FRIA for ANDA and 505(b)(2) Applications

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration

Abbreviated New Drug Applications and 505(b)(2)
Applications
Docket No. FDA-2011-N-0830

Final Regulatory Impact Analysis
Final Regulatory Flexibility Analysis
Unfunded Mandates Reform Act Analysis

Economics Staff
Office of Planning
Office of Policy, Planning, Legislation, and Analysis
Office of the Commissioner

SEPTEMBER 2016
1

I.

INTRODUCTION AND SUMMARY............................................................................................................ 3
A.
B.
C.
D.

NEED FOR REGULATION AND THE OBJECTIVE OF THIS FINAL RULE ........................................................................ 4
BACKGROUND ............................................................................................................................................ 5
COMMENTS RECEIVED AND CHANGES MADE TO THE REGULATORY IMPACT ANALYSIS .............................................. 6
BENEFITS AND COSTS OF THE FINAL RULE ........................................................................................................ 6
1.
Cost to Read and understand the rule............................................................................................... 7
2.
Definitions ......................................................................................................................................... 8
3.
Submission of Patent Information..................................................................................................... 9
4.
Patent Certification ......................................................................................................................... 14
5.
Notice of Paragraph IV Certification ............................................................................................... 15
6.
Amended Patent Certifications ....................................................................................................... 17
7.
Patent Certification Requirements for Amendments and Supplements to 505(b)(2) Applications
and ANDAs 17
8.
Amendments or Supplements to a 505(b)(2) Application for a Different Drug and Amendments or
Supplements to an ANDA That Reference a Different Listed Drug ..................................................................... 18
9.
Procedure for Submission of an Application Requiring Investigations for Approval of a New
Indication for, or Other Change From, a Listed Drug ......................................................................................... 19
10.
Petition to Request a Change From a Listed Drug........................................................................... 19
11.
Filing an NDA and Receiving an ANDA ............................................................................................ 19
12.
Approval of an NDA and ANDA ....................................................................................................... 20
13.
Refusal to Approve an NDA or ANDA .............................................................................................. 20
14.
Date of Approval of a 505(b)(2) Application or ANDA .................................................................... 20
15.
Assessing Bioavailability and Bioequivalence for Drugs Not Intended to be Absorbed Into the
Bloodstream ....................................................................................................................................................... 20
16.
Miscellaneous Changes ................................................................................................................... 21
17.
Summary of Costs............................................................................................................................ 21
E.
SMALL ENTITY ANALYSIS ............................................................................................................................ 25
II. REFERENCES ........................................................................................................................................ 28

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I.

INTRODUCTION AND SUMMARY

We have 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 us 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). We have developed a comprehensive Economic Analysis of Impacts that assesses the
impacts of the final rule. We believe that this final rule is not a significant regulatory action as
defined by Executive Order 12866.
The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize
any significant impact of a rule on small entities. Because average costs per entity are small,
and the regulatory requirement with the highest cost per instance would affect few if any of
the smallest entities, we certify that the final rule will not have a significant economic impact on
a substantial number of small entities.
The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a
written statement, which includes an assessment of anticipated costs and benefits, before
issuing "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 $146 million, using the most current (2015) Implicit Price Deflator for the Gross
Domestic Product. This final rule would not result in an expenditure in any year that meets or
exceeds this amount.
Many provisions of this final rule codify current practice, but some elements will lead to
changes that generate additional benefits and costs. Table 1 summarizes the benefits and costs
of this final rule. The estimated annualized monetized benefits of this final rule are $215,247 at
a 3 percent or 7 percent discount rate, while the estimated annualized monetized costs are
$266,947 at a 3 percent discount rate and $275,925 at a 7 percent discount rate. We have also
identified, but are unable to quantify, additional impacts from changes to submitted patent
information.

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Table 1--Summary of Benefits and Costs
One-time (Year 1) Cost for Reading the Rule
Annually Recurring Compliance Costs or Savings (Years 1-10)
Present Value at 3 Percent
Present Value at 7 Percent
Annualized Value at 3 Percent
Annualized Value at 7 Percent

Benefits
Not Applicable
$215,247
$1,836,098
$1,511,803
$215,247
$215,247

Costs
$466,450
$213,858
$2,277,116
$1,937,983
$266,947
$275,925

The full analysis of economic impacts is available in the docket for this final rule (Ref. 2) and
at
http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm
.

A. NEED FOR REGULATION AND THE OBJECTIVE OF THIS FINAL RULE
This final rule implements portions of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) in a manner that preserves the balance struck in the 1984
Hatch-Waxman Amendments between encouraging the availability of less expensive generic
drugs and encouraging bringing innovative new drugs to market. This rule also revises and
clarifies procedures related to the approval of 505(b)(2) applications and abbreviated new drug
applications (ANDAs) to reduce uncertainty among drug firms, reduce costs to industry for
some of these procedures, and reduce demands on FDA resources responding to industry
inquiries.
The approval pathways for 505(b)(2) applications and ANDAs established by the HatchWaxman Amendments consider the competing interests of the entity that has developed
information used to support approval of a new drug application (NDA) (including a 505(b)(2)
application) and those wishing to rely on FDA’s finding of safety and effectiveness for a drug
approved in an NDA to support approval of their ANDA or 505(b)(2) application.
Innovative behavior often leads to information that would be widely beneficial. When
information is freely distributed and is both non-rivalrous and non-excludable, the innovator is
unable to profit from its investment; this type of market failure is known as a public good.
Innovative behavior that would otherwise be socially beneficial will not take place, and the
statically efficient market is dynamically inefficient. Our system of patents grants inventors a
temporary right to their discoveries to allow them to benefit from their innovation. The HatchWaxman Amendments strike a balance between rewarding innovation through market
exclusivity and improving access and affordability for generic drugs.
FDA has been implementing the MMA directly from the statute and based on this
experience has identified opportunities to clarify MMA provisions through the adoption of
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codified language. To the extent that clarified regulatory language improves certainty among
regulated entities, this final rule will reduce industry compliance costs and agency enforcement
costs. FDA believes promulgation of a regulation to be an appropriate mechanism to make
known its practices in implementing the MMA.
This final rule will affect those submitting NDAs (including 505(b)(2) applications) and
ANDAs for approval. Provisions of this rule will affect the submission of patent information by
NDA holders for listing in the Agency’s publication entitled “Approved Drug Products with
Therapeutic Equivalence Evaluations” (the “Orange Book”) and the submission by 505(b)(2) and
ANDA applicants of a patent certification or statement addressing the listed patent(s) for the
listed drug(s) relied upon or reference listed drug (RLD), respectively. This final rule will also
affect, for those certifying that a listed patent is invalid, unenforceable, or not infringed
(paragraph IV certification), the requirements for the provision of notice of the paragraph IV
certification to each patent owner and the NDA holder for the listed drug. The final rule also
affects other requirements associated with 505(b)(2) applications and ANDAs.
Over the years 2012 through 2014, FDA filed an average of 114 NDAs and 127 NDA
supplements requiring a patent declaration each year (81 FR 5465, February 2, 2016). Over the
same years, FDA approved an average of 96 NDAs and 104 NDA supplements requiring a patent
declaration each year (81 FR 5465).
A 505(b)(2) application is an NDA for which one or more of the investigations described in
section 505(b)(1)(A) of the FD&C Act and relied upon by the applicant for approval “were not
conducted by or for the applicant and for which the applicant has not obtained a right of
reference or use from the person by or for whom the investigations were conducted” (section
505(b)(2) of the FD&C Act). FDA files approximately 62 new original 505(b)(2) applications per
year. For a 505(b)(2) application that relies upon a listed drug, the application must contain an
appropriate patent certification or statement for each patent listed for the listed drug(s) relied
upon. Based on a review of past filings, we estimate that approximately 20 of the 62 505(b)(2)
applications submitted each year will contain one or more paragraph IV certifications.
An ANDA generally is an application for a duplicate of a previously approved drug that is
submitted under the abbreviated approval pathway described in section 505(j) of the FD&C Act.
As described in § 314.94, an ANDA is required to contain a patent certification or statement for
each patent listed in the Orange Book for its RLD. FDA receives approximately 1,181 original
ANDAs each year. Based on a review of past filings, we estimate that approximately 400 of the
original ANDAs submitted each year contain one or more paragraph IV certifications.

B. BACKGROUND
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This final rule is part of a series of actions to balance the benefits from the availability of
less expensive generic drugs and the need to reward those who bring innovative drugs to
market, consistent with the Hatch-Waxman Amendments. In response to a 2002 report from
the Federal Trade Commission, FDA published a proposed rule in 2002 and final rule in 2003 to
address circumstances in which innovator drug firms obtained and listed additional patents
after a drug was approved which resulted in a delay in generic competition due to multiple 30month stays. 1 The MMA was enacted later in 2003, and Title XI of that statute included
provisions that, among other things, limited the availability of 30-month stays of approval.
Since the enactment of the MMA, FDA has been regulating directly from the statute. Although
the MMA superseded certain provisions of the June 2003 final rule (which were subsequently
revoked by technical amendment), remaining differences between current regulations and the
requirements of the MMA result in operating procedures that are not codified, leading to
potential confusion among firms. FDA is amending the regulations for consistency with the
MMA and to make other changes related to 505(b)(2) applications and ANDAs. These changes
will improve transparency and facilitate compliance and enforcement and are consistent with
the balance struck in the Hatch-Waxman Amendments.
We discuss benefits and costs of a government action relative to a baseline. For this
analysis, we assume that but for this rulemaking, FDA would continue with current practices,
regulating directly from the statute. Our baseline in this analysis is therefore continued
operation under the FD&C Act, as amended by the MMA, without the promulgation of these
regulations.

C. COMMENTS RECEIVED AND CHANGES MADE TO THE REGULATORY IMPACT ANALYSIS
FDA received 13 comments from the public on the proposed rule, none of which
commented directly on the economic analysis of impacts. (FDA responds to the comments
received in the preamble to this final rule.) Nevertheless, we have revised this analysis of
impacts throughout for three broad reasons: to reflect changes in the final rule, to incorporate
updated data, and to conform more closely to current best practices in regulatory analysis.

D. BENEFITS AND COSTS OF THE FINAL RULE
Many provisions of this final rule would codify current practice, but some elements will lead
to changes that generate additional benefits and costs. We organize benefits and costs below
by thematic sections. We have also identified, but are unable to quantify, impacts from
changes to submitted patent information.

1

Federal Trade Commission “Generic Drug Entry Prior to Patent Expiration: An FTC Study,”
July 2002, available at http://www.ftc.gov/os/2002/07/genericdrugstudy.pdf.
6

1. COST TO READ AND UNDERSTAND THE RULE
This final rule will affect applicants submitting NDAs (including 505(b)(2) applications) and
ANDAs for approval as well as NDA and ANDA holders. Based on Orange Book data from
January 2016, we estimate that there are currently 707 unique application holders; we use this
number of current NDA and ANDA holders to proxy for the number of entities affected by the
rule.
Individuals from affected entities will need to devote time to reading and understanding
this final rule. Because this final rule will affect applicants and application holders across the
board, usually with small impacts on individual application holders, we assume an average of
one regulatory affairs specialist at each firm reads the final rule. We further estimate that each
reader will spend about 4 hours. 2 In valuing the time spent learning about the rule and
complying with its various provisions, we use a cost of $164.94 per hour; this is an increase
compared with the hourly cost used throughout our analysis of the proposed rule. 3 With these
assumptions the total cost for reading the rule will be approximately $466,450, as shown in
Table 2.
Table 2—Cost for Reading the Rule
Number of application holders
707
Time to read the final rule (hrs)
4
Value of time ($/hr)
164.94
Total Cost ($)
466,450

2

Because not all parts of the final rule will apply to each applicant, we assume portions of
the rule may be skimmed quickly while other parts may be read more closely. We account for
this by estimating the cost based on the preamble only. At an adult average reading speed of
200-250 words per minute, we estimate that it will take approximately 4 hours to read the
preamble to this final rule.
3
We continue to base our estimate of the opportunity cost of one hour on the mean hourly
wage of a lawyer in the pharmaceutical industry but update from 2009 to 2015 wages. The
2015 wage is $82.47, according to the Bureau of Labor Statistics’ 2015 National IndustrySpecific Occupational Employment and Wage Estimates (Ref. 1), compared with $70.64 in 2009.
In addition, in the PRIA, we escalated the wage cost by 29.3 percent to account for employee
benefits. In this FRIA, we have updated our methodology in accordance with current best
practices and HHS guidance, and we double the wage to account for both employee benefits
and overhead costs.
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2. DEFINITIONS
This final rule would add several definitions to § 314.3(b), many of which are used in current
practice. Some of the added definitions are not part of current practice but have been added in
order to facilitate the enforcement of the FD&C Act, as amended by the MMA. We have not
significantly changed any currently codified definitions in this section of our regulations except
to remove obsolete references or otherwise clarify the definition. In summary, we expect these
definitions to provide beneficial clarity and to improve efficiency, but we do not quantify
impacts.
Some of the additions would codify longstanding definitions for terms used by the Agency in
the implementation of section 505(b) and (j) of the FD&C Act, the statutory sections pertaining
to the approval of “innovative” and “generic” drugs. Codifying longstanding definitions
improves the clarity of current regulations and is consistent with current practice. Other
additions are definitions that are established in the MMA. Codifying these definitions also
improves clarity and efficiency while being consistent with FDA’s current practice operating
under the statute.
Some definitions added in this final rule are new and are not part of current practice, but
we do not estimate impacts for them. For example, there currently is no formal letter stating
that FDA has determined that a 505(b)(2) application containing a paragraph IV certification is
regarded as filed. We are designating the filing communication that generally is sent to the
505(b)(2) applicant not later than 14 calendar days after the 60-day filing date (sometimes
referred to as the “74-day letter”) as the “paragraph IV acknowledgment letter” for a 505(b)(2)
application that contains a paragraph IV certification. Formally describing the “paragraph IV
acknowledgement letter” in codified language creates recognized milestones useful for defining
processes in the implementation of the MMA. Establishing a new process in the
implementation of the MMA might create a burden (which we address in the appropriate
section of this analysis), but merely codifying a new definition does not create a burden.
We define the term “postmark” to give effect to the intent of the MMA; however, it should
be noted that our definition is broader than the common usage of the term. The MMA requires
a 505(b)(2) or ANDA applicant to give notice of its paragraph IV certification not later than 20
days after the date of the postmark on the notice from FDA informing the applicant that the
application has been filed. Neither current section 505 of the FD&C Act nor part 314 of our
current regulations defines “postmark.” A postmark is often defined in terms of the official
mark stamped by the United States Postal Service on an item of mail to cancel the stamp and to
record the date and place of sending or receiving. 4 The MMA, however, uses the date of the

4

See Concise Oxford English Dictionary, 1122 (11th Ed. 2008).
8

postmark to establish a reliable, verifiable record governing the timing of an important
communication (i.e., date from which the 20-day period for sending notice of a paragraph IV
certification runs). Based on our experience implementing the MMA, we have found that
defining a postmark narrowly as an official mark from the United States Postal Service is
problematic because some filing communications mailed by the Agency are typically sent in a
franked envelope that may not bear a postmark made by the United States Postal Service and,
when used, postmarks may not always be legible on mailings. Such a narrow definition would
also fail to anticipate the increasing role of electronic communications. The final rule defines
“postmark” more broadly to facilitate compliance and anticipate the continued growth in the
role of electronic communications.
3. SUBMISSION OF PATENT INFORMATION
We proposed several changes that would affect the submission of patent information and
the burden of Forms FDA 3542a and 3542. Applicants are currently required to submit
information on whether the patent has been previously submitted to FDA. We proposed to
limit this requirement to identify previously submitted patent information to a patent that is a
reissued patent of a patent previously submitted for listing in the Orange Book for the NDA or
supplement. However, as explained in the preamble to this final rule, we are not finalizing this
proposal to limit this requirement. For any patent that claims a polymorph that is the same as
the active ingredient described in the NDA, NDA applicants currently submit information on
whether the patent claims a polymorph, including test data. We are finalizing our proposal to
narrow the submission requirements such that information on a polymorph is only required in
circumstances in which the patent claims only a polymorph. This narrowing will reduce the
burden on NDA applicants. We are finalizing our proposal providing that an applicant
submitting information for a patent that claims the drug substance or the drug product need
not also submit information on whether the patent also claims the drug product or drug
substance, and vice-versa. We are finalizing our proposal to clarify that an NDA applicant or
holder may submit a single Form FDA 3542a or Form FDA 3542 for a patent claiming more than
one method of use, provided that each method of use is listed separately along with the patent
claim number(s) of the patent claim(s) that corresponds to each pending or approved method
of use. We are finalizing, with clarifying revisions, our proposal to expressly require that if the
method(s) of use claimed by the patent does not cover an indication or other approved
condition of use in its entirety, the applicant must describe only the specific approved method
of use claimed by the patent for which a claim of patent infringement could reasonably be
asserted if a person not licensed by the owner of the patent engaged in the manufacture, use,
or sale of the drug product. We also are finalizing, with clarifying revisions, our proposal to
require that the NDA holder submitting information on the method-of-use patent identify with
specificity the section(s) and subsection(s) of approved product labeling that describe the
method(s) of use claimed by the patent submitted.
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Based on the changes to the final rule and our assessment of current baseline practices for
Forms FDA 3542a and 3542, we have updated our estimate of the effects of this rule on the
burdens for submitting Forms FDA 3542a and 3542. We previously estimated that the burden
of Form FDA 3542a would fall by 3 hours per response. We now estimate that the burden for
Form FDA 3542a will be reduced by 5 hours from 20 hours to 15 hours; we further estimate
that the burden for Form FDA 3542 will increase by 5 hours from 5 to 10 hours. We have
shifted a portion of the time spent preparing Form FDA 3542a to the estimated time spent
preparing Form FDA 3542 to reflect the additional time spent by the NDA holder to develop the
use code in accordance with FDA’s revised regulations and identify the specific section(s) and
subsection(s) of labeling that describe the specific approved method of use claimed by the
patent. Because FDA receives more Forms FDA 3542a annually than Forms FDA 3542, the net
effect is an annual cost savings.
In a recent analysis of patent declaration requirements, FDA estimated there will be 200
annual instances in which an NDA holder is affected by patent declaration requirements, based
on an average of 96 NDA approvals and 104 supplement approvals per year (81 FR 5465). In
these instances, the NDA holders submit an average of 3.4 declarations (including declarations
of no relevant patent information), for a total of 680 patent declarations on Form FDA 3542
annually. A regulatory affairs specialist will perform the tasks associated with the submission of
patent information. The 5 hour increase in average burden per patent declaration submitted
on Form FDA 3542 yields a cost increase of approximately $825 per patent or $560,796
annually.
In the same recent analysis of patent declaration requirements, FDA estimated there will be
241 annual instances in which an NDA applicant will be affected by patent declaration
requirements, based on an average of 114 NDAs and 127 supplements requiring a declaration
filed each year (81 FR 5465). Applying this same ratio of patent declarations per instance to
241 NDA submissions subject to patent listing requirements implies that 819 patent
declarations are submitted on Form FDA 3542a annually. The 5 hour reduction in average
burden per patent declaration submitted on Form FDA 3542a yields a cost savings of
approximately $825 per patent or $675,429 annually.
The net effect of the reduction in burden on Form FDA 3542a and increase in burden on
Form FDA 3542 is an annual cost savings of $114,633.
Section 314.53(d)(2) avoids duplicative submission of patent information that would
accompany supplements to NDAs. Current regulations broadly require the submission of
patent information with supplements seeking approval for a change in formulation, to add a
new indication or other condition of use, to change the strength, or to make any other
patented change regarding the drug substance, drug product, or any method of use. Section
10

314.53(d)(2) more clearly defines and limits situations where submission of patent information
would be required for a supplement and clarifies when an NDA holder would need to resubmit
patent information that was previously submitted. This provision is expected to reduce costs to
those submitting NDA supplements, but we have not estimated the anticipated savings.
We are finalizing, with revisions, changes to §§ 314.50(i)(4) and 314.94(a)(12)(vi) stating
conditions under which an NDA holder’s amendment to the description of the approved
method(s) of use claimed by the patent will be considered untimely filing of patent
information. As revised, an NDA holder’s amendment to the description of the approved
method(s) of use claimed by the patent (“use code”) will be considered untimely filed unless it
is submitted within 30 days of patent issuance; within 30 days of approval of a corresponding
change to product labeling; or within 30 days of a decision by the PTO or a Federal court that is
specific to the patent and alters the construction of a method-of-use claim(s) of the patent (see
§§ 314.50(i)(4) and 314.94(a)(12)(vi)). The amendment based on a PTO or Federal court
decision must contain a copy of the decision, and the accompanying Form FDA 3542 must
identify the decision as a change related to the patent in section 1.h of the form. We do not
estimate the cost of providing this documentation because we do not know how often this
would occur. This proposed revision is consistent with the objective of ensuring that
prospective 505(b)(2) and ANDA applicants have timely notice of changes to the asserted
patent coverage for a listed drug. Finally, method-of-use patent information that is untimely
filed generally does not require a patent certification or statement by an applicant with a
pending 505(b)(2) application or ANDA and thus would not delay approval of a pending
505(b)(2) application or ANDA.
Section 314.53(f)(2) establishes circumstances under which an NDA holder is required to
correct listed patent information. If an NDA holder determines a patent no longer meets the
statutory requirements for listing, or is required by court order to amend or withdraw the
patent information, or if the term of the patent is extended under statutory provisions to
compensate patent holders for regulatory review time, the NDA holder is required to correct or
change the patent information. The request to correct patent information would be prepared
by a regulatory affairs specialist who would prepare a new Form FDA 3542 and the process
would take about 1 hour per request. We recognize that certain events (e.g., patent term
extensions) for some NDAs would require changes for multiple patent listings. We have
updated our estimates based on more recent experience. We now estimate that under section
314.53(f)(2) there will be 27 additional annual instances in which an NDA holder will be
required to prepare a request to change patent information and that this will result in 39
additional changes to patent information. At an estimate of 1 hour per request, the estimated
cost is $164.94 per request or $6,433 for all 39 requests.
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Some patents claim a method of using a drug. Section 314.53(b)(1) more clearly aligns the
requirements for submitting information on such method-of-use patents with the intent of the
Hatch-Waxman Amendments. The Hatch-Waxman Amendments are based on a system in
which accurate listed patent information assists 505(b)(2) and ANDA applicants (referred to as
“generic applicants” or “generic application holders” for purposes of this analysis) in preparing
their applications and determining whether their applications seek approval for a drug or
method of using a drug that is claimed by a listed patent. Current regulations require NDA
holders to identify the specific section of the proposed labeling that corresponds to the method
of use claimed by the patent and to submit on Form FDA 3542 a description of the patented
method of use (“use code”) as required for publication in the Orange Book. NDA holders
currently are instructed to provide a use code that contains “adequate information to assist
505(b)(2) and ANDA applicants in determining whether a listed method of use patent claims a
use for which the 505(b)(2) or ANDA applicant is not seeking approval” (Form FDA 3542). In
reviewing generic applications, the Agency generally relies on the use code information
provided by the NDA holder (and does not conduct an independent analysis of the scope of the
patent) and uses this information to determine whether the proposed application is seeking
approval for a method of use claimed by the listed patent.
This final rule requires identification of the specific section(s) and sub-section(s) of the
proposed or approved labeling for the drug product that describes the method of use claimed
by the patent submitted. The final rule also explicitly requires that if the method(s) of use
claimed by the patent does not cover an indication or other approved condition of use in its
entirety, then the use code must describe only the specific approved method of use claimed by
the patent for which a claim of patent infringement could reasonably be asserted if a person
not licensed by the owner of the patent engaged in the manufacture, use, or sale of the drug
product. By limiting the patent use code to the approved method(s) of use claimed by the
patent, a labeling carve-out based on the use code should appropriately protect the intellectual
property rights of the NDA holder and patent owner. By revising the regulations to address an
overbroad or ambiguous description of the approved method(s) of use claimed by a listed
patent, the final rule is intended to remove a barrier to submission or approval of a 505(b)(2)
application or an ANDA for uses that are not claimed by a listed patent.
We proposed to revise § 314.53(f)(1) to clarify and improve the mechanism for challenging
the accuracy or relevance of patent information submitted to the Agency under § 314.53 and
listed in the Orange Book. We proposed to establish a 30-day timeframe in which the NDA
holder would be required to respond to FDA’s request to confirm the correctness or omission of
patent information to facilitate timely resolution of the patent listing dispute. We also
proposed enhanced procedures to govern challenges to the accuracy or relevance of an NDA
holder’s submission of method-of-use patent information. We are finalizing the 30-day
12

timeframe for an NDA holder to respond to a patent listing dispute and are finalizing, with
revisions, procedures to govern challenges to the accuracy or relevance of an NDA holder’s
submission of patent information. However, as described in the preamble to this final rule, at
this time we are not finalizing our proposal to review a proposed labeling carve-out with
deference to the applicant(s)’ interpretation of the scope of the patent in certain
circumstances. (We will continue to consider whether there is a need to finalize this proposal
in the future.) Our changes to § 314.53(f)(1) to clarify and improve the mechanism for
challenging the accuracy or relevance of patent information are expected to affect the burden
of submitting and responding to these challenges. We currently receive approximately 12
patent listing disputes each year. We are unable to forecast whether or how much the number
of disputes will change under this final rule. We estimate, based on recent patent listing
disputes, that a person (including a 505(b)(2) or ANDA applicant) spends approximately 3 hours
submitting a dispute and an NDA holder spends, on average, 2 hours responding to a patent
listing dispute. We estimate that with our revisions to the process, it will take the person
(including a 505(b)(2) or ANDA applicant) 10 hours to submit a dispute, an increase of 7 hours
from the status quo. We also estimate that it will take the NDA holder 10 hours to respond to a
dispute, an increase of 8 hours from the status quo. The total estimated increase in costs is
then $13,855 for submitters of disputes, $15,834 for NDA holders, and $29,689 in total each
year.
If an NDA holder submits patent information that includes a description of the patented
method of use (i.e., the use code) that is broader than the actual scope of the patent claim(s), a
generic applicant can: (1) carve out the labeling corresponding to the overbroad use code and
seek approval for the remaining conditions of use, if any (assuming the drug product remains
safe and effective for the remaining non-protected conditions of use with the labeling
corresponding to the overbroad use code carved out); (2) submit a paragraph III certification
and delay approval until patent expiry; or (3) submit a paragraph IV certification and proposed
labeling that includes the patented method of use with the potential to be sued by the NDA
holder or patent owner. For an overbroad use code that incorrectly suggests that the patent
covers the entire indication or other essential condition(s) of use, as a practical matter a carveout such as that described in scenario (1) may be precluded because there would be no way to
label the drug safely for the remaining non-protected conditions of use without including, for
example, the sole approved indication. It is this outcome, among others, that the final rule
seeks to address where the patent itself is narrower than the use code provided and where,
had the use code been described more precisely to correspond to the scope of the patent, a
labeling carve-out would have been viable. If the generic applicant instead pursues scenario (3)
and submits a paragraph IV certification for an overbroad use code and the NDA holder for the
RLD or patent owner initiates patent infringement litigation, then the generic applicant can file
a counterclaim seeking to correct the use code. If the counterclaim is successful, the NDA
13

holder would revise its use code and the generic applicant can amend its application to change
its patent certification to a statement and carve out the narrower method of use that is actually
claimed by the patent. This process can be time-consuming and can result in delayed
marketing of a proposed drug product that is otherwise ready for approval.
To quantify the potential effects of revising the regulations to address an overbroad or
ambiguous description of the approved method(s) of use claimed by a listed patent and
clarifying and improving the mechanism for challenging the accuracy or relevance of patent
information, we would need a baseline estimate of the likelihood of scenarios (2) and (3) and an
estimate of the degree to which timing of generic entry would change as a result of these
provisions. Monetization of effects from reducing delays in generic drug market entry, such as
transfers in sales revenues from the NDA holder to the generic application holder along with
consumer surplus gains from lower prices, would require data on market size and data on the
elasticity of supply and demand of the affected markets. We do not know the likelihood that in
the future an NDA holder would submit an overbroad use code that will not be consistent with
the requirements under this final rule. We also do not know the extent to which making even
more explicit the requirement that the use code be crafted narrowly to correspond to the
specific approved method(s) of use claimed by the patent and improving the mechanism for
challenging the accuracy or relevance of patent information will help generic applicants
determine whether their applications do not seek approval for a use claimed by a listed patent,
which would allow these applicants to submit a statement that the method-of-use patent does
not claim a use for which the applicant is seeking approval (under scenario (1)) instead of a
paragraph III certification or a paragraph IV certification (under scenarios (2) and (3)). For these
reasons, we do not quantify the potential effects of these provisions.
4. PATENT CERTIFICATION
Section 314.50(i)(1)(i)(C) requires a 505(b)(2) applicant to submit a patent certification or
statement for each patent listed in the Orange Book for one drug product that was approved in
an NDA before the date of submission of the original 505(b)(2) application and is
pharmaceutically equivalent to the proposed drug product in the original 505(b)(2) application.
In our experience, a 505(b)(2) application generally will cite a pharmaceutically equivalent
product as a listed drug, and we assume that without this rule, failure to do so would occur
twice per year. Applying our estimate of 3.4 patents in the Orange Book per NDA holder, this
provision will result in 6.8 additional submissions per year. Based on our experience,
composing the submission will require 2 hours of work by a regulatory affairs specialist, for a
total of 13.6 hours. If the patent certification is a paragraph IV certification, the applicant will
face additional requirements for notice of paragraph IV certification, which require an

14

additional 15.33 hours of work. 5 Based on recent agency experience, we estimate that
505(b)(2) applications that contain at least 1 paragraph IV certification contain an average of 3
such certifications. Therefore, we estimate that 6 of the additional submissions per year are
paragraph IV certifications, which results in an additional burden of approximately 92 hours.
The estimated annual cost of this requirement is approximately 105.6 hours at $164.94 per
hour or $17,414.
5. NOTICE OF PARAGRAPH IV CERTIFICATION
Sections 314.52(a) and 314.95(a) expand the acceptable methods for 505(b)(2) or ANDA
applicants to provide notice of paragraph IV certification by permitting applicants to provide
notice using designated delivery services, i.e., alternative delivery services that meet certain
criteria. Expanding the methods by which a 505(b)(2) or ANDA applicant may send notice of
paragraph IV certification reduces the need for such applicants to submit written requests to
use an alternate delivery method. We currently receive about 390 such requests each year (an
increase from approximately 200 per year we estimated for the proposed rule) and believe that
380 of the 390 will be unnecessary under the final rule. Assuming a request takes 30 minutes
and is completed by a regulatory affairs specialist at $164.94 per hour, this change will reduce
costs by $31,339 annually. Based on our experience with granting these requests, we can
expand the acceptable delivery methods without creating costs elsewhere. This might also
benefit applicants who are not currently submitting written requests but otherwise prefer to
use an alternate delivery method.
This final rule changes the required contents of the notice of paragraph IV certification.
Section 314.95(c) requires that an ANDA applicant’s notice of paragraph IV certification contain
a statement that the paragraph IV acknowledgment letter has been received to ensure that
notice is not sent prematurely for an application that FDA ultimately decides to refuse to
receive. As described in the preamble to this final rule, we are not finalizing our proposal under
314.52(c) requiring a 505(b)(2) applicant to include a statement that it has received a paragraph
IV acknowledgment letter.
However, existing regulations require a statement that the
505(b)(2) application has been filed (see § 314.52(c)(1)). Including this statement in the notice
of certification will confirm that the required notice for a 505(b)(2) application is not sent
prematurely. In addition, section 314.52(c) requires that the notice include a statement that a

5

We have in the past (76 FR 20680 at 20683, April 13, 2011) estimated the information
collection requirements associated with § 314.52 to require 16 hours of work. We assume
other revisions to this section reduce this burden by 1 hour, but that section 314.52(c) will
result in an additional 20 minutes of work. The total time burden estimated for
section 314.50(i)(1)(i)(C) is 2 hours plus, if notice of paragraph IV certification is required, an
additional 15.33 hours.
15

505(b)(2) application containing any required bioavailability or bioequivalence data has been
submitted by the applicant and filed by FDA. As discussed above, we currently estimate that 20
505(b)(2) applications and 400 ANDAs are filed each year with paragraph IV certifications; these
applications contain, on average, 3 paragraph IV certifications to listed patents. The 420
applications with paragraph IV certifications will result in 1,260 affected patent certifications.
Based on experience with similar provisions, we estimate that a regulatory affairs specialist will
spend an additional 20 minutes on each paragraph IV certification, for 420 additional hours at a
total cost of $69,275. There will be additional costs associated with paragraph IV certifications
for 505(b)(2) and ANDA supplements as well, but due to data limitations we are unable to
quantify those costs.
Sections 314.52(d)(1) and 314.95(d)(1) codify the statutory requirement, added by the
MMA, for 505(b)(2) and ANDA applicants to provide notice for all paragraph IV certifications,
regardless of whether the applicant had previously given notice of a paragraph IV certification
contained in its application or in an amendment or supplement to the application. These
provisions codify current practice and will not result in additional costs.
Sections 314.52(b), 314.52(e), 314.95(b) and 314.95(e) allow a 505(b)(2) or ANDA applicant
to submit a single amendment that includes: certification that notice has been provided to the
NDA holder and each patent owner as required by §§ 314.52(a) and 314.95(a), respectively, and
the notice met the content requirements described in §§ 314.52(c) and 314.95(c), respectively;
documentation of timely sending of notice of the paragraph IV certification; and
documentation of timely receipt of notice of the paragraph IV certification. (This is a
modification of our proposal, under which an applicant still would need to amend its 505(b)(2)
application or ANDA at the time that it provides notice of a paragraph IV certification with a
statement certifying that notice has been provided and that the notice met the content
requirements.) As applicants are currently required to submit at least two separate
amendments, the consolidation into a single amendment will reduce costs. Section 314.95(e)
also requires the ANDA applicant submit a dated printout of the entry for the RLD in the Orange
Book, demonstrating that the paragraph IV certification was not sent prematurely. We
estimate the 20 505(b)(2) applicants and 400 ANDA applicants with paragraph IV certifications
will spend 1 hour less per certification, while the cost of submitting the page from the Orange
Book will be negligible. At $164.94 per hour, the estimated cost reduction for 420 responses is
$69,275.
The MMA explicitly requires that applicants making paragraph IV certifications provide
notice within 20 days of the postmark on the FDA notification letter, but does not specify
consequences for failing to meet this deadline (section 1101(a)(1)(A) of the MMA). For reasons
described in the preamble to this final rule, we are not finalizing proposed § 314.101(b)(4),
16

which would have created an administrative consequence to encourage compliance with MMA
by delaying the submission date of an ANDA by the number of days the applicant exceeded the
statutory timeframe for providing notice. The impact of this proposal was not quantified in the
proposed RIA.
6. AMENDED PATENT CERTIFICATIONS
Under certain circumstances, an applicant with a 505(b)(2) application or ANDA may need
to amend a previously submitted patent certification. For example, a 505(b)(2) or ANDA
applicant is required to amend its previously submitted patent certification if it is no longer
accurate. In addition, a 505(b)(2) and ANDA applicant must submit a patent certification or
statement to a newly issued patent for which patent information is timely filed by the NDA
holder for the listed drug. Sections 314.50(i)(6) and 314.94(a)(12)(viii) require a 505(b)(2) or
ANDA applicant to amend the patent certification from a paragraph IV certification to a
paragraph III certification after a court enters a final decision or signs and enters a settlement
order or consent decree with a finding of infringement. These provisions also require an
applicant to amend a patent certification in certain circumstances when an NDA holder has
requested to remove patent information from the list. We do not know with certainty the
annual number of patents for which a patent certification will need to be revised, nor do we
know for each such patent, the number of 505(b)(2) and ANDA applicants that will be required
to amend their certification. Based on our experience, we estimate this requirement would
result in 17 and 153 additional instances per year in which an applicant will amend its 505(b)(2)
application or ANDA to submit a revised patent certification, respectively. At 2 hours per
response and $164.94 per hour, the estimated cost of 170 responses is $56,080.
7. PATENT CERTIFICATION REQUIREMENTS FOR AMENDMENTS AND SUPPLEMENTS TO 505(b)(2)
APPLICATIONS AND ANDAS
Certain amendments or supplements to a 505(b)(2) application or an ANDA have the
potential to change an aspect of the proposed product in a way that changes the relationship
between the proposed product and aspects of the listed drug relied upon or RLD, respectively,
protected by a listed patent. Current regulations require an applicant to amend a certification
if, at any time before approval of the 505(b)(2) application or ANDA, the applicant learns the
certification is no longer accurate. We proposed revising the requirements to require that
applicants submitting amendments or supplements for specified types of changes to their
products would update their patent certifications and, if a paragraph IV certification, provide a
new notice of paragraph IV certification that describes the basis for the applicant’s opinion that
the patent is invalid, unenforceable, or will not be infringed. As discussed in the preamble to
this final rule, after considering several comments on these proposals, we are finalizing the
requirements for patent certifications for certain types of amendments to 505(b)(2)
17

applications and ANDAs but are not finalizing the proposed requirements for patent
certifications for certain types of supplements at this time.
Section 314.60(f) requires an amendment to a 505(b)(2) application to contain a patent
certification if it would make other than minor changes in product formulation, change the
physical form or crystalline structure of the active ingredient, add a new indication or other
condition of use, or add a new strength. The applicant will be required to provide a patent
certification and, if a paragraph IV certification, provide notice of the paragraph IV certification
that includes the basis for the applicant’s opinion that the patent is invalid, unenforceable, or
will not be infringed. This may result in some new costs for 505(b)(2) applicants for certain
types of amendments. We do not have a precise estimate for how often this will occur, but we
estimate six amendments will need to include a new certification each year, with each requiring
2 hours of time from a regulatory affairs specialist. The 6 additional certifications will require
12 hours of time at $164.94 per hour for an estimated cost of $1,979.
Section 314.96(d) applies the same patent certification requirements for amendments to
ANDAs. We do not have a precise estimate for the number of amendments to ANDAs that will
need to contain a new patent certification under these provisions, but we estimate the
provision will require additional patent certifications for at least 100 amendments, a slight
increase from our estimate for the proposed rule. The 100 additional patent certifications will
require 200 hours of time at $164.94 per hour or $32,988. Combining the estimated costs for
505(b)(2) applicants and ANDAs, the estimated cost of these provisions is $34,967.
8. AMENDMENTS OR SUPPLEMENTS TO A 505(b)(2) APPLICATION FOR A DIFFERENT DRUG AND
AMENDMENTS OR SUPPLEMENTS TO AN ANDA THAT REFERENCE A DIFFERENT LISTED DRUG
Sections 314.60(e) and 314.70(h) implement section 505(b)(4)(A) of the FD&C Act by
prohibiting an applicant from amending or supplementing a 505(b)(2) application to seek
approval of a drug that has been modified to have a different active ingredient or other
specified differences from the drug proposed in the original application. This prohibition is
consistent with current practice as FDA currently requires applicants seeking to modify the
proposed drug product to have a different active ingredient or to make other specified changes
to submit the different proposed drug in a new application.
Sections 314.96(c) and 314.97(b) implement section 505(j)(2)(D)(i) of the FD&C Act by
prohibiting an applicant from amending or supplementing an ANDA to seek approval of a drug
referring to a different listed drug than the RLD identified in the ANDA. As an example, this will
apply if an ANDA applicant seeks approval for a change from a listed drug in a petitioned ANDA,
and an NDA applicant obtains approval for a drug product with the changes that are the subject
of the ANDA applicant’s petition while the petitioned ANDA is pending. The ANDA applicant
will not be permitted to amend the pending petitioned ANDA to cite the newly approved
18

pharmaceutical equivalent as its RLD. Such a change will be required to be made in a new
ANDA that references the newly approved pharmaceutical equivalent as its RLD. If an applicant
with a pending ANDA needs to identify a newly listed drug as its RLD, it is required to submit a
new ANDA (because an amendment or supplement is not permitted). Based on our experience,
such situations are very unusual, perhaps occurring two times per year. Because this provision
is consistent with current practice, estimated costs are negligible.
9. PROCEDURE FOR SUBMISSION OF A 505(b)(2) APPLICATION REQUIRING INVESTIGATIONS FOR
APPROVAL OF A NEW INDICATION FOR, OR OTHER CHANGE FROM, A LISTED DRUG
It is possible for a 505(b)(2) application to be submitted for a proposed drug that is
pharmaceutically equivalent to a listed drug (and not eligible for approval in an ANDA). We are
revising § 314.54 to require a 505(b)(2) application to identify one pharmaceutically equivalent
drug approved in an NDA as a listed drug relied upon, if one or more such drug products is
approved before the original 505(b)(2) application is submitted. In our experience, 505(b)(2)
applicants generally cite a pharmaceutically equivalent product as a listed drug, and we assume
that without this rule, failure to do so would occur twice per year. We estimate the cost of
submitting a patent certification or statement for each patent listed in the Orange Book for a
drug product that was approved before the date of submission of the original 505(b)(2)
application and is pharmaceutically equivalent to the proposed drug product in the original
505(b)(2) application (as required by section 314.50(i)(1)(i)(C)), above. Any other costs from
this provision will be too small to reliably estimate.
10. PETITION TO REQUEST A CHANGE FROM A LISTED DRUG
A suitability petition is a request to use the ANDA pathway when there are specified
differences between the proposed drug and an RLD. It has long been FDA’s policy to require
that when there is a pharmaceutically equivalent RLD, the ANDA should refer to that drug and
not submit a suitability petition based upon another listed drug. Section 314.93 codifies
current practice. There may be some small benefit associated with fewer suitability petitions
that would ultimately not be granted, but any quantifiable monetized benefit will be so small as
to make reliable estimation impossible.
11. FILING AN NDA AND RECEIVING AN ANDA
This final rule codifies FDA’s practice of sending an acknowledgment letter or a paragraph IV
acknowledgment letter to notify an ANDA applicant that its application has been received. It
also codifies FDA’s proposal to use the filing communication that generally is sent to the
505(b)(2) applicant not later than 14 calendar days after the 60-day filing date as the
“paragraph IV acknowledgment letter” that notifies an applicant of the filing of a 505(b)(2)
application that contains a paragraph IV certification. The final rule also removes outdated
language regarding antibiotics, clarifies certain refuse-to-file or refuse-to-receive provisions as
19

applying to both NDAs and ANDAs, and more precisely describes the factors that FDA considers
in determining whether an ANDA is incomplete on its face and the actions that an ANDA
applicant may take following a refuse-to-receive decision. Because Section 314.101 does not
differ from current practice, its impact will be negligible.
12. APPROVAL OF AN NDA AND ANDA
The proposed rule clarified that an application is approved on the date of the issuance of an
approval letter and that a drug that is “tentatively approved” is not an approved drug. We are
finalizing the definition of “date of approval” with technical amendments to incorporate the
Improving Regulatory Transparency for New Medical Therapies Act (IRTNMTA) (Public Law 11489), which addresses concerns that delays in scheduling a newly approved drug product may
reduce an applicable exclusivity period that commences on the “date of approval.” The
revisions to § 314.105 will result in no additional costs.
13. REFUSAL TO APPROVE AN NDA OR ANDA
Revisions to §§ 314.90, 314.99, 314.125, and 314.127 establish that a waiver of a
submission requirement for an NDA or ANDA also waives that requirement as a condition for
approval. Because the final rule codifies FDA’s current approach, there will be no additional
costs.
14. DATE OF APPROVAL OF A 505(b)(2) APPLICATION OR ANDA
We are finalizing, with revisions, changes to section 314.107(e) to expand the requirements
associated with the notification to FDA of court actions and written consent to approval. To
ensure timely notification to FDA, we are requiring a 505(b)(2) or ANDA applicant to submit all
required information to the appropriate division in FDA’s Office of New Drugs or Office of
Generic Drugs within 14 calendar days of the date of entry by the court, the date of appeal or
expiration of the time for appeal, or the date of written consent to approval, as applicable. It is
current practice for applicants to notify FDA within 10 working days of a final judgment. We are
expanding the set of actions that trigger the requirement to notify FDA within an established
timeframe, now 14 calendar days. However, we have determined that the principle effect of
this requirement will be to change the timing of these submissions, not to increase the total
number of submissions, because applicants eventually submit this information (if applicable) to
FDA under the status quo on their own initiative or upon request by FDA in order for FDA to
determine when the application is eligible for approval. Therefore, the incremental cost of
these changes will be negligible.
15. ASSESSING BIOAVAILABILITY AND BIOEQUIVALENCE FOR DRUGS NOT INTENDED TO BE ABSORBED INTO
THE BLOODSTREAM
For some drugs that are not intended to be absorbed into the bloodstream, the
establishment of bioavailability and bioequivalence may not be straightforward. The MMA
20

explicitly authorizes FDA to establish methods for assessing the bioavailability and
bioequivalence of these drugs. Section 320.23 codifies FDA’s existing practice of establishing
such methods and costs are expected to be negligible.
16. MISCELLANEOUS CHANGES
This final rule makes several minor editorial changes to current regulations. These changes
involve making clarifications and updating terminology but are not intended to change the
meaning of the affected regulations. These changes would be generally beneficial, but benefits
would be too small to reliably quantify.
17. SUMMARY OF COSTS
Table 3 summarizes the provisions of this final rule and their associated benefits
(compliance cost savings) or costs. Table 4 summarizes the total costs of this final rule.
Table 3-- Summary of Provisions
Section of This
Document
General Change
Establish definitions.
I.D.2 Definitions
I.D.3. Submission of Modifications to innovator
Patent Information
patent declaration
requirements.

States conditions under which
an NDA holder’s amendment
to the description of the
approved method(s) of use
claimed by the patent will be
considered untimely filing of
patent information.

Require submission of

Annual Benefits
A net savings of $114,633
from saving 5 hours on
each Form FDA 3542a and
spending 5 more hours on
each Form FDA 3542. (The
number of Forms FDA
3542a that FDA receives
exceeds the number of
Forms FDA 3542 that FDA
receives.)
This is consistent with the
objective of ensuring that
prospective 505(b)(2) and
ANDA applicants have
timely notice of changes to
the asserted patent
coverage for a listed
drug. Method-of-use
patent information that is
untimely filed generally
does not require a patent
certification or statement
by an applicant with a
pending 505(b)(2)
application or ANDA and
thus would not delay
approval of a pending
505(b)(2) application or
ANDA.

21

Annual Costs

If the amendment is based
on a PTO or Federal court
decision, it must contain a
copy of the decision and the
accompanying Form FDA
3542 must identify the
decision as a change related
to the patent in section 1.h
of the form. We do not
estimate the cost of
providing this
documentation because we
do not know how often this
would occur.

$6,433 for 39 additional

Section of This
Document

I.D.4. Patent
Certification

I.D.5. Notice of
Paragraph IV
Certification

General Change
corrected patent information
(e.g., for patent term
extensions) and describe
procedures for withdrawal of
patents that no longer meet
the statutory requirements
for listing.
More clearly defines
requirements for submission
of information on method-ofuse patents, facilitating
generic “carve-out.”

Clarify and improve the
mechanism and procedures
governing challenges to the
accuracy or relevance of an
NDA holder’s submission of
patent information, including
establishment of a 30-day
timeframe for an NDA holder
to respond to a patent listing
dispute.
Require 505(b)(2) applicants
to provide a patent
certification to one
pharmaceutically equivalent
drug product approved in an
NDA.
Expand the acceptable
delivery methods for
505(b)(2) and ANDA
applicants providing notice,
reducing the need for formal
requests to FDA.
Require ANDA applicants to
include a statement that it
has received a paragraph IV
acknowledgment letter in its
notice of paragraph IV
certification. Requires
505(b)(2) applicants to
include a statement on
bioequivalence data, if
appropriate.
Allow for the submission of a
single amendment including:
certification that notice has

Annual Benefits

Aligns submitted patent
information with innovator
intellectual property
protected by patent.
Potentially facilitates
generic entrance into the
market under certain
circumstances.
Potentially facilitates
generic entrance into the
market under certain
circumstances.

Annual Costs
requests at $164.94 each.

Total increase in costs of
$29,689 for 12 disputes per
year. (An increase of
$13,855 for people,
including 505(b)(2) or ANDA
applicants, to submit
disputes and $15,834 for
NDA holders to respond).
$17,414 for 2 instances
requiring identification of a
pharmaceutically equivalent
product as a listed drug.

$31,339 savings from 380
fewer requests for
permission to use an
alternate delivery method.
$69,275 for additional
information in 1,260
certifications.

$69,275 for 420 fewer
required responses.

22

Section of This
Document

I.D.6. Amended
Patent Certifications
I.D.7. Patent
Certification
Requirements for
Amendments and
Supplements to
505(b)(2)
Applications and
ANDAs.

I.D.8. Amendments
or Supplements to a
505(b)(2)
Application for a
Different Drug and
Amendments or
Supplements to an
ANDA That
Reference a
Different Listed
Drug

I.D.9. Procedure for
Submission of a
505(b)(2)
Application
Requiring
Investigations for
Approval of a New

General Change
been provided to the NDA
holder and each patent
owner as required by
§§ 314.52(a) and 314.95(a)
and the notice met the
content requirements
described in §§ 314.52(c) and
314.95(c), documentation of
timely sending of notice of
the paragraph IV certification,
and documentation of timely
receipt of notice of the
paragraph IV certification.
Require 505(b)(2) and ANDA
applicants to amend patent
certifications if no longer
accurate.
Require 505(b)(2) and ANDA
applicants making certain
changes to their products to
submit a new patent
certification. (We are
finalizing the requirements
for amendments to 505(b)(2)
applications and ANDAs but
are not finalizing the
requirements for
supplements at this time.)
Prohibit an applicant from
amending or supplementing a
505(b)(2) application to seek
approval of a drug that has
been modified to have a
different active ingredient or
other specified differences
from the drug proposed in
the original application.
Prohibit an applicant from
amending or supplementing
an ANDA to reference a
different RLD. Instead, the
applicant must submit a new
NDA or ANDA.
Establish requirements for
505(b)(2) applications to
identify one pharmaceutically
equivalent drug product
approved in an NDA as a
listed drug relied upon.

Annual Benefits

Annual Costs

$56,080 for 170 additional
amendments to patent
certifications.
$34,967 for additional
certifications for 6
amendments to 505(b)(2)
applications and 100
amendments to ANDAs.

Negligible, consistent with
current practice under the
statute.

Above we estimate the cost
of patent certifications for 2
annual instances requiring
identification of a
pharmaceutically equivalent
product as a listed drug.
Any other costs from this

23

Section of This
Document
Indication for, or
Other Change From,
a Listed Drug
I.D.10. Petition to
Request a Change
From a Listed Drug
I.D.11 Filing an NDA
and Receiving an
ANDA
I.D.12. Approval of
an NDA and ANDA
I.D.13. Refusal to
Approve an NDA or
ANDA
I.D.14. Date of
Approval of a
505(b)(2)
Application or ANDA

I.D.15. Assessing
Bioavailability and
Bioequivalence for
Drugs Not Intended
to be Absorbed Into
the Bloodstream
I.D.16.
Miscellaneous
Changes
Annual Compliance
Cost Savings and
Costs

General Change

Annual Benefits

Annual Costs
provision will be too small
to reliably estimate.

Clarify procedures for
petitioned ANDAs.

Negligible, would codify
current practice.

Clarify FDA procedures for
paragraph IV
acknowledgment letters and
acknowledgment letters
Clarify definition of an
approved application and
procedures related to
tentative approval.
Clarify that a waiver of an
application requirement is a
waiver of an approval
requirement.
Revise the description of
court actions relevant to the
date of approval of a
505(b)(2) application or
ANDA, and require
submission of related
documentation within 14
calendar days.

Negligible, would codify
current practice.
Negligible, would codify
current practice and
address confusing language.
Negligible, would codify
current practice.
Negligible. The principle
effect of this requirement
will be to change the timing
of submissions because
applicants eventually
submit this information (if
applicable) to FDA under
the status quo on their own
initiative or upon request by
FDA in order for FDA to
determine when the
application is eligible for
approval.
Negligible, would codify
current practice.

Codify statutory revisions in
the regulations.

Editorial changes.

Would address confusing
language.

Negligible.

$215,247

$213,858

24

Table 4--Summary of Benefits and Costs
One-time (Year 1) Cost for Reading the Rule
Annually Recurring Compliance Costs or Savings (Years 1-10)
Present Value at 3 Percent
Present Value at 7 Percent
Annualized Value at 3 Percent
Annualized Value at 7 Percent

Benefits
Not Applicable
$215,247
$1,836,098
$1,511,803
$215,247
$215,247

Costs
$466,450
$213,858
$2,277,116
$1,937,983
$266,947
$275,925

E. SMALL ENTITY ANALYSIS
The following analysis, together with other relevant sections of this analysis and the final
rule, serves as the Final Regulatory Flexibility Analysis, as required under the Regulatory
Flexibility Act.
This final rule changes patent listing, patent certification, and 30-month stay regulations. It
also updates regulations pertaining to the type of bioavailability and bioequivalence data that
can be used to support 505(b)(2) applications and ANDAs. Revisions to the Agency’s
regulations in parts 314 and 320 implement portions of Title XI of the MMA and facilitate
compliance with and enforcement of the FD&C Act.
The final rule applies to applicants submitting NDAs (including 505(b)(2) applications) and
ANDAs and to NDA and ANDA holders. According to the February 2016 Table of Small Business
Size Standards, the U.S. Small Business Administration (SBA) considers pharmaceutical
preparation manufacturing entities (NAICS 325412) with 1,250 or fewer employees to be small.
Statistics on the classification of establishments by employment size from the U.S. Bureau of
the Census show that in 2007 and 2012, approximately 98 percent of pharmaceutical
manufacturing establishments had fewer than 1,000 employees. (See Table 5.) Using 1,000
employees as the size cutoff closest to the SBA threshold, and using establishments as a proxy
for firms, we estimate that at least 98 percent of pharmaceutical manufacturing firms are
considered small by SBA.

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Table 5: Size distribution of Pharmaceutical Preparation Manufacturing Establishments in the Economic Census,
2012 and 2007
Number of
Proportion of
Number of
Proportion of
Establishments
Establishments
Establishments
Establishments
(2012 Census)
(2012 Census)
(2007 Census)
(2007 Census)
Establishments with 0 to
4 employees
349
30.0%
284
28.7%
Establishments with 5 to
9 employees
138
11.8%
124
12.5%
Establishments with 10 to
19 employees
136
11.7%
77
7.8%
Establishments with 20 to
49 employees
193
16.6%
163
16.4%
Establishments with 50 to
99 employees
102
8.8%
86
8.7%
Establishments with 100
to 249 employees
105
9.0%
114
11.5%
Establishments with 250
to 499 employees
89
7.6%
68
6.9%
Establishments with 500
to 999 employees
35
3.0%
53
5.3%
Establishments with 1,000
to 2,499 employees
12
1.0%
15
1.5%
Establishments with 2,500
employees or more
6
0.5%
7
0.7%
Total
1,165
991

We have estimated costs of $680,308 in year 1 (including both the one-time cost to read
the rule and the first annual compliance cost) and $213,858 in annually recurring compliance
costs in years 2 through 10. The costs of this final rule are generally small unit costs incurred
across many entities. Our estimated unit costs for all but one of the recurring costs are less
than $1,350 per unit.
This final rule would require 505(b)(2) applicants to identify one pharmaceutically
equivalent drug product approved in an NDA as a listed drug relied upon and comply with
applicable regulatory requirements (including submission of an appropriate patent certification
or statement for each patent listed in the Orange Book for the pharmaceutically equivalent
listed drug relied upon). The estimated cost of this provision is $8,707 per instance. In Table 6,
we express this unit cost as a percentage of the average value of establishment shipments from
the 2012 and 2007 Economic Censuses. (We include both years because the value-ofshipments data are suppressed for some size categories for confidentiality reasons; we display
the two smallest size categories for which data are available in each Census year.) As shown in
Table 6 of this document, for firms with less than 5 employees, the cost of this provision would

26

be 1.03 percent of average shipments, below a range that has been cited as a threshold for
significant impacts. 6 For firms with 20 to 49 employees, which is a more likely lower bound for
firms submitting 505(b)(2) applications, the unit cost of this provision would be less than 0.1
percent of average shipments. We do not believe such a cost constitutes a significant impact.
In Table 6 we also express the average total cost per establishment, in both year one and
subsequent years, as a percent of average value of shipments. Average costs in year 1 are
approximately 0.11 percent of the average value of shipments of the smallest firms (those with
fewer than 5 employees); average costs in years 2 through 10 are approximately 0.04 percent
of the average value of shipments of the same small establishments.
We lack the data to provide reliable estimates of impacts for provisions that seek to align
submitted patent information with patent-protected intellectual property.
We find that this final rule will not have a significant impact on a substantial number of
small entities.
Table 6.-- Impact on Small Businesses of Costs Attributable to this Final Rule
5-9
50 – 99
Employees
Employees
(2012 Census) (2012 Census)
Total Value of Shipments ($1,000)
413,685
3,537,620
No. of Establishments
138
102
Average Value of Shipments ($)
2,997,717
34,682,549
Unit Costs of Identifying One
Pharmaceutically Equivalent Drug Product
as a Listed Drug Relied Upon per
§ 314.50(i)(1)(i)(C) as a Percentage of the
Average Value of Shipments ($8,707)
0.29%
0.03%
Average cost per establishment in year 1
($962) as a percentage of the average value
of shipments (includes both the one-time
cost to read the rule and the first annual
compliance cost)
0.03%
0.00%
Average annual cost per Establishment in
years 2 - 10 ($302) as a percentage of the
average value of shipments
0.01%
0.00%

6

Fewer than 5
Employees
(2007 Census)
239,929
284
844,820

20 – 49
Employees
(2007 Census)
1,998,457
163
12,260,472

1.03%

0.07%

0.11%

0.01%

0.04%

0.00%

Guidance issued by the Department of Health and Human Services suggests that a 3 to 5
percent impact on total costs or revenues on small entities could constitute a significant
regulatory impact (Ref. 4).
27

II.

REFERENCES

1. Bureau of Labor Statistics (BLS). 2016. May 2015 National Industry-Specific Occupational
Employment and Wage Estimates for NAICS 325400 - Pharmaceutical and Medicine
Manufacturing, SOC 23-1011 Lawyers. Available at http://data.bls.gov/cgibin/print.pl/oes/current/naics4_325400.htm.
2. U.S. Department of Commerce, Bureau of the Census, Economic Census, Manufacturing
Summary Series: General Summary: Industry Statistics for Subsectors and Industries by
Employment Size: 2012, Pharmaceutical Preparation Manufacturing (NAICS 325412), American
FactFinder, EC1231SG2, 2015. Accessed March 2016.
3. U.S. Department of Commerce, Bureau of the Census, Economic Census, Manufacturing
Summary Series: General Summary: Industry Statistics for Subsectors and Industries by
Employment Size: 2007, Pharmaceutical Preparation Manufacturing (NAICS 325412), American
FactFinder, EC0731SG3, 2010. Accessed March 2016.
4. U.S. Department of Health & Human Services, ‘‘Guidance on Proper Consideration of
Small Entities in Rulemakings of the U.S. Department of Health and Human Services,’’ May
2003.

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