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 Department of Health and Human Services Food and Drug Administration [Docket No. FDA-2016-N-4119]
 AGENCY: Food and Drug Administration, HHS.
 ACTION: Notice.
 SUMMARY: The Food and Drug Administration (FDA) is announcing the fiscal year (FY) 2019 annual fee rate for recognized accreditation bodies and accredited certification bodies, and the fee rate for accreditation bodies applying to be recognized in the third-party certification program that is authorized by the Federal Food, Drug, and Cosmetic Act (FD&C Act), as amended by the FDA Food Safety Modernization Act (FSMA). We are also announcing the fee rate for certification bodies that are applying to be directly accredited by FDA.
 DATES: This fee is effective October 1, 2018.
 FOR FURTHER INFORMATION CONTACT: Donald Prater, Office of Foods and Veterinary Medicine, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 1, Rm. 3234, Silver Spring, MD 20993, 301-348-3007.


SUPPLEMENTARY INFORMATION: I. Background Section 307 of FSMA, Accreditation of Third-Party Auditors, amended the FD&C Act to create a new provision, section 808, under the same name. Section 808 of the FD&C Act (21 U.S.C. 384d) directs FDA to establish a program for accreditation of third-party certification bodies [1]
                    
                     conducting food safety audits and issuing food and facility certifications to eligible foreign entities (including registered foreign food facilities) that meet our applicable requirements. Under this provision, we established a system for FDA to recognize accreditation bodies to accredit certification bodies, except for limited circumstances in which we may directly accredit certification bodies to participate in the third-party certification program. Section 808(c)(8) of the FD&C Act directs FDA to establish a reimbursement (user fee) program by which we assess fees and require reimbursement for the work FDA performs to establish and administer the third-party certification program under section 808 of the FD&C Act. The user fee program for the third-party certification program was established by a final rule entitled “Amendments to Accreditation of Third-Party Certification Bodies To Conduct Food Safety Audits and To Issue Certifications To Provide for the User Fee Program” (81 FR 90186, December 14, 2016). The FSMA FY 2019 third-party certification program user fee rate announced in this notice is effective on October 1, 2018, and will remain in effect through September 30, 2019. II. Estimating the Average Cost of a Supported Direct FDA Work Hour for FY 2019 In each year, the costs of salary (or personnel compensation) and benefits 
                    ( print page 44278)
                    for FDA employees account for between 50 and 60 percent of the funds available to, and used by, FDA. Almost all of the remaining funds (operating funds) available to FDA are used to support FDA employees for paying rent, travel, utility, information technology, and other operating costs. A. Estimating the Full Cost per Direct Work Hour in FY 2019 Full-time Equivalent (FTE) reflects the total number of regular straight-time hours—not including overtime or holiday hours—worked by employees, divided by the number of compensable hours applicable to each fiscal year. Annual leave, sick leave, compensatory time off, and other approved leave categories are considered “hours worked” for purposes of defining FTE employment. In general, the starting point for estimating the full cost per direct work hour is to estimate the cost of an FTE or paid staff year. Calculating an Agency-wide total cost per FTE requires three primary cost elements: Payroll, non-payroll, and rent. We have used an average of past year cost elements to predict the FY 2019 cost. The FY 2019 FDA-wide average cost for payroll (salaries and benefits) is $157,731; non-payroll—including equipment, supplies, information technology, general and administrative overhead—is $91,008; and rent, including cost allocation analysis and adjustments for other rent and rent-related costs, is $24,400 per paid staff year, excluding travel costs. Summing the average cost of an FTE for payroll, non-payroll, and rent, brings the FY 2019 average fully supported cost to $273,139 per FTE, excluding travel costs. FDA will use this base unit fee in determining the hourly fee rate for third-party certification user fees for FY 2019 prior to including travel costs as applicable for the activity. To calculate an hourly rate, FDA must divide the FY 2019 average fully supported cost of $273,139 per FTE by the average number of supported direct FDA work hours in FY 2017—the last FY for which data are available. See table 1. Table 1—Supported Direct FDA Work Hours in a Paid Staff Year in FY 2017
Total number of hours in a paid staff year
2,080Less:10 paid holidays
−8020 days of annual leave
−16010 days of sick leave
−8012.5 days of training
−10026.5 days of general administration
−18426.5 days of travel
−2122 hours of meetings per week
−104Net Supported Direct FDA Work Hours Available for Assignments
= 1,160
 Dividing the average fully supported FTE cost in FY 2019 ($273,139) by the total number of supported direct work hours available for assignment in FY 2017 (1,160) results in an average fully supported cost of $235 (rounded to the nearest dollar), excluding travel costs, per supported direct work hour in FY 2019. B. Adjusting FY 2017 Travel Costs for Inflation To Estimate FY 2019 Travel Costs To adjust the hourly rate for FY 2019, FDA must estimate the cost of inflation in each year for FY 2018 and FY 2019. FDA uses the method prescribed for estimating inflationary costs under the Prescription Drug User Fee Act (PDUFA) provisions of the FD&C Act (section 736(c)(1) (21 U.S.C. 379h(c)(1)), the statutory method for inflation adjustment in the FD&C Act that FDA has used consistently. FDA previously determined the FY 2018 inflation rate to be 1.6868 percent; this rate was published in the FY 2018 PDUFA user fee rates notice in the 
                    **Federal Register**
                     (82 FR 43244, September 14, 2017). Utilizing the method set forth in section 736(c)(1) of the FD&C Act, FDA has calculated an inflation rate of 1.6868 percent for FY 2018 and 1.7708 percent for FY 2019, and FDA intends to use this inflation rate to make inflation adjustments for FY 2019 for several of its user fee programs; the derivation of this rate is published in the 
                    **Federal Register**
                     in the FY 2019 notice for the PDUFA user fee rates (83 FR 37504 at 37505, August 1, 2018). The compounded inflation rate for FYs 2018 and 2019, therefore, is 1.034875 (or 3.4875 percent) (1 plus 1.6868 percent times 1 plus 1.7708 percent). The average fully supported cost per supported direct FDA work hour, excluding travel costs, of $235 already takes into account inflation as the calculation above is based on FY 2019 predicted costs. FDA will use this base unit fee in determining the hourly fee rate for third-party certification program fees for FY 2019 prior to including travel costs as applicable for the activity. For the purpose of estimating the fee, we are using the travel cost rate for foreign travel because we anticipate that the vast majority of onsite assessments made by FDA under this program will require foreign travel. In FY 2017, the Office of Regulatory Affairs spent a total of $2,566,050 on 480 foreign inspection trips related to FDA's Center for Food Safety and Applied Nutrition and Center for Veterinary Medicine field activities programs, which averaged a total of $5,346 per foreign inspection trip. These trips averaged 3 weeks (or 120 paid hours) per trip. Dividing $5,346 per trip by 120 hours per trip results in a total and an additional cost of $45 (rounded to the nearest dollar) per paid hour spent for foreign inspection travel costs in FY 2017. To adjust $45 for inflationary increases in FY 2018 and FY 2019, FDA must multiply it by the same inflation factor mentioned previously in this document (1.034875 or 3.4875 percent), which results in an estimated cost of $47 (rounded to the nearest dollar) per paid hour in addition to $235 for a total of $282 per paid hour ($235 plus $47) for each direct hour of work requiring foreign inspection travel. FDA will use these rates in charging fees in FY 2019 when travel is required for the third-party certification program. Table 2—FSMA Fee Schedule for FY 2019
Fee category
Fee rates 
                             for  
                             FY 2019Hourly rate without travel
$235Hourly rate if travel is required
282
 III. Fees for Accreditation Bodies and Certification Bodies in the Third-Party Certification Program Under Section 808(c)(8) of the FD&C Act The third-party certification program assesses application fees and annual fees. In FY 2019, the only fees that could be collected by FDA under section 808(c)(8) of the FD&C Act are the initial application fee for accreditation bodies seeking recognition, the annual fee for recognized accreditation bodies, the annual fee for certification bodies accredited by a recognized accreditation body, and the initial application fee for a certification body seeking direct accreditation from FDA. Table 3 provides an overview of the fees for FY 2019.
                    ( print page 44279) Table 3—FSMA Third-Party Certification Program User Fee Schedule for FY 2019
Fee category
Fee rates 
                             for  
                             FY 2019Initial Application Fee for Accreditation Body Seeking Recognition
$38,211Annual Fee for Recognized Accreditation Body
1,775Annual Fee for Accredited Certification Body
2,219Initial Application Fee for a Certification Body Seeking Direct Accreditation from FDA
38,211
 A. Application Fee for Accreditation Bodies Applying for Recognition in the Third-Party Certification Program Under Section 808(c)(8) of the FD&C Act Section 1.705(a)(1) (21 CFR 1.705(a)(1)) establishes an application fee for accreditation bodies applying for initial recognition that represents the estimated average cost of the work FDA performs in reviewing and evaluating initial applications for recognition of accreditation bodies. The fee is based on the fully supported FTE hourly rates and estimates of the number of hours it would take FDA to perform relevant activities. These estimates represent FDA's current thinking, and as the program evolves, FDA will reconsider the estimated hours. We estimate that it would take, on average, 60 person-hours to review an accreditation body's submitted application, 48 person-hours for an onsite performance evaluation of the applicant (including travel and other steps necessary for a fully supported FTE to complete an onsite assessment), and 45 person-hours to prepare a written report documenting the onsite assessment. FDA employees are likely to review applications and prepare reports from their worksites, so we use the fully supported FTE hourly rate excluding travel, $235/hour, to calculate the portion of the user fee attributable to those activities: $235/hour × (60 hours + 45 hours) = $24,675. FDA employees will likely travel to foreign countries for the onsite performance evaluations because most accreditation bodies are anticipated to be located in foreign countries. For this portion of the fee we use the fully supported FTE hourly rate for work requiring travel, $282/hour, to calculate the portion of the user fee attributable to those activities: $282/hour × 48 hours (
                    *i.e.,*
                     two fully supported FTEs × ((2 travel days × 8 hours) + (1 day onsite × 8 hours))) = $13,536. The estimated average cost of the work FDA performs in total for reviewing an initial application for recognition for an accreditation body based on these figures would be $24,675 + $13,536 = $38,211. Therefore, the application fee for accreditation bodies applying for recognition in FY 2019 will be $38,211. B. Annual Fee for Accreditation Bodies Participating in the Third-Party Certification Program Under Section 808(c)(8) of the FD&C Act To calculate the annual fee for each recognized accreditation body, FDA takes the estimated average cost of work FDA performs to monitor performance of a single recognized accreditation body and annualizes that over the average term of recognition. At this time we assume an average term of recognition of 5 years. We also assume that FDA will monitor 10 percent of recognized accreditation bodies onsite. As the program proceeds, we will adjust the term of recognition as appropriate. We estimate that for one performance evaluation of a recognized accreditation body, it would take, on average (taking into account that not all recognized accreditation bodies would be monitored onsite), 24 hours for FDA to conduct records review, 8 hours to prepare a report detailing the records review and onsite performance evaluation, and 4.8 hours of onsite performance evaluation (
                    *i.e.,*
                     10 percent × two fully supported FTEs × ((2 travel days × 8 hours)) + (1 day onsite × 8 hours))). Using the fully supported FTE hourly rates in table 2, the estimated average cost of the work FDA performs to monitor performance of a single recognized accreditation body would be $7,520 ($235/hour × (24 hours + 8 hours)) plus $1,354 ($282/hour × 4.8 hours), which is $8,874. Annualizing this amount over 5 years would lead to an annual fee for recognized accreditation bodies of $1,775 for FY 2019. C. Annual Fee for Certification Bodies Accredited by a Recognized Accreditation Body in the Third-Party Certification Program Under Section 808(c)(8) of the FD&C Act To calculate the annual fee for a certification body accredited by a recognized accreditation body, FDA takes the estimated average cost of work FDA performs to monitor performance of a single certification body accredited by a recognized accreditation body and annualizes that over the average term of accreditation. At this time we assume an average term of accreditation of 4 years. This fee is based on the fully supported FTE hourly rates and estimates of the number of hours it would take FDA to perform relevant activities. We estimate that FDA would conduct, on average, the same activities, for the same amount of time to monitor certification bodies accredited by a recognized accreditation body as we would to monitor an accreditation body recognized by FDA. Using the fully supported FTE hourly rates in table 2, the estimated average cost of the work FDA performs to monitor performance of a single accredited certification body would be $7,520 ($235/hour × (24 hours + 8 hours)) plus $1,354 ($282/hour × 4.8 hours), which is $8,874. Annualizing this amount over 4 years would lead to an annual fee for accredited certification bodies of $2,219 for FY 2019. D. Initial Application Fee for Certification Bodies Seeking Direct Accreditation From FDA in the Third-Party Certification Program Under Section 808(c)(8) of the FD&C Act Section 1.705(a)(3) establishes an application fee for certification bodies applying for direct accreditation from FDA that represents the estimated average cost of the work FDA performs in reviewing and evaluating initial applications for direct accreditation of certification bodies. The fee is based on the fully supported FTE hourly rates and estimates of the number of hours it would take FDA to perform relevant activities. These estimates represent FDA's current thinking, and as the program evolves, FDA will reconsider the estimated hours. We estimate that it would take, on average, 60 person-hours to review a certification body's submitted application, 48 person-hours for an onsite performance evaluation of the applicant (including travel and other steps necessary for a fully supported FTE to complete an onsite assessment), and 45 person-hours to prepare a written report documenting the onsite assessment. FDA employees are likely to review applications and prepare reports from their worksites, so we use the fully supported FTE hourly rate excluding travel, $235/hour, to calculate the portion of the user fee attributable to those activities: $235/hour × (60 hours + 45 hours) = $24,675. FDA employees will likely travel to foreign countries for the onsite performance evaluations because most certification bodies are anticipated to be located in foreign countries. For this portion of the fee we use the fully supported FTE hourly rate for work requiring travel, $282/hour, to calculate the portion of the user fee attributable to those activities: $282/
                    ( print page 44280)
                    hour × 48 hours (
                    *i.e.,*
                     two fully supported FTEs × ((2 travel days × 8 hours) + (1 day onsite × 8 hours))) = $13,536. The estimated average cost of the work FDA performs in total for reviewing an initial application for direct accreditation of a certification body based on these figures would be $24,675 + $13,536 = $38,211. Therefore, the application fee for certification bodies applying for direct accreditation from FDA in FY 2019 will be $38,211. IV. Estimated Fees for Accreditation Bodies and Certification Bodies in Other Fee Categories for FY 2019 Section 1.705(a) also establishes application fees for recognized accreditation bodies submitting renewal applications and certification bodies applying for renewal of direct accreditation. Section 1.705(b) also establishes annual fees for certification bodies directly accredited by FDA. Although we will not be collecting these other fees in FY 2019, for transparency and planning purposes, we have provided an estimate of what these fees would be for FY 2019 based on the fully supported FTE hourly rates for FY 2019 and estimates of the number of hours it would take FDA to perform relevant activities as outlined in the Final Regulatory Impact Analysis for the Third-Party Certification Regulation. Table 4 provides an overview of the estimated fees for other fee categories. Table 4—Estimated Fee Rates for Other Fee Categories Under the FSMA Third-Party Certification Program
Fee category
Estimated 
                             fee rates  
                             for  
                             FY 2019Renewal application fee for recognized accreditation body
$21,350Renewal application fee for directly accredited certification body
28,999Annual fee for certification body directly accredited by FDA
21,056
 V. How must the fee be paid? Accreditation bodies seeking initial recognition must submit the application fee with the application. For recognized accreditation bodies and accredited certification bodies, an invoice will be sent annually. Payment must be made within 30 days of the invoice date. Detailed payment information will be included with the invoice when it is issued. VI. What are the consequences of not paying this fee? The consequences of not paying these fees are outlined in 21 CFR 1.725. If FDA does not receive an application fee with an application for recognition, the application will be considered incomplete and FDA will not review the application. If a recognized accreditation body fails to submit its annual user fee within 30 days of the due date, we will suspend its recognition. If the recognized accreditation body fails to submit its annual user fee within 90 days of the due date, we will revoke its recognition. If an accredited certification body fails to pay its annual fee within 30 days of the due date, we will suspend its accreditation. If the accredited certification body fails to pay its annual fee within 90 days of the due date, we will withdraw its accreditation. Dated: August 24, 2018. Leslie Kux, Associate Commissioner for Policy.


# Footnotes

1.
    
                         For the reasons explained in the third-party certification final rule (80 FR 74570 at 74578-74579, November 27, 2015), and for consistency with the implementing regulations for the third-party certification program in 21 CFR parts 1, 11, and 16, this notice uses the term “third-party certification body” rather than the term “third-party auditor” used in section 808(a)(3) of the FD&C Act. Back to Citation


[FR Doc. 2018-18802 Filed 8-29-18; 8:45 am] BILLING CODE 4164-01-P