Over-the-Counter Drugs: Status of FDA's Implementation of Exclusivity Provisions in the CARES Act
Fast Facts
In July 2020, we reported that the CARES Act gave the Food and Drug Administration new tools to regulate over-the-counter drugs like sunscreen and cold medicine. It included a provision offering 18 months of exclusive marketing rights for drugs with new uses or innovative active ingredients.
As of May 2023, however, no companies had requested approval for over-the-counter drug innovations. FDA is still preparing to review and approve over-the-counter drugs under a newer, faster process. Officials told us they don't expect to receive any requests before October at the earliest.
Highlights
What GAO Found
Over-the-counter (OTC) drugs play an important role in the U.S. health care system by providing consumers quick access to health care products for a variety of uses without a prescription. The Food and Drug Administration (FDA)—an agency within the Department of Health and Human Services (HHS)—is responsible for ensuring the safety and effectiveness of drugs, including OTC drugs. FDA regulates the safety and effectiveness of most OTC drugs through its monograph process, through which OTC drugs can be marketed without prior FDA evaluation and approval for each individual product. Both FDA officials and industry stakeholders, among others, have noted that FDA's monograph process has limited its ability to quickly update OTC monographs to allow additional OTC products to be marketed for consumers, as GAO previously reported.
In March 2020, the CARES Act made several changes to the regulation of OTC monograph drugs. Among those changes, the CARES Act changed the monograph process to make it less burdensome on the agency to update and create new monographs. The act also allowed drug manufacturers, marketers, and others to request changes to a monograph and provided an 18-month period of marketing exclusivity if FDA makes certain requested changes. Specifically, OTC monograph drug exclusivity is available for (1) a change adding a new active ingredient or (2) a change in the conditions of use of a drug for which new human data studies are conducted or sponsored by the requestor. This means that, for 18 months, the requestor would have exclusive rights to sell the new OTC product. This exclusivity is intended to create an incentive for industry innovation for OTC drug products.
As of May 2023, no companies have received OTC monograph drug exclusivity for any OTC drugs under the new provisions in the CARES Act. FDA is in the process of implementing OTC monograph reform, including provisions related to OTC monograph drug exclusivity. For fiscal years 2021 and 2022, FDA reported that it had collected over $42 million in OTC monograph user fees and had used those funds in conjunction with the agency's regular appropriations to support all OTC monograph reform activities, including hiring 32 new employees, implementing a public-facing monograph IT dashboard, and designing an IT platform for FDA's monograph review activities.
The potential effect of OTC monograph drug exclusivity on OTC drug innovation and consumers is unknown. None of the 91 journal articles GAO reviewed provided evidence for the effect that exclusivity could have on consumer access to OTC drugs on the affordability of OTC drug products or on OTC drug innovation. An organization representing consumer interests publicly raised concerns that OTC drug companies may limit the availability of older but equally effective OTC drugs, pushing consumers to purchase newer, more expensive drugs that have received exclusivity. In contrast, industry stakeholders told GAO they expect exclusivity to increase consumer access to new OTC drug products because it is a key incentive for product innovation. They also expect the effect on OTC drug affordability for consumers to be minimal because of the availability of alternative OTC drugs.
Why GAO Did This Study
The CARES Act included a provision that allows OTC drug manufacturers, marketers, and others to request changes to an OTC monograph and provides an 18-month period of exclusivity for certain changes. The CARES Act also included a provision for GAO to report on the implementation and impact of OTC monograph drug exclusivity for OTC drugs on industry innovation and consumer access and affordability.
This report describes the status of FDA's efforts to implement OTC monograph drug exclusivity provisions, and research and stakeholder perspectives on how exclusivity may affect industry innovation for OTC drugs and consumer access to and affordability of these drugs. GAO reviewed FDA draft guidance, annual progress reports, relevant legislation, and interviewed FDA officials about their activities to implement the changes to the OTC monograph process under the CARES Act. GAO also conducted a literature search and interviewed representatives for industry stakeholders about how exclusivity may affect consumers and industry innovation.
For more information, contact John Dicken at (202) 512-7114 or dickenj@gao.gov.