Q&A: The CARES ACT and OTC Drug Reform in 2020

Footnotes for this article are available at the end of this page.

In March 2020, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) ushered in a wave of reforms to modernize the regulation of over-the-counter (OTC) drugs in the United States.1    A summary of some of the key provisions can be found in our bulletin entitled, “It is Not All About the Coronavirus: The CARES Act Brings Long-Awaited Over-the-Counter (OTC) Monograph Reform.”2

Since we published that summary, we have received many questions concerning the upcoming changes to the OTC Drug Review process. We prepared the list below of some commonly asked questions and answers.

When did the OTC reforms implemented pursuant to the CARES Act take effect?

The CARES Act was signed into law on March 27, 2020. Many of the new provisions had immediate effect (e.g., replacement of the notice-and-comment rulemaking process for OTC drug monographs with an administrative order process).  Facility fees will begin to be assessed in Fiscal Year 2021 for OTC drug manufacturers, including contract manufacturers. Some additional changes for sunscreen active ingredients will go into effect at the end of Fiscal Year 2022.

What will happen to existing monographs under the new system?

Category I ingredients in a Final Monograph or Tentative Final Monograph (TFM) are deemed generally recognized as safe and effective (GRASE) under the CARES Act.3   These existing monographs, with some caveats, are being converted into final administrative orders. Administrative orders should allow for faster agency decisions, as the process can be run through the Center for Drug Evaluation and Research (CDER), instead of being required to go through the rulemaking process with issuance of a final rule (as required by the old OTC Drug Review process).  Notably, the process under the old OTC Drug Review, which was initiated in 1972, was never finalized and some OTC drug monographs are still not completed more than 40 years later. The new system is meant to help streamline the process and provide a more efficient and effective review.

How should I review my current OTC drugs on the market?

Manufacturers should review the regulatory history of the active ingredients (i.e., Category) for any OTC drug products currently on the market.

Category I drugs marketed pursuant to a Final Monograph or a Tentative Final Monograph (TFM) are deemed to be GRASE, as long as they comply with all the requirements of the final monograph or TFM and the “general requirements” (which is the statutory language) for OTC drugs.

Category II drugs are deemed to be “new drugs” and require a new drug application, within 180 days from the enactment of the law, in order to continue to be marketed, unless FDA determines it is in the interest of the public health to extend the period during which a specific drug may be marketed without an approval.

Category III drugs subject to a TFM and category I drugs subject to an Advanced Notice of Proposed Rulemaking (ANPRM) will not require a new drug application if they comply with all the requirements in the TFM or ANPRM and the general requirements for OTC drugs, until FDA issues a final administrative order addressing the status of these ingredients.

Any other OTC drug that does not fall into one of these categories, or is not subject to a final administrative order, is deemed a “new drug” and requires a new drug application for marketing authorization.

Based on the foregoing, manufacturers should be aware of their Category III active ingredients that are subject to a TFM and Category I active ingredients subject to an ANPRM, as these products may be subject to regulatory or marketing status changes upon the agency’s issuance of a final administrative order. In addition, Category II drugs require swift regulatory action (e.g., new drug applications within 180 days) or potentially a request to FDA to keep the products on the market in the interest of the public health.

Can FDA change a final administrative order once it has been issued?

There is a clause that allows FDA to make changes to any final administrative order if new evidence becomes available that a particular drug or class of drugs poses an unreasonable risk of an adverse event and requires a label or other type of change.

How can a manufacturer request a change to a monograph?

Manufacturers can make a request to change a condition for use or ingredient, for instance, by submitting an OTC monograph order request (“OMOR”).  A request may not be necessary for some minor changes.

Are there different types of OMOR requests?

Yes.  The Cares Act establishes two types of OMOR requests:  Tier 1 OMORs and Tier 2 OMORs.  The term “Tier 1 OTC monograph order request” is defined under the statue as any OTC monograph order request not determined to be a Tier 2 OTC monograph order request.

The term “Tier 2 OTC monograph order request” is defined as an OTC monograph request for “(i) the reordering of existing information in the drug facts label of an OTC monograph drug; (ii) the addition of information to the other information section of the drug facts label . . . . (iii) modification to the directions for use section of the drug facts label of an OTC monograph drug, . . .(iv) the standardization of the concentration or dose of a specific finalized ingredient without a particular finalized monograph; (v) a change to ingredient nomenclature to align with nomenclature of a standards-setting organization; or (vi) addition of an interchangeable term.”

How long will it take for FDA to review an OMOR request?

According to FDA’s 2018–2022 OTC Monograph Goals Letter, the average proposed timeframes for the issuance of a final administrative order are as follows:4

  • 17.5 months upon receipt of an OMOR for Tier 1 changes that do not have numerous or substantive public comments, and
  • 15.5 months upon receipt of OMOR for a Tier II change that does not have numerous or substantive public comments5  

How can I challenge FDA’s decision regarding an administrative order?

The CARES Act includes a dispute resolution process, a hearing provision, and judicial review of final agency administrative orders that serve as checks on FDA’s discretion and assure due process.

Is my OTC drug eligible for exclusivity under the new OTC drug regulatory framework?

FDA can grant market exclusivity following the issuance of a final administrative order that is initiated by a sponsor for a new OTC drug active ingredient (not previously included in a monograph or order), or for an administrative order for a different condition for use, if new human studies were essential to the issuance of the final administrative order.

How long is the exclusivity period?

18-months following the effective date of the final order and beginning on the day the requestor may lawfully market the drugs pursuant to the order.

What are the new OTC drug user fees that were implemented because of the CARES Act?

The CARES Act establishes facility fees and OMOR fees beginning with Fiscal Year 2021. Each person that owns a facility identified as an OTC monograph drug facility on December 31 of the fiscal year “or at any time during the preceding 12-month period” will be assessed an annual fee for each facility.  For the first program year (Fiscal Year 2021), the facilities fee will be due on the later of July 1, 2020 or 45 days after FDA publishes the OTC monograph drug facilities fee for FY 2021.

In addition, each person that submits an OMOR must pay a user fee in the following amounts:

  • $500,000 for a Tier 1 OTC monograph order request (e.g., a request to add a new ingredient to a monograph)[6], adjusted for inflation; or
  • $100,000 for any Tier 2 OTC monograph order request for certain minor modifications of the monograph, adjusted for inflation.

The fees must be paid at the time that the OMOR is submitted for FDA review.

When am I exempt from the OMOR fee?

A fee is not required if FDA determines that the OMOR seeks to change the Drug Facts labeling of an OTC monograph drug in a way that would add to or strengthen:

  • a contraindication, warning, or precaution;
  • a statement about risks associated with misuse or abuse; or
  • an instruction about dosage and administration that is intended to increase the safe use of the OTC monograph drug.

Where will FDA publish the final administrative orders?

All final administrative orders will be published on FDA’s website.  A Notice of Availability will also be published in the Federal Register.

What actions will FDA be required to take to implement the new provisions of the CARES Act?

The CARES Act requires that FDA withdraw the regulations establishing the final monographs and the procedures governing the OTC drug review under 21 C.F.R. Part 330 and other relevant parts, or make technical changes “to ensure conformity with appropriate terminology and cross references.”  These changes will be made without public notice and comment and will be effective upon publication or on the date specified in the notice.

FDA is also required to issue guidance on the following topics:

  • the procedures and principles for formal meetings with sponsors or other OMOR requestors;
  • the format and content of data submissions;
  • the format of electronic submissions;
  • consolidated proceedings for appeals and the procedures for such proceedings where appropriate; and
  • minor changes in drugs, including recommendations on determining whether a minor change will affect the safety or effectiveness of a drug.

There are no statutorily mandated timelines for FDA to withdraw the current regulations or to issue any of these guidance documents.  However, FDA has stated that it is currently working on the implementation of the new provisions of the CARES Act.   While the country is dealing with the COVID-19 pandemic, and the agency is overwhelmed with Emergency Use Authorization submissions, it is not likely that FDA will be able to issue guidance on all these topics in 2020.


[1] The full text of the CARES Act is available at https://www.govinfo.gov/content/pkg/BILLS-116hr748enr/pdf/BILLS-116hr748enr.pdf.

[2] Available at https://www.agg.com/news-insights/publications/it-is-not-all-about-the-coronavirus-the-cares-act-brings-long-awaited-over-the-counter-otc-monograph-reform/.

[3] Under the 1972 OTC Drug Review process, panels classified ingredients in three categories as follows:

Category I: generally recognized as safe and effective for the claimed therapeutic indication;

Category II: not generally recognized as safe and effective or unacceptable indications;

Category III: insufficient data available to permit final classification

[4] See the Over-the-Counter Monograph User Fee Program Performance Goals and Procedures – Fiscal Years 2018-2022 available at https://www.fda.gov/media/106407/download.

[5] If comments received are numerous or substantive, there will be an extension of the final order goal date.