Document ID: FDA-2021-N-0698-0001
Agency: fda
Document Type: Notice
Title: Outsourcing Facility Fee Rates for Fiscal Year 2022
Posted Date: 2021-07-28T04:00Z

[Federal Register Volume 86, Number 142 (Wednesday, July 28, 2021)]
[Notices]
[Pages 40588-40591]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16057]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2021-N-0698]

Outsourcing Facility Fee Rates for Fiscal Year 2022

AGENCY: Food and Drug Administration, Health and Human Services (HHS).

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the 
fiscal year (FY) 2022 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 2022 rates for the small business 
establishment fee ($5,824), the non-small business establishment fee 
($18,999), and the reinspection fee ($17,472) for outsourcing 
facilities; provides information on how the fees for FY 2022 were 
determined; and describes the payment procedures outsourcing facilities 
should follow. These fee rates are effective October 1, 2021, and will 
remain in effect through September 30, 2022.

FOR FURTHER INFORMATION CONTACT: For more information on human drug 
compounding and outsourcing facility fees: Visit FDAs website at: 
https://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/default.htm.
    For questions relating to this notice: Melissa Hurley, Office of 
Financial Management, Food and Drug Administration, 4041 Powder Mill 
Rd., Rm. 61075, Beltsville, MD 20705-4304, 240-402-4585.

SUPPLEMENTARY INFORMATION:

I. Background

    Under section 503B of the FD&C Act (21 U.S.C. 353b), a human drug 
compounder can become 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 (NDAs) 
or abbreviated new drug applications (ANDAs); 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 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 2022

A. Methodology for Calculating FY 2022 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 2022. The 3-year average is 2.7383 percent.

                                 Table 1--FDA PC&Bs Each Year and Percent Change
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                Fiscal year                       2018              2019              2020        3-Year average
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Total PC&B................................    $2,690,678,000    $2,620,052,000    $2,875,592,000  ..............
Total FTE.................................            17,023            17,144            17,535  ..............
PC&B per FTE..............................          $158,061          $152,826          $163,992  ..............
Percent change from previous year.........            4.2206           -3.3120            7.3063          2.7383
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[[Page 40589]]

    Section 744K(c)(2)(A)(ii) of the FD&C Act specifies that this 
2.7383 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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                Fiscal year                       2018              2019              2020        3-Year average
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Total PC&B................................    $2,690,678,000    $2,620,052,000    $2,875,592,000  ..............
Total Costs...............................    $5,370,935,000    $5,663,389,000    $6,039,321,000  ..............
PC&B Percent..............................           50.0970           46.2630           47.6145         47.9915
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    The payroll adjustment is 2.7383 percent multiplied by 47.9915 
percent, or 1.3142 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 2022 
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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                      Year                             2018            2019            2020       3-Year average
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Annual CPI......................................         251.107         255.657         258.811  ..............
Annual Percent Change...........................          2.4425          1.8120          1.2337          1.8294
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    Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that this 
1.8294 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 2018 to 2020 is 52.0085 percent (100 percent minus 47.9915 
percent equal 52.0085 percent). Therefore, the non-pay adjustment is 
1.8294 percent times 52.0085 percent, or 0.9514 percent.
    The PC&B component (1.3142 percent) is added to the non-PC&B 
component (0.9514 percent), for a total inflation adjustment of 2.2656 
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 
1.022656.
    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 2022 
(2.2656 percent) is compounded by adding one to it, and then 
multiplying it by one plus the inflation adjustment factor for FY 2021 
(13.8991 percent), as published in the Federal Register on August 4, 
2020 (85 FR 47225). The result of this multiplication of the inflation 
factors for the 7 years since FY 2015 (1.022656 x 1.138991) becomes the 
inflation adjustment for FY 2022. For FY 2022, the inflation adjustment 
is 16.4796 percent (rounded). We then add one, making the FY 2022 
inflation adjustment factor 1.164796.
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 2022, FDA must 
estimate: (1) The number of outsourcing facilities that will pay the 
reduced fee for small businesses for FY 2022 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 2022 were to pay the inflation-adjusted fee 
amount of $17,472).
    With respect to (1), FDA estimates that 12 entities will qualify 
for small business exceptions and will pay the reduced fee for FY 2022. 
With respect to (2), to estimate the total number of entities that will 
register as outsourcing facilities for FY 2022, FDA used data submitted 
by outsourcing facilities through the voluntary registration process, 
which began in December 2013. Accordingly, FDA estimates that 80 
outsourcing facilities, including 12 small businesses, will be 
registered with FDA in FY 2022.
    If the projected 80 outsourcing facilities paid the full inflation-
adjusted fee of $17,472, this would result in total revenue of 
$1,397,760 in FY 2022 ($17,472 x 80). However, 12 of the entities that 
are expected to register as outsourcing facilities for FY 2022 are 
projected to qualify for the small business exception and to pay one-
third of the full fee ($5,824 x 12), totaling $69,888 instead of paying 
the full fee ($17,472 x 12), which would total $209,664. This would 
leave a potential shortfall of $139,776 ($209,664 minus $69,888).
    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

[[Page 40590]]

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 2020 ($2,208), 
to what would have been the small business adjustment factor for FY 
2020 ($1,671) 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 2020, this 
was $1,293,446 ($16,798 x 77). The actual FY 2020 revenue from the 77 
total registrants (i.e., 67 registrants paying FY 2020 non-small 
business establishment fee and 10 small business registrants) paying 
establishment fees is $1,181,456. $1,181,456 is calculated as follows: 
(FY 2020 Non-Small Business Establishment Fee adjusted for inflation 
only) x (total number of registrants in FY 2020 paying Non-Small 
Business Establishment Fee) + (FY 2020 Small Business Establishment 
Fee) x (total number of small business registrants in FY 2020 paying 
Small Business Establishment Fee). $16,798 x 67 + $5,599 x 10 = 
$1,181,456. This left a shortfall of $111,990 from the estimated total 
target collection amount ($1,293,446 minus $1,181,456). This amount 
($111,990) divided by the total number of registrants in FY 2020 paying 
Standard Establishment Fee (67) equals $1,671.
    The difference between the small business adjustment factor used in 
FY 2020 and the small business adjustment factor that would have been 
used had FDA estimated perfectly is $537 ($2,208 minus $1,671). The 
$537 (rounded to the nearest dollar) is then multiplied by the number 
of actual registrants who paid the standard fee for FY 2020 (67), which 
provides us a total excess collection of $35,963 in FY 2020.
    Therefore, to calculate the small business adjustment factor for FY 
2022, FDA subtracts $35,963 from the projected shortfall of $139,776 
for FY 2022 to arrive at the numerator for the small business 
adjustment amount, which equals $103,813. This number divided by 68 
(the number of expected non-small businesses for FY 2022) is the small 
business adjustment amount for FY 2022, which is $1,527 (rounded to the 
nearest dollar).

B. FY 2022 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 2022 
establishment fee, entities had to submit their exception requests 
by April 30, 2021. See section 744K(c)(4)(B) of the FD&C Act. The 
time for requesting a small business exception for FY 2022 has now 
passed. An entity that wishes to request a small business exception 
for FY 2023 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 2022 is 
1.164796. See section II.A.1 for the methodology used to calculate the 
FY 2022 inflation adjustment factor. Therefore, the establishment fee 
for a qualified small business for FY 2022 is one third of $17,472, 
which equals $5,824 (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 2022 is 1.164796. The 
small business adjustment amount for FY 2022 is $1,527. See section 
II.A.2 for the methodology used to calculate the small business 
adjustment factor for FY 2022. Therefore, the establishment fee for a 
non-small business for FY 2022 is $15,000 multiplied by 1.164796 plus 
$1,527, which equals $18,999 (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 2022 reinspection fee is equal to $15,000, multiplied by the 
inflation adjustment factor for that fiscal year. The inflation 
adjustment factor for FY 2022 is 1.164796. Therefore, the reinspection 
fee for FY 2022 is $15,000 multiplied by 1.164796, which equals $17,472 
(rounded to the nearest dollar). There is no reduction in this fee for 
small businesses.

C. Summary of FY 2022 Fee Rates

                   Table 4--Outsourcing Facility Fees
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Qualified Small Business Establishment Fee..............          $5,824
Non-Small Business Establishment Fee....................          18,999
Reinspection Fee........................................          17,472
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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, or via 
regular mail if email is not an option. 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 2021 and wish to 
maintain their status as an outsourcing facility in FY 2022 must 
register during the annual registration period that lasts from October 
1, 2021, to December 31, 2021. Failure to register and complete payment 
by December 31, 2021, will result in a loss of status as an outsourcing 
facility on January 1, 2022. Entities should submit their registration 
information no later than December 10, 2021, 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

[[Page 40591]]

or via regular mail if email is not an option. Invoices must be paid 
within 30 days.

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 paying with a paper check: Checks must be in U.S. currency 
from a U.S. bank and made payable to the Food and Drug Administration. 
Payments can be mailed to: Food and Drug Administration, P.O. Box 
979033, St. Louis, MO 63197-9000. Include invoice number on check. If a 
check is sent by a courier that requests a street address, the courier 
can deliver the check to: U.S. Bank, Attn: Government Lockbox 979033, 
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).
    3. When paying 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 20, 2021.
Lauren K. Roth,
Acting Principal Associate Commissioner for Policy.
[FR Doc. 2021-16057 Filed 7-27-21; 8:45 am]
BILLING CODE 4164-01-P