IND - Exemptions PRIA

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration

Investigational New Drug Applications; Exemptions
for Clinical Investigations to Evaluate a Drug Use of
a Product Lawfully Marketed as a Conventional
Food, Dietary Supplement, or Cosmetic
Docket No. FDA-2019-N-2650

Preliminary Economic Analysis of Impacts:
Preliminary Regulatory Impact Analysis
Initial Regulatory Flexibility Analysis
Unfunded Mandates Reform Act Analysis

Economics Staff
Office of Economics and Analysis
Office of Policy, Legislation, and International Affairs
Office of the Commissioner

Executive Summary
Quantifiable benefits of this proposed rule are cost savings that come from reducing the burden of
submitting investigational new drug applications (INDs) to the Food and Drug Administration
(FDA) for clinical investigations to evaluate a drug use of a product that is lawfully marketed as a
food for human consumption (including both conventional foods and dietary supplements) or as a
cosmetic. The proposed rule would have a one-time, upfront cost for current and future sponsors
and sponsor-investigators who would have to read the rule. In addition, there would be costs to
FDA associated with a new type of IND-related submission, a request for an FDA-determined
exemption. The impact of this new submission is analyzed in section II.E, “Benefits of the
Proposed Rule,” as a partial offset to the cost savings of the rule. Discounted over 10 years, the
total net benefit of the rule is estimated to be $33 million at a 3% discount rate and $27 million at
a 7% discount rate.

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Table of Contents

Executive Summary ....................................................................................................................... 2
I. Introduction and Summary ......................................................................................................... 4
A. Introduction ........................................................................................................................... 4
B. Summary of Costs and Benefits ............................................................................................ 4
Table 1. Summary of Benefits, Costs and Distributional Effects of Proposed Rule ............. 5
II. Preliminary Regulatory Impact Analysis .................................................................................. 6
A. Background ........................................................................................................................... 6
B. Need for Federal Regulatory Action ..................................................................................... 6
C. Purpose of the Proposed Rule ............................................................................................... 7
D. Baseline Conditions .............................................................................................................. 8
E. Benefits of the Proposed Rule ............................................................................................. 10
Table 2. Estimated Sponsor Cost Savings by Submission Type ......................................... 11
Table 3. Estimated FDA Cost Savings by Submission Type............................................... 12
Table 4. Average Sponsor and FDA Cost Savings over 10 years ....................................... 13
Table 5. Cost savings of Proposed Rule, in thousands, discounted over 10 years .............. 13
F. Costs of the Proposed Rule .................................................................................................. 13
Table 6. Costs of Proposed Rule, discounted over 10 years ................................................ 14
G. Distributional Effects .......................................................................................................... 14
H. International Effects ............................................................................................................ 14
I. Uncertainty and Sensitivity Analysis ................................................................................... 15
Table 7. Net Benefits of Proposed Rule, in thousands, discounted over 10 years............... 15
Table 8. Sensitivity Analysis: Net Benefits of Proposed Rule, in thousands, discounted
over 10 years ........................................................................................................................ 15
J. Analysis of Regulatory Alternatives to the Proposed Rule .................................................. 16
Table 9. Alternative 2: Net Benefits in thousands, discounted over 10 years ..................... 16
Table 10. Alternative 3: Net Benefits in thousands, discounted over 10 years ................... 16
III. Initial Small Entity Analysis .................................................................................................. 17
A. Description and Number of Affected Small Entities .......................................................... 17
Table 11. NAICS 54171 by Number of Employees ............................................................ 17
B. Description of the Potential Impacts of the Rule on Small Entities .................................... 18
C. Alternatives to Minimize the Burden on Small Entities ..................................................... 18

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I. Introduction and Summary
A. Introduction
We have examined the impacts of the proposed 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 believe that
this proposed 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 this proposed rule would create net cost
savings for the affected industry by reducing the number of investigational new drug applications
(INDs) that must be submitted to the Food and Drug Administration (FDA or the Agency), we
propose to certify that the proposed 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 proposing “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 $165 million,
using the most current (2021) Implicit Price Deflator for the Gross Domestic Product. This
proposed rule would not result in an expenditure in any year that meets or exceeds this amount.
B. Summary of Costs and Benefits
Quantifiable benefits of this proposed rule are cost savings that come from reducing the burden of
submitting INDs to FDA for clinical investigations evaluating drug uses of lawfully marketed
foods for human consumption (including conventional foods and dietary supplements) and
cosmetics. (We refer to these product categories collectively as “foods and cosmetics” or
“CFSAN-regulated products” in this document). The cost savings would go to sponsors and
sponsor-investigators (collectively, “sponsors”), typically physicians and other researchers at
hospitals and academic institutions, who would no longer need to submit as many INDs because
the proposed rule provides exemptions for qualifying drug studies of products lawfully marketed
as a food or cosmetic. The proposed rule also would provide net cost savings to FDA, which
would not need to evaluate and monitor as many INDs. We expect the average present value of
the benefits to be $28 million at a 7% discount rate and $34 million at a 3% discount rate over a
10-year time horizon.
If this proposed rule is finalized, sponsors would incur a one-time cost because they, or lawyers or
consultants acting on their behalf, would have to spend time reading the rule to understand which
studies are eligible for an exemption and how to request an exemption. We estimate that 557
sponsors would read the rule the first year and 279 additional sponsors would read the rule in
subsequent years. We estimate the cost of reading the rule to be $153 per sponsor. We expect the
4

average present value of the reading cost to be $418,000 at a 3% discount rate and $364,000 at a
7% discount rate over a 10-year time horizon. In addition, there would be costs to FDA associated
with a new type of IND-related submission, a request for an FDA-determined exemption. The
impact of this new submission is analyzed in section II.E, “Benefits of the Proposed Rule,” as a
partial offset to the cost savings of the rule. The total net benefit of the rule is estimated to be $33
million at a 3% discount rate and $27 million at a 7% discount rate.
Table 1. Summary of Benefits, Costs and Distributional Effects of Proposed Rule
Category

Primary
Estimate

Low Estimate

Annualized $3,450,000
($850,000)
Monetized
$/year
$3,530,000
($780,000)
Benefits
Annualized
Quantified
Qualitative
Annualized
$45,300
$15,700
Monetized
$ /year
$43,800
$15,100
Costs
Annualized
Quantified
Qualitative
Federal
Annualized
Monetized
$ /year
From/ To
From:
Transfers
Other
Annualized
Monetized
$ /year
From/To
From:
State, Local or Tribal Government:
Small Business:
Effects
Wages:
Growth:

Units
Notes
Year Discount Period
Dollars
Rate
Covered
$7,730,000 2021
7%
10 Cost
2021
10 savings
to FDA
$7,840,000
3%
and
7%
industry
3%
High
Estimate

$77,800
$75,700

2021
2021

7%
3%
7%
3%

10
10

7%

To:

3%
7%
3%

To:

We request comment on our estimates of the costs and benefits of this proposed rule.

5

II. Preliminary Regulatory Impact Analysis
A. Background
FDA is proposing to amend its regulations on INDs to exempt certain clinical investigations
evaluating drug uses of foods and cosmetics from most IND requirements. Under the proposal,
such clinical studies would not have to be conducted under an IND when, among other things, the
study is not intended to support a drug development plan or marketing of the product for any drug
use, and the study does not present a potential for significant risk to the health, safety, or welfare
of subjects. Though exempt from most IND requirements, such investigations would still be
subject to other regulations designed to protect the rights, safety, and welfare of subjects, such as
requirements for informed consent and review by institutional review boards (IRBs).
Currently, FDA regulations provide an exemption from most IND requirements for studies of
lawfully marketed drug products that meet certain criteria, including that the study does not involve
a route of administration, dosage level, use in a patient population, or other factor that significantly
increases the risks (or decreases the acceptability of these risks) associated with the use of the drug
product. However, this exemption applies only to clinical investigations of drugs lawfully
marketed in the United States, and therefore generally does not apply to clinical investigations of
products lawfully marketed as foods or cosmetics in the United States.
FDA has exercised its enforcement discretion on a case-by-case basis and has not objected to
certain clinical studies evaluating a drug use of a product lawfully marketed as a food or cosmetic
being conducted without an IND, based on consideration of factors such as the purpose of the
investigation and whether the study raises any concerns about the health, safety, and welfare of
subjects. The proposed rule would now establish exemptions from the IND requirements for drug
studies of products lawfully marketed in the United States as a food or cosmetic when the studies
meet criteria similar to those in the IND exemption for certain investigations of lawfully marketed
drug products (21 CFR 312.2(b)(1)).
By exempting from the IND requirements certain low-risk studies evaluating drug uses of lawfully
marketed foods and cosmetics, the proposed rule would reduce the regulatory burden of
conducting such studies, without lessening protections for human subjects in studies that pose
significant risks or jeopardizing the quality of data from studies used to support marketing approval
for a drug or biological product.
B. Need for Federal Regulatory Action
The proposed rule would establish new IND exemptions for certain clinical investigations of
products lawfully marketed as foods and cosmetics, similar to an exemption that already applies
to some clinical investigations of drug products lawfully marketed in the United States. For many
of these investigations, the proposed rule would make clear that the investigation is exempt from
the IND requirements, without the sponsor having to ask FDA whether an IND is required. Thus,
the proposed rule would address informational asymmetry by providing greater clarity and
consistency to sponsors, investigators, and others about when a clinical study to evaluate a drug
use of a food or cosmetic must be conducted under an IND.
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By creating exemptions from the IND requirements for certain low-risk clinical studies evaluating
a drug use of a food or cosmetic, the proposed rule would make it less time-consuming and costly
for sponsors to conduct such studies. Without this rulemaking, sponsors may be unsure whether
their clinical study must be conducted under an IND and spend more than the optimal amount of
time submitting inquiries on the matter. The proposed rule would also reduce the time FDA
employees need to spend responding to inquiries and evaluating and monitoring INDs.
C. Purpose of the Proposed Rule
The proposed rule would create two types of IND exemptions for clinical investigations to evaluate
a drug use of products lawfully marketed in the United States as foods or cosmetics. One
exemption, the proposed “self-determined exemption” (SDE), would specify that a clinical
investigation to evaluate a drug use of a product that is lawfully marketed in the United States as
a food or cosmetic is exempt from the IND requirements if certain conditions are met, including
that the investigation is not intended to support a drug development plan for the product or a change
in the labeling of the lawfully marketed product that would cause it to become an unlawfully
marketed drug, and that the investigation meets certain criteria concerning the health, safety, and
welfare of subjects. 1
Under the proposed SDE, if a clinical investigation to evaluate a drug use of a product that is
lawfully marketed in the United States as a food or cosmetic meets these criteria, the study would
be exempt from most requirements in the IND regulations. Accordingly, the sponsor would not
have to submit an IND for the study. In addition, the sponsor would not have to request that FDA
exempt the study from the IND requirements.
Under the second proposed IND exemption, the “FDA-determined exemption” (FDE), the sponsor
of a clinical investigation to evaluate a drug use of a product lawfully marketed in the United States
as a food or cosmetic could ask FDA to exempt the investigation from the IND requirements when
the investigation meets the SDE criteria except for one or more of the subject health, safety, and
welfare criteria, but the sponsor has concluded that the investigation nevertheless does not present
a potential for significant risk to subjects.
To obtain such an exemption, the sponsor would submit a written request that includes the
following: a copy of the study protocol or a detailed protocol summary with information about the
study design, investigational product, and procedures; the names of the manufacturer and source
of the product to be studied; the name (if different from the name of the product to be studied in
the investigation) and form of the lawfully marketed food or cosmetic product, with a copy of the
product’s labeling and, if the labeling does not list the product’s ingredients, a description of the
product’s composition; the source(s) of funding for the investigation; contact information for the
sponsor; a brief description of why the investigation does not present a potential for significant
risk to the health, safety, or welfare of study subjects; and any other information requested by FDA.
Upon receiving such a request for exemption from the IND requirements, FDA would evaluate
any risks to subjects and would grant an exemption if we found that the investigation did not

See the proposed rule for a full list of conditions the investigation must meet to be exempt and the criteria that must
be met concerning the health, safety, and welfare of the subjects.

1

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present a potential for significant risk (or decrease the acceptability of the risks) to the health,
safety, or welfare of subjects.
The proposed rule also would authorize FDA to grant an exemption from the IND requirements
on our own initiative (i.e., the sponsor would not have to submit an FDE) if we determined, upon
review of an IND, that the study met the decision criteria for an FDE.
D. Baseline Conditions
In some cases, sponsors may initiate or fund a study of a food or cosmetic for other uses (such as
treating or preventing a disease) because the sponsor hopes to develop and obtain marketing
approval of the product as a drug, has a financial relationship with an entity that hopes to obtain
such marketing approval, or wishes to market the product for disease treatment or prevention
without seeking approval for it as a new drug. In other cases, the motivation for conducting a
study may be purely scientific or medical, and the sponsor may have no intent to seek approval of
the product as a drug or to use the research results to market the product unlawfully for a drug use
without such approval. Under current regulations, the great majority of clinical studies
investigating drug uses of a food or cosmetic are not eligible for the IND exemption for which
similar investigations of a lawfully marketed drug product are eligible. 2
FDA’s Center for Drug Evaluation and Research (CDER) and Center for Biologics Evaluation and
Research (CBER) receive about 4,170 INDs and 656 IND-related inquiries annually. 3 Of these,
about 12 INDs and 58 inquiries (1.43% of the total inquiries and INDs received) concern clinical
investigations of a product marketed as a food or cosmetic. Approximately 75% of these INDs and
inquiries concern a drug use of a dietary supplement, 15% concern a drug use of a conventional
food, and 4% concern a drug use of a cosmetic. The remaining submissions pertain to studies of
conventional foods, dietary supplements, or cosmetics not intended for use as drugs and therefore
are not covered by the proposed rule.
To help estimate the potential impact of establishing the IND exemptions proposed in this rule,
FDA reviewed all INDs and IND inquiries received in 2016 through 2020 that concerned clinical
investigations of products marketed as foods or cosmetics. In this time period, FDA received 75
such INDs and 247 such IND inquiries. Currently, FDA exercises enforcement discretion on a
case-by-case basis with respect to IND requirements for some clinical studies evaluating drug uses
of products lawfully marketed as foods or cosmetics, based on consideration of factors such as the
purpose of the study and whether the study raises any concerns about the health, safety, or welfare
of subjects. In these five years, FDA notified the sponsor of the Agency’s intent to exercise
enforcement discretion regarding approximately 40% of INDs and inquiries concerning clinical
investigations of products marketed as foods or cosmetics. We incorporate this exercise of
enforcement discretion within the baseline of this economic analysis (see Section J for further
discussion of the impact of FDA’s exercise of enforcement discretion).

See 21 CFR 312.2(b)(1) for the details of this exemption from the IND requirements.
See Tables 1 and 4 in “Agency Information Collection Activities; Submission for Office of Management and
Budget Review; Comment Request; Investigational New Drug Applications” (84 FR 3462; February 12, 2019).

2
3

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About 15% of the INDs and IND inquiries involved studies that were determined not to require an
IND, suggesting a lack of clarity about when the IND requirements apply to studies involving
products marketed as food or cosmetics. FDA estimates that an inquiry concerning applicability
of the IND requirements to a clinical investigation takes a sponsor about 24 hours to complete. 4
The average hourly wage of a person in the “Research and development in the physical,
engineering, and life science” industry (NAICS 54171) is $57.38. 5 After applying the standard
wage multiplier of two to account for employee benefits and other overhead costs, we estimate
that submitting an inquiry to FDA costs a sponsor about $2,750 in the first year (= 24
hours*$114.76 hourly). There are no additional annual costs associated with the inquiry itself, but
if the study is found to require an IND, the sponsor must submit an IND and comply with the
annual reporting requirements in the IND regulations (see cost estimate in the following paragraph).
We estimate that preparing and submitting an IND that complies with the IND content and format
requirements takes a sponsor approximately 1,600 hours per submission. The average time spent
on IND annual reports is estimated at 360 hours per submission. 6 Using the same NAICS 54171
wage, we estimate that submitting an IND costs a sponsor about $183,600 in the first year (=1,600
hours*$114.76 hourly), and post-submission IND requirements like submitting adverse event
reports and annual progress reports cost $41,300 annually (= 360 hours*$114.76 hourly) thereafter.
FDA staff read and evaluate each inquiry or IND for a clinical study to evaluate a possible drug
use of a CFSAN-regulated product. Across the Agency, we estimate that reading and evaluating
an average inquiry takes about 15 hours total, distributed among several FDA employees with
differing roles and fields of expertise; reading and evaluating an IND for a study to evaluate a
possible drug use of a CFSAN-regulated product takes two to four times as long, or 45 hours on
average. An average FDA employee’s hourly wage is $66.97. After applying the wage multiplier,
we estimate that reading and reviewing an inquiry costs FDA $2,009 (=15 hours*$133.94 hourly)
and reading and reviewing an IND costs FDA $6,027, on average (=45 hours*$133.94 hourly). In
addition to the initial time spent reading and evaluating each inquiry or IND, FDA also reviews
IND-related submissions, such as safety reports and annual progress reports. We do not include
the time spent reading and reviewing these submissions because the nature of reviewing such
submissions varies widely.
The 2017 Economic Census of the United States identifies approximately 15,000 establishments
(also referred to as “entities” or “covered entities”) in the “Research and development in the
physical, engineering, and life science” industry. 7 The industry is broadly defined, comprising

FDA estimates the average burden per response for 21 CFR 312.2(e), “Requests for FDA advice on the
applicability of part 312 to a planned clinical investigation,” to be 24 hours (see 84 FR 3462, Tables 1 and 4).
5
See U.S. Bureau of Labor Statistics, “May 2021 National Industry-Specific Occupational Employment and Wage
Estimates: NAICS 541710 - Research and Development in the Physical, Engineering, and Life Sciences” at
https://www.bls.gov/oes/current/naics5_541710.htm#00-0000.
6
See 84 FR 3462, Tables 1 and 4.
7
See TableID EC1700SIZEEMPFIRM, “ECN Core Statistics Economic Census: Establishment and Firm Size
Statistics for the U.S.: Employment Size of Firms for the U.S.: 2017” at
https://data.census.gov/cedsci/table?d=ECN%20Core%20Statistics%20Economic%20Census%3A%20Establishmen
t%20and%20Firm%20Size%20Statistics%20for%20the%20U.S.&n=54171%3AN0500.00&tid=ECNSIZE2017.EC
1700SIZEEMPFIRM .
4

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establishments primarily engaged in conducting research and experimental development in the
physical, engineering, and life sciences, such as agriculture, electronics, environmental science,
biology, botany, biotechnology, computers, chemistry, food science, fisheries, forests, geology,
health, mathematics, medicine, oceanography, pharmacy, physics, veterinary sciences, and other
allied subjects. An example of an entity in this industry would be a university or independent
laboratory conducting research in the physical, engineering, or life sciences. It is likely that not
all entities categorized in this industry submit INDs or IND inquiries to FDA, let alone INDs or
IND inquiries for clinical investigations evaluating a product marketed as a food or cosmetic.
Given the small percentage of overall sponsor submissions (INDs and IND inquiries) for clinical
investigations of food and cosmetics, we estimate that between 198 and 916 entities (1% to 5% of
total entities) would be affected by this proposed rule.
E. Benefits of the Proposed Rule
Benefits of the proposed rule come in the form of cost savings to industry and FDA. Creating the
proposed IND exemptions would reduce the burden of conducting certain clinical investigations
evaluating drug uses of foods and cosmetics, as well as the Agency’s burden of evaluating and
monitoring such studies and reviewing IND inquiries, without eliminating requirements to help
ensure the rights, safety, and welfare of study subjects and the quality of data submitted in support
of drug product approval.
We estimate that submitting a request for an FDA-determined exemption (FDE) would take about
the same amount of time as submitting an inquiry about whether the IND requirements apply, 24
hours. As with an inquiry, there would be no annual reporting or other additional annual costs
associated with the FDE request. Thus, the initial sponsor cost per FDE request would be $2,750.
We request comment on whether this under- or over-estimates the time and cost of submitting an
FDE request.
The proposed rule would not require sponsors to submit anything to FDA in order to rely on the
self-determined exemption (SDE). In addition, there would be no requirement for sponsors to keep
records documenting that their study meets the criteria for this exemption. However, we recognize
that other entities, such as the IRB with oversight over the clinical investigation, may require
sponsors to keep records relating to the SDE. Therefore, because entities may choose to keep such
additional records, which would increase the time-burden and thus the cost of an SDE, we estimate
the initial time-burden to sponsors would be anywhere from 4 to 24 hours per exemption. Using
the same wage rate described above, the initial sponsor cost for an SDE would be about $1,150,
on average. We request comment on whether this under- or over-estimates the time and cost of
keeping records to document that a study meets the criteria for the SDE.
Cost savings to sponsors can be estimated based on the difference between the baseline (current)
cost of submitting an IND or IND-related inquiry regarding a clinical investigation (estimated in
section D, “Baseline Conditions”) and the cost of choosing one of the other options that would
become available under the proposed rule (submitting a request for an FDE or self-determining
that the clinical investigation is exempt under the proposed SDE). Table 2 shows the estimated
cost savings by submission type. Based on our evaluation of the IND inquiries and INDs for
clinical investigations of food and cosmetics reviewed between 2016 and 2020, we estimate that
25% of the investigations that were the subject of these previous inquiries and INDs would be
eligible for an SDE, saving sponsors between $1,600 (for studies previously submitted as inquiries)
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to $182,450 (for studies previously submitted as INDs) initially and $41,300 annually thereafter
(for studies previously submitted as INDs). We estimate that under the proposed rule,
approximately 15% of previous IND inquiries and INDs would be submitted as requests for an
FDE, potentially saving sponsors $180,850 initially and $41,300 annually for studies previously
submitted as INDs. FDA also anticipates that the proposed regulation will lead some sponsors who
now submit IND inquiries to seek an FDE instead, and that an approximately equal number of
other sponsors who now submit INDs will also request an FDE instead. Therefore, we estimate
that the number of requests for an FDE will be 28 annually. We derived this estimate by doubling
the number of IND inquiries and INDs for clinical investigations of food and cosmetics reviewed
between 2016 and 2020 for which we would have granted an FDE.
A sponsor might choose to submit an IND instead of requesting an FDE because the sponsor is
risk-averse: they would rather spend the additional time to prepare an IND than risk not having an
IND for a clinical investigation that requires one. We expect that the rate at which this occurs will
decrease over time as sponsors better understand the rule. If FDA grants an exemption from the
IND requirements on its own initiative upon review of an IND, the sponsor would still incur the
cost of submitting an IND, but would not incur annual reporting burdens thereafter. To the extent
the Agency grants such exemptions, the cost savings of the rule are underestimated. We do not
have enough data to quantify the effect of this FDA-initiated exemption.
If FDA denies a request for an FDE because the clinical investigation does not meet the proposed
exemption criteria, the investigation would have to be conducted under an IND. We are uncertain
what proportion of requests for an FDE would be denied; therefore, we do not include the
additional cost a sponsor may incur to submit an IND and comply with the annual reporting
requirements in the IND regulations after submitting an FDE for the same investigation. To the
extent this occurs, the cost savings are overestimated.
We expect that the number of inquiries regarding applicability of the IND requirements will
decrease by 5% each year due to increased clarity provided by the proposed rule; over a 10-year
period, inquiries would decrease to 10% of IND-related submissions (INDs, IND inquiries, SDEs,
and FDEs).
Table 2. Estimated Sponsor Cost Savings by Submission Type
Proposed
Current Submission
Expected
Submission Type
Type
Total Submissions
(%)
SDE
Inquiry
20
SDE

IND

3

FDE
FDE

Inquiry
IND

12
5

Inquiry
IND

Inquiry
IND

10
50

Sponsor Cost Savings
Per Submission
($)
Initial: 1,600
Annual: No change
Initial: 182,450
Annual: 41,300
No change
Initial: 180,850
Annual: 41,300
No change
No change

Notes: SDE is “Self-determined exemption” and FDE is “FDA-determined exemption.”

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Cost savings to FDA resulting from establishment of the proposed IND exemptions are calculated
similarly and shown in Table 3. FDA’s cost savings would be between $2,009 for each SDE
previously submitted as an inquiry about the applicability of the IND regulations and $6,030 for
an SDE previously submitted as an IND. We estimate that reviewing a request for an FDE will
take us between 1.5 times and twice as long as a current inquiry review because review of an FDE
request will likely involve more complex health, safety, and welfare issues than review of a typical
inquiry now. We estimate that reviewing an FDE request would, on average, take 27 hours and
cost FDA $3,616. Because of the longer review time, FDA would incur additional costs of $1,607
for this subset of total submissions. In an average year, this cost would be made up for in other
cost savings. FDA’s estimated cost savings would be $2,410 for each FDE previously submitted
as an IND.
If FDA, after reviewing an IND, grants an FDE on its own initiative, we assume there is no cost
savings to FDA because the reviewer still conducts the IND review and thus there is no change in
cost savings per IND. However, FDA would experience reduced costs due to not having to review
post-IND submissions, such as safety reports and annual progress reports, for such studies). As
noted above, we do not attempt to quantify those cost savings because the time needed to read and
review these submissions varies widely.
Table 3. Estimated FDA Cost Savings by Submission Type
Proposed
Current
Expected
Submission Type
Submission Type
Total Submissions
(%)
SDE
Inquiry
20
SDE
IND
3
FDE
Inquiry
12
FDE
IND
5
Inquiry
Inquiry
10
IND
IND
50

FDA Cost Savings
Per Submission
($)
2,009
6,030
(1,607)
2,410
No change
No change

Notes: SDE is “Self-determined exemption” and FDE is “FDA-determined exemption.”

Table 4 summarizes the total cost savings to sponsors and FDA over ten years. The cost savings
to sponsors estimated in Table 2 and the cost savings to FDA estimated in Table 3 are summed
over the expected number of IND-related submissions each year. We assume that the total number
of submissions FDA receives annually will remain the same as seen between 2016 and 2020, but
will be distributed across the new types of submissions as shown in Table 2 and Table 3. Sponsors’
annual cost savings will increase over 10 years as the number of expected annual IND progress
reports and safety reports a sponsor would have had to submit if its investigation was subject to
the IND requirements increases. About 99% of the proposed rule’s total cost savings would be
realized by sponsors.

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Table 4. Average Sponsor and FDA Cost Savings over 10 years
Years after Effective Date
Sponsor
$
1
1,850,000
2
2,280,000
3
2,690,000
4
3,110,000
5
3,610,000
6
4,100,000
7
4,600,000
8
5,100,000
9
5,590,000
10
6,090,000
Total
39,020,000

FDA
$
36,000
37,000
38,000
39,000
39,000
40,000
41,000
42,000
43,000
43,000
397,000

Present discounted values over a 10-year period are presented in Table 5. Discounted at 3%, the
mean present value of cost savings of the proposed rule is $34 million, with a 90% confidence
interval of negative 7.5 million to positive $75 million. Discounted at 7%, the mean present value
of cost savings of the proposed rule is $28 million, with a 90% confidence interval of negative
$6.8 million to $62 million. The range includes negative values, suggesting that it is possible there
would be no cost savings given the variability over time in the number of SDE, FDE, inquiries,
and IND submissions.
Table 5. Cost savings of Proposed Rule, in thousands, discounted over 10 years
Cost Savings (in thousands)
Discount Rate
Low
Primary
Present Discounted Value ($)

Annualized Value ($)

High

3%

(7,470)

33,620

74,680

7%

(6,780)

27,650

62,050

3%

(780)

3,530

7,840

7%

(850)

3,450

7,730

F. Costs of the Proposed Rule
This proposed rule has a one-time upfront cost for current sponsors who would have to read and
comprehend the rule to determine whether a study meets the requirements for a self-determined
exemption or an FDA-determined exemption. In addition, there would be a cost in future years
for new sponsors entering the field to read and comprehend the rule.
The cost of reading the rule is calculated using the time cost of a researcher at each covered entity.
We expect between 198 and 916 covered entities will read the final rule in the first year after FDA
publishes it, or an average of 557 covered entities. We anticipate about 279 (50% fewer) covered
13

entities will read the rule each year thereafter. The rule has about 16,000 words; the average reader
can read 200 words per minute, so it should take about 1.33 hours to read. Using the hourly wage
of $114.76 (including standard wage multiplier of 2 to cover benefits and overhead), the cost of
reading the rule would be $153.01 per sponsor. Across all covered entities, the total cost of reading
in the first year would be $85,200 (=$153.01/sponsor*557 covered entities) on average, with a low
estimate of $30,300 (=$153.01/sponsor*198 covered entities) and a high estimate of $140,200
(=$153.01/ sponsor*916 covered entities). Annual reading costs for anticipated new sponsors
would be $42,600 on average, estimated at half the first-year costs.
As noted above, entities may choose to keep additional records not required by the proposed rule,
such as records required by the IRB with oversight over the clinical investigation. We request
comment on any unintended costs or time-burdens that would offset the estimated cost savings to
sponsors.
Relative to the baseline scenario described in Section D above, we do not expect a change in
government administrative or enforcement costs associated with the proposed rule. Thus, there
are no additional costs to FDA.
Present discounted values for the costs of the rule over a 10-year period are presented in Table 6.
Discounted at 3%, the mean present value of costs of the proposed rule is $417,600, with a 90%
confidence interval of $144,100 to $722,000. Discounted at 7%, the mean present value of costs
of the proposed rule is $363,000, with a 90% confidence interval of $126,000 to $624,000.
Table 6. Costs of Proposed Rule, discounted over 10 years
Costs
Discount Rate
Low
Present Discounted Value ($)

Annualized Value ($)

Primary

High

3%

144,100

417,600

721,600

7%

126,100

363,400

624,400

3%

15,100

43,800

75,700

7%

15,700

45,300

77,800

G. Distributional Effects
We do not expect there to be any distributional effects of this rule.
H. International Effects
We do not expect there to be any significant international effects of this rule. Foreign sponsors
that currently submit INDs or inquiries about applicability of the IND requirements incur the same
costs as sponsors in the United States. If a foreign sponsor submitted an IND or request for FDAdetermined exemption, it would achieve the same cost savings as any domestic sponsor.

14

I. Uncertainty and Sensitivity Analysis
We account for uncertainty throughout the model and describe it in the “Benefits” and “Costs”
sections above. The following data include ranges to account for uncertainty and variability in
estimation: current and anticipated annual inquiry and IND submissions, sponsor cost of
submitting inquiries and INDs, FDA cost of reviewing inquiries and INDs, FDA review time for
the proposed FDE, and the number of affected entities.
The mean net benefits and a 90% confidence interval are described in Table 7.
Table 7. Net Benefits of Proposed Rule, in thousands, discounted over 10 years
Net Benefits in thousands
Discount Rate
Low
Primary
Present Discounted Value ($)

Annualized Value ($)

High

3%

(7,610)

33,200

73,960

7%

(6,910)

27,290

61,430

3%

(800)

3,480

7,760

7%

(860)

3,400

7,660

It is possible that the proposed rule would not provide additional clarity for sponsors or
investigators regarding applicability of the IND regulations to clinical investigations of foods or
cosmetics. As a sensitivity analysis, we estimate net benefits assuming there are no changes in the
number of inquiries, i.e., the anticipated 5% decrease in inquiries each year does not occur. The
mean annualized net benefits discounted at 3% are roughly the same than in our main analysis,
shown in Table 8.
Table 8. Sensitivity Analysis: Net Benefits of Proposed Rule, in thousands, discounted over
10 years
Sensitivity: Net Benefits in thousands Discount Rate
Low
Primary
High
Present Discounted Value ($)

Annualized Value ($)

3%

(7,890)

33,050

73,790

7%

(7,140)

27,170

61,300

3%

(830)

3,470

7,740

7%

(890)

3,390

7,640

15

J. Analysis of Regulatory Alternatives to the Proposed Rule
We analyze three regulatory alternatives to the proposed rule. In the first alternative, we assume
that FDA decides not to make any changes to the current regulations and practices regarding
clinical investigations of food or cosmetics. In this case, there would be no changes to the baseline
estimated in Section D of this document.
The second regulatory alternative assumes that FDA does not make any changes to the current
IND regulations and also does not exercise enforcement discretion with respect to IND
requirements for any clinical investigations evaluating drug uses of foods or cosmetics. Under this
Alternative 2, sponsors would have to submit more INDs and would therefore incur additional
costs. FDA would also incur additional costs related to evaluating and monitoring these additional
INDs. There would be no cost savings and thus the net benefits would be negative. Table 9
describes the net benefits under Alternative 2.
Table 9. Alternative 2: Net Benefits in thousands, discounted over 10 years
Alt. 2: Net Benefits in thousands
Discount Rate
Low
Primary
Present Discounted Value ($)

Annualized Value ($)

High

3%

(47,570)

(93,600) (139,400)

7%

(38,940)

(77,320) (115,520)

3%

(4,990)

(9,820)

(14,630)

7%

(4,850)

(9,640)

(14,400)

Lastly, we estimate the net benefits if the proposed rule is modified to remove the sponsordetermined exemption (Alternative 3). Under this alternative, only the FDA-determined exemption
would remain. Thus, sponsors would not be allowed to self-determine that their studies qualify for
an exemption, and FDA would review each exemption request to determine whether the study met
the exemption criteria. The mean net benefits discounted at 3% are positive and roughly equivalent
to estimates in the main analysis. Table 10 describes the net benefits under Alternative 3.
Table 10. Alternative 3: Net Benefits in thousands, discounted over 10 years
Alt. 3: Net Benefits in thousands
Discount Rate
Low
Primary
Present Discounted Value ($)

Annualized Value ($)

High

3%

(8,380)

32,590

73,360

7%

(7,570)

26,760

60,920

3%

(880)

3,420

7,700

7%

(940)

3,340

7,590
16

III. Initial Small Entity Analysis
The Regulatory Flexibility Act requires agencies to analyze regulatory options that would
minimize any significant impact of a rule on small entities. Because this proposed rule would
create a net cost savings for the affected industry by reducing the number of INDs that must be
submitted for clinical investigations evaluating drug uses of products lawfully marketed as foods
or cosmetics, we propose to certify that the proposed rule will not have a significant economic
impact on a substantial number of small entities. This analysis, as well as other sections in this
document, serves as the Initial Regulatory Flexibility Analysis, as required under the Regulatory
Flexibility Act.
A. Description and Number of Affected Small Entities
Entities affected by this proposed rule are classified in the “Research and development in the
physical and life sciences” industry (NAICS 54171) by the Economic Census of Manufacturer. 8
This industry includes laboratory or other physical research and development in biotechnology,
physical, and life sciences. It does not include economic, educational, engineering, operations,
systems, or other nonphysical research. The Small Business Administration (SBA) defines an
establishment (entity) as small in this industry if the business has fewer than 1,000 employees. 9
Table 11. NAICS 54171 by Number of Employees
Size
Num. of Entities
(# of Employees)
Less than 5
5-9
10-19
20-49
50-99
100-249
250 or more
All Entities

5,385
2,135
1,622
1,435
857
841
2,527
14,802

Receipts/Revenue
($1,000)
2,392,627
2,886,410
4,661,128
8,903,136
9,811,043
17,549,575
105,804,538
152,008,457

See TableID EC1700SIZEEMPFIRM, “ECN Core Statistics Economic Census: Establishment and Firm Size
Statistics for the U.S.: Employment Size of Firms for the U.S.: 2017” at
https://data.census.gov/cedsci/table?d=ECN%20Core%20Statistics%20Economic%20Census%3A%20Establishmen
t%20and%20Firm%20Size%20Statistics%20for%20the%20U.S.&n=54171%3AN0500.00&tid=ECNSIZE2017.EC
1700SIZEEMPFIRM
8

9

See U.S. SBA’s Size Standards Table, https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.

17

The 2017 Economic Census indicates that there are 14,802 entities classified in the NAICS 54171.
Table 11 shows the breakdown of the research and development entities in the physical and life
sciences industry by number of employees. Based on the data in Table 11, we estimate that all of
these entities employ fewer than 1,000 employees and would qualify as small entities as defined
by the SBA. Based on the annual receipts or revenue reported in the 2017 Economic Census, we
estimate the average annual receipts or revenue per small entity in the industry is $10.4 million.
We request comment or data to support other assumptions made in this analysis.
B. Description of the Potential Impacts of the Rule on Small Entities
We estimate the cost per small entity to be $153, which is the cost of reading the rule establishing
certain exemptions from the IND requirements. All affected entities are small as defined by the
SBA. We do not anticipate this cost to be burdensome enough to create an incentive to leave the
industry. In addition, about 99% of the cost savings of the proposed rule are attributed to sponsors
of clinical investigations. Divided across 557 affected entities, we estimate that annualized cost
savings per sponsor are about $6,300, more than 40 times the one-time cost of reading the rule.
C. Alternatives to Minimize the Burden on Small Entities
The proposed rule would provide the largest cost savings for all small entities. The alternative
regulatory options would decrease or eliminate total cost savings to small entities. First, if there
is no change in current regulations, small entities would not get any cost savings. Second, if FDA
does not exercise enforcement discretion with respect to any studies evaluating a drug use of a
food or cosmetic (in addition to not adopting the proposed rule), the burden on small entities would
increase significantly compared to the baseline. Finally, if the proposed rule is modified to create
an FDA-determined exemption but not a self-determined exemption, the cost savings to small
entities would be positive, but about two percent less than estimated in our main analysis.

18