80 FR 55237 - Administrative Destruction of Certain Drugs Refused Admission to the United States

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration

Federal Register Volume 80, Issue 178 (September 15, 2015)

The Food and Drug Administration (FDA or Agency) is implementing its authority to destroy a drug valued at $2,500 or less (or such higher amount as the Secretary of the Treasury may set by regulation) that has been refused admission into the United States under the Federal Food, Drug, and Cosmetic Act (the FD&C Act), by issuing a rule that provides to the owner or consignee notice and an opportunity to appear and introduce testimony to the Agency prior to destruction. This regulation is authorized by amendments made to the FD&C Act by the Food and Drug Administration Safety and Innovation Act (FDASIA). Implementation of this authority will allow FDA to better protect the public health by providing an administrative process for the destruction of certain refused drugs, thus increasing the integrity of the drug supply chain.

[Federal Register Volume 80, Number 178 (Tuesday, September 15, 2015)]
[Rules and Regulations]
[Pages 55237-55242]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-23124]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1

[Docket No. FDA-2014-N-0504]
RIN 0910-AH12


Administrative Destruction of Certain Drugs Refused Admission to 
the United States

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA or Agency) is 
implementing its authority to destroy a drug valued at $2,500 or less 
(or such higher amount as the Secretary of the Treasury may set by 
regulation) that has been refused admission into the United States 
under the Federal Food, Drug, and Cosmetic Act (the FD&C Act), by 
issuing a rule that provides to the owner or consignee notice and an 
opportunity to appear and introduce testimony to the Agency prior to 
destruction. This regulation is authorized by amendments made to the 
FD&C Act by the Food and Drug Administration Safety and Innovation Act 
(FDASIA). Implementation of this authority will allow FDA to better 
protect the public health by providing an administrative process for 
the destruction of certain refused drugs, thus increasing the integrity 
of the drug supply chain.

DATES: This rule is effective October 15, 2015.

FOR FURTHER INFORMATION CONTACT: Ann M. Metayer, Office of Regulatory 
Affairs, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 
32, Rm. 4338, Silver Spring, MD 20993-0002, 301-796-3324, 
[email protected].

SUPPLEMENTARY INFORMATION:

Executive Summary

Purpose of the Regulatory Action

    Implementation of FDA's administrative destruction authority will 
better protect the integrity of the

[[Page 55238]]

drug supply chain by providing a disincentive for the importation of 
drugs that are adulterated, misbranded, or unapproved in violation of 
section 505 of the FD&C Act (21 U.S.C. 355) (unapproved drugs) and 
reducing the likelihood of such drugs being refused admission and 
subsequently offered for reimportation. In 2012, Congress amended 
section 801(a) of the FD&C Act (21 U.S.C. 381(a)) to provide FDA with 
the authority to destroy a refused drug valued at $2,500 or less (or 
such higher amount as the Secretary of the Treasury may set by 
regulation) without providing the owner or consignee with the 
opportunity to export the drug. Congress directed FDA to issue 
regulations that provide the drug's owner or consignee with notice and 
an opportunity to present testimony to the Agency prior to the drug's 
destruction (section 708 of FDASIA). The final rule provides the owner 
or consignee of a drug that has been refused admission into the United 
States, and that is valued at $2,500 or less (or such higher amount as 
the Secretary of the Treasury may set by regulation) with: (1) Written 
notice that FDA intends to destroy the drug and (2) an opportunity to 
present testimony to the Agency before the drug is destroyed.
    FDA is issuing this final rule under section 801(a) of the FD&C 
Act.

Summary of the Major Provisions

    The final rule implements the authority of FDA to destroy a drug 
after providing the owner or consignee of a drug that has been refused 
admission into the United States under section 801(a) of the FD&C Act, 
and that is valued at $2,500 or less (or such higher amount as the 
Secretary of the Treasury may set by regulation) with: (1) Written 
notice that FDA intends to destroy the drug and (2) an opportunity to 
present testimony to the Agency before the drug is destroyed.
    FDA is amending part 1 (21 CFR part 1) by expanding the scope of 
Sec.  1.94 (21 CFR 1.94) to include administrative destruction. 
Currently this provision provides the owner or consignee of an FDA-
regulated product offered for import into the United States with notice 
and opportunity to present testimony to the Agency prior to refusal of 
admission of the product. The final rule expands the scope of Sec.  
1.94 to also provide an owner or consignee with notice and opportunity 
to present testimony to the Agency prior to the destruction of certain 
refused drugs.
    Section 708 of FDASIA and the final rule allow FDA to provide two 
separate notices and hearings--one for refusal of admission and one for 
destruction of a refused drug product--or to combine both notices and 
hearings into one notice and proceeding. Whether the determinations 
occur separately or in one combined proceeding, the determination of 
refusal and the determination regarding destruction of a drug will be 
made separately by the Agency as the findings are separate and 
distinct.

Costs and Benefits

    The primary public health benefit from adoption of the rule would 
be the value of the illnesses and deaths avoided because FDA destroyed 
a drug valued at $2,500 or less (or such higher amount as the Secretary 
of the Treasury may set by regulation) that posed a public health risk. 
This benefit accrues whenever the Agency's other enforcement tools 
would not have prevented a drug, including a biological product, which 
does not comply with the requirements of the FD&C Act (violative drug) 
from entering the U.S. market. The estimated primary costs of the final 
rule include the additional costs to destroy a violative drug and the 
one-time costs of updating the FDA Operational and Administrative 
System for Import Support (OASIS), making appropriate revisions to 
Chapter 9 of the FDA Regulatory Procedures Manual (RPM) and the 
Agency's internal import operations guidelines, and training for FDA 
personnel. FDA estimates the quantifiable net annual effect of the 
final rule to range between a cost of $54,325 and a cost savings of 
$901,950 for an estimated 15,100 destructions each year. The Agency 
estimates that it will also incur one-time costs of $531,670.

I. Background and Legal Authority

    In the Federal Register of May 6, 2014 (79 FR 25758), FDA proposed 
a rule to implement its new authority under section 708 of FDASIA to 
destroy a refused drug valued at $2,500 or less (or such higher amount 
as the Secretary of the Treasury may set by regulation). As discussed 
in the preamble to the proposed rule, President Obama signed FDASIA 
(Pub. L. 112-144) into law on July 9, 2012. Title VII of FDASIA 
provides FDA with important new authorities to help the Agency better 
protect the integrity of the drug supply chain. One of those new 
authorities is provided in section 708 of FDASIA, which amends section 
801(a) of the FD&C Act, to provide FDA with the authority to use an 
administrative procedure to destroy a drug valued at $2,500 or less (or 
such higher amount as the Secretary of the Treasury may set by 
regulation) that was not brought into compliance as described in 
section 801(b) of the FD&C Act and was refused admission into the 
United States. Section 708 of FDASIA authorizes FDA to use this new 
administrative procedure without offering the owner or consignee the 
opportunity to export the drug. The statute further provides that FDA 
will store and, as applicable, dispose of the drug that the Agency 
intends to destroy. The drug's owner or consignee is liable for FDA's 
storage and disposal costs under section 801(c) of the FD&C Act.
    Section 708 of FDASIA directs FDA to issue regulations that provide 
the owner or consignee of a drug designated by the Agency for 
administrative destruction with notice and an opportunity to introduce 
testimony to the Agency prior to the destruction of the drug. The 
provision further states that this process may be combined with the 
notice and opportunity to appear before FDA and introduce testimony on 
the admissibility of the drug under section 801(a) of the FD&C Act, as 
long as appropriate notice is provided to the owner or consignee.

II. Overview of the Final Rule Including Changes to the Proposed Rule

    FDA is amending part 1 to implement the administrative destruction 
of refused drugs. The amendment to part 1 consists of amendments to 
Sec.  1.94, including two technical changes to Sec.  1.94(b) where 
``his'' is now changed to ``his or her'' and ``act'' is now changed to 
``Federal Food, Drug, and Cosmetic Act'' in the final rule. No changes 
have been made to the proposed regulation and, therefore, FDA is 
finalizing the implementing regulation as proposed.

III. Comments on the Proposed Rule

    FDA received 22 comments in the public docket for the May 6, 2014, 
proposed rule by the close of the comment period, July 7, 2014, each 
containing one or more comments. One comment was received in the public 
docket on July 8, 2014, 1 day after the docket closed. These comments 
were submitted by consumers, consumer advocacy groups, industry and 
trade organizations, industry, and a member of Congress. One comment 
consisted of a ``placeholder'' and did not contain any substantive 
remarks.
    After considering the comments responsive to the proposed rule, the 
Agency is not making any changes to the regulatory language included in 
the proposed rule.
    This section contains summaries of the relevant portions of the 
responsive comments and the Agency's responses to those comments. To 
make it easier to

[[Page 55239]]

identify the comments and our responses, the word ``Comment,'' in 
parentheses, appears before the comment's description, and the word 
``Response,'' in parentheses, appears before our response. We have 
numbered each comment and response to help distinguish between 
different types of comments. Similar comments are grouped together 
under the same number. The number assigned to each comment is purely 
for organizational purposes and does not signify the comment's value, 
importance, or the order in which it was received.
    The Agency also received some general comments that were not 
responsive to the content of the rule, and therefore were not 
considered in its final development. Some of these comments, however, 
are summarized in this section and the Agency responded to those 
comments to provide clarity for the public and industry on the Agency's 
implementation of its administrative destruction authority under 
section 708 of FDASIA.

A. Notice and Hearing Process

    Two comments suggested that FDA modify the notice and hearing 
process in the proposed rule.
    (Comment 1) One comment asserted that the procedure set forth in 
Sec.  1.94 appears to apply only to large commercial drug imports, not 
drugs offered for import by individuals, and that FDA should create a 
separate administrative hearing process for individuals.
    (Response 1) The proposed rule amends Sec.  1.94 to add 
administrative destruction of certain drugs to the current 
administrative hearing process for refusal of admission of an FDA-
regulated product. The current rule applies to all imports regardless 
of how they enter the United States, e.g., via a commercial port or an 
International Mail Facility (IMF), and regardless of who seeks to 
import the drug. As amended by this final rule, Sec.  1.94 will provide 
an administrative hearing process to any owner or consignee of a 
refused drug with a value of $2,500 or less (or such higher amount as 
the Secretary of the Treasury may set by regulation) that FDA intends 
to destroy whether that owner or consignee is an individual owner or 
consignee or a commercial importer. There is, therefore, no need to 
establish a separate administrative hearing process for individuals 
whose drugs have been refused and designated for administrative 
destruction.
    (Comment 2) One comment stated that FDA should provide clarity for 
consumers regarding how they can introduce testimony to the Agency to 
challenge the administrative destruction of drugs they attempted to 
import but which were refused admission. The comment suggested that FDA 
allow testimony to be submitted by an affected owner or consignee 
through an online platform, email, regular mail, or facsimile and that 
the Agency include a supplemental document in the notice that instructs 
consumers on how to provide testimony to FDA to prevent administrative 
destruction of their drugs.
    (Response 2) As described in Chapter 9 of the RPM, the type of 
administrative hearing under Sec.  1.94 may vary from a series of 
telephone conversations to a more formal procedure. Introduction of 
testimony by the owner or consignee for Agency review and consideration 
can take many forms, including a telephone conversation, a facsimile, 
or mail, and does not have to be introduced in person. However, an in-
person hearing will be scheduled if requested by the owner or 
consignee. (http://www.fda.gov/downloads/ICECI/ComplianceManuals/RegulatoryProceduresManual/UCM074300.pdf). Current Agency procedures 
also allow such testimony to be submitted by the owner or consignee by 
email. Under the final rule, owners or consignees will have the same 
options for submitting testimony in opposition to the destruction of 
their drugs. Given the variety of options historically available to 
owners and consignees for submission of testimony, which will continue 
under the final rule, FDA does not believe that a dedicated online 
platform for submission of testimony is currently needed. If 
circumstances change in the future, FDA will consider whether such a 
system is appropriate.
    FDA recognizes that an owner or consignee importing a drug for his/
her own personal use may need information about the administrative 
hearing process when that drug has been detained by FDA for 
administrative destruction. Accordingly, the Agency will provide 
information on the administrative hearing process under Sec.  1.94, as 
amended in this rule, by providing an insert in the Agency's notice of 
detention or by establishing a Web page on the FDA Web site containing 
information about the administrative destruction process including ways 
to submit testimony to the Agency in opposition to the destruction of a 
drug. FDA will also consider issuing guidance or other explanatory 
materials, as appropriate.

B. Drugs Subject to Administrative Destruction by FDA

    Two comments requested clarity regarding what drugs will be 
destroyed by FDA under section 708 of FDASIA.
    (Comment 3) Two commenters requested clarity on when a refused drug 
will be destroyed under section 708 of FDASIA and when the Agency will 
give the owner or consignee the option to destroy or export a refused 
drug.
    (Response 3) Currently, owners or consignees of drugs that have 
been refused admission into the United States under section 801(a) of 
the FD&C Act have the option to destroy or export those drugs. Drugs 
imported via an IMF that have been refused admission are sent back to 
the United States Postal Service (USPS) for export. After 
implementation of section 708 of FDASIA, FDA anticipates that owners or 
consignees will still have the option to destroy or export a refused 
drug in at least two situations. First, only a drug valued at $2,500 or 
less (or such higher amount as the Secretary of the Treasury may set by 
regulation) is subject to administrative destruction under section 708 
of FDASIA. Owners or consignees of a drug valued over the current 
$2,500 threshold that has been refused admission will still have the 
option to destroy or export that drug unless the drug has been imported 
via an IMF. For a drug valued at $2,500 or less (or such higher amount 
as the Secretary of the Treasury may set by regulation) that has been 
refused admission, section 708 of FDASIA allows FDA to destroy the drug 
without providing the owner or consignee with the opportunity to 
destroy or export the drug.
    The second situation where owners or consignees will still have the 
option to destroy or export a refused drug is when FDA refuses 
admission to a drug, including a biological product, that is subject to 
destruction under section 708 of FDASIA, but the Agency is not able to 
make a determination that the drug is, in fact, adulterated, 
misbranded, or unapproved in violation of section 505 of the FD&C Act. 
As stated in the proposed rule, FDA intends to administratively destroy 
a drug only where the Agency has made a determination that the drug is 
adulterated, misbranded, or is an unapproved drug. There may be 
situations where the Agency refuses admission to a drug that is valued 
at $2,500 or less (or such higher amount as the Secretary of the 
Treasury may set by regulation) because it appears to be an 
adulterated, misbranded, or unapproved

[[Page 55240]]

drug but the Agency does not have sufficient information to make a 
determination that the drug is, in fact, an adulterated, misbranded, or 
unapproved drug. Under those circumstances, the owner or consignee will 
be given the opportunity to destroy or export that refused drug. If 
such a drug has come into the United States via an IMF, however, FDA 
will generally return the drug to the USPS for export.

C. Storage and Destruction Costs of Drugs Designated for Destruction

    Section 708 of FDASIA provides that FDA will store and, as 
applicable, dispose of a drug where the Agency has made the 
determination to destroy that drug. The drug's owner or consignee is 
liable for FDA's storage and disposal costs under section 801(c) of the 
FD&C Act.
    (Comment 4) One comment asked when FDA will take physical 
possession of drugs designated for destruction at express courier 
facilities and expressed concern about the possibility of extended 
storage time for these drugs at the expense of the express courier. The 
commenter also requested clarification regarding whether an express 
courier could be held liable for the costs of storage and destruction 
of a refused drug under section 801(c) of the FD&C Act.
    (Response 4) If FDA designates a drug for possible destruction that 
has been offered for import into the United States via an express 
courier, FDA intends to take physical possession of that drug when the 
Agency has made the determination to destroy the drug. The Agency 
expects that by combining the notice and introduction of testimony on 
destruction with the notice and introduction of testimony on refusal of 
admission, any additional storage time at an express courier due to 
implementation of section 708 of FDASIA will be minimal.
    An express courier is not liable for the storage or destruction 
costs under section 801(c) of the FD&C Act unless that courier is also 
the owner or consignee of a destroyed drug, which would be unusual. As 
stated in the proposed rule, if a drug is sent by international mail, 
FDA generally considers the addressee of the parcel to be the owner or 
consignee of the drug.
    (Comment 5) One commenter requested that FDA clearly define and 
outline the storage and destruction costs to consumers under section 
801(c) of the FD&C Act and that the Agency provide offsets to those 
costs for consumers unable to pay due to financial stress.
    (Response 5) FDA generally does not intend to pursue recovery of 
storage and destruction costs under section 801(c) of the FD&C Act 
against individual consumers who seek to import a drug for their own 
personal use that is then refused and destroyed by the Agency under 
section 708 of FDASIA.

D. General Comments

    The final rule provides the owner or consignee of a drug valued at 
$2,500 or less (or such higher amount as the Secretary of the Treasury 
may set by regulation) that is refused admission into the United States 
with: (1) Written notice that FDA intends to destroy the drug and (2) 
an opportunity to present testimony to the Agency before the drug is 
destroyed.
    (Comment 6) Many comments made general remarks expressing support 
or opposition to the authority granted to FDA by section 708 of FDASIA 
to administratively destroy certain refused drugs and did not focus on 
the rule or a particular section of the rule.
    One comment supported the administrative destruction of certain 
refused drugs while several comments expressed concern about the 
potential impact of administrative destruction on a consumer's access 
to foreign drugs. These comments cited a patient's inability to comply 
with a drug treatment plan as a consequence of that lack of access. One 
comment requested that FDA change its current Personal Importation 
Policy to allow importation of any drug from a ``safe'' foreign 
pharmacy or for which there is a ``valid'' prescription. The comment 
further requested that FDA define the term ``safe personal drug 
import'' in the final rule.
    (Response 6) As required for implementation of section 708 of 
FDASIA, the final rule provides appropriate due process to the owner or 
consignee of a drug that has been refused admission under section 
801(a) of the FD&C Act, and that FDA intends to destroy. The new 
authority granted to FDA by section 708 of FDASIA to administratively 
destroy a drug applies only after the Agency has made the final 
decision to refuse admission to the drug. This new authority, 
therefore, does not affect a consumer's access to a foreign drug 
because consumers have no access to a refused drug under the FD&C Act. 
The final rule does not modify FDA's current policy with respect to 
personal importation of drugs.
    (Comment 7) One comment suggested that implementation of section 
708 of FDASIA could adversely affect the supply of low-value excipients 
and other drug components potentially leading to a drug shortage. The 
commenter suggested that FDA closely coordinate with manufacturers to 
limit the impact on the drug supply chain when the Agency exercises its 
authority to destroy low-value excipients or other drug components. The 
commenter further suggested that FDA's Drug Shortages Task Force 
monitor and publicly report on the effects of section 708 of FDASIA on 
the drug supply in the United States.
    (Response 7) Excipients and other components of a drug are defined 
as drugs under section 201(g)(1) of the FD&C Act. An excipient or other 
drug component is therefore subject to administrative destruction under 
section 708 of FDASIA if that excipient or drug component offered for 
import is valued at $2,500 or less (or such higher amount as the 
Secretary of the Treasury may set by regulation) and is refused 
admission. FDA does not expect that administrative destruction of 
refused excipients or other drug components will lead to shortages of 
medically necessary drugs. The majority of excipients and drug 
components are imported into the United States as commercial entries. 
Currently, where excipients or drug components are refused admission, 
they are exported or destroyed. Refused excipients or other drug 
components, therefore, are not currently available for drug 
manufacturing in the United States. The Agency's exercise of 
administrative destruction will not affect a manufacturer's access to 
these refused excipients or other drug components and, therefore, will 
not contribute to shortages of drugs manufactured in the United States.
    (Comment 8) One comment asserted that FDA only quantified the 
benefits but not the costs of the proposed rule which, according to the 
comment, should include the societal costs attributable to a patient's 
lack of access to an imported drug that does not pose a public health 
risk, and that patient's non-adherence to a medical plan that includes 
such drug.
    (Response 8) In the proposed rule, FDA estimated both the costs and 
the benefits of the implementation of section 708 of FDASIA and the 
result was a quantifiable net annual social benefit. The detailed 
analysis of the estimated economic impact as provided in Ref. 10 in the 
proposed rule can be found at http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm#.
    The preliminary Regulatory Impact Analysis did not include any 
costs attributable to lack of access to an imported drug by a patient 
as this is not a cost attributable to administrative destruction. 
Currently, drugs that are

[[Page 55241]]

refused admission are destroyed or exported by the importer or, in the 
case of international mail, returned to the USPS for export. 
Consequently, patients do not have access to those drugs. Only refused 
drugs are subject to administrative destruction under section 708 of 
FDASIA and, therefore, implementation of this authority does not result 
in a quantifiable cost to be included in the regulatory impact analysis 
of the implementation of section 708.
    (Comment 9) A number of comments requested that FDA flag shipments 
in Customs and Border Protection's Automated Commercial System (ACS) or 
the Automated Commercial Environment (ACE) system, which is expected to 
replace ACS by December 2016, when a drug is destroyed. Another comment 
suggested that FDA establish a public database listing drugs destroyed 
by FDA under the authority of section 708 of FDASIA.
    (Response 9) These comments relate to the Agency's operations 
implementing the final rule and, as FDA stated in the proposed rule, 
the Agency plans to specify the operational details of its process for 
destruction by guidance, operating guidelines, or similar means.

IV. Analysis of Impacts (Summary of the Final Regulatory Impact 
Analysis)

    FDA has examined the impacts of the final rule under Executive 
Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 
U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4). Executive Orders 12866 and 13563 direct Agencies to assess all 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety, and other advantages; distributive impacts; and 
equity). The Agency believes that this final rule is not a significant 
regulatory action under Executive Order 12866.
    The Regulatory Flexibility Act requires Agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. Because of the small number of expected destructions 
each year and the very small value per event, the Agency certifies that 
this final rule will not have a significant economic impact on a 
substantial number of small entities.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that Agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before finalizing ``any rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $141 million, using the most current (2013) Implicit 
Price Deflator for the Gross Domestic Product. FDA does not expect this 
final rule to result in any 1-year expenditure that would meet or 
exceed this amount.
    The primary public health benefit from adoption of the rule will be 
the value of the illnesses or deaths avoided because the Agency 
destroyed a refused drug valued at $2,500 or less (or such higher 
amount as the Secretary of the Treasury may set by regulation) that 
posed a public health risk. Additionally, the final rule may benefit 
firms through increases in sales, brand value, and investment in 
research and development if the destroyed drug is a counterfeit or an 
otherwise falsified version of an approved drug. The threat of 
destruction may also have a deterrent effect resulting in a reduction 
in the amount of violative drugs shipped into the United States in the 
future. These benefits accrue whenever the Agency's other enforcement 
tools would not have prevented a violative drug from entering the U.S. 
market. The current procedure whereby a drug refused admission might be 
exported does not ensure that the drug would not be imported into the 
United States in the future. These benefits are not quantified.
    The estimated primary costs to FDA include the additional costs 
incurred by FDA to destroy a refused drug as opposed to the costs 
related to exportation of the drug and the one-time costs of updating 
OASIS, revising Chapter 9 of the RPM and other internal import 
operations guidelines, and training for FDA personnel. Our estimates of 
the primary costs assume that all refused drugs valued at $2,500 or 
less (or such higher amount as the Secretary of the Treasury may set by 
regulation) would be destroyed (estimated 15,100 destructions performed 
each year), that FDA would contract the act of destruction out to 
another government agency or private firm, and the notice and hearing 
process for destruction will be combined with the current FDA notice 
and hearing process for refusal of drugs. The assumption that FDA will 
destroy all refused drugs represents an upper bound and may not always 
hold. If FDA chooses to destroy less than all of the refused drugs, all 
annual costs will decrease but the one-time costs will stay the same.
    Based on an assumed 15,100 administrative destructions performed 
each year, the Agency estimates the quantifiable net annual effect of 
the final rule to be between a cost of $54,325 and a cost savings of 
$901,950, in addition to one-time costs of $531,670. Annualized over 20 
years, the final rule is estimated to produce a net effect ranging from 
a cost of $89,021 to a cost savings of $867,254 at a 3 percent discount 
rate and a cost of $101,228 to a cost savings of $855,047 at a 7 
percent discount rate. The present discounted value of the quantifiable 
net effect over 20 years ranges from a cost of $1,324,403 to a cost 
savings of $12,902,554 at a 3 percent discount rate and a cost of 
$1,072,408 to a cost savings of $9,058,383 at a 7 percent discount 
rate.
    Our estimates do not include net benefits of the final rule because 
we have not quantified the potential health benefits of reducing the 
probability that a refused drug will be imported into the United States 
in the future. However, because the final rule likely represents a cost 
savings and the health benefits, though not quantified, will be 
positive even if one violative drug that would have caused an adverse 
event is destroyed rather than entering the U.S. market, the net 
benefits of the rule are likely positive.
    FDA has examined the economic implications of the final rule as 
required by the Regulatory Flexibility Act. If a rule will have a 
significant economic impact on a substantial number of small entities, 
the Regulatory Flexibility Act requires Agencies to analyze regulatory 
options that would lessen the economic effect of the rule on small 
entities. U.S. Federal Government Agencies will bear the costs of the 
final rule with FDA bearing most of the cost as the Agency is 
responsible under section 708 of FDASIA for implementation of the rule 
and for the costs of storage and destruction. Therefore we certify that 
this final rule will not have a significant economic impact on a 
substantial number of small entities. This analysis, together with 
other relevant sections of this document, serves as the Final 
Regulatory Flexibility Analysis, as required under the Regulatory 
Flexibility Act.
    The full discussion of economic impacts, which includes a list of 
changes made in the final regulatory impact analysis, is available in 
Docket No. FDA-2014-N-0504 and at http://www.fda.gov/AboutFDA/
ReportsManualsForms/Reports/

[[Page 55242]]

EconomicAnalyses/default.htm# (Ref. 1).

V. Paperwork Reduction Act of 1995

    This final rule contains no collection of information under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3518(c)(1)(B)(ii)). 
Therefore, clearance by the Office of Management and Budget is not 
required under the Paperwork Reduction Act of 1995.

VI. Federalism

    FDA has analyzed this final rule in accordance with the principles 
set forth in Executive Order 13132. FDA has determined that the rule 
does not contain policies that have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Accordingly, the Agency has concluded 
that the rule does not contain policies that have federalism 
implications as defined in the Executive order and, consequently, a 
federalism summary impact statement is not required.

VII. Environmental Impact

    The Agency has determined under 21 CFR 25.30(h) that this action is 
of a type that does not individually or cumulatively have a significant 
effect on the human environment. Therefore, neither an environmental 
assessment nor an environmental impact statement is required.

VIII. Reference

    The following reference has been placed on display in the Division 
of Dockets Management (HFA-305), Food and Drug Administration, 5630 
Fishers Lane, Rm. 1061, Rockville, MD 20852, and may be seen by 
interested persons between 9 a.m. and 4 p.m., Monday through Friday, 
and is available electronically at http://www.regulations.gov. (FDA has 
verified the Web site address in this Reference section, but FDA is not 
responsible for any subsequent changes to the Web site after this 
document publishes in the Federal Register.)

    1. Final Regulatory Impact Analysis, Final Regulatory 
Flexibility Analysis, and Final Unfunded Mandates Reform Act 
Analysis for Administrative Destruction of Certain Drugs Refused 
Admission to the United States, available at http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm#.

List of Subjects in 21 CFR Part 1

    Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling, 
Reporting and recordkeeping requirements.

    Therefore, under the Federal Food, Drug, and Cosmetic Act, and 
under authority delegated to the Commissioner of Food and Drugs, 21 CFR 
part 1 is amended as follows:

PART 1--GENERAL ENFORCEMENT REGULATIONS

0
1. The authority citation for 21 CFR part 1 continues to read as 
follows:

    Authority: 15 U.S.C. 1333, 1453, 1454, 1455, 4402; 19 U.S.C. 
1490, 1491; 21 U.S.C. 321, 331, 332, 333, 334, 335a, 343, 350c, 
350d, 352, 355, 360b, 360ccc, 360ccc-1, 360ccc-2, 362, 371, 374, 
381, 382, 387, 387a, 387c, 393; 42 U.S.C. 216, 241, 243, 262, 264.


0
2. Revise Sec.  1.94 to read as follows:


Sec.  1.94  Hearing on refusal of admission or destruction.

    (a) If it appears that the article may be subject to refusal of 
admission, or that the article is a drug that may be subject to 
destruction under section 801(a) of the Federal Food, Drug, and 
Cosmetic Act, the district director shall give the owner or consignee a 
written notice to that effect, stating the reasons therefor. The notice 
shall specify a place and a period of time during which the owner or 
consignee shall have an opportunity to introduce testimony. Upon timely 
request giving reasonable grounds therefor, such time and place may be 
changed. Such testimony shall be confined to matters relevant to the 
admissibility or destruction of the article, and may be introduced 
orally or in writing.
    (b) If such owner or consignee submits or indicates his or her 
intention to submit an application for authorization to relabel or 
perform other action to bring the article into compliance with the 
Federal Food, Drug, and Cosmetic Act or to render it other than a food, 
drug, device, or cosmetic, such testimony shall include evidence in 
support of such application. If such application is not submitted at or 
prior to the hearing on refusal of admission, the district director 
shall specify a time limit, reasonable in the light of the 
circumstances, for filing such application.
    (c) If the article is a drug that may be subject to destruction 
under section 801(a) of the Federal Food, Drug, and Cosmetic Act, the 
district director may give the owner or consignee a single written 
notice that provides the notice on refusal of admission and the notice 
on destruction of an article described in paragraph (a) of this 
section. The district director may also combine the hearing on refusal 
of admission with the hearing on destruction of the article described 
in paragraph (a) of this section into a single proceeding.

    Dated: September 9, 2015.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2015-23124 Filed 9-14-15; 8:45 am]
 BILLING CODE 4164-01-P