currentl y l icensed products within the 4

- year implementation period

. We estimate that about 1,700 summaries would need to be completed as a result of this rule because efficacy and safety studies are frequently provided fo r multiple products. The estimated cost would be about $55 per summary , or about $94,000 in total

.iv



### Table of Contents Summary
................................ ................................ ................................ .............................. i Introduction

................................ ................................ ................................ ......................... 1 Overview of the Action and affected Entities

................................ ................................ ..... 2 Expected Benefits and Costs of the Rule

................................ ................................ ............ 3 Initial Regulatory

Flexibility

Anal ys is

................................ ................................ ................ 8 Reasons Action is Being Considered

................................ ................................ .............. 8 Objectives of and Legal Basis for the Rule

................................ ................................ .... 8 Potentially

Affected Small Entities

................................ ................................ ................. 9 Projected Reporting, Recordkeeping, and Other Compliance Requirements

............... 11 Duplication, Overlap, or Conflict with Existing Rules and Regulations

...................... 11 Alternatives to minimize Significant Economic Impacts of the Rule

........................... 111



### Introduction The Animal and Plant Health Inspection Service ( APHI S ) issues licenses for veterinary biological products based, in part, on acceptable efficacy and safety

data. Prescribed information included on final container labels, carton labels, and enclosures is addressed in 9 CFR part 112. APHI S is proposing to amend the regulations to require provision on labels of a single standardized indications statement describing the efficacy of the product as well as a statement referring the end user to an APHI S Web site for efficacy and safet y data. The standardized in dications statement ( e.g., a label claim stating that the product can be used “as an aid in the prevention of

___” or “as an aid in the control of

___” would be replaced with the statement “This product has been shown to be effective for the vaccination of health y animals

___ weeks of age or older against

___” ) would replace current indications statements that may reflect any

of four different levels of effectiveness. In addition to a standardized indications statement, the amendment would also provide for the public disclosure of a summary (with confidential business information removed) of the efficacy and safet y data submitted to APHI S in support of the issuance of the product license. Effects of this action would be to clarify information available to customers by providing for a simpler indications statement on labels and public disclosure of data summaries from the efficacy and safet y studies conducted for product licensure. This document provides a benefit

- cost anal ys is, as required b y Executive Ord ers 12866 and 13563, which direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary , to select regulatory approaches that maximize net benefits (including potential economic, environmental, publi c health and safety effects, and2

equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This document also examines the potential economic ef fects of the rule on small entities, as required by the Regulatory

Flexibility

Act. 

### Overview of the Action and **a ffected**  **Entities**
APHI S is proposing to amend the Virus

- Serum

- Toxin Act regulations to provide for the use of a simpler labeling format. This si mpler uniform format would allow biologics licensees and permittees to more clearl y communicate product performance to the user. Biologics licensees and permittees would also provide a standardized summary of the efficacy

and safet y data that are submitte d to APHI S in support of the issuance of a full product license or conditional product license. The summary of efficacy

and safety

data would be made available to the public on the APHIS Center for Veterinary Biologics (CVB) Web site. This rule would af

fect all veterinary

biologics licensees and permittees. Currentl y, there are approximately 98 veterinary biological establishments, including permittees. These companies produce about 1,900 different products, and there are about 11,7 00 active approved l abels for veterinary

biologics. There were about 3,100 labels submitted for approval in the last 12 months by

about two
- thirds of the companies . The average number of labels submitted per firm over that time frame was 46 and the median was 8. Companies undergoing acquisition or name changes submit high numbers of labels. Also, m any companies must maintain a number of different approved labels for products that are exported to meet the various requirements of importing countries

.3



### Expected Benefits and **Costs of the Rule** This proposal would amend the regulations to require that labels of veterinary biologics have a standardized indications statement describing the efficacy of the product as well as a statement referring the end user to an APHIS Web site for efficacy and safety

data. We believe that the benefits of this rule justify the costs. The simpler, uniform labeling format along with publicly available safety

and efficacy data would assist the licensees and permittees in communicating product perf ormance to their domestic and international customers

. Veterinarians, the largest group of consumers of veterinary

biologics, often find labeling indications statements based on the current guidance to be confusing, and have expressed a desire for indicat ions statements to provide insight into the actual performance of the product, including summaries of safety and efficacy data. In addition, the rule would simplify

the evaluation of efficacy studies, focusing on a basic claim of effectiveness compared to the more complex, tiered approach historicall y used by APHI S. T he proposed rule would reduce the amount of time required by CVB to evaluat e study data . A novel veterinary

biological product can generate revenue in the neighborhood of $5 to $ 10 million p er ye ar. Therefore, increased efficiencies in the generation and evaluation of efficacy data should result in fewer delay s in bringing a product to market. Inaddition, a simpler label may benefit those manufacturers who export their products, as foreign manufacturers do not use a tiered approach to label claims. Section 112.2 of the regulations currentl y requires labeling materials to include the true name; name of producer, permittee, or foreign manufacturer; the license or permit number; storage temper ature; full instructions for the proper use of the product; warning statements on multiple dose final containers; a burn statement if the product contains viable or dangerous4

organisms or viruses; withholding statement for products intended for use in food animals; expiration date; number of doses; recoverable quantity of contents; a serial number; antibiotics added during the production process; an y other statement that is not false or misleading; and various restrictions. Section 112.5 of the regulations describes the review and approval process of labeling materials. Adding a single indications/efficacy statement and a statement referring the end user to an APHI S Web site where efficacy and safet y summary data may be found should not significantly

alter the recordkeeping burden. This proposed rule contains no new information or recordkeeping requirements. Costs associated with the proposed rule are not expected to be significant. APHI S anticipates that the onl y costs associated with the proposed labeli ng format would be one - time costs incurred b y licensees and permittees in having labels for existing licensed products reformatted in accordance with the proposed rule. The Food and Drug Administration (FDA) has developed a model to estimate the cost of l abeling changes in consumer labeling regulations. 1 While not directl y applicable to veterinary biologics labeling changes, the model does include cost information on various areas pertinent to a veterinary biologics label change. These areas include labor, materials, administration and recordkeeping. The costs depend on the extent of the change (from minor to extensive), ty pe of printing method used for the label being changed and whether the label change can be coordinated with p lanned label changes b y the manufacturer that occur in the ordinary course of business

. Because the proposed label change s would only require new text and not a label redesign, they are considered minor changes. Most biologics companies, in the course of normal business,

1 Model to Estimate Costs of Using Labeling as a Risk Reduction Strategy for Consumer Products Regulated by the Food and Drug Administration. March 2011. Prepared by RTI International for the Food and Drug Administration. Contract Number GS

- 10F

- 0097L, Task Order 5.5

use a just

- in

- time method for producing new labels and can therefore readil y alter their content. Labels are regularl y altered, for example, to enhance marketing through changes in design. Products that are not yet licensed but are withi n 6 months of licensure at the time these proposed regulations may

become effective would be expected to be fully compliant no later than 1 year after licensure. Products that are more than 6 months away from licensure at the time these proposed regulatio ns may become effective would be expected to be full y compliant at the time of licensure. For products that are currentl y licensed , the standardized summary of efficacy

and safety data and revised labels would have to be submitted to APHI S within 4 years of the time these proposed regulations may become effective. CVB would consider written requests to extend the time period for submitting the summaries by an additional 2 years if necessary. Of the approximately 11,7 00 a ctive labels, 53 percent, or about 6,200 , are no more than 4 ye ars old. This suggests that more than one

- half of the labels affected by the rule would be replaced in the ordinary

course of business during the implementation period. Thus, in these instances , manufacturers would not have to produce new labeling materials before they would do so in the normal course of business. Costs incurred f

or minor label changes that are coordinated with planned label changes at a manufacturer include the costs of adminis trative activities. Even if manufacturers can coordinate a labeling change, they still incur costs associated with understanding the regulation, determining their responses, tracking the required change throughout the labeling change process, and reviewin g and updating their records of product labels. Other ty pes of costs, such
as prepress, graphic design, and printing the labels are not attributable to the regulation if the labeling change is coordinated with a planned change

. All labels for a specific product would be changed at the same time. Costs incurred for minor label changes that are coordinated with6

planned label changes are estimated to range between $99 and $500 per product , with a mid

point estimate of $310 , per product with label s that need to be changed. 2 There are about 1,000 products associated with the 6,200 labels for which there would be coordinated changes. For these label changes, the total cost is estimated to range between $99,000 and $500,000 with a mid

- point estimate of $310,00 0
. Costs incurred for minor label changes that cannot be coordinated with planned label changes include costs for prepress, graphic design, and printing the labels in addition to administrative activities. L abeling information can be displayed on a package in two way s
– it can be printed directl y on the package or it can be printed on a label, which is then applied to the package. All labels for a specific product would be changed at the same time. All current veterinary

biologics products are labeled with pre

- printed , computer generated label s applied to the package and most are produced in

- house

. 3 Paper is the most commonly used material in label production. W e expect that about 5,500 of the active labels, associated with about 900 products, would be changed other than in conjunction with a planned change. It is estimated that the cost s of a minor label change that is not coordinated with a planned change usin g computer generated printing is between $ 465 to $1,613 in administrative and labor costs (with a mid

- point estimate of $ 971 ) for each product with label s that need to be changed ; and between $ 100 and $ 275 in material s cost (with a mid

- point estimate of $ 158 ) per new label

. 4 Because most veterinary biologics companies handle label changes in

- house, th e cost does not include graphics design or

2 Ibid

. 3 Dr.Kevin Ruby, Senior Staff Microbiologis t; Policy, Evaluation and Licens ing; Center for Veterinary Biologics; USDA

- APHIS. Personal communication. 4 Model to Estimate Costs of Using Labeling as a Risk Reduction Strategy for Consumer Products Regulated by the Food and Drug Administration . March 2011. Prepared by RTI International for the Food and Drug Administration. Contract Number GS

- 10F

- 0097L, Task Order 5.7

prepress consulting fees. Veterinary biologics manufacturers are also likely to make changes for groups of produc ts, all cattle products for example, when the changes are uncoordinated with planned label changes. Therefore, there are likel y to be savings in administrative and labor costs for those grouped changes. Based on the above ranges, the total cost for these uncoordinated label changes is estimated to range between $ 968,000 and $ 3 million , with a mid

- point estimate of $ 1.7 million

. M inor costs may

be incurred in producing the standardized summaries of efficacy and safety data for currentl y l icensed products within the four ye ar implementation period

. Products whose original efficacy

data are not available would require a statement on their data summary stating , “Original efficacy data is not available because the product was licensed “x” years ago.” We est imate that it would take 1 hour to review instructions, search existing data sources, gather and maintain the data needed , and complete and review the collection of information. This activity would most likely be done by

a mid

- level manager. At a rate of $55.04 per hour, 5 this labor will cost a manufacturer about $55. Cost of submission by electronic mail or regular mail would be negligible. There are approximately 98 veterinary

biological establishments, including permittees. These companies produce a bout 1,900 different products that would need to be summarized on our W eb site. However, companies often perform efficacy and safet y studies on a combination of products and then license the various products separately . We estimate that about 1,700 data summaries would need to be completed. In total, these 1,700 summaries may cost about $94,000 to complete.

5 May 20 11 National Industry

- Specific Occupational Employment and Wage Estimates, Bureau of Labor Statistics, 11

- 1021, General and Operations managers , mean ho urly wage.8



### Initial Regulatory Flexibility Analysis The Regulatory

Flexibility

Act requires agencies to evaluate the potential effects of their proposed and fina l rules on small businesses, small organizations and small governmental jurisdictions. This initial regulatory flexibility

analy sis describes expected impacts of this proposed rule on small entities, as required b y section 603 of the Act. **Reasons Action is Being Considered**  Current APHI S guidelines provide examples of label claims that may be used to reflect the expected performance of the product provided that appropriate efficacy data have been submitted and approved by APHIS. The guidelines describe pe rformance requirements and allowable indications statements for four different levels of effectiveness. Outreach to various stakeholders , including biologics manufacturers, the American Veterinary

Medical Association, private and academic veterinarians, an d pet owners, indicated general support for a change in the format in which expectations of product efficacy are communicated on labels. The proposed standardized indications statement and summary of safety and efficacy data would provide insight into the actual performance of the product and product differences , but not requir e disclosure of proprietary information. Currently licensed products would not need to be re

- licensed based on these proposed changes. This proposal is not intended to change the e fficacy requirements for currentl y licensed veterinary

biological products. The licensees would be required to provide the same data as are currentl y required. **Objectives of**  **and Legal Basis for the Rule** APHI S administers and enforces the Virus

- Serum

- Tox in Act, as amended (21 U.S.C. 151

- 159). The regulations issued pursuant to the Act are intended to ensure that veterinary9

biological products are pure, safe, potent, and efficacious when used according to label instruction. We are proposing to amend the regulations to require the use of a simpler labeling format, and to require biologics licensees to provide a standardized summary of the efficacy

and safety data submitted in support of licensing. The simpler, uniform format would more clearl y communicate product performance to end users and enable APHIS to evaluate efficacy studies more efficiently by focusing on a basic claim of effectiveness compared to the more complex, tiered approach histori cally used. **Potentially Affected**  **Small Entities** This rule would affect all veterinary biologics licensees and permittees. Currentl y, there are approximately 98 veterinary biological establishments, including permittees. These establishments are classif ied within the industry Biological product (except diagnostic) manufacturing in the North American Industry Classification Sy stem (NAICS 325414). The Small Business Administration (SBA) has established guidelines for determining which businesses are consi dered small. According to SBA size standards for NAI CS 325414, operations with not more than 500 employees are considered small entities. The vast majority of these establishments are small. In 2007, more than 95 percent of biological product manufactur ers had fewer than 500 employees, and more than 70 percent had fewer than 50 employees. 6 Costs for licensees and permittees of the proposed rule are not expected to be significant, whether the affected entity is small or large. APHIS anticipates that th e only costs associated with the proposed labeling format would be one - time costs incurred b y licensees and permittees in having labels for existing licensed products reformatted in accordance with the proposed rule.

6 2007 Economic Census . U.S. Census Bureau, Department of Commerce.10

Most biologics companies, in the cours e of normal business, use a just

- in

- time method for producing new labels (i.e., do not store large inventories of labels but rather obtain labels as needed for current vaccine production) and readil y alter their content. Labels are regularl y altered, for example, to enhance marketing through changes in design. Products that are not yet licensed but are within 6 months of licensure at the time these proposed regulations may become effective would be expected to be full y compliant no later than 1 year after licensure. Products that are more than 6 months away from licensure at the time these proposed regulations may become effective would be expected to be fully compliant at the time of licensure. For products that are currently licensed , the standardized summary of efficacy and safety data and revised labels would have to be submitted to APHI S within 4 years of the time these proposed regulations may become effective. CVB would consider written requests to extend the time period for subm itting the summaries by an additional 2 years if necessary

. In man y instances manufacturers would not have to produce new labeling materials before they would do so in the normal course of business , and would only incur additional administrative costs to track the changes

. Costs incurred for minor label changes that are coordinated with planned label changes are estimated to range between $99 and $500 per product with labels needing to be changed. We estimate that there are about 6,200 labels associated with about 1,000 products for which there would be this type of coordinated change. For these label changes, the total cost is estimated to range between $99,000 and $500,000

. We expect that about 5,500 of the active labels, associated with 900 product s, would be changed other than in conjunction with a planned change. In these cases, manufacturers would incur costs for prepress, graphic design, and printing in addition to administrative costs. All labels for a specific product would be changed at the same time. Based on these activities, the11

costs of minor label changes that are not coordinated with planned label changes could range from $465 to $1,613 in administrative and labor costs for each product with labels needing to be changed and from $100 to $275 per new label in materials cost. Because veterinary biologics manufacturers are likel y to make changes for groups of products, all cattle products for example, there are likel y to be savings in administrative and labor costs for those grouped chan ges. However, based on the above ranges, the total cost for these uncoordinated label changes is estimated to be between $ 968,000 and $ 3 million

. M inor costs may

be incurred in producing the standardized summaries of efficacy and safety data for currently

licensed products within the 4

- year implementation period

. We estimate that about 1,700 summaries would need to be completed as a result of this rule because efficacy and safety studies are frequently provided for multiple products. The estimated cos t would be about $55 per summary , or about $94,000 in total. **Projected Reporting, Recordkeeping, and Other**  **Compliance Requirement**  **s** This proposed rule contains no new information or recordkeeping requirements under the Paperwork Reduction Act of 1995. **Dupli cation, Overlap**  **, or**  **Conflict with Existing Rules and Regulations** APHI S has not identified any duplication, overlap, or conflict of the proposed rule with other Federal rules. **Alternatives to minimize Significant Economic Impacts of the**  **Rule** Based on the information we have, there is no reason to conclude that adoption of this proposed rule would result in any significant economic effect on a substantial number of small entities. However, we do not currentl y have all of the data necessary for a comprehens ive anal ys is of the effects of this p roposed rule on small entities and invit e comm ents on potential12

effects. In particular, we are interested in determining the number and kind of small entities that may incur benefits or costs from the implementation of this proposed rule

. Further, we are interested in receiving information that could be used to further quantify the benefits of this proposed rule.