[Federal Register: June 16, 2004 (Volume 69, Number 115)]
[Proposed Rules]               
[Page 33602-33618]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16jn04-31]                         


[[Page 33602]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 2

[Docket No. 2003P-0029]
RIN 0910-AF18

 
Use of Ozone-Depleting Substances; Removal of Essential-Use 
Designations

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to amend 
its regulation on the use of ozone-depleting substances (ODSs) in self-
pressurized containers to remove the essential-use designations for 
albuterol used in oral pressurized metered-dose inhalers (MDIs). Under 
the Clean Air Act, FDA, in consultation with the Environmental 
Protection Agency (EPA), is required to determine whether an FDA-
regulated product that releases an ODS is an essential use of the ODS. 
Two albuterol MDIs that do not use an ODS are currently marketed. FDA 
has tentatively determined that the two non-ODS MDIs will be 
satisfactory alternatives to albuterol MDIs containing ODSs and are 
proposing to remove the essential-use designation for albuterol MDIs. 
If the essential-use designation is removed, albuterol MDIs containing 
an ODS could not be marketed after a suitable transition period.

DATES: Submit written or electronic comments by August 16, 2004.

ADDRESSES: You may submit comments, identified by [Docket No. 2003P-
0029], by any of the following methods:
     Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov. 

Follow the instructions for submitting comments.
     Agency Web site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fda.gov/dockets/ecomments. 

Follow the instructions for submitting comments on the agency Web site.
     E-mail: fdadockets@oc.fda.gov. Include [Docket No. 2003P-
0029] in the subject line of your e-mail message.
     FAX: 301-827-6870.
     Mail/Hand delivery/Courier [For paper, disk, or CD-ROM 
submissions]: Division of Dockets Management, 5630 Fishers Lane, rm. 
1061, Rockville, MD 20852.
    Instructions: All submissions received must include the agency name 
and Docket No. 2003P-0029 for this rulemaking. All comments received 
will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fda.gov/dockets/ecomments, 

including any personal information provided. For detailed instructions 
on submitting comments and additional information on the rulemaking 
process, see the ``Comments'' heading of the SUPPLEMENTARY INFORMATION 
section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fda.gov/dockets/ecomments and/or 

the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Wayne H. Mitchell, Center for Drug 
Evaluation and Research (HFD-7), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-594-2041.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Albuterol
II. CFCs
III. Regulation of ODSs
    A. The 1978 Rules
    B. The Montreal Protocol
    C. The 1990 Amendments to the Clean Air Act
    D. EPA's Implementing Regulations
    E. FDA's 2002 Regulation
    F. The Stakeholder's Petition
IV. Application of the Criteria to Remove the Essential-Use Designation 
for Albuterol CFC MDIs
    A. Non-ODS Products Have the Same Active Moiety With the Same Route 
of Administration, for the Same Indication, and With Approximately the 
Same Level of Convenience of Use
    1. The Same Active Moiety
    2. The Same Route of Administration
    3. The Same Indications
    4. Approximately the Same Level of Convenience of Use
    B. Supplies and Production Capacity for the Non-ODS Products Will 
Exist at Levels Sufficient to Meet Patient Need
    C. Adequate U.S. Postmarketing Use Data Are Available for the Non-
ODS Products
    D. Patients Are Adequately Served by the Non-ODS Products
V. Potential Effective Dates
VI. Decision XV/5
VII. Environmental Impact
VIII. Analysis of Impacts
    A. Introduction
    B. Objective of the Proposed Rule
    C. Current Conditions
    1. CFCs and Stratospheric Ozone
    2. Effects of the Montreal Protocol
    3. Asthma
    4. COPD
    5. Current U.S. MDI Market
    D. Benefits of Earlier Phaseout Dates
    1. Controlled Transition to Non-CFC MDIs
    2. Value of Reduced ODS Emission
    3. International Cooperation
    4. Encouraging Innovation
    E. Costs of Earlier Phaseout Dates
    F. Insurance and Third Party Payers
    G. Small Business Impact
    1. Affected Sector and Nature of Impacts
    2. Alternatives
    3. Outreach
    H. Conclusion
IX. References
X. The Paperwork Reduction Act of 1995
XI. Federalism
XII. Request for Comments

I. Albuterol

    Albuterol is a relatively selective beta2-adrenergic 
agonist used in the treatment of bronchospasm associated with asthma 
and chronic obstructive pulmonary disease (COPD). Albuterol has the 
molecular formula C13H21NO3. Albuterol 
is the name established for the drug by the U.S. Pharmacopeia and the 
U.S. Adopted Names Council. FDA uses the name albuterol, and it is the 
name commonly used in the United States. In most of the rest of the 
world, the drug is called salbutamol, which is the international 
nonproprietary name for the drug (the name recommended by the World 
Health Organization). Albuterol is widely used in its sulfate salt 
form, which has the molecular formula 
(C13H21NO3)2H2SO4
. We will use ``albuterol'' to refer to both albuterol base and 
albuterol sulfate, unless otherwise indicated.
    Albuterol is available in many dosage forms for the treatment of 
asthma and COPD. Syrups and tablets may be taken by mouth to be 
absorbed into the blood through the digestive tract. Albuterol drug 
products are marketed in various forms for inhalational use. Albuterol 
is available in inhalation solutions for use in nebulizers and was 
previously marketed in the United States in a compact dry-powder 
inhaler. Most important for purposes of this document, albuterol is 
marketed in MDIs, which are small, pressurized aerosol devices that 
deliver a measured dose of an aerosol into a patient's mouth for 
inhalation into the lungs.
    Albuterol MDIs were first approved for use in the United States in 
1981, when the new drug applications (NDAs) for VENTOLIN (NDA 18-473) 
and PROVENTIL (NDA 17-559) albuterol

[[Page 33603]]

MDIs were approved by FDA. The first generic albuterol MDI was approved 
in 1995. Albuterol MDIs have historically used the chlorofluorocarbons 
(CFCs) trichlorofluoromethane (CFC-11) and dichlorodifluoromethane 
(CFC-12) as propellants.
    Albuterol MDIs are among the most widely used drug products for the 
treatment of asthma and COPD. Because of albuterol's relatively rapid 
onset of action, albuterol MDIs are frequently used as ``rescue'' 
inhalers for treatment of bronchospasm during acute episodes. Albuterol 
MDIs can be considered lifesaving for some patients at certain times; 
they are very important for controlling symptoms in many more patients 
who suffer from asthma or COPD. We recognize and take very seriously 
our obligation to examine with particular care any action that may 
affect the availability of these important drugs.

II. CFCs

    CFCs are organic compounds that contain carbon, chlorine, and 
fluorine atoms. CFCs were first used commercially in the early 1930s as 
a replacement for hazardous materials then used in refrigeration, such 
as sulfur dioxide and ammonia. Subsequently, CFCs were found to have a 
large number of uses, including as solvents and as propellants in self-
pressurized aerosol products, such as MDIs.
    CFCs are very stable in the troposphere, the lowest part of the 
atmosphere. They move to the stratosphere, a region that begins about 
10 to 16 kilometers (km) (6 to 10 miles) above Earth's surface and 
extends up to about 50 km (31 miles) altitude. Within the stratosphere, 
there is a zone about 15 to 40 km (10 to 25 miles) above the Earth's 
surface in which ozone is relatively highly concentrated. This zone in 
the stratosphere is generally called the ozone layer. Once in the 
stratosphere, CFCs are gradually broken down by strong ultraviolet 
light, where they release chlorine atoms that then deplete 
stratospheric ozone. Depletion of stratospheric ozone by CFCs and other 
ODSs allows more ultraviolet-B (UV-B) radiation to reach the Earth's 
surface, where it increases skin cancers and cataracts, and damages 
some marine organisms, plants, and plastics.

III. Regulation of ODSs

    The link between CFCs and the depletion of stratospheric ozone was 
discovered in the mid-1970s. Since 1978, the U.S. Government has 
pursued a vigorous and consistent policy through the enactment of laws 
and regulations, of limiting the production, use, and import of ODSs, 
including CFCs.

A. The 1978 Rules

    In the Federal Register of March 17, 1978 (43 FR 11301 at 11318), 
FDA and EPA published rules banning, with a few exceptions, the use of 
CFCs as propellants in aerosol containers. These rules were issued 
under authority of the Federal Food, Drug, and Cosmetic Act (the act) 
(21 U.S.C. 321 et seq.) and the Toxic Substances Control Act (15 U.S.C. 
2601 et seq.) respectively. FDA's rule (the 1978 rule) was codified as 
Sec.  2.125 (21 CFR 2.125). The rules issued by FDA and EPA had been 
preceded by rules issued by FDA and the Consumer Product Safety 
Commission requiring products that contain CFC propellants to bear 
warning statements on their labeling (42 FR 22018, April 29, 1977; 42 
FR 42780, August 24, 1977).
    The 1978 rule prohibited the use of CFCs as propellants in self-
pressurized containers in any food, drug, medical device, or cosmetic. 
As originally published, the rule listed five essential uses that were 
exempt from the ban. The third listed essential use was for 
``[m]etered-dose adrenergic bronchodilator human drugs for oral 
inhalation.'' This language describes albuterol MDIs, so the list of 
essential uses did not have to be amended in 1981 when VENTOLIN and 
PROVENTIL albuterol MDIs were approved by FDA.
    The 1978 rule provided criteria for adding new essential uses, and 
several uses were added to the list, the last one in 1996. The 1978 
rule did not provide any mechanism for removing essential uses from the 
list as alternative products were developed or CFC-containing products 
were removed from the market. The absence of a removal procedure came 
to be viewed as a deficiency in the 1978 rule, and was addressed in a 
later rulemaking, discussed in section III.E of this document.

B. The Montreal Protocol

    On January 1, 1989, the United States became a party to the 
Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol) 
(September 16, 1987, 26 I.L.M. 1541 (1987), available at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.unep.org/ozone/pdfs/Montreal-Protocol2000.pdf
 (FDA has verified the 

Web site address, but FDA is not responsible for any subsequent changes 
to the Web site after this document has published in the Federal 
Register). The United Sates played a leading role in the negotiations 
of the Montreal Protocol, believing that internationally coordinated 
control of ozone-depleting substances would best protect both the U.S. 
and global public health and the environment from potential adverse 
effects of depletion of stratospheric ozone. Currently, there are 186 
parties to this treaty.\1\ When it joined the treaty, the United States 
committed to reducing production and consumption of certain CFCs to 50 
percent of 1986 levels by 1998 (Article 2(4) of the Montreal Protocol). 
It also agreed to accept an ``adjustment'' procedure, whereby, 
following assessment of the existing control measures, the parties 
could adjust the scope, amount and timing of those control measures for 
substances already subject to the Montreal Protocol. As the evidence 
regarding the impact of ODSs on the ozone layer became stronger, the 
parties utilized this adjustment procedure to change the treaty's 
obligations and accelerate the phaseout of ODSs. At the fourth meeting 
of the parties to the Montreal Protocol, held at Copenhagen in November 
1992, the parties adjusted Article 2 of the Montreal Protocol to 
eliminate the production and importation of CFCs in parties that are 
developed countries by January 1, 1996 (Decision IV/2).\2\ The 
adjustment also indicated that it would apply ``save to the extent that 
the Parties decide to permit the level of production or consumption 
that is necessary to satisfy uses agreed by them to be essential'' 
(Article 2A(4)). Under the treaty's rules of procedure, the parties may 
make such an essential use decision by a two-thirds majority vote, 
although, to date, all such decisions have been made by consensus.
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    \1\ The summary descriptions of the Montreal Protocol and 
decisions of parties to the Montreal Protocol contained in this 
document are presented here to help you understand the background of 
the action we are proposing. These descriptions are not intended to 
be formal statements of policy regarding the Montreal Protocol. 
Decisions by the parties to the Montreal Protocol are cited in this 
document in the conventional format of ``Decision IV/2,'' which 
refers to the second decision recorded in the Report of the Fourth 
Meeting of the parties to the Montreal Protocol on Substances That 
Deplete the Ozone Layer. Reports of meetings of the parties to the 
Montreal Protocol may be found on the United Nations Environment 
Programme's Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.unep.org/ozone/mop/mop-reports.shtml.
 (FDA has verified the Web site address, but FDA is 

not responsible for any subsequent changes to the Web site after 
this document publishes in the Federal Register.)
    \2\ Production of CFCs in economically less-developed countries 
is being phased out and is scheduled to end by January 1, 2010. See 
Article 2a of the Montreal Protocol.
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    To produce or import CFCs for an essential use under the Montreal 
Protocol, a party must request and obtain approval for an exemption at 
a meeting of the Parties. One of the most important essential uses of 
CFCs under the Montreal Protocol is their use in

[[Page 33604]]

MDIs for the treatment of asthma and COPD. The decision on whether the 
use of CFCs in MDIs is ``essential'' for purposes of the Montreal 
Protocol turns on whether: ``(1) It is necessary for the health, 
safety, or is critical for the functioning of society (encompassing 
cultural and intellectual aspects) and (2) there are no available 
technically and economically feasible alternatives or substitutes that 
are acceptable from the standpoint of environment and health'' 
(Decision IV/25). Each request and any subsequent exemption is for only 
1 year's duration (Decision V/18). Since 1994 the United States and 
some other parties to the Montreal Protocol have annually requested, 
and been granted, essential-use exemptions for the production or 
importation of CFCs for their use in MDIs for the treatment of asthma 
and COPD (see, among others, Decisions VI/9 and VII/28). The exemptions 
have been consistent with the criteria established by the Parties, 
which make the grant of an exemption contingent on a finding that the 
use for which the exemption is being requested is essential for health, 
safety, or the functioning of society, and that there are no available 
technically and economically feasible alternatives or substitutes that 
are acceptable from the standpoint of health or the environment 
(Decision IV/25).
    Phasing out the use of CFCs in MDIs for the treatment of asthma and 
COPD has been an issue of particular interest to the parties to the 
Montreal Protocol. Several decisions of the parties have dealt with the 
transition to CFC-free MDIs, including the following decisions:
     Decision VIII/10 required the parties that are developed 
to take various actions to promote industry's participation in a smooth 
and efficient transition away from CFC-based MDIs (San Jose, Costa 
Rica, 1996).
     Decision IX/19 required the parties that are developed 
countries to present an initial national or regional transition 
strategy by January 31, 1999 (Montreal, 1997).
     Decision XII/2 elaborated on the required content of 
national or regional transition strategies required under Decision IX/
19 and indicated that any MDI for the treatment of asthma or COPD 
approved for marketing after 2000 would not be an ``essential use'' 
unless it met the criteria laid out by the Parties for essential uses. 
(Ouagadougou, Burkina Faso, 1999).
     Decision XIV/5 requested that each party report annually 
the quantities of CFC and non-CFC MDIs and dry-powder inhalers sold or 
distributed within the party and the approval and marketing status of 
non-CFC MDIs and dry-powder inhalers. Decision XIV/5 also noted ``with 
concern the slow transition to CFC-free metered-dose inhalers in some 
Parties''. (Rome, 2002).
     Decision XV/5 required parties that are developed 
countries to submit a plan of action that includes a specific date by 
which time the party will stop seeking essential-use exemptions for 
CFCs for albuterol MDIs (Nairobi, 2003). Decision XV/5 is discussed in 
more detail in section VI of this document.
    On the basis of these decisions, many Parties have made substantial 
progress in phasing out CFCs from MDIs.

C. The 1990 Amendments to the Clean Air Act

    In 1990, Congress amended the Clean Air Act to, among other things, 
better protect stratospheric ozone (Public Law 101-549, November 15, 
1990) (the 1990 amendments). The 1990 amendments were drafted to 
complement and be consistent with our obligations under the Montreal 
Protocol (see section 614 of the Clean Air Act (42 U.S.C. 7671m)). 
Section 614(b) of the Clean Air Act provides that in the case of a 
conflict between any provision of the Clean Air Act and any provision 
of the Montreal Protocol, the more stringent provision will govern. 
Section 604 of the Clean Air Act requires the phaseout of the 
production of CFCs by 2000 (42 U.S.C. 7671c)\3\, while section 610 of 
the Clean Air Act (42 U.S.C. 7671i) required EPA to issue regulations 
banning the sale or distribution in interstate commerce of nonessential 
products containing CFCs. Sections 604 and 610 provide exceptions for 
``medical devices.'' Section 601(8) (42 U.S.C. 7671(8)) of the Clean 
Air Act defines ``medical device'' as
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    \3\ In conformance with Decision IV/2, EPA issued regulations 
accelerating the complete phaseout of CFCs, with exceptions for 
essential uses, to January 1, 1996 (58 FR 65018, December 10, 1993).
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    any device (as defined in the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 321)), diagnostic product, drug (as defined in the 
Federal Food, Drug, and Cosmetic Act), or drug delivery system-
    (A) if such device, product, drug, or drug delivery system 
utilizes a class I or class II substance for which no safe and 
effective alternative has been developed, and where necessary, 
approved by the Commissioner [of Food and Drugs]; and
    (B) if such device, product, drug, or drug delivery system, has, 
after notice and opportunity for public comment, been approved and 
determined to be essential by the Commissioner [of Food and Drugs] 
in consultation with the Administrator [of the U.S. EPA].

D. EPA's Implementing Regulations

    EPA regulations implementing the Montreal Protocol and the 
stratospheric ozone protection provisions of the 1990 amendments are 
codified in part 82 of title 40 of the Code of Federal Regulations (40 
CFR part 82). (See 40 CFR 82.1 for a statement of intent.) Like the 
1990 amendments, EPA's implementing regulations contain two separate 
prohibitions, one on the production and transfer of CFCs (subpart A of 
40 CFR part 82) and the other on the sale or distribution of products 
containing CFCs (40 CFR 82.66).
    The prohibition on production and transfer of CFCs contains an 
exception for essential uses and, more specifically, for essential 
MDIs. The definition of essential MDI at 40 CFR 82.3 requires that the 
MDI be intended for the treatment of asthma or COPD, be essential under 
the Montreal Protocol, and if the MDI is for sale in the United States, 
be approved by FDA and listed as essential in FDA's regulations at 
Sec.  2.125.
    The prohibition on the sale of products containing CFCs includes a 
specific prohibition on aerosol products or other pressurized 
dispensers. The aerosol product ban contains an exception for medical 
devices listed in Sec.  2.125(e). The term ``medical device'' is used 
with the same meaning it was given in the 1990 amendments and includes 
drugs as well as medical devices.

E. FDA's 2002 Regulation

    In the 1990s, we decided that Sec.  2.125 required revision to 
better reflect our obligations under the Montreal Protocol, the 1990 
amendments, and EPA's regulations, and to encourage the development of 
ozone-friendly alternatives to medical products containing CFCs. In 
particular, as acceptable alternatives that did not contain CFCs or 
other ODSs came on the market, there was a need to provide a mechanism 
to remove essential uses from the list in Sec.  2.125(e). In the 
Federal Register of March 6, 1997 (62 FR 10242), we published an 
advance notice of proposed rulemaking (ANPRM) in which we outlined our 
then-current thinking on the content of an appropriate rule regarding 
ODSs in products FDA regulates. We received almost 10,000 comments on 
the ANPRM. In response to the comments, we revised our approach and 
drafted a proposed rule published in the Federal Register of September 
1, 1999 (64 FR 47719) (the 1999 proposed rule). We received 22 comments 
on the proposed

[[Page 33605]]

rule. After minor revisions in response to these comments, we published 
a final rule in the Federal Register of July 24, 2002 (67 FR 48370) 
(the 2002 rule) (corrected in 67 FR 49396, July 30, 2002, and 67 FR 
58678, September 17, 2002).
    Among other changes, the 2002 rule, in revised Sec.  2.125(g)(3), 
set standards that FDA would use for determining whether the use of an 
ODS in a medical product is no longer essential. The 2002 rule provided 
that to remove an essential-use designation, FDA must find that:
     At least one non-ODS product with the same active moiety 
is marketed with the same route of administration, for the same 
indication, and with approximately the same level of convenience of use 
as the ODS product containing that active moiety;
     Supplies and production capacity for the non-ODS 
product(s) exist or will exist at levels sufficient to meet patient 
need;
     Adequate U.S. postmarketing use data is available for the 
non-ODS product(s); and
     Patients who medically required the ODS product are 
adequately served by the non-ODS product(s) containing that active 
moiety and other available products.
    To remove the essential-use designation of an active moiety 
marketed in an ODS product represented by one NDA, there must be at 
least one acceptable alternative, while for an active moiety marketed 
in ODS products and represented by two or more NDAs, there must be at 
least two acceptable alternatives.
    Because there are multiple NDAs for albuterol MDIs containing an 
ODS, the rule requires that there must be at least two acceptable 
alternatives available for us to remove the essential-use designation 
for albuterol. We have tentatively concluded that there are two 
acceptable alternatives for albuterol MDIs containing an ODS.
    FDA approved the NDA for PROVENTIL HFA, albuterol sulfate MDI, on 
August 15, 1996 (NDA 20-503), and the product was introduced into the 
U.S. market later that year. VENTOLIN HFA, albuterol sulfate MDI, was 
approved on April 19, 2001 (NDA 20-983), and it was introduced into the 
U.S. market in February 2002. Both of these products use the 
hydrofluoroalkane HFA-134a as a replacement for ODSs. HFA-134a does not 
affect stratospheric ozone. We will use the phrase HFA MDIs to refer to 
both of these products as we discuss in section IV of this document how 
these products meet the criteria for being alternatives to albuterol 
CFC MDIs.
    There is a separate essential-use designation for metered-dose 
ipratropium bromide and albuterol sulfate, in combination, administered 
by oral inhalation for human use Sec.  2.125(e)(2)(viii). This 
essential use was added to the list of essential uses (Sec.  2.125(e)) 
even though albuterol and ipratropium bromide were already separately 
included in the list of essential uses. (See 60 FR 53725, October 17, 
1995, and 61 FR 15699, April 9, 1996.) The only drug product marketed 
under the essential use designation for metered-dose ipratropium 
bromide and albuterol sulfate, in combination, is Boehringer Ingelheim 
Phamaceuticals' product Combivent. Because Combivent has two active 
ingredients, it is not subject to Decision XV/5 (discussed in section 
VI of this document), which concerns MDIs with albuterol as the sole 
active ingredient. This rulemaking will not affect the essential use 
status of Combivent.

F. The Stakeholders Petition

    Fran Du Melle, Executive Vice President of the American Lung 
Association, submitted a citizen petition on behalf of the U.S. 
Stakeholders Group on MDI Transition on January 29, 2003 (Docket No. 
2003P-0029/CP1)(the Stakeholders' petition). The petition requested 
that we initiate rulemaking to remove the essential-use designation of 
albuterol MDIs. In addition to manyother issues discussed in the 
petition, the petitioners expressed concerns about the possibility that 
the parties to the Montreal Protocol could refuse to allocate CFCs for 
use in albuterol CFC MDIs adversely affecting a smooth transition that 
ensured adequate supplies of both albuterol CFC MDIs and albuterol HFA 
MDIs (Stakeholder's petition at 3-4). Another concern expressed in the 
petition was the possibility that supplies of pharmaceutical grade CFCs 
could be interrupted by actions of other countries. These issues are 
discussed in section IV.D of this document.
    Many comments were submitted to the docket for this petition. 
Commenters included GlaxoSmithKline (GSK), Honeywell Chemicals 
(Honeywell), National Economic Research Associates, Inc., patient 
advocacy groups, a drug industry association, and a law firm. Comments 
on the Stakeholder's petition may be seen in the Division of Dockets 
Management (see ADDRESSES) between 9 a.m. and 4 p.m., Monday through 
Friday.
    While we found the citizen petition and comments on the petition 
informative and relied on some of the information provided by the 
petition and comments in preparing this document, this proposed rule is 
not being issued in response to the petition. Section 2.125(g) requires 
that a petition present ``compelling evidence'' demonstrating that the 
criteria for removing an essential use are met. We concluded that the 
petition, though informative, did not provide the level of evidence 
needed for us to initiate rulemaking. This proposed rule is being 
issued on our own initiative in accordance with the Clean Air Act and 
the Montreal Protocol.

IV. Application of the Criteria to Remove the Essential-Use Designation 
for Albuterol CFC MDIs

A. Non-ODS Products Have the Same Active Moiety With the Same Route of 
Administration, for the Same Indication, and With Approximately the 
Same Level of Convenience of Use

    Section 2.125(g)(4)(i) provides that alternatives must ``contain 
the same active moiety * * * with the same route of administration, for 
the same indication, and with approximately the same level of 
convenience of use as the ODS products.'' We will examine how each 
component of this criterion applies to the albuterol HFA MDIs.
1. The Same Active Moiety
    Active moiety is defined in Sec.  314.108(a) (21 CFR 314.108(a)) as
    the molecule or ion, excluding those appended portions of the 
molecule that cause the drug to be an ester, salt (including a salt 
with hydrogen or coordination bonds), or other noncovalent 
derivative (such as a complex, chelate, or clathrate) of the 
molecule, responsible for the physiological or pharmacological 
action of the drug substance.
    The active ingredient in the albuterol CFC MDIs is the albuterol 
base, albuterol, while the active ingredient in albuterol HFA MDIs is 
the sulfate salt of albuterol, albuterol sulfate. The active moiety of 
both is albuterol; therefore, both the albuterol CFC MDIs and albuterol 
HFA MDIs have the same active moiety.
2. The Same Route of Administration
    Both the albuterol CFC MDIs and albuterol HFA MDIs are MDIs used 
for oral inhalation. They both have the same route of administration.
3. The Same Indications
    We have provided, for comparison, the labeled indications for 
albuterol CFC MDIs and albuterol HFA MDIs in table 1 of this document.

[[Page 33606]]



                Table 1.--Indications for Albuterol MDIs
------------------------------------------------------------------------
    Products                           Indications
------------------------------------------------------------------------
PROVENTIL        PROVENTIL Inhalation Aerosol is indicated in patients
 (ODS)\1\         12 years of age and older, for the prevention and
                  relief of bronchospasm in patients with reversible
                  obstructive airway disease, and for the prevention of
                  exercise-induced bronchospasm.
------------------------------------------------------------------------
PROVENTIL HFA    PROVENTIL HFA Inhalation Aerosol is indicated in adults
                  and children 4 years of age and older for the
                  treatment or prevention of bronchospasm with
                  reversible obstructive airway disease and for the
                  prevention of exercise-induced bronchospasm.
------------------------------------------------------------------------
VENTOLIN         VENTOLIN Inhalation Aerosol is indicated for the
 (ODS)\2\         prevention and relief of bronchospasm in patients 4
                  years of age and older with reversible obstructive
                  airway disease and for the prevention of exercise-
                  induced bronchospasm in patients 4 years of age and
                  older.
------------------------------------------------------------------------
VENTOLIN HFA     VENTOLIN HFA is indicated for the treatment or
                  prevention of bronchospasm in adults and children 4
                  years of age and older with reversible obstructive
                  airway disease and for the prevention of exercise-
                  induced bronchospasm in patients 4 years of age and
                  older.
------------------------------------------------------------------------
\1\ The labeled indications for Warrick brand albuterol metered-dose
  inhalers (MDIs) are identical to those of PROVENTIL ozone-depleting
  substance (ODS). Warrick MDIs contain ODSs.
\2\ The labeled indications for generic albuterol MDIs manufactured by
  Armstrong Pharmaceuticals and PLIVA are identical to those of VENTOLIN
  (ODS). Generic albuterol MDIs contain ODSs.

    The labeled indications for albuterol HFA MDIs are essentially 
identical to those for VENTOLIN(ODS) MDIs and somewhat broader than the 
indications for PROVENTIL (ODS) MDIs (``adults and children 4 years of 
age and older'' for albuterol HFA MDIs as opposed to ``patients 12 
years of age and older'' for PROVENTIL (ODS)).
    We have also looked at significant uses of albuterol CFC MDIs that 
may not be included in the labeled uses. We are unaware of any off-
label use of albuterol CFC MDIs for which albuterol HFA MDIs would not 
be a satisfactory alternative.
4. Approximately the Same Level of Convenience of Use
    In the preamble to the 2002 rule, we stated that in evaluating 
whether an alternative has approximately the same level of convenience 
of use compared to the ODS product containing the same active moiety, 
FDA will consider whether:
     The product has approximately the same or better 
portability,
     The product requires approximately the same amount of or 
less preparation before use, and
     The product does not require significantly greater 
physical effort or dexterity (67 FR 48370 at 48377).
    Albuterol HFA MDIs are approximately the same small size and light 
weight as the albuterol CFC MDIs and are, therefore, equally portable.
    The only noteworthy difference in amount of preparation between the 
albuterol CFC MDIs and albuterol HFA MDIs is that patients using 
albuterol HFA MDIs may need to more closely follow the labeling 
instructions on cleaning the mouthpiece, even though cleaning 
instructions are included in the patient labeling for both albuterol 
CFC MDIs and albuterol HFA MDIs. We do not consider 30 seconds spent 
cleaning the mouthpiece once a week to prevent clogging (see approved 
labeling for PROVENTIL HFA and VENTOLIN HFA) to be a significant 
difference in amount of preparation.
    The method of operation of the albuterol CFC MDIs and albuterol HFA 
MDIs is the same, and although the albuterol CFC MDIs and albuterol HFA 
MDIs use different valves, the MDIs do not differ significantly in the 
amount of strength needed to operate them. We have tentatively 
concluded that albuterol HFA MDIs have approximately the same level of 
convenience as albuterol CFC MDIs.

B. Supplies and Production Capacity for the Non-ODS Products Will Exist 
at Levels Sufficient to Meet Patient Need

    In many ways, this is the most difficult criterion to apply. 
Industry is understandably reluctant to allocate the resources 
necessary to establish new manufacturing facilities to ensure adequate 
supplies and production of albuterol HFA MDIs without assurance that 
albuterol CFC MDIs will be phased out. At the same time, we cannot 
eliminate the essential use of ODSs for albuterol MDIs until we are 
assured of adequate supplies and production of alternative products. We 
have carefully considered GSK's comment on the Stakeholders' petition 
(Docket No. 2003P-0029/C2) (GSK comment). In their comment, GSK 
projected that they could have capacity to produce adequate supplies of 
VENTOLIN HFA within 12 to 18 months of the start of their production 
scale-up (GSK comment at 7). The production scale-up would presumably 
start when we publish the final rule eliminating the essential use of 
ODSs in albuterol MDIs. GSK did not describe the circumstances that 
were presumed for their projection. GSK did not explain what they meant 
by ``adequate supplies and production capacity'' (GSK comment at 7). 
The manufacturer of PROVENTIL HFA, 3M Co. (3M), has not submitted any 
comments on the Stakeholders' petition and we have no information about 
their plans regarding future supplies and production capacity. With the 
relatively minimal amount of information on production capacity that we 
currently have, we have tentatively concluded that capacity to produce 
adequate supplies of non-ODS albuterol MDIs could be in place no sooner 
than 12 months after date of publication in the Federal Register of any 
final rule based on this proposed rule. We welcome the submission of 
additional information on the production and supply of alternative 
products, and the time it may take to put in place any additional 
production capacity that may be needed to meet projected U.S. needs.
    In the 2002 rule, we stated that we ``generally will expect the 
non-ODS product to be manufactured at multiple manufacturing sites if 
the ODS product was manufactured at multiple manufacturing sites'' (67 
FR 48370 at 48374). We do not require that replacement products be 
manufactured at multiple sites; the only requirement is that supplies 
and production capacity for the non-ODS product exist at levels 
sufficient to meet patient need. However, we did note in the 2002 rule 
that multiple manufacturing sites increase the likelihood that a 
manufacturer will be able to supply the replacement drug in the event 
of an

[[Page 33607]]

unforeseen circumstance that shuts down one site. (See 67 FR 48370 at 
48377.) We do not believe that this issue is a concern in this proposed 
rulemaking. GSK and 3M will be making albuterol HFA MDIs at separate 
facilities. As an additional assurance in this regard, GSK said that 
the three European supply sites that manufacture albuterol HFA MDIs for 
non-U.S. markets could be used as an alternative in an emergency (GSK 
comment at 8).

C. Adequate U.S. Postmarketing Use Data Are Available for the Non-ODS 
Products

    PROVENTIL HFA has been on the market 7 years, and VENTOLIN HFA has 
been on the market for more than 2 years. As with all new drug 
products, we have periodically examined reports made to our MedWatch 
system\4\ and reports made to FDA by and for the sponsors of the NDAs 
for PROVENTIL HFA and VENTOLIN HFA. These reports do not reveal any 
unexpected adverse events, nor do they reveal any unanticipated 
problems with the safety, effectiveness, tolerability, and patient 
acceptance of albuterol HFA MDIs when the products are properly used.
---------------------------------------------------------------------------

    \4\ MedWatch is FDA's safety information and adverse event 
reporting program that allows health care professionals and 
consumers to report serious problems they suspect are associated 
with the drugs and medical devices they prescribe, dispense, or use.
---------------------------------------------------------------------------

    We have read with interest a report of a study conducted in the 
United Kingdom of patients using VENTOLIN EVOHALER, a product 
substantially similar to VENTOLIN HFA.\5\ This report supports our 
conclusion that albuterol HFA MDIs are well tolerated and accepted by 
patients.
---------------------------------------------------------------------------

    \5\ Craig-McFeely, P.M., L.V. Wilton, J.B. Soriano, et al., 
``Prospective Observational Cohort Safety Study to Monitor the 
Introduction of a Non-CFC Formulation of Salbutamol with HFA134a in 
England,'' International Journal of Clinical Pharmacology and 
Therapeutics, 41:67-76, 2003.
---------------------------------------------------------------------------

    While additional information is always welcome, we have tentatively 
determined that we do not need the results of additional studies to 
make a valid scientific assessment of the safety, effectiveness, 
tolerability, and patient acceptance of albuterol HFA MDIs. As we 
stated in the 1999 proposed rule, we will not require a postmarketing 
study if available data, including more traditional postmarketing 
surveillance data, are sufficient to support a finding that the CFC 
product is no longer essential (64 FR 47719 at 47730).

D. Patients Are Adequately Served by the Non-ODS Products

    PROVENTIL HFA and VENTOLIN HFA were demonstrated to be safe and 
effective during the review of their NDAs. Data submitted with the NDAs 
showed that PROVENTIL HFA and VENTOLIN HFA are similarly tolerated 
compared to albuterol CFC MDIs, and patient compliance rates in the 
studies were comparable. All of the information available to us 
currently indicates that PROVENTIL HFA and VENTOLIN HFA will adequately 
serve all patient populations currently using albuterol CFC MDIs.
    Albuterol CFC MDIs are only available in one strength, 0.09 
milligrams per inhalation. PROVENTIL HFA and VENTOLIN HFA are available 
in strengths equivalent to 0.09 milligrams of albuterol base per 
inhalation. Because albuterol CFC MDIs are only available in one 
strength, alternative products need not be available in more than one 
strength to adequately serve patients. (See the 2002 rule (67 FR 48370 
at 48374).)
    In the preamble to the 2002 rule, we said we will ``consider 
whether a high-priced non-ODS product is effectively unavailable to a 
portion of the patient population because they cannot afford to buy the 
product'' (67 FR 48370 at 48374). As explained in section VIII.C.5 of 
this document, current retail prices of PROVENTIL HFA and VENTOLIN HFA 
are in excess of $20 more than the prices of generic albuterol CFC 
MDIs. This price difference is undesirable in that some patients whose 
drug expenditures are not covered by third parties may choose not to 
buy these MDIs that may be important to their health. However, FDA 
lacks adequate evidence to estimate precisely the number of MDIs that 
might not be bought as the result of this price increase or what the 
public health consequences of such decisions would be. The best 
evidence available to us indicates that the demand for prescription 
drugs is generally quite inelastic with respect to price changes, so 
even this relatively large price increase is likely to cause changes in 
the consumption of MDIs that are quite small relative to the market. 
When generic albuterol CFC MDIs first came on the market in 1995 and 
1996, we did not see any clear indication that underserved patients who 
had not been purchasing the more expensive VENTOLIN ODS or PROVENTIL 
ODS began to purchase the lower-priced generics. Increases in total 
sales of albuterol MDIs around that time have been attributed to the 
continuing rising incidence of asthma and COPD. Still, given the number 
of albuterol canisters sold yearly in the United States, even a minor 
change could amount to as many as a million MDI canisters not purchased 
each year. Section VIII of this document describes the analysis we used 
in reaching this tentative conclusion.
    Private and public health insurance should ameliorate some of the 
anticipated adverse impacts of price increases, though differences in 
co-payments between generics and branded products may make these 
inhalers more expensive for even insured patients. Programs run, or 
supported, by the pharmaceutical industry to provide low-cost or free 
drugs to less-affluent patients should also reduce the effect of price 
increases. Information on such programs has been submitted to FDA by 
GSK describing their ``Bridges to Access,'' ``Orange Card,'' ``Together 
Rx Card,'' and ``Promise'' Programs, as well as their commitment to 
provide 2 million free HFA canisters per year beginning at the time of 
the effective date of a final rule removing the essential-use 
designation of albuterol MDIs (see GSK comment at p. 15, and GSK's 
supplementary comment dated August 5, 2003 (Docket No. 2003P-0029/SUP 
1).) At this time, FDA believes that the information provided by GSK is 
insufficient to fully evaluate the extent that these programs would 
assist low-income uninsured patients and seeks further details on how 
they would specifically address this issue. We seek comments from 
manufacturers and other interested persons on any similar efforts 
indicating how these programs might alleviate concerns over patient 
access for low-income, uninsured patients after the effective date.
    We are particularly interested in receiving comments that provide 
more data on how the expected price increases for albuterol MDIs will 
affect the public health.
    As described in section V of this document, the effects of any 
price increases on the availability of non-ODS products, and any 
potential resulting impacts on public health associated with such price 
increases, can, in theory, be reduced by adjusting the effective date 
of the rule to be closer to the time when low-cost generic copies of 
PROVENTIL HFA and VENTOLIN HFA will be available, which could be in 
either 2010 or 2015, depending on which patents control the 
availability of generic alternatives. We say ``in theory'' because such 
an outcome rests on the assumption that the United States can continue 
to successfully petition the Parties to the Montreal Protocol to grant 
the United States an essential use exemption for CFCs for use in 
albuterol MDIs for a time period up to 2010 or 2015. At present, the 
United States has received approval for an essential use exemption for 
2005, and a request for an

[[Page 33608]]

exemption for 2006 is pending for consideration by the Parties to the 
Montreal Protocol in November 2004. The Parties will not approve U.S. 
essential use exemption requests indefinitely. Therefore the projected 
impacts in tables 2 and 3 of this document, may overestimate actual 
impacts because the analysis assumes approval of essential use 
exemptions through 2015. In fact, the Montreal Protocol's technical 
review group and many parties already have informally discussed a 
target date of 2005 for discontinuing exemptions for albuterol CFC 
MDIs. They may believe this target date is warranted because, for some 
time now, there have been at least two alternatives to albuterol CFC 
MDIs in the United States and other developed countries that appear to 
meet the medical needs of patients. However, in many countries, the 
price differential between the albuterol CFC MDIs and albuterol HFA 
MDIs is less than that in the United States, and medication 
reimbursement is handled differently in these countries. By virtue of 
having albuterol HFA alternatives available, many other developed 
countries have achieved a phaseout of albuterol CFC MDIs already and 
virtually all will do so earlier than 2010 or 2015. Therefore, these 
Parties to the Montreal Protocol have already questioned, and are 
likely to continue to question, why the United States has not made 
similar progress. This questioning on the part of other developed 
countries could affect future U.S. nominations for essential-use CFCs.
    Another issue that should be considered in determining an 
appropriate effective date is the availability of pharmaceutical grade 
CFCs for use in MDIs. We have received a comment on the Stakeholder's 
petition from Honeywell (Docket No. 2003P-0029/C9). The comment states 
that Honeywell has been informed by the government of the Netherlands 
that production of CFCs will not be permitted at Honeywell's Weert, 
Netherlands plant past the end of 2005. The Weert plant is currently 
the only source of pharmaceutical grade CFCs used in the United States. 
Honeywell also said that they planned to renew production of certain 
pharmaceutical-grade CFCs this year at a plant in Baton Rouge, 
Louisiana that previously produced these CFCs and that they would be 
able to ship the pharmaceutical grade CFCs to customers this year also. 
We have no reason to disbelieve Honeywell's statements that they will 
have the capacity to supply the domestic demand for pharmaceutical 
grade CFCs from their Baton Rouge plant. However it is worth noting 
that Honeywell has not produced pharmaceutical grade CFC-11 or CFC-12 
at Baton Rouge since 1995, and we cannot be certain that Honeywell will 
meet their goals.
    Accordingly, the decision on what timeframe to use for removing the 
domestic essential-use status of albuterol must take into account 
several factors. On the one hand, it must consider the potential but 
uncertain health benefit that may result from ensuring a stable price 
for albuterol MDIs for a long period of time. Conversely, it must take 
into account several significant possibilities: that the United States 
will not be able to procure a long-term exemption for albuterol; that a 
unilateral U.S. action permitting use of albuterol CFC MDIs for up to a 
decade longer than other developed nations is likely to lead the 
parties to the Montreal Protocol to impose a more abrupt reduction in 
the exemption granted the United States; and that, in the near term, it 
is possible there may be a disruption in supply of pharmaceutical-grade 
CFCs. Based on our preliminary analysis, we have tentatively concluded 
that patients will be adequately served by albuterol HFA MDIs within 
the timeframes discussed in this document; therefore we are initiating 
rulemaking at this time. We hope that comments received on this 
proposed rule will further establish the adequacy of the HFA products 
to meet patients' needs (including issues of cost and access), as well 
as the potential risks to patients of misjudging the degree to which 
CFCs may continue to be available for albuterol MDIs, to help us 
establish an optimal effective date for albuterol CFCs no longer to be 
designated essential.

V. Potential Effective Dates

    Setting an appropriate effective date for the elimination of the 
essential use designation for albuterol MDIs is one of the key aspects 
of this proposed rulemaking. No albuterol CFC MDIs can be legally 
marketed in the United States after the effective date of the final 
rule based on this proposal. We are particularly interested in 
receiving comments on what would be an appropriate effective date for 
this rulemaking.
    As we discussed in section IV.B of this document, we have 
tentatively concluded that capacity to produce adequate supplies of 
non-ODS albuterol MDIs could be in place no sooner than 12 months after 
date of publication in the Federal Register of any final rule based on 
this proposed rule. An effective date that does not allow the creation 
of adequate production capacity would not be appropriate, and persons 
submitting comments on an effective date should keep this consideration 
in mind.
    Section 505(b)(1) of the act (21 U.S.C. 355(b)(1)) requires that 
persons submitting NDAs to FDA include information about all patents 
that claim the drug for which the NDA is submitted. We publish that 
information in Approved Drug Products With Therapeutic Equivalence 
Evaluations (the Orange Book). We note that the last listed patent for 
an albuterol HFA MDI expires in 2015. Another listed patent expires in 
2010. Thus, lower priced generic versions of albuterol HFA MDIs can be 
expected to be marketed as early as 2010, or as late as 2015 depending 
on the validity of the patents involved. While we do not have the 
expertise to evaluate the validity of the patents, it seems at least 
possible that key patents could be successfully challenged well before 
2015 or perhaps even 2010, allowing generic drugs to enter the market 
much earlier than anticipated. We welcome comments from interested 
parties on when patents may cease to bar the marketing of generic 
albuterol HFA MDIs. In addition we seek comments on the feasibility of 
generic manufacturers obtaining rights to use patented technology 
before the expiration of the patents. While the availability of lower-
priced generic albuterol HFA MDIs should remove any concerns that 
patients might not be adequately served by alternatives to albuterol 
CFC MDIs due to the higher prices of albuterol HFA MDIs, the future 
availability of generics may not be relevant to the ability of the 
United States to continue to receive exemptions for albuterol CFC MDIs 
(see section IV.D of this document).
    The year 2010, in addition to its potential significance for 
patents on albuterol HFA MDIs, will be a major milestone in the 
regulation of ODSs under the Montreal Protocol. Beginning January 1, 
2010, production and importation of new CFCs would be generally banned 
in all parties that are countries that are parties to the Montreal 
Protocol, both economically developed and less-developed countries (See 
paragraphs 4 and 8 of Article 2A of the Montreal Protocol (as 
amended)). There is an exception to this general ban for essential 
uses, but as we discussed in section IV.D of this document, the parties 
to the Montreal Protocol will be more reluctant to allocate CFCs for 
essential uses as time passes. We believe that the United States should 
take all appropriate action to support the global phaseout of CFCs, and 
eliminating the essential use for albuterol CFC MDIs,

[[Page 33609]]

before January 1, 2010, may be such an appropriate action.
    Having weighed the public health, economic, and environmental 
impacts associated with this determination, we have tentatively 
concluded that currently no date after December 31, 2009, appears to be 
a practical effective date for this rulemaking, just as no date earlier 
than 12 months after publication of a final rule would appear to be a 
practical effective date. In any case, our current intention is to 
establish the earliest effective date that will adequately protect the 
public health of the United States. We invite comments on an 
appropriate effective date for the final rulemaking. Persons submitting 
comments on an appropriate effective date may wish to discuss how 
suggested effective dates would affect supplies and production capacity 
of non-ODS albuterol products and how different dates would affect the 
degree to which patients are adequately served by the non-ODS products. 
Interested persons may wish to comment on effective dates that are 
later than 2009 or earlier than 12 months after publication of the 
final rule.

VI. Decision XV/5

    The parties to the Montreal Protocol held their 15th meeting at 
Nairobi, Kenya on November 10 through 14, 2003. The parties agreed to 
Decision XV/5, which states that no essential uses of CFCs will be 
authorized for parties that are developed countries at the 17th meeting 
of the parties (Autumn 2005), or thereafter, unless the party 
requesting the essential-use allocation has submitted an action plan. 
Among other items, the action plan is required to include a specific 
date by which the party will cease requesting essential-use allocations 
of CFCs for albuterol MDIs to be sold or distributed in developed 
countries. The action plan must be submitted before the 25th meeting of 
the Open-Ended Working Group \6\ (Summer 2005).
---------------------------------------------------------------------------

    \6\ The Open-Ended Working Group (OEWG) was established in 1989 
at the first meeting of the parties to the Montreal Protocol held in 
Helsinki. The OEWG, among other duties, considers proposals for 
amendments and adjustments to the Montreal Protocol and prepares 
consolidated reports based on the reports of various scientific, 
technical, and economic panels. These proposals and reports may then 
be subsequently acted on by a meeting of the parties to the Montreal 
Protocol.
---------------------------------------------------------------------------

    In addition to fulfilling our obligations under the Clean Air Act 
and other provisions of the Montreal Protocol, this proposed rulemaking 
is intended to provide the specific date after which the United States 
will not request essential-use allocations of CFCs for albuterol MDIs. 
We realize that some comments received in response to this notice of 
proposed rulemaking may state that it is impractical to set a specific 
date for this purpose. However, based on the information we currently 
have, we believe that it will be both practical and desirable to 
establish a specific phaseout date for albuterol CFC MDIs.

VII. Environmental Impact

    We have carefully considered the potential environmental effects of 
this action. We have tentatively concluded that the action will not 
have a significant adverse impact on the human environment, and that an 
environmental impact statement is not required. Our initial finding of 
no significant impact and the evidence supporting that finding, 
contained in a draft environmental assessment, may be seen in the 
Division of Dockets Management (see ADDRESSES) between 9 a.m. and 4 
p.m., Monday through Friday. We invite comments on the draft 
environmental assessment. Comments on the draft environmental 
assessment may be submitted in the same way as comments on this 
document (see DATES).

VIII. Analysis of Impacts

A. Introduction

    We have examined the proposed rule under Executive Order 12866 and 
the Regulatory Flexibility Act (5 U.S.C. 601-612) and the Unfunded 
Mandates Reform Act of 1995 (Public Law 104-4) (UMRA), and the 
Congressional Review Act. Executive Order 12866 directs agencies 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). This proposed regulation is considered an economically 
significant regulatory action under Executive Order 12866.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of a 
rule.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that agencies 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 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.'' Currently, such a statement is required if costs exceed 
about $110 million for any one year. The Congressional Review Act 
requires that regulations determined to be major must be submitted to 
Congress before taking effect.
    The removal of the essential-use designation for ODS propellants 
used in albuterol MDIs will result in the elimination of low-priced 
generic versions of these products until protective patents for the HFA 
product expire. Assuming that the generics have otherwise received FDA 
approval, low-priced generic albuterol HFA MDIs can be expected to be 
marketed as soon as legally permissible, i.e., when the relevant 
patents for albuterol HFA MDIs expire or are successfully challenged. 
Currently, two versions of albuterol MDIs are available using an ozone-
safe propellant, but at a price close to the higher prices of branded 
products using ODSs. Thus, we project that removal of the essential-use 
designation for albuterol MDIs before the albuterol HFA MDIs patents 
expire will result in higher consumer prices for this important 
medication for asthma and COPD unless and until generic versions of 
albuterol HFA MDIs become available. During this period, despite the 
relatively inelastic demand for medicines generally, the higher prices 
will discourage some patients from buying albuterol. Nonetheless, early 
removal of the essential-use designation for ODSs used in albuterol 
MDIs provide some marginal environmental and health gains related to 
reduced risk of skin cancers and cataracts and increase expected 
returns to research and development of new environmentally preferable 
technologies.
    We note that the parties to the Montreal Protocol may decide to 
cease providing the United States and all other countries with 
exemptions for CFCs for albuterol prior to the time when the U.S. 
patents will expire (see discussion in section IV.D of this document). 
This decision may occur based on the simple availability of 
alternatives. In addition, a decision by the United States not to phase 
out promptly the use of CFCs in albuterol MDIs may be seen as 
discouraging greater efforts by other countries to comply with the 
Montreal Protocol.
    Any economic analysis of prospective government actions needs to 
begin with a baseline from which to assess those actions. Standard 
practice is to use as a baseline the state of the world absent the 
rulemaking in question, or, where this implements a legislative 
requirement, the world absent the statute. In this world, generic 
albuterol MDIs containing CFCs might remain on the market indefinitely. 
To the extent

[[Page 33610]]

that consumers perceive generic albuterol HFA MDIs after they are 
introduced to be perfect substitutes to generic albuterol CFC MDIs, and 
generic producers also see the choice of propellant as immaterial, we 
can take a world with generic HFA MDIs as equivalent to the world where 
albuterol CFC MDIs are marketed indefinitely. Because the specific date 
by which generic albuterol HFA MDIs will be approved and marketed is 
uncertain, we have conducted our analyses using the dates of expiration 
of both the first (2010) and the last (2015) patents currently listed 
in the Orange Book for albuterol HFA MDIs as the likely dates for the 
reintroduction of generic competition. The choice of baseline for this 
analysis is in large part academic. The baseline does not affect the 
incremental costs and benefits of one phaseout date relative to 
another. Instead it affects only the characterization of the total 
benefits and costs associated with the choice of phaseout date.
    Tables 2 and 3 of this document illustrate major quantifiable 
effects of alternative dates for removing the essential-use designation 
for the use of ODSs in albuterol MDIs. Table 2 of this document 
presents the effects assuming that generics do not enter the market 
until 2015, while table 3 of this document presents the same effects 
with an assumption that generics enter the market in 2010. In the 
second column of both tables 2 and 3 of this document, we present our 
estimates of the cumulative number of generic albuterol MDIs that would 
be marketed between the year the essential use is eliminated and 2015 
or 2010. For example, in the 2015 scenario, elimination of the 
essential-use designation in the year beginning July 2006 would affect 
a total of 388 million generic MDIs of albuterol that would otherwise 
be sold between 2007 and 2015. Similarly in that scenario, elimination 
of the essential-use designation in July 2010 would affect 218.6 
million generic MDIs of albuterol sales. In comparison, table 3 of this 
document shows that an estimated 169.4 million MDIs of generic 
albuterol would be affected by elimination of essential-use designation 
in 2006 and only 42.8 million in 2009. These estimates are adjusted for 
increases in current uses derived from projections of increased asthma 
prevalence based on age-adjusted population projections and stable 
incidence rates for the period. The estimates apply age-specific asthma 
incidence rates published by the Centers for Disease Control and 
Prevention (CDC) (Ref. 1) to mid-range population projections from the 
Bureau of Census. The resulting estimates of future increases in asthma 
prevalence were applied to the current quantity and market share of 
MDIs to result in projected increases in demand. The third and fourth 
columns in tables 2 and 3 of this document show the increased consumer 
expenditures associated with the purchase of branded, albuterol HFA 
MDIs rather than generic albuterol CFC MDIs for each year. We note that 
these expenditures represent primarily transfers from consumers and 
third-party payers to branded pharmaceutical manufacturers and are not 
societal costs. Since these estimates are based on average retail 
prices they include additional spending on parties other than the 
innovative drug manufacturers, including pharmaceutical distributors 
and the retail sector. These estimates are based on a current retail 
price difference of approximately $23 between branded and generic 
albuterol CFC MDIs derived below using data from the IMS National 
Prescription Audit Plus\TM\; 1st Quarter 2004 (extracted April 2004). 
As we do not have a single ``best'' estimate of U.S. retail prices we 
discuss different data suggesting larger and smaller price differences. 
Future expenditures are discounted to 2006 using both 7 percent and 3 
percent annual discount rates in accordance with Office of Management 
and Budget Circular A-4. For example, the present value of increased 
consumer expenditures in table 2 of this document is expected to be 
about $6.9 billion if essential-use designations are removed in 2006 
(at 7 percent), but are $5.9 billion if 2007 is the date at which the 
essential use is ended. The present value of these expenditures 
(transfers) in table 3 of this document for a 2006 removal is $3.5 
billion (at 7 percent), and $2.6 billion if 2007 is the decision year. 
As discussed in the following paragraphs, we expect that between 10 and 
15 percent of these expenditures are out-of-pocket payments from 
patients, between 65 and 70 percent represent payments from private 
third-party payers, and the remainder (15 to 20 percent) represent 
increased government spending.
    The fifth column in tables 2 and 3 of this document illustrates a 
potential reduction in therapies that may occur due to the price 
increase associated with the loss of cheaper generic competition. We 
estimate in the following paragraphs that the price increase could 
potentially reduce purchases and use of MDIs by several hundreds of 
thousands or more MDIs though there is substantial uncertainty about 
these estimates. We focus on a range from 400,000 to 1 million MDIs per 
year. The potential effect of the loss of medication on health outcomes 
is even more uncertain, and we have not attempted to quantify it. A 
recent article in the Journal of the American Medical Association has 
found, however, that increases in copayments for insured consumers can 
reduce utilization, and may thereby adversely attect health (Ref. 2). 
If it is assumed that generics cannot enter into the market until 2015, 
removal of essential-use designations in 2006 may result in between 3.9 
and 9.7 million fewer MDIs sold over the entire period. This estimate 
assumes no price increase to branded HFA products for the entire 
period. If lower priced generic products are reintroduced in 2010, 
removal of essential-use designations in 2006 may result in between 1.6 
and 4.0 million fewer MDIs being sold. Our estimates of reductions in 
canisters are based primarily on a response among the uninsured, 
although insured consumers may also reduce utilization in response to 
higher co-pays on the branded HFA albuterol MDIs (see Goldman et al., 
2004 (Ref. 2)).
    These estimates are based on very uncertain market responses to 
price changes and do not account for potential actions that may 
ameliorate this effect. For example, private programs such as GSK's 
``Bridges to Access'' as well as its commitment to provide 2 million 
MDIs of HFA albuterol each year to physicians for distribution to 
patients are not explicitly accounted for in these estimates. We are 
unable to include the commitment to distribute free MDIs into our 
quantitative analysis because of uncertainty about the recipients. If 
the MDIs went exclusively to low income uninsured patients these 
estimates would likely be a large overstatement of expected effects. If 
the free MDIs went primarily to insured patients, the preceding 
estimates would remain valid.
    The sixth column in tables 2 and 3 of this document illustrates the 
cumulative reduction in CFC emissions expected between each decision 
year and 2010. The cumulative reductions in CFC emissions are based on 
the 2004 allocation of approximately 1,400 metric tons of CFCs for 
albuterol MDIs that would no longer be available. If emissions were to 
be reduced by this amount, the levels of ozone in the stratosphere 
would be marginally higher, providing more protection from harmful UV-B 
radiation and resulting in reduced risks of skin cancers and cataracts 
because ozone reduces human exposure to UV-B radiation.

[[Page 33611]]

    The final two columns of the tables present a measure of how the 
decision to remove essential-use designations would affect returns to 
the innovators of non-ODS albuterol MDI technology. We present the 
ratio of the value of U.S. sales discounted to 2006, relative to the 
value of U.S. sales if the phaseout were in 2006. This ratio also 
measures how returns to research and development (R&D) would be 
affected, as the R&D costs are independent of the phaseout date, so 
that their value is immaterial when the returns to R&D for one possible 
phaseout year are expressed relative to the returns if the phaseout 
were in a different year. This measure is expressed as a percent of the 
total returns in net gains investors would make given phaseout at the 
fastest possible rate, i.e., by March 2006. The numbers show the 
percent of that total return that investors would receive for each 
year's decision on essential uses.
    To estimate the returns to innovative technology, we started our 
calculations using two manufacturers' total stated costs to research 
and develop non-ODS MDI technology worldwide and for all products. 
These expenditures were divided into the two manufacturers' share of 
the increased U.S. consumer expenditures for their branded products. 
(The National Association of Chain Drug Stores has estimated that 
manufacturers receive approximately 75 percent of branded prescription 
drug prices.) Thus, the innovating firms are expected to capture 
approximately 75 percent of the total annual expenditures for albuterol 
after the removal of the essential-use designation. The difference 
between this amount and their current estimated return was estimated 
for each year until generic competition is expected to return (2015 in 
table 2 of this document or 2010 in table 3 of this document). The 
present values of the increased streams of revenue are discounted 
(using both a 7-percent and a 3-percent annual discount rate) to 2006, 
then normalized to the present value of the increased revenues expected 
if 2006 is the decision year. For example, if generic competition is 
not expected until 2015 (table 2 of this document), a phaseout in 2007 
would reduce the expected return on investment in this technology by 13 
percent (using 7-percent discount rate) or 11 percent (using 3-percent 
discount rate). If generic competition returns in 2010, a phaseout in 
2007 would reduce the expected return on investment by 27 percent 
(using 7-percent discount rate) or 26 percent (using 3-percent).
    Returns on investment are very sensitive to the current market 
prices in the United States. The pharmaceutical markets of other 
parties to the Montreal Protocol operate with implicit or explicit 
price controls. These pricing agreements have depressed the potential 
returns to technological innovation. For example, we examined the 
relative prices of generic albuterol CFC MDIs and branded albuterol HFA 
MDIs in three European markets (United Kingdom, France, and Germany). 
The price difference ranged between $0.30 and $0.85 per MDI. These 
differences are much less than the U.S. price difference. The U.S. 
decision to eliminate albuterol CFC products is complicated, not only 
because the U.S. price difference is so large that the phaseout may 
limit some consumers' access to albuterol, but also because the U.S. 
decision has a disproportionately large effect on the returns to R&D.

     Table 2.--Major Quantifiable Effects of Alternative Dates for Ending the Essential-Use Designation for CFCs\1\ for Albuterol MDIs With Generic
                                                                   Competition in 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Increased Expenditures on                                                         Discounted Innovators'
                                               albuterol. Present Value                                                         Revenue from U.S. Sales,
                                  Number of       in 2006; (billions)                                                            Relative to Discounted
                                  Affected   ----------------------------                                Reduced Aggregate CFC      Revenue With 2006
 Year of Removal of Essential-  Canisters of                               Possible  Reduction in MDIs    Emissions  Relative           Phaseout
       Use  Designation           Albuterol     7-percent     3-percent             (millions)           to a Phaseout in 2015 -------------------------
                                 (millions)     discount      discount                                       (metric tons)       7-percent    3-percent
                                                  rate          rate                                                              discount     discount
                                                                                                                                    rate         rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
2006                                  388.0           $6.9          $7.9  3.9 to 9.7                                    12,600          100          100
--------------------------------------------------------------------------------------------------------------------------------------------------------
2007                                  346.1           $5.9          $7.0  3.5 to 8.7                                    11,200           87           89
--------------------------------------------------------------------------------------------------------------------------------------------------------
2008                                  303.9           $5.0          $6.0  3.0 to 7.6                                     9,800           75           78
--------------------------------------------------------------------------------------------------------------------------------------------------------
2009                                  261.4           $4.2          $5.1  2.6 to 6.5                                     8,400           63           68
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010                                  218.6           $3.4          $4.2  2.0 to 5.5                                     7,000           53           57
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011                                  175.5           $2.6          $3.3  1.8 to 4.4                                     5,600           42           47
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012                                  132.1           $1.9          $2.5  1.3 to 3.3                                     4,200           33           37
--------------------------------------------------------------------------------------------------------------------------------------------------------
2013                                   88.4           $1.2          $1.6  0.9 to 2.2                                     2,800           24           28
--------------------------------------------------------------------------------------------------------------------------------------------------------
2014                                   44.4           $0.6          $0.8  0.4 to 1.1                                     1,400           15           18
--------------------------------------------------------------------------------------------------------------------------------------------------------
2015                                 None           None          None    None                                            None         None         None
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ CFC means chlorofluorocarbons.


[[Page 33612]]


 Table 3.--Major Quantifiable Effects of Alternative Dates for Ending the Essential Use Designation for CFCs for Albuterol MDIs With Generic Competition
                                                                         in 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Increased Expenditures on                                                         Discounted Innovators'
                                               albuterol. Present Value                                                         Revenue from U.S. Sales,
                                  Number of       in 2006; (billions)                                                            Relative to Discounted
                                  Affected   ----------------------------                                Reduced Aggregate CFC      Revenue With 2006
 Year of Removal of Essential-     MDIs of                                  Possible Reduction in MDIs    Emissions  Relative           Phaseout
       Use  Designation           Albuterol     7-percent     3-percent             (millions)           to a Phaseout in 2015 -------------------------
                                 (millions)     discount      discount                                       (metric tons)       7-percent    3-percent
                                                  rate          rate                                                              discount     discount
                                                                                                                                    rate         rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
2006                                  169.4           $3.5          $3.7  1.6 to 4                                       5,600          100          100
--------------------------------------------------------------------------------------------------------------------------------------------------------
2007                                  127.5           $2.6          $2.8  1.2 to 3                                       4,200           73           74
--------------------------------------------------------------------------------------------------------------------------------------------------------
2008                                   85.3           $1.7          $1.8  0.8 to 2                                       2,800           47           49
--------------------------------------------------------------------------------------------------------------------------------------------------------
2009                                   42.8           $0.8          $0.9  0.4 to 1                                       1,400           23           24
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010                                 None           None          None    None                                            None         None         None
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Objective of the Proposed Rule

    The objective of the proposed rule is to reduce emissions of ODSs, 
specifically CFCs. CFCs and other ODSs deplete the stratospheric ozone 
that protects the Earth from ultraviolet solar radiation. FDA is 
proposing to end the essential-use designation for ODSs to be used in 
albuterol MDIs, given that two ODS-free albuterol MDIs have been 
successfully marketed in the United States for more than 2 years, and 
these MDIs may provide patients with adequate access to these 
medications. Under this proposal, albuterol CFC MDIs would no longer 
qualify for an essential use, so the essential use designation will 
cease when the rule goes into effect.

C. Current Conditions

1. CFCs and Stratospheric Ozone
    During the 1970s, scientists became aware of a relationship between 
the level of stratospheric ozone and industrial use of CFCs. Ozone 
(O3), which causes respiratory problems when it occurs in 
elevated concentrations near the ground, shields the Earth from 
potentially harmful solar radiation when in the stratosphere. Excessive 
exposure to solar radiation is associated with adverse health effects 
such as skin cancer and cataracts, as well as adverse environmental 
effects. Emissions of CFCs and other ODSs reduce stratospheric ozone 
concentrations through a catalytic reaction, thereby allowing more 
solar radiation to reach the Earth. As a result, environmental 
scientists advocated ending the use of these chemicals. An effort to 
craft a coordinated international response to this global environmental 
problem culminated in the historic 1987 Montreal Protocol. This 
Protocol now has been ratified by 186 parties. The current procedures 
to nominate essential uses and allocation of CFCs under the Montreal 
Protocol are described in section III.B of this document. At the 
November 2003 meeting, the parties to the Protocol decided that all 
parties must announce prior to the Open-Ended Working Group meeting in 
summer 2005, a date by which they would no longer seek an essential-use 
designation for CFCs for albuterol MDIs.
2. Effects of the Montreal Protocol
    Since the Montreal Protocol has been in place, overall usage of 
CFCs has been dramatically reduced. In 1986, global consumption of CFCs 
totaled 1,078,634 metric tons. By 2000, global consumption had fallen 
to 96,058 metric tons (Ref. 3). This decline amounts to about a 90-
percent drop and is a key measure of the success of the Protocol. 
Within the United States, emissions of CFCs have also fallen sharply--
about 80 percent from 1990 to 2000 when measured as the sum of CFC-11 
and CFC-12.\7\
---------------------------------------------------------------------------

    \7\ This sum is valid, as their ozone depleting potentials are 
equal. See http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.epa.gov/ozone/ods.html. (FDA has verified the 

Web site address, but FDA is not responsible for any subsequent 
changes to the Web site after this document has published in the 
Federal Register.)
---------------------------------------------------------------------------

    EPA has generated a series of estimates of the public health 
benefits of the Montreal Protocol (see The Benefits and Costs of the 
Clean Air Act: 1990-2010, http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.epa.gov/air/sect812/1990-2010/fullrept.pdf
 (Benefits and Costs) (FDA has verified the Web site 

address, but FDA is not responsible for any subsequent changes to the 
Web site after this document has published in the Federal Register)). 
These include hundreds of millions of nonfatal avoided skin cancers, 6 
million fatal avoided skin cancers, and 27.5 million avoided cataracts, 
all between the years 1990 and 2165 (see Benefits and Costs, Table G-
4). In dollar terms EPA estimated these and related benefits to sum to 
$4.3 trillion in present value when discounted at 2 percent over the 
period of 175 years (see Benefits and Costs, Table G-7). This amount is 
equivalent to $6 trillion after adjusting for inflation between 1990 
and 2003. These estimates include all the benefits of total worldwide 
emission reductions expected from the Montreal Protocol, and are based 
on reductions from a baseline that assumes future increases in 
emissions of CFC and all other ozone depleting substances in the 
absence of the protocol (see Benefits and Costs, page G-13). EPA does 
not report, however, any information about the magnitude of the 
emissions reductions associated with its benefits estimates. Thus, 
these estimates are of little help in evaluating the economic impacts 
of this rulemaking.
    We believe that a reduction in emissions of CFCs from MDIs would 
result in public health gains in the United States, and that these 
gains could be magnified if other countries follow suit and further 
reduce emissions.
3. Asthma
    Asthma is a chronic respiratory disease characterized by episodes 
or attacks of bronchospasm on top of chronic airway inflammation. These 
attacks can vary from mild to life-threatening and involve shortness of 
breath, wheezing, cough, or a combination of symptoms. Many factors, 
including allergens, exercise, viral infections, and others, may 
trigger an asthma attack.

[[Page 33613]]

    According to the National Health Interview Survey (NHIS), 31.3 
million people in the United States have been diagnosed with asthma 
during their lifetime, and 20.3 million of them are currently being 
treated for asthma (National Center for Health Statistics, 2003). The 
prevalence of current asthma decreases with age, with the prevalence 
being 87 per 1,000 children ages 0-17 years (6.3 million children) 
compared to 69 per 1,000 adults 18 years and over (14 million adults).
    Asthma attack prevalence, or the number of people who had at least 
one asthma attack during the previous year, is considered by CDC to be 
a crude indicator of how many people have uncontrolled asthma and are 
at risk for a poor outcome from asthma, such as hospitalization. In 
2001, 12 million people (about 60 percent of the people who had asthma) 
reported experiencing an asthma attack in the previous year. Asthma 
attack prevalence tends to decrease with age; 57 per 1,000 children 
ages 0-17 years (4.2 million children) had an asthma attack during the 
previous year compared to 38 per 1,000 adults (7.8 million adults).
    NHIS reported there were 10.4 million outpatient asthma visits to 
physician offices and hospital clinics during 2000. In addition, there 
were 1.8 million emergency room visits; 465,000 hospital admissions; 
and 4,487 mortalities associated with asthma. The estimated direct 
medical cost of asthma (hospital services, physician care, and 
medications) was $10.4 billion (Ref. 4).
    While the prevalence of asthma, or the proportion of the U.S. 
population with asthma, has been increasing, the incidence of asthma, 
the rate of new diagnoses of asthma, has remained fairly constant since 
1997, according to CDC (Ref. 1). Non-Hispanic blacks, children under 17 
years, and females have higher incidence rates than the general 
population and also have higher asthma attack prevalence. CDC notes 
that although a numeric increase has occurred in the numbers and rates 
of physician office visits, hospital outpatient, and emergency room 
visits, these increases are accounted for by the increase in 
prevalence. This phenomenon might indicate early successes by asthma 
intervention programs that include access to medications.
4. COPD
    COPD has been defined as the physiologic finding of non-reversible 
impairment of lung function. While there is some overlap between asthma 
patients and COPD patients, COPD encompasses a group of diseases 
characterized by relatively fixed airway obstruction associated with 
breathing-related symptoms (e.g., chronic coughing, expectoration, and 
wheezing). COPD is generally associated with cigarette smoking and is 
extremely rare in persons younger than 25 years of age.
    According to CDC, an estimated 10 million adults were diagnosed 
with COPD during 2000 (Ref. 5). Because such diagnoses have usually 
been based on patient-reported symptoms, the NHIS suggests that as many 
as 24 million Americans are actually affected by the disease. Between 
1980 and 2000, the rate of COPD in females increased relative to males. 
However, the proportion of the U.S. population with mild or moderate 
COPD has declined over the last quarter century, suggesting increases 
seen in recent decades may not continue indefinitely. The most 
effective intervention in modifying the course of COPD is smoking 
cessation. However, symptoms, such as coughing, wheezing, and sputum 
production are treated with medications.
5. Current U.S. MDI Market
    Patients in the United States currently use MDIs with 12 approved 
medications--active ingredients--for treatment of asthma and COPD. 
According to updated data originally presented in 64 FR 47719, 
approximately 120 million prescription MDIs are sold per year. 
Albuterol is the only ingredient available in both CFC and HFA MDIs and 
is also the only prescription MDI available from generic manufacturers, 
although patents have expired for 9 of the 12 medications (Ref. 6).
    Branded, private-label branded, and generic versions of albuterol 
MDIs account for about 40 percent of all MDI prescriptions, or about 50 
million per year. During 2002, about 40 million prescriptions were for 
private label branded and generic versions of the product.
    Two versions of albuterol MDIs are now available with HFA as a 
propellant. The first patent for albuterol HFA MDI technology will 
expire on July 6, 2010. Additional patents expire through June 16, 
2015. We are not currently aware of any other marketing exclusivities.
    We use price data from several sources because we lack 
comprehensive detailed data that are representative of prices faced by 
consumers whose behavior is most likely to be affected by this rule--
uninsured and underinsured asthma and COPD patients of low to modest 
incomes. A key source is a private company, IMS Health, which provides 
marketing data on drug products. A recent FDA analysis of the average 
national retail price of drugs in ``brick-and-mortar'' pharmacies 
(i.e., chain, independent, and foodstore pharmacies, excluding 
Internet, mail order and long-term care pharmacies) found that median 
prices for generic albuterol MDIs are about 48 percent of the brand 
price for VENTOLIN (ODS), when prices are measured using the average 
pharmacies' revenues from uninsured customers, insured customers, and 
Medicaid beneficiaries alike. See http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fda.gov/cder/consumerinfo/savingsfromgenericdrugs.htm.
 We have analyzed the same IMS data set, 

National Prescription Audit Plus\TM\; 1st Quarter 2004 (extracted April 
2004), and find that the median price per MDI for generic albuterol 
MDIs is $19.70, and that the price per MDI for albuterol HFA MDIS is 
$43.00.\8\ These prices imply a price difference of $23.00 and should 
be seen as approximate in part, because they change over time. Over the 
preceding year HFA MDI prices rose by almost 8 percent. Therefore, 
these prices are not necessarily comparable to prices for cash-paying 
customers because they reflect the average price for all payer types.
---------------------------------------------------------------------------

    \8\ We calculate the HFA price as follows: Retail revenues for 
PROVENTIL HFA and for VENTOLIN HFA for the quarter ending in March 
2004, divided by total canisters dispensed. We calculate the number 
of canisters dispensed as the number of grams of active ingredient 
times the grams per canister (6.7 grams for PROVENTIL HFA, and 18 
for VENTOLIN HFA).
---------------------------------------------------------------------------

    Manufacturers also report price data in the form of average 
wholesale prices (AWP) per prescription as noted in the Red Book (Ref. 
7). For generic albuterol MDIs, the AWP reported from this reference 
was about $25 in 2002. However, according to utilization data from the 
Medicaid drug rebate program, the average Medicaid reimbursement for 
generic albuterol MDIs during 2002 was $27.29.\9\ The AWP for branded 
albuterol CFC MDIs was approximately $35 per MDI during 2003. The 
reported AWP for albuterol HFA MDIs is also approximately $35. These 
prices have remained fairly constant since 2000.
---------------------------------------------------------------------------

    \9\ Utilization Data from the Medicaid Drug Rebate Program, 
Centers for Medicare and Medicaid Services. July 28, 2003.
---------------------------------------------------------------------------

    The federal supply schedule (FSS) established by the Department of 
Veterans Affairs (http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.vapbm.org/PBM/prices.htm) provides yet 

another source of information on prices (FDA has verified the Web site 
address, but FDA is not responsible for any subsequent changes to the 
Web site after this document has published in the Federal Register). It 
indicates that the HFA MDI with the larger market share is priced

[[Page 33614]]

significantly lower than the other HFA MDI: $14.30 versus $26.50 per 
MDI. The other FSS prices are all lower than the IMS prices by various 
amounts. Ten products, however, have no FSS price, so that broader 
generalizations about these prices are very problematic.
    Alternative medications for the treatment of asthma and COPD 
available in MDIs have reported average wholesale prices between $30 
and $50 per prescription (Ref. 7).
    Finally, we have conducted an informal assessment of retail MDI 
prices that offers evidence of price differences at the retail level 
for uninsured customers. A March 24, 2004, examination of http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.drugstore.com
's (FDA has verified the Web site address, but FDA is 

not responsible for any subsequent changes to the Web site after this 
document has published in the Federal Register) prices revealed that a 
generic albuterol MDI was 60 percent less expensive than branded 
PROVENTIL (ODS) or VENTOLIN (ODS) MDIs ($13.99 versus $38.10 and 
$35.99, respectively). PROVENTIL HFA and VENTOLIN HFA were priced at a 
small premium of 4 to 8 percent over the branded CFC equivalents (e.g., 
one MDI of PROVENTIL HFA was $39.60 and one MDI of VENTOLIN HFA was 
$38.99).
    For our analysis we use a range of price differences for the ratio 
of the branded HFA MDI price to the generic MDI price. As a lower bound 
we use 1.2, reflecting the price difference based on IMS data and as an 
upper bound we use 1.8, reflecting the price differences reported using 
Internet price data. Note that the first estimate reflects all retail 
prices in all brick and mortar pharmacies, including uninsured and 
insured patients. The second estimate reflects only prices for cash-
paying customers on the Internet.

D. Benefits of Earlier Phaseout Dates

    There are four categories of benefits of earlier dates to eliminate 
the essential-use designation for ODSs in albuterol MDIs: controlled 
transition from CFC MDIs to HFA MDIs that avoids any ambiguity in the 
authorization of the parties to produce and market CFCs and MDIs 
containing CFCs, the environmental and human health benefits of ODS 
emissions reductions by the United States, the environmental and human 
health benefits of continued compliance by other countries with the 
phaseout targets of the Montreal Protocol, and perceived improvements 
in incentives to research and develop new and better technologies to 
solve environmental problems. We address these items in turn.
1. Controlled Transition to Non-CFC MDIs
    Under the Montreal Protocol, manufacture of CFCs is allowed only 
for export to economically less-developed countries and for purposes 
designated as ``essential,'' including MDIs. As discussed in section 
IV. D of this document, one manufacturer of pharmaceutical grade CFCs 
has announced plans to cease production at the current site in the 
Netherlands in 2005. We do not have information that conclusively shows 
that the Baton Rouge facility can produce adequate quantities of 
pharmaceutical grade CFC-11 and CFC-12. Consequently, a benefit of a 
2006 phaseout date is that it would avoid a possibility of a shortfall 
in MDI production due to the unavailability of CFCs after the plant in 
the Netherlands ceases production in 2005.
2. Value of Reduced ODS Emissions
    In an evaluation of its program to administer the Clean Air Act, 
EPA has estimated that the benefits of controlling ODSs under the 
Montreal Protocol are $6.0 trillion.\10\ However, EPA's report provides 
no information about the tons of emissions reduced or the value of 
reducing CFC emissions by one more ton. Moreover, EPA's reports provide 
no information about the total emissions reductions associated with its 
benefits estimates. Therefore we cannot use those reports as a basis 
for estimating benefits of reducing ODS emissions from MDIs. As a share 
of total global emissions, a few years' of CFC emissions from MDIs in 
the United States would represent only a small fraction of a percent. 
In fact, the current U.S. allocation of CFCs for albuterol MDIs 
accounts for about 0.1 percent of the total 1986 global consumption of 
CFCs.\11\ Furthermore, current U.S. CFC emissions from MDIs represent a 
much smaller but unknown share of the total emissions reduction 
associated with EPA's estimate of $6 trillion in benefits from the 
Montreal Protocol, because that estimate reflects avoided growth in 
emissions over many decades. FDA solicits comment on how to analyze 
further the benefits of CFC and other ODS emission reductions. We 
believe that the direct benefits of this proposed regulation are small 
relative to the overall benefits of the Montreal Protocol. More 
importantly, however, we have been unable to assess how these reduced 
UV-B radiation related health effects would compare to the possible 
negative public health impacts associated with more years of reduced 
access to inexpensive generic albuterol.
---------------------------------------------------------------------------

    \10\ See http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.epa.gov/air/sect812/1990-2010/ch_apg.pdf. 

(FDA has verified the Web site address, but FDA is not responsible 
for any subsequent changes to the Web site after this document has 
published in the Federal Register.)
    \11\ See United Nations Environmental Programme; ``Production 
and Consumption of Ozone Depleting Substances: 1986-2000''; 2003 
(Ref. 1).
---------------------------------------------------------------------------

3. International Cooperation
    The Montreal Protocol, like most international environmental 
treaties, relies primarily on a system of national self-enforcement. 
However, it does include significant trade sanctions for noncompliance. 
Moreover, execution of its directives is in many respects subject to 
differences in national implementation procedures. Economically less-
developed nations, which have a more protracted phaseout schedule, have 
emphasized in previous meetings of the parties the importance to their 
own national programs of continued progress by developed nations (such 
as the United States) in eliminating CFC production. As noted 
previously, if the United States adopts a relatively later phaseout 
date, other parties to the Montreal Protocol may decide to alter their 
own adoption of control measures. Conversely, parties that have already 
achieved an early phaseout of albuterol CFC MDIs by conversion to the 
same alternatives currently available in the United States may promote 
a decision to phase out albuterol CFC MDIs in all developed countries 
by a specified date in the near future, which could prevent an orderly 
transition away from CFC MDIs and could also raise compliance issues 
for the United States under the Montreal Protocol. Thus, the advantages 
of selecting a date that maintains international cooperation in 
implementing the remaining measures required by the Montreal Protocol 
are potentially substantial. Selection of a date seen to be unsuitable 
could have adverse environmental and human health consequences (e.g., 
if all countries interpret U.S. action as a license to consume 1,400 
additional tons of CFCs per year).
4. Encouraging Innovation
    Earlier phaseout dates not only reward the developers of the HFA 
technology, but also would serve as a signal to potential developers of 
other environmentally benign technologies. In particular, earlier 
phaseout dates would promote the perception that the incentives to 
research and develop such technologies are relatively high.
    Newly developed technologies to reduce ODS emissions have resulted 
in more environmentally ``friendly'' air conditioners, refrigerants, 
solvents, and propellants. Several manufacturers have

[[Page 33615]]

claimed development costs that total between $250 and $400 million to 
develop HFA MDIs and new propellant free devices for the global market 
(Ref. 8).
    These investments have resulted in several innovative products in 
addition to albuterol HFA MDIs. For example, breath-activated delivery 
systems, dose counters, dry-product inhalers, and mini-nebulizers have 
also been successfully marketed. This technology could also affect 
other medications used for the treatment of asthma and COPD because of 
the likelihood that all CFC allocations may be revoked at some future 
date. However, currently only two albuterol HFA MDIs are marketed in 
the United States, accounting for less than 5 percent of albuterol MDI 
prescriptions.
    Earlier removal of the essential-use designation for albuterol MDIs 
will increase the overall returns on these investments, thereby serving 
to encourage future research in related areas.
    The expected revenue increases for HFA MDIs that would follow the 
removal of the essential-use designation for ODSs in albuterol MDIs in 
the United States would be large. With an estimated $43 per MDI cost 
for albuterol HFA MDIs, manufacturers of branded HFA MDIs would 
increase revenues by about $850 million per year, based on historical 
returns to manufacturers of branded products. These revenue gains are 
based on innovating firms capturing the current generic market for 
albuterol and receiving 75 percent of the retail price of the HFA 
product with the remainder kept by distributors and retailers. 
Innovating firms have claimed total costs of R&D for non-ODS MDIs 
globally and for all products to be between $250 and $400 million per 
firm. No other market provides the potential for such significant 
returns on investment because of the low difference between generic and 
branded prices. European prices have typically shown differences of 
less than $1.00, which limit the potential gains on investment from 
these markets.

E. Costs of Earlier Phaseout Dates

    The key cost of earlier dates to discontinue use of albuterol CFC 
MDIs is the potential decline in consumption of such MDIs that may 
result from the price increase that would accompany loss of generic 
products. Patients respond to price increases of medicines for chronic 
conditions in a way that may adversely affect their health. A recent 
paper by Goldman et al. reported that:
    * * *copayment increases led to increased use of emergency 
department visits and hospital days for the sentinel conditions of 
diabetes, asthma and gastric acid disorder: predicted annual 
emergency department visits increased by 17 percent and hospital 
days by 10 percent when copayments doubled* * *,
though they characterize these results as ``not definitive'' (Ref. 2). 
These data suggest that increased prices for albuterol medication may 
lead to some adverse public health effects in the United States among 
populations who would pay increased prices. This evidence is 
insufficient, however, to permit us to quantify the adverse effects of 
an albuterol price increase on public health. We adopt two 
complementary approaches to estimate the potential change in MDI use 
that may result from the expected increase in market price of albuterol 
MDIs when albuterol CFC MDIs are taken off the market. In both 
instances, we focus on aggregate MDI use because it provides an overall 
measure of whether patients are adequately served, that is, whether 
high-priced non-ODS products may be effectively unavailable to a 
portion of the patient population because the high price discourages 
them from buying MDIs.
    Our first approach simply assumes that the only effect of an 
elimination of albuterol CFC MDIs from the market would be an increase 
in the average price of albuterol MDIs. We ignore any changes in the 
price of albuterol HFA MDIs that removal of the essential use 
designation for albuterol may cause. Given the projected price increase 
and existing estimates of the market response to the price increase, we 
project how the quantity of albuterol MDIs consumed may decline.
    Our second approach assumes that the effects of removing albuterol 
CFC MDIs from the market can be inferred from the effects of the 
introduction of generic products. We describe these two approaches in 
turn.
    To apply the first approach, we need to start with estimates of 
market price. As previously discussed, the Internet prices and the IMS 
retail prices suggest that delisting albuterol as an essential use 
would imply price increases of 180 and 120 percent, respectively.
    We have no information about how consumers react to increases in 
the price of MDIs per se, and the price of ``rescue'' type MDIs such as 
albuterol bronchodilators in particular, which are used in more 
emergency cases. Economists have written many articles about the 
response of consumers to higher insurance copayments for drugs 
generally, however, and these appear to be concentrated in the range of 
-.1 to -.2, meaning that a 10 percent increase in insurance copayments 
appears to lead to a reduction in the number of prescriptions of 
between 1 and 2 percent (Ref. 9). One recent paper suggests a somewhat 
larger estimate for antiasthmatic medications. Based on an analysis of 
nearly 530,000 people enrolled in 52 health plans over 4 years, Goldman 
et al., 2004, report that as the average copayment for antiasthmatics 
doubles, the average number of days of treatment supplied fell by more 
than 30 percent. Albuterol was one of the most common antiasthmatic 
drugs in their sample (Ref. 10). Given that a doubling of the copayment 
amounts to a 100 percent increase in the effective (out of pocket) 
price, this results suggests an elasticity for antiasthmatics of -.3. 
The authors also report, however, that the effect of price of 
consumption falls as fewer substitutes are available. For drugs with no 
over the counter substitutes--a set that presumably includes 
albuterol--the effect is only 0.15, while for drugs with close 
substitutes available over the counter the effect rises to 0.32. A 
doubling of the average copayment of $12.85 is a slightly smaller price 
increase in both absolute and relative terms than might be expected 
from the delisting of albuterol, as explained in the following 
paragraphs.
    We assume that elasticity estimates derived from increases in 
copayments are applicable to forecasting the demand response among 
uninsured patients. Assuming that 15 percent of the 40 million generic 
albuterol MDIs now marketed annually are sold to uninsured patients, 
and a price elasticity of demand of 0.05, a 120 increase in price would 
lead to a reduction in demand in this population of about 360,000 MDIs 
per year (40 million x 15 percent x .05 price elasticity x 120 percent 
price increase). Given the obvious uncertainty we round this estimate 
to 400,000 MDIs per year. A similar calculation using the price 
difference observed on the Internet and assuming that demand is more 
sensitive to price would yield a higher estimate. In particular the 
sale of albuterol MDIs would drop by slightly more than a million MDIs 
annually given a price difference of 1.8 and a price elasticity of 
demand of 0.1. The elasticity consistent with the Goldman paper for 
products without substitutes available OTC--0.15-would imply a market 
effect of 1.6 million MDIs not sold.
    These forecasts require several caveats. First, they apply 
estimates of consumer behavior developed from very small price changes 
to a large price change. This application may not be warranted. Second, 
these forecasts

[[Page 33616]]

assume that the elimination of albuterol CFC MDIs from the market would 
not affect other factors, such as advertising. Finally, and most 
importantly, these estimates ignore the GSK plan to distribute 2 
million free MDIs per year. Clearly, GSK's plan could substantially 
reduce the projected loss in consumption of MDIs if its 2 million free 
MDIs were distributed to the patients whose consumption of MDIs is most 
sensitive to price. Given the limitations in the data, we cannot 
develop an estimate free from these caveats.
    In an effort to corroborate this estimate, we tried to develop a 
completely independent approach borrowing from the experience of 
markets when generics are first introduced. Estimates of the market 
response to the introduction of a generic product should provide 
information about how markets respond when a generic product is 
eliminated. One study (Ref. 10) examined the effects of generic 
competition on pharmaceutical markets, and offers suggestive, but not 
definitive, evidence. It estimates how the prices and quantity of drugs 
sold vary with the number of generic competitors. The authors note that 
the total quantity of drugs sold after generic competition began 
initially increased and then decreased. The authors note that the 
variable response reflects both the impact of lower prices and the 
decline in advertising by the manufacturer of the branded product. The 
largest identified response, a 3-percent increase in the quantity of 
drugs sold, occurs after four to five generic products have been 
introduced. With further entry, consumption falls relative to the level 
it had with no generics because the effect of greater competition on 
increasing consumption is more than offset by the effect of diminished 
advertising.
    This research suggests that any effect on consumption by the 
removal of generic albuterol MDIs may be quite small. However, there 
are several limitations. First, the peak response in terms of the 
increase in the number of prescriptions (3 percent) is dependent on a 
statistically insignificant response. Second, the number of generic 
albuterol CFC MDIs currently marketed exceeds the four to five entries 
associated with the peak quantity response relative to the no-generics 
scenario.
    These analyses suggest that a reasonable range of estimates for the 
potential reduction in the quantity of albuterol MDIs sold could range 
from about 400,000 per year to more than 1 million per year. We derive 
the estimate of 400,000 fewer MDIs as a reduction of 1 percent of the 
40 million generic albuterol MDIs currently sold each year. We present 
1 million as a reasonable upper bound but note that the research allows 
the possibility that the true response will be greater.
    We also note that the assumption that prices of HFA MDIs would 
remain constant may be inappropriate. Many economic models suggest that 
reducing the number of products that compete in a market will tend to 
raise prices, other things remaining equal. However, since one 
manufacturer (GSK) has announced a voluntary price freeze on its 
albuterol HFA MDIs (i.e., it voluntarily agreed to not change its 
price), we have assumed stable prices for this analysis.
    The withdrawal of ODSs as propellants for albuterol MDIs may affect 
pricing of the 15 active moieties available for treatment of asthma and 
COPD, including albuterol HFA MDIs. However, generic albuterol HFA MDIs 
will not be available until current patents no longer bar generic 
competition. We believe the albuterol market is attractive to potential 
generic marketers and competition will reenter this market as soon as 
possible. Until generic albuterol HFA MDIs enter the market, however, 
the average price for albuterol MDIs in the event that albuterol CFC 
MDIs are discontinued will be significantly higher than the current 
price. The availability of other therapies for the treatment of asthma 
and COPD (such as dry powder inhalers) may provide sufficient 
competition to avoid any additional price effects.
    GSK has stated that sufficient supplies of albuterol HFA MDIs would 
be available within 12 to 18 months of notification of removal of the 
essential-use designation. Therefore, we do not believe inadequate 
supplies of these products would occur after the removal of essential-
use designations through notice-and-comment rulemaking.

F. Insurance and Third Party Payers

    According to the Department of Census, about 85 percent of the 
population has some health insurance coverage (Ref. 11), while 
according to the National Council of Prescription Drug Plans (NCPDP), 
about 80 percent of all health plans offer drug coverage (Ref. 12). 
Together, these imply that about 35 percent of the population has no 
prescription drug coverage and must pay for medications out of pocket. 
However, the recent Medicare Prescription Drug Improvement and 
Modernization Act increased the proportion of the population covered by 
a prescription drug insurance plan. Overall, based on discussions with 
NCPDP, we expect that the patient population will consist of 
approximately 15 percent uninsured, 20 percent insured by public 
sources (Medicare, Medicaid, Department of Veterans Affairs, etc.), and 
65 percent insured privately. (These estimates are for analysis 
purposes and are rounded for ease of estimation. They are not meant to 
be precise estimates of coverage.) The uninsured sector of the 
population may be particularly affected by the expected increase in 
price with the loss of generic competition.
    This effect has been noted by the innovating manufacturers. GSK has 
pledged to supply up to 2 million albuterol HFA MDIs to physicians for 
free distribution to low income patients. They also have long provided 
private programs, such as ``Bridges to Access'' and others to provide 
access to needed medications. We believe that any potential access 
problems may be ameliorated by programs such as these and specifically 
request comment on them in order to better analyze their potential 
impact on maximizing patient access to therapies.
    Patients who use more MDIs than average may incur greater than 
average costs as a result of the expected price increase. Extrapolating 
data from one long-term Canadian study that tracked asthma patients 
over many years, and included information on the number of MDIs used by 
asthmatics who had received at least 3 prescriptions for asthma during 
any one period from 1975 to 1991 (Ref. 13), about 1 million patients 
may use 6 or more MDIs of medication a year. Assuming that 15 percent 
of these are uninsured, and face a conservative out-of-pocket price 
increase of $23 per MDI, then about 150,000 patients would pay $138 or 
more per year for their medications. Higher differences in prices, such 
as the $25 difference in Internet prices reported above would lead to 
proportionately much greater increases in spending.
    The loss of generic products may also affect co-payment rates in 
that most carriers require a higher per prescription copayment for 
branded rather than generic products. For example, a patient may pay 
$22 per prescription for a branded drug, but only $10 for a generic 
substitute. However, if there is no generic substitute, most plans 
provide the lower copayment (Ref. 12). Patients in plans that offer co-
insurance rates for prescription coverage would face higher out-of-
pocket costs because of the loss of generic products.
    To assess the population of users of albuterol we asked the Agency 
for Healthcare Research and Quality

[[Page 33617]]

(AHRQ) to use the Medical Expenditure Panel Survey (MEPS) for 2000 and 
2001 to estimate how many low- or moderate-income people without health 
insurance or with inadequate used albuterol MDIs. The results of that 
assessment suggest the following.
     There are about 620,000 low and moderate income users of 
albuterol MDIs that have no health insurance or that have no group 
health insurance. The 95 percent confidence interval for this estimate 
is approximately 470,000 to 770,000 users. Low and moderate income in 
this context means belonging to a family whose income is less than 400 
percent of the Federal poverty line.
     The prescriptions per user per year among low- and 
moderate-income users who have no insurance or no group insurance are 
about 3.8, somewhat greater than the 2.9 prescriptions among all users 
irrespective of income or insurance status.
     The average price per prescription for users of albuterol 
MDIs who were low or moderate income and either uninsured or without 
group health insurance, was $25.40, but only $22 if they bought 
generic. AHRQ did not report the price of branded products, or the 
price of the HFA MDIs, however, so no comparison between generic and 
branded prices is possible.
     Of all users of albuterol MDIs, approximately 88 percent 
use generics, while for the low and moderate income patients with non-
group insurance or no insurance, only 80 percent use generics.
    The average expenditures on albuterol MDIs for the low or moderate 
income user without group health insurance or any insurance were $97 
per year. An increase in price of $23 per MDI would mean additional out 
of pocket health care costs of about $43 million per year for this 
group.

G. Small Business Impact

    We believe the proposed rule is likely to have a significant impact 
on a substantial number of small entities. Current HHS guidance 
suggests that 3 to 5 percent impact of small entity's revenues could 
constitute a significant regulatory impact (Guidance on Proper 
Consideration of Small Entities in Rulemakings of the U.S. Department 
of Health and Human Services; May 2003). Because of this, we have 
prepared an initial Regulatory Flexibility Analysis (IRFA) and invite 
comment from any affected entities. In addition, the proposed rule is 
considered a significant rule under UMRA, and alternatives are examined 
and briefly discussed here.
1. Affected Sector and Nature of Impacts
    The affected industry sector includes manufacturers of 
pharmaceutical products (NAICS 32514). We obtained data on this 
industry from the 1997 Economic Census and estimated revenues per 
establishment. Although other economic measures, such as profitability, 
may provide preferable alternatives to revenues as a basis for 
estimating the significance of regulatory impacts, we do not believe it 
would change the results of this analysis.
    The impact of this proposed rule on generic manufacturers is the 
lost revenues generated by sales of generic albuterol CFC MDIs. While 
``lost revenues'' are an imperfect measure, because production 
resources could be shifted to alternative markets, they provide a 
measure that suggests the magnitude of the impact.
    SBA has defined as small any entity in this industry with fewer 
than 750 employees. According to Census data, 84 percent of the 
industry is considered small. The average annual revenue for a small 
entity is $26.6 million per entity. Of the 40 million generic or 
relabeled prescriptions for albuterol, about 30 million were dispensed 
by a large innovative firm under a different label (Warrick). According 
to IMS, the remaining 10 million dispensed generic or relabeled 
prescriptions were marketed by eight different companies. Each company 
sold an average of about 1.25 million MDIs. According to data collected 
by the Congressional Budget Office (Ref. 14), the value of shipments 
from manufacturers of generic drug products accounts for approximately 
35 percent of the retail price of the product. If so, revenues from 
1.25 million MDIs would approximate $10 million per year, or about 40 
percent of annual revenues for a small entity. We believe this 
constitutes a significant impact on a substantial number of small 
entities.
2. Alternatives
    We are considering the effect of removing the essential-use 
designation for ODSs in albuterol MDIs for each year between 12 months 
after issuance of a final rule on this subject and December 31, 2009. 
There is no difference in the expected annual effect on small entities 
in any of the examined years. However, if generic competition with HFA 
albuterol was available prior to the removal of the essential-use 
designation any impact on small entities would be eliminated. But this 
alternative is not being considered at this time because it would not 
meet the objective of meeting the requirements of the Montreal 
Protocol.
3. Outreach
    The Montreal Protocol and Clean Air Act have been in place for more 
than a decade. Manufacturers of albuterol CFC MDIs have long known that 
CFCs would eventually lose their essential-use designations for this 
purpose. However, we will specifically solicit comments from small 
entities on ways the proposed rule may affect their businesses.

H. Conclusion

    The proposed rule could result in increased health care 
expenditures of about a billion dollars for each year between the 
reintroduction of generic competition in this market and the selected 
year for removing the essential-use designation.
    We project that higher prices may reduce the MDIs sold by between 
400,000 and 1 million per year for each year without generic 
competition, though this estimate ignores GSK's offer to distribute 
free MDIs because we are unable to quantify how many of these MDIs 
would go the people who would otherwise reduce MDI purchases because of 
the higher prices. In addition, each earlier year after removing the 
essential-use designation will avoid about 1,400 metric tons of CFC 
emissions and provide increased investment returns for innovators of 
ODS-free technology. Removing the essential-use designation will also 
meet requirements of international agreements and avoid the potential 
disruption of complete withdrawal of CFC allocation. Finally, we 
believe the removal of the essential-use designation for this purpose 
will result in a significant impact on a substantial number of small 
entities, but this impact can be ameliorated by adjusting the effective 
date of the rule.

IX. References

    The following references have been placed on display in the 
Division of Dockets Management (see ADDRESSES) and may be seen by 
interested persons between 9 a.m. and 4 p.m., Monday through Friday.
    1. Mannino, D.M. et al., ``Surveillance for Asthma--United 
States, 1980-1999,'' Morbidity and Mortality Weekly Report, 
51(SS01):1-13, March 29, 2002.
    2. Goldman, J. et al., ``Pharmacy Benefits and the Use of Drugs 
by the Chronically Ill,'' The Journal of the American Medical 
Association, May 19, 2004; 291:2344-2350, 2349.
    3. United Nations Environmental Programme, ``Production and 
Consumption of Ozone-Depleting Substances 1986-2000,'' 2003.
    4. Weiss, K.B. et al., ``Trends in the Costs of Illness for 
Asthma in the United States,

[[Page 33618]]

1985-1994,'' Journal of Allergy and Clinical Immunology, 106(3):493-
499, September 2000.
    5. Mannino, D.M. et al., ``Chronic Obstructive Pulmonary Disease 
Surveillance--United States, 1971-2000,'' Morbidity and Mortality 
Weekly Report, 51(SS06):1-16, August 2, 2002.
    6. Food and Drug Administration, Center for Drug Evaluation and 
Research, Approved Drug Products with Therapeutic Equivalent 
Evaluations, 23rd Edition, 2003.
    7. Drug Topics, Red Book, Thomson Medical Economics, 2002.
    8. Rozek, R.P., and E.R. Bishko, ``The Impact on Patients and 
Payers of Designating Albuterol a Non-Essential Use of an Ozone-
Depleting Substance,'' National Economic Research Associates, 
September 8, 2003.
    9. Ringel J.S. et al., ``The Elasticity of Demand for Health 
Care,'' National Defense Research Institute, Rand Health, 2002.
    10. Goldman, Dana, private communication, May 29, 2004.
    11. Caves, R.E. et al., ``Patent Expiration, Entry, and 
Competition in the U.S. Pharmaceutical Industry,'' Brookings Papers 
on Economic Activity, Microeconomics, 1991.
    12. Bureau of Census, ``Health Insurance Coverage: 2001,'' 
Current Population Reports, U.S. Department of Commerce, September 
2002.
    13. Communication between Mr. Thomas Bizzaro, Vice-President of 
the National Council of Prescription Drug Plans, and Mr. Steven A. 
Tucker, Food and Drug Administration, June 23, 2003.
    14. Suissa, S. et al., ``Low-Dose Inhaled Corticosteroids and 
the Prevention of Death from Asthma,'' New England Journal of 
Medicine, 343(5):332-336, 2000.
    15. Congressional Budget Office, ``How Increased Competition 
from Generic Drugs Has Affected Prices and Returns in the 
Pharmaceutical Industry,'' July 1998.

X. The Paperwork Reduction Act of 1995

    We have tentatively concluded that this proposed rule contains no 
collection of information. Therefore clearance by the Office of 
Management and Budget under the Paperwork Reduction Act of 1995 is not 
required.

XI. Federalism

    We have analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. We have tentatively 
determined that the rule does not contain policies that have 
substantial direct effects on the States, on the relationship between 
the National Government and the States, or on the distribution of power 
and responsibilities among the various levels of government. 
Consequently, we do not currently plan to prepare a federalism summary 
impact statement for this rulemaking procedure. We invite comments on 
the federalism implications of this proposed rule.

XII. Request for Comments

    Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES) written or electronic comments regarding this proposal. 
Submit a single copy of electronic comments or two paper copies of any 
mailed comments, except that individuals may submit one paper copy. 
Comments are to be identified with the docket number found in brackets 
in the heading of this document. Received comments may be seen in the 
Division of Dockets Management between 9 a.m. and 4 p.m., Monday 
through Friday.

List of Subjects in 21 CFR Part 2

    Administrative practice and procedure, Cosmetics, Drugs, Foods.
    Therefore, under the Federal Food, Drug, and Cosmetic Act and the 
Clean Air Act and under authority delegated to the Commissioner of Food 
and Drugs, after consultation with the Administrator of the 
Environmental Protection Agency, it is proposed that 21 CFR part 2 be 
amended as follows:

PART 2--GENERAL ADMINISTRATIVE RULINGS AND DECISIONS

    1. The authority citation for 21 CFR part 2 continues to read as 
follows:

    Authority: 15 U.S.C. 402, 409; 21 U.S.C. 321, 331, 335, 342, 
343, 346a, 348, 351, 352, 355, 360b, 361, 362, 371, 372, 374; 42 
U.S.C. 7671 et seq.


Sec.  2.125  [Amended]

    2. Section 2.125 is amended by removing and reserving paragraph 
(e)(2)(i).

    Dated: June 8, 2004.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 04-13507 Filed 6-9-04; 4:09 pm]

BILLING CODE 4160-01-S