[Federal Register Volume 81, Number 240 (Wednesday, December 14, 2016)]
[Notices]
[Pages 90363-90365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30034]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA-2016-N-4119]
Food Safety Modernization Act Third-Party Certification Program
User Fee Rate for Fiscal Year 2017
AGENCY: Food and Drug Administration, HHS.
ACTION: Notice.
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SUMMARY: The Food and Drug Administration (FDA) is announcing the
fiscal year (FY) 2017 fee rate for accreditation bodies applying to be
recognized in the third-party certification program that is authorized
by the Federal Food, Drug, and Cosmetic Act (the FD&C Act), as amended
by the FDA Food Safety Modernization Act (FSMA).
FOR FURTHER INFORMATION CONTACT: Sylvia Kim, Office of Foods and
Veterinary Medicine, Food and Drug Administration, 10903 New Hampshire
Ave., Bldg. 1, Rm. 3212, Silver Spring, MD 20993, 301-796-7599.
DATES: This fee is effective January 13, 2017, and will remain in
effect through September 30, 2017.
SUPPLEMENTARY INFORMATION:
I. Background
Section 307 of FSMA, Accreditation of Third-Party Auditors, amends
the FD&C Act to create a new provision, section 808, under the same
name. Section 808 of the FD&C Act (21 U.S.C. 384d) directs us to
establish a new program for accreditation of third-party certification
bodies \1\ conducting food safety audits and issuing food and facility
certifications to eligible foreign entities (including registered
foreign
[[Page 90364]]
food facilities) that meet our applicable requirements. Under this
provision, we will recognize accreditation bodies to accredit
certification bodies, except for limited circumstances in which we may
directly accredit certification bodies to participate in the third-
party certification program.
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\1\ For the reasons explained in the third-party certification
final rule (80 FR74570 at 74578-74579, November 27, 2015), and for
consistency with the implementing regulations for the third-party
certification program in 21 CFR parts 1, 11, and 16, this notice
uses the term ``third-party certification body'' rather than the
term ``third-party auditor'' used in section 808(a)(3) of the FD&C
Act.
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Section 808(c)(8) of the FD&C Act directs FDA to establish a
reimbursement (user fee) program by which we assess fees and require
reimbursement for the work FDA performs to establish and administer the
third-party certification program under section 808 of the FD&C Act.
The FSMA FY 2017 third-party certification program user fee rate
announced in this notice is effective on January 13, 2017, and will
remain in effect through September 30, 2017. We plan to publish the
FSMA third-party certification program user fee rates for FY 2018 prior
to the beginning of the next fiscal year.
Section 808(c)(8) of the FD&C Act requires FDA to establish the
user fee program for the third-party certification program by
regulation. Elsewhere in this issue of the Federal Register we are
issuing a final rule entitled ``Amendments to Accreditation of Third-
Party Certification Bodies to Conduct Food Safety Audits and To Issue
Certifications to Provide for the User Fee Program.''
II. Estimating the Average Cost of a Supported Direct FDA Work Hour for
FY 2017
In each year, the costs of salary (or personnel compensation) and
benefits for FDA employees account for between 50 and 60 percent of the
funds available to, and used by, FDA. Almost all of the remaining funds
(operating funds) available to FDA are used to support FDA employees
for paying rent, travel, utility, information technology, and other
operating costs.
A. Estimating the Full Cost per Direct Work Hour in FY 2015
In general, the starting point for estimating the full cost per
direct work hour is to estimate the cost of a full-time equivalent
(FTE) or paid staff year for the relevant activity. This is done by
dividing the total funds allocated to the elements of FDA primarily
responsible for carrying out the activities for which fees are being
collected by the total FTEs allocated to those activities. For the
purposes of the third-party certification program user fees authorized
by section 808(c)(8) of the FD&C Act (the fees that are the subject of
this notice), primary responsibility for the activities for which fees
will be collected rests with FDA's Office of Regulatory Affairs (ORA).
ORA carries out field-based activities on behalf of FDA's product
centers, including the Center for Food Safety and Applied Nutrition
(CFSAN) and the Center for Veterinary Medicine (CVM). Thus, as the
starting point for estimating the full cost per direct work hour, FDA
will use the total funds allocated to ORA for CFSAN and CVM related
field activities. The most recent fiscal year with available data was
FY 2015. In that year, FDA obligated a total of $666,722,326 for ORA in
carrying out the CFSAN and CVM related field activities work, excluding
the cost of inspection travel. In that same year, the number of ORA
staff primarily conducting the CFSAN and CVM related field activities
was 3,022 FTEs or paid staff years. Dividing $666,722,326 by 3,022 FTEs
results in an average cost of $220,623 per paid staff year, excluding
travel costs.
Not all of the FTEs required to support the activities for which
fees will be collected are conducting direct work such as conducting
onsite assessments. Data collected over a number of years and used
consistently in other FDA user fee programs (e.g., under the
Prescription Drug User Fee Act (PDUFA) and the Medical Device User Fee
and Modernization Act (MDUFA)) show that every seven FTEs who perform
direct FDA work require three indirect and supporting FTEs. These
indirect and supporting FTEs function in budget, facility, human
resource, information technology, planning, security, administrative
support, legislative liaison, legal counsel, program management, and
other essential program areas. On average, two of these indirect and
supporting FTEs are located in ORA or the FDA center where the direct
work is being conducted, and one of them is located in the Office of
the Commissioner. To get the fully supported cost of an FTE, FDA needs
to multiply the average cost of an FTE by 1.43, to take into account
the indirect and supporting functions. The 1.43 factor is derived by
dividing the 10 fully supported FTEs by 7 direct FTEs. In FY 2015, the
average cost of an FTE was $220,623. Multiplying this amount by 1.43
results in an average fully supported cost of $315,491 per FTE,
excluding the cost of travel.
To calculate an hourly rate, FDA must divide the average fully
supported cost of $315,491 per FTE by the average number of supported
direct FDA work hours. See table 1.
Table 1--Supported Direct FDA Work Hours in a Paid Staff Year
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Total number of hours in a paid staff year..................... 2,080
Less:
10 paid holidays............................................. 80
20 days of annual leave...................................... 160
10 days of sick leave........................................ 80
10 days of training.......................................... 80
2 hours of meetings per week................................. 80
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Net Supported Direct FDA Work Hours Available for 1,600
Assignments...............................................
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Dividing the average fully supported cost of an FTE in FY 2015
($315,491) by the total number of supported direct work hours available
for assignment (1,600) results in an average fully supported cost of
$197 (rounded to the nearest dollar), excluding travel costs, per
supported direct work hour in FY 2015--the last fiscal year for which
complete data are available.
B. Adjusting FY 2015 Costs for Inflation To Estimate FY 2017 Costs
To adjust the hourly rate for FY 2017, FDA must estimate the cost
of inflation in each year for FY 2016 and FY 2017. FDA uses the method
prescribed for estimating inflationary costs under the PDUFA provisions
of the FD&C Act (section 736(c)(1) (21 U.S.C. 379h(c)(1)), the
statutory method for inflation adjustment in the FD&C Act that FDA has
used consistently. FDA previously determined the FY 2016 inflation rate
to be 2.0266; this rate was published in the FY 2016 PDUFA user fee
rates notice in the Federal Register of August 3, 2015 (80 FR 46028).
Utilizing the method set forth in section 736(c)(1) of the FD&C Act,
FDA has calculated an inflation rate of 1.5468 percent for FY 2017 and
FDA intends to use this inflation rate to make inflation adjustments
for FY 2017 for several of its user fee programs; the derivation of
this rate is published in the Federal Register in the FY 2017 notice
for the PDUFA user fee rates (81 FR 49674). The compounded inflation
rate for FYs 2016 and 2017, therefore, is 3.6047 percent (1 plus 2.0266
percent times 1 plus 1.5468 percent).
Increasing the FY 2015 average fully supported cost per supported
direct FDA work hour of $197 (excluding travel costs) by 3.6047 percent
yields an inflationary adjusted estimated cost of $204 per a supported
direct work hour in FY 2017, excluding travel costs. FDA will use this
base unit fee in determining the hourly fee rate for third-party
certification program fee for FY 2017 prior to including travel costs
as applicable for the activity. For the purpose of estimating the fee,
we are
[[Page 90365]]
using the travel cost rate for foreign travel, because we anticipate
that the vast majority of onsite assessments made by FDA under this
program will require foreign travel. In FY 2015, ORA spent a total of
$2,521,216 on 269 foreign inspection trips related to FDA's CFSAN and
CVM field activities programs, which averaged a total of $9,373 per
foreign inspection trip. These trips averaged 3 weeks (or 120 paid
hours) per trip. Dividing $9,373 per trip by 120 hours per trip results
in a total and an additional cost of $78 per paid hour spent for
foreign inspection travel costs in FY 2015. To adjust $78 for
inflationary increases in FY 2016 and FY 2017, FDA must multiply it by
the same inflation factor mentioned previously in this document
(1.036047), which results in an estimated cost of $81 dollars per paid
hour in addition to $204 for a total of $285 per paid hour ($204 plus
$81) for each direct hour of work requiring foreign inspection travel.
FDA will use these rates in charging fees in FY 2017 when travel is
required for the third-party certification program.
Table 2--FSMA Fee Schedule for FY 2017
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Fee rates for
Fee category FY 2017
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Hourly rate without travel.............................. $204
Hourly rate if travel is required....................... 285
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III. Application Fee for Accreditation Bodies Applying for Recognition
in the Third-Party Certification Program Under Section 808(c)(8) of the
FD&C Act
In FY 2017 (the first fiscal year in which the program will
operate), the only fee that will be collected by FDA under section
808(c)(8) of the FD&C Act is the initial application fee for
accreditation bodies seeking recognition. Section 1.705(a)(1)
establishes an application fee for accreditation bodies applying for
initial recognition that represents the estimated average cost of the
work FDA performs in reviewing and evaluating initial applications for
recognition of accreditation bodies.
The fee is based on the fully supported FTE hourly rates and
estimates of the number of hours it would take FDA to perform relevant
activities. These estimates represent FDA's current thinking, and as
the program evolves, FDA will reconsider the estimated hours. We
estimate that it would take, on average, 60 person-hours to review an
accreditation body's submitted application, 48 person-hours for an
onsite performance evaluation of the applicant (including travel and
other steps necessary for a fully supported FTE to complete an onsite
assessment), and 45 person-hours to prepare a written report
documenting the onsite assessment.
FDA employees are likely to review applications and prepare reports
from their worksites, so we use the fully supported FTE hourly rate
excluding travel, $204/hour, to calculate the portion of the user fee
attributable to those activities: $204/hour x (60 hours + 45 hours) =
$21,420. FDA employees will likely travel to foreign countries for the
onsite performance evaluations because most accreditation bodies are
located in foreign countries. For this portion of the fee we use the
fully supported FTE hourly rate for work requiring travel, $285/hour,
to calculate the portion of the user fee attributable to those
activities: $285 x 48 hours (i.e., 2 fully supported FTEs x (2 travel
days + 1 day onsite)) = $13,680. The estimated average cost of the work
FDA performs in total for reviewing an initial application for
recognition for an accreditation body based on these figures would be
$21,420 + $13,680 = $35,100. Therefore the application fee for
accreditation bodies applying for recognition in FY 2017 will be
$35,100.
IV. Estimated Fees for Accreditation Bodies and Certification Bodies in
Fee Categories Not Applicable in FY 2017
The third-party certification program will also assess other
application fees and annual fees in future years of this program.
Section 1.705(a) also establishes application fees for recognized
accreditation bodies submitting renewal applications, certification
bodies applying for direct accreditation, and certification bodies
applying for renewal of direct accreditation. Section 1.705(b)
establishes annual fees for recognized accreditation bodies,
certification bodies directly accredited by FDA, and certification
bodies accredited by recognized accreditation bodies.
Although we will not be collecting these other fees in FY 2017, for
transparency and planning purposes, we have provided an estimate of
what these fees could have been for FY 2017 based on the fully
supported FTE hourly rates for FY 2017 and estimates of the number of
hours it would take FDA to perform relevant activities as outlined in
the Final Regulatory Impact Analysis for the Third-Party Certification
Regulation. Table 3 provides an overview of the estimated fees for
other fee categories.
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Estimated fee
Fee category rates for FY
2017
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Renewal application fee for recognized accreditation $18,855
body...................................................
Initial application fee for certification body seeking 35,100
direct-accreditation from FDA..........................
Renewal application fee for directly-accredited 26,460
certification body.....................................
Annual fee for recognized accreditation body............ 1,579
Annual fee for certification body directly-accredited by 20,208
FDA....................................................
Annual fee for accredited certification body............ 1,974
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V. How Must the Fee Be Paid?
Accreditation bodies seeking initial recognition must submit the
application fee with the application.
VI. What Are the Consequences of Not Paying This Fee?
The consequence of not paying this fee is outlined in Sec. 1.725.
If FDA does not receive an application fee with an application for
recognition, the application will be considered incomplete and FDA
would not review the application.
Dated: December 9, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-30034 Filed 12-13-16; 8:45 am]
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