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MANUFACTURER ALERT: CARES Act Clears Path for Over-the-Counter Expansion

The rising cost of healthcare and the renewed focus on personal hygiene related to the COVID-19 pandemic has brought a marked increase in the use of over-the-counter (OTC) medications such as cold remedies, antihistamines, pain relievers and hand sanitizers. Nonprescription drug products play an increasingly important role in the United States health care system.

OTC drugs are defined as those that are safe and effective for use by the general public without seeking treatment by a health professional. They are efficient and low-cost treatments that may alleviate the need to visit a physician or obtain a prescription; however, they still carry risk and are regulated by the U.S. Food and Drug Administration (FDA). The FDA is working to streamline the approval of OTC drugs while bolstering the agency’s ability to respond to inaccurate or misleading labels. The U.S. Federal Trade Commission (FTC) also has regulatory oversight for OTC drug promotion.

The FDA’s New Drug Approval Process Has Changed

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, designed to respond to the COVID-19 pandemic and its impact on the economy, public health and businesses, streamlined the FDA’s approval process for OTC medications by replacing rulemaking with an administrative order giving the FDA the authority to allow an OTC product to avoid the new drug application (NDA) process. Under the new method, the FDA can issue an administrative order that a specific OTC drug is generally recognized as safe and effective (GRASE) and not subject to the NDA process.

New Rules Reward Innovation

New sponsors or requestors of an FDA order for an OTC drug containing a new active ingredient or where the requestor conducted new human trials to secure approval can also earn 18 months of market exclusivity. This rewards manufacturers for innovation and accelerates the development of OTC drug products. It also informs consumers, improves overall health and reduces the transmission of viral infection without placing additional strains on the healthcare system.

Manufacturers Should Reevaluate the Labeling Requirements

Manufacturers should be aware that the FDA regularly updates consumers when it modifies or strengthens the warnings on OTC medication, such as when nonsteroidal anti-inflammatory drugs (NSAIDs) were found to increase the chance of a heart attack or stroke. The FDA labeling requirements and updates have followed a slow, complex regulatory scheme of approval under the OTC monograph system created more than 40 years ago. The CARES Act changes are the first meaningful update to the OTC drug approval process since the early 1970s.

Labeling is Subject to Scrutiny

While competitors can challenge an OTC advertisement, the Department of Justice (DOJ) can pursue judicial action against potentially deceptive advertising or misbranding (i.e., improperly labeled) drug products. In fact, on May 27, 2020, a U.S District Court Judge in the Southern District of New York entered an order of permanent injunction against a drug distributor and its executives after the FDA issued a warning letter for various violations regarding mislabeling and distributing unapproved over-the-counter drugs which [injunction] requires recalling the drugs and receiving written permission from the FDA to resume operations.

Key Concerns for Manufacturers

Under the CARES Act, the FDA can determine that a drug, class of drugs, or drug combination poses an imminent hazard to public health and requires labeling changes to identify adverse conditions associated with drug use. This could force pharmaceutical and consumer product companies to increase expenses, delay production and face additional regulatory scrutiny. In addition, the National Advertising Division (NAD), an investigative unit of the advertising industry’s system of self-regulation, may impact a manufacturer’s business operations as well, such as when it recommended that a company discontinue certain challenged claims in online and social media advertising for a series of baby products. As alluded to above, companies can submit an advertising dispute with a competitor to the NAD.

How Frier Levitt Can Help

Frier Levitt attorneys have significant experience with navigating the FDA drug approval process for non-prescription drugs as well as counseling clients on OTC drug labeling requirements and the marketing rules governing OTC medications. Contact Frier Levitt if you have questions about this FDA update or require assistance in bringing your consumer or personal care products to market.