FDA OTC Monograph Reform: What the CARES Act Changed for Foreign Drug Manufacturers

The OTC drug monograph system was fundamentally reformed by the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), signed into law on March 27, 2020. Title III, Subtitle F of the CARES Act — the Over-the-Counter Monograph Safety, Innovation, and Reform Act (OMSIRA) — replaced the prior notice-and-comment rulemaking process for OTC drug monographs with an administrative order process, introduced user fees to fund FDA's OTC monograph activities, created an exclusivity mechanism to incentivize new OTC drug studies, and gave the FDA more efficient tools to respond to safety concerns with marketed OTC drugs. For foreign manufacturers who market OTC drugs in the United States under the monograph system, these changes are significant and ongoing.

From rulemaking to administrative orders

Before the CARES Act, the FDA updated OTC drug monographs through the standard federal rulemaking process — proposed rules published in the Federal Register, followed by public comment periods, and then final rules. This process was notoriously slow; some monograph proceedings had been ongoing for decades without final resolution. The sunscreen monograph, for example, had been in rulemaking since the 1970s. The CARES Act replaced this process with administrative orders, which the FDA can issue more efficiently. The FDA publishes a proposed administrative order, accepts comments for a specified period, and then issues a final administrative order. Administrative orders have the same legal force as regulations — OTC drugs must comply with the conditions specified in the final order — but the process is substantially faster than traditional rulemaking.

OTC Monograph Drug User Fees (OMUFA)

The CARES Act established the OTC Monograph User Fee Act (OMUFA), which requires manufacturers of OTC monograph drugs to pay annual user fees to fund the FDA's OTC monograph activities. The fee structure includes facility fees and OTC monograph order request fees. Facility fees apply to each establishment that manufactures OTC monograph drugs for the US market, including foreign establishments. The fee amounts are published annually by the FDA in the Federal Register and are adjusted based on inflation and FDA workload. These fees are separate from and in addition to the GDUFA establishment fees that may also apply to some OTC drug manufacturers. Foreign manufacturers must budget for these fees as an annual cost of US market participation.

The exclusivity mechanism for new studies

One of the most innovative provisions of OMSIRA is the exclusivity mechanism designed to encourage companies to invest in new studies that support changes to OTC drug monographs. If a company conducts a study or investigation that the FDA relies upon to change the conditions of use for an OTC monograph — such as adding a new indication, increasing the approved dosage range, or switching a prescription ingredient to OTC status through the monograph pathway — the company may be eligible for up to 18 months of exclusivity during which other manufacturers cannot market OTC drugs under the changed conditions. This exclusivity period incentivizes the significant investment required to generate new clinical or safety data for OTC monograph drugs.

Deemed final orders and existing monograph drugs

The CARES Act addressed the status of OTC drug ingredients and conditions of use that had been subject to the old rulemaking process but never received a final rule. Ingredients and conditions of use that were classified as Category I (Generally Recognized as Safe and Effective, or GRASE) in a final monograph or tentative final monograph are deemed to be subject to a final administrative order and can continue to be marketed. Ingredients classified as Category III (additional data needed) in a tentative final monograph were given a transition period, and the FDA is evaluating these ingredients through the new administrative order process. Ingredients classified as Category II (not GRASE) are not permitted to be marketed. This transition framework affects foreign manufacturers who market OTC drugs containing ingredients that were under review but never finalized under the old system.

Impact on foreign OTC drug manufacturers

For foreign manufacturers, the OTC monograph reform creates both opportunities and obligations. The faster administrative order process means that monograph updates — including the potential addition of new OTC active ingredients, revised labeling requirements, and updated safety conditions — will occur more frequently than under the old system. Foreign manufacturers must stay current with these changes and update their products and labeling accordingly. The user fee structure adds a new annual cost that must be factored into the economics of US market participation. And the exclusivity mechanism, while primarily benefiting companies that invest in new studies, may temporarily limit market access for competitors who want to market under newly changed monograph conditions.

How FDABridge helps with OTC monograph compliance

FDABridge provides drug establishment registration, NDC Labeler Code acquisition, and drug product listing services for foreign OTC drug manufacturers. We keep our clients informed of monograph changes that affect their products and ensure their FDA registrations and listings remain current. Visit fdabridge.com/drug to see our drug registration services or fdabridge.com/contact to discuss your OTC drug compliance needs.