[Federal Register: July 20, 2004 (Volume 69, Number 138)]
[Rules and Regulations]
[Page 43299-43302]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20jy04-4]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 17
[Docket No. 2003N-0308]
Civil Money Penalties Hearings; Maximum Penalty Amounts and
Compliance With the Federal Civil Penalties Inflation Adjustment Act
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is issuing a new
regulation to adjust for inflation the maximum civil money penalty
amounts for the various civil money penalty authorities within our
jurisdiction. We are taking this action to comply with the Federal
Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), as amended.
DATES: This rule is effective on September 20, 2004.
FOR FURTHER INFORMATION CONTACT: Philip L. Chao, Office of Policy and
Planning (HF-23), Food and Drug Administration, 5600 Fishers Lane,
Rockville, MD 20857, 301-827-0587.
SUPPLEMENTARY INFORMATION:
I. Why Are We Revising Our Civil Money Penalty Rules?
In general, the FCPIAA (28 U.S.C. 2461, as amended by the Debt
Collection Improvement Act of 1996) requires Federal agencies to issue
regulations to adjust for inflation each civil monetary penalty
provided by law within their jurisdiction. The FCPIAA directs agencies
to adjust the civil monetary penalties by October 23, 1996, and to make
additional adjustments at least once every 4 years thereafter. The
adjustments are based on changes in the cost of living, and the FCPIAA
defines the cost of living adjustment as:
* * * the percentage (if any) for each civil monetary penalty by
which--
(1) the Consumer Price Index for the month of June of the
calendar year preceding the adjustment, exceeds
(2) the Consumer Price Index for the month of June of the
calendar year in which the amount of such civil monetary penalty was
last set or adjusted pursuant to law. * * *
The FCPIAA also prescribes a rounding method based on the amount of
the calculated increases, but states that the initial adjustment of a
civil monetary penalty may not exceed 10 percent of the penalty.
The FCPIAA defines a civil monetary penalty as:
* * * any penalty, fine, or other sanction that--
(A)(i) is for a specific monetary amount as provided by Federal
law; or
(ii) has a maximum amount provided for by Federal law; and
(B) is assessed or enforced by an agency pursuant to Federal
law; and
(C) is assessed or enforced pursuant to an administrative
proceeding or a civil action in the Federal Courts * * *.
Congress enacted the FCPIAA, in part, because it found that the
impact of civil monetary penalties had been reduced by inflation and
that reducing the impact of civil monetary penalties had weakened their
deterrent effect.
In the Federal Register of December 1, 2003 (68 FR 67094), we
published a proposed rule that identified 14 civil monetary penalties
that fall within our jurisdiction and are subject to adjustments under
the FCPIAA. The proposal amended our civil money penalties hearing
regulations at part 17 (21 CFR part 17) to establish a new Sec. 17.2,
entitled ``Maximum penalty amounts'' to show the current maximum civil
monetary penalty amounts that were adjusted under the FCPIAA.
The proposal also revised Sec. 17.1 which lists statutory
provisions authorizing civil money penalties that were governed by the
civil money penalty regulations as of August 28, 1995. The proposed
revision simply updated the statutory citations.
II. What Comments Did We Receive on the Proposal?
We received two comments on the proposed rule. A description of
those comments and our responses follow. To make it easier to identify
comments and our responses, the word ``Comment,'' in parentheses, will
appear before the comment's description, and the word ``Response,'' in
parentheses, will appear before our response. We have also numbered
each comment to help distinguish between different comments. The number
assigned to each comment is purely for organizational purposes and does
not signify the comment's value or importance or the order in which it
was received.
(Comment 1) One comment stated that the adjusted penalties were not
severe enough to ``keep crooked manufacturers from stopping their
criminal acts which injure the American people.'' The comment said that
the penalties should be increased by another 25 percent, and claimed
that some drugs have caused more harm than benefits to individuals.
The comment also made remarks concerning compensation afforded to
pharmaceutical executives and the drug approval process.
(Response) As we previously stated and in the preamble to the
proposed rule, the FCPIAA prescribes a formula for calculating the
increase for a civil monetary penalty and states that the initial
adjustment of a civil monetary penalty may not exceed 10 percent of the
penalty. (See 68 FR at 67094.) Thus, while higher civil monetary
penalties might be a better deterrent, the FCPIAA does not authorize
increases in penalties greater than 10 percent. Instead, the FCPIAA
creates a framework for calculating and limiting the increases to a
civil monetary penalty, and so the comment's suggestion to increase the
penalties by 25 percent is not consistent with the FCPIAA.
As for the comment's remarks concerning alleged harm from human
drug products, executive compensation, and drug approval, such matters
are outside the scope of this rulemaking.
(Comment 2) A comment from the General Accounting Office stated
that we had miscalculated the increases for several civil monetary
penalties and that the correct amounts should be higher. The comment
said that four of the proposed adjustments were not consistent with the
law regarding inflation increases and explained that the errors were
probably due to applying the specified 10-percent cap before rounding
instead of after the prescribed rounding. Thus, because all 14 rounded
CPI adjustments exceeded the specified 10-percent cap, each penalty
should be increased by exactly 10 percent to be consistent with the
FCPIAA.
Consequently, the four civil monetary penalty adjustments, as
originally proposed and as revised under the comment's interpretation
of the FCPIAA's rounding and increase cap formulas, are as follows:
[[Page 43300]]
Table 1.--Four Civil Monetary Penalties as Adjusted by FDA in the Proposed Rule and Readjusted Under Comment 2
of Section II of This Document
----------------------------------------------------------------------------------------------------------------
Current Maximum
U.S. Code Citation Description of Penalty Amount (in Adjusted Penalty, as Adjusted Penalty, as
Violation dollars) Proposed by FDA Recalculated
----------------------------------------------------------------------------------------------------------------
21 U.S.C.
----------------------------------------------------------------------------------------------------------------
333(f)(1)(A) Violation of certain 15,000 15,000 16,500
requirements of the
Safe Medical Devices
Act
----------------------------------------------------------------------------------------------------------------
360pp(b)(1) Violation of certain 1,000 1,000 1,100
requirements of the
Radiation Control for
Health and Safety Act
of 1968 (RCHSA)
----------------------------------------------------------------------------------------------------------------
360pp(b)(1) Violation of certain 300,000 325,000 330,000
requirements of the
RCHSA
----------------------------------------------------------------------------------------------------------------
42 U.S.C.
----------------------------------------------------------------------------------------------------------------
263b(h)(3) Violation of certain 10,000 10,000 11,000
requirements of the
Mammography Quality
Standards Act of 1992
and the Mammography
Quality Standards Act
of 1998
----------------------------------------------------------------------------------------------------------------
(Response) We agree with the comment and have revised Sec. 17.2
accordingly.
We also note that proposed Sec. 17.2 contained a table to show the
civil monetary penalties, including:
``Description of Violation'' to explain what actions could
lead to a civil monetary penalty;
``Current Maximum Penalty Amount (in dollars)'';
``Assessment Method'' to explain how each civil monetary
penalty might be applied;
``Date of Last Penalty Figure or Adjustment'' because,
under the FCPIAA, we are obligated to adjust the maximum penalty
amounts periodically; and
``Adjusted Maximum Penalty Amount (in dollars)''.
The column for the ``Date of Last Penalty Figure or Adjustment''
was left blank because we did not know when we might issue a final
rule. Because we are now issuing this final rule, the ``Date of Last
Penalty Figure or Adjustment'' in each column will now be ``2004.''
We have also revised the column that originally read as ``Current
Maximum Penalty Amount (in dollars)'' to read as ``Former Maximum
Penalty Amount (in dollars).'' We replaced ``Current'' with ``Former''
to eliminate any potential confusion about whether the ``Current
Maximum Penalty'' should apply or whether the ``Adjusted Maximum
Penalty'' should apply.
III. What Other Changes Did We Make?
Proposed Sec. 17.1 revised the list of statutory civil monetary
penalties. In revising the list, we inadvertently omitted two revisions
to Sec. 17.1(b), which refers to section 303(g) of the Federal Food,
Drug, and Cosmetic Act (the act) (21 U.S.C. 333(g)) and civil money
penalties for certain violations of the act that relate to medical
devices. The first omission would correct the citation so that it
referred to section 303(f)(1)(A) of the act. We accounted for the
correct citation in proposed Sec. 17.2(a), but neglected to propose a
corresponding citation change in proposed Sec. 17.1(b). The second
omission was a reference to section 303(f)(2) of the act, which
provides for monetary penalties for certain violations related to
pesticide residues. We included a reference to 21 U.S.C. 333(f)(2) in
proposed Sec. 17.2, but neglected to make a corresponding change to
Sec. 17.1(b).
Consequently, on our own initiative, we have revised Sec. 17.1(b)
to delete the reference to section 303(g) of the act and to insert
references to section 303(f)(1) and (f)(2) of the act.
Additionally, the introductory text of Sec. 17.1 contains a
sentence that reads, in relevant part, ``Listed below are the statutory
provisions that as of August 28, 1995, authorize civil money penalties
that are governed by these procedures.'' Because we have updated the
citations to reflect current laws, the August 28, 1995, date is no
longer appropriate. Therefore, this final rule deletes ``August 28,
1995'' and revises the sentence to read as follows: ``Listed below are
the statutory provisions that authorize civil money penalties that are
governed by these procedures.''
IV. What Does the Final Rule Do?
In brief, the final rule:
Revises Sec. 17.1 to update the statutory citations
regarding various civil monetary penalties and
Creates a new Sec. 17.2, entitled ``Maximum penalty
amounts,'' to show the maximum civil monetary penalties associated with
the statutory provisions authorizing civil monetary penalties under the
act or the Public Health Service Act (PHS Act).
We remind readers that section 351(d)(2) of the PHS Act (42 U.S.C.
262(d)(2)) authorizes a civil monetary penalty for certain violations
of the PHS Act. We omitted section 351(d)(2) of the PHS Act from this
rule because, unlike the other civil monetary penalty provisions,
section 351(d)(2) of the PHS Act is self-adjusting so that the maximum
civil monetary penalty amount increases annually. Section 351(d)(2) of
the PHS Act, when first enacted in 1986, provided for a maximum civil
penalty of up to $100,000 per day of violation. By using the adjustment
formula prescribed in section 351(d)(2) of the PHS Act, we calculate
the adjusted maximum civil penalty amount for section 351(d)(2) of the
PHS Act to be $151,637.28 per day of violation.
V. Environmental Impact
We have determined under 21 CFR 25.30(a) and (h) that this action
is of a type that does not individually or cumulatively have a
significant effect on the human environment. Therefore, neither an
environmental assessment nor an environmental impact statement is
required.
VI. Paperwork Reduction Act 1995
We conclude that the civil monetary penalties adjustments in this
final rule are not subject to review by the Office of Management and
Budget because they do not constitute a ``collection of
[[Page 43301]]
information'' under the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-3520). The adjustments do not require disclosure of any
information to FDA, third parties, or the public.
VII. Federalism
We have analyzed this final rule in accordance with the principles
set forth in Executive Order 13132. We have 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. Accordingly, we have concluded that the
rule does not contain policies that have federalism implications as
defined in the Executive order and, consequently, a federalism summary
impact statement is not required.
VIII. Analysis of Impacts
We have examined the impacts of the final 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). 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 final rule is
consistent with the regulatory philosophy and principles identified in
the Executive order. In addition, the final rule is not a significant
regulatory action as defined by the Executive order and so is not
subject to review under the Executive order.
The Regulatory Flexibility Act requires agencies to analyze
regulatory options that would minimize any significant impact of a rule
on small entities. Because the final rule simply adjusts the maximum
amount of civil monetary penalties administered by FDA, and because the
adjustment is required by the FCPIAA, we certify that the final rule
will not have a significant economic impact on a substantial number of
small entities. Therefore, under the Regulatory Flexibility Act, no
further analysis is required.
List of Subjects in 21 CFR Part 17
Administrative practice and procedure, Penalties.
0
Therefore, under the Federal Food, Drug, and Cosmetic Act and the
Public Health Service Act, and under authority delegated to the
Commissioner of Food and Drugs, 21 CFR part 17 is amended as follows:
PART 17--CIVIL MONEY PENALTIES HEARINGS
0
1. The authority citation for 21 CFR part 17 continues to read as
follows:
Authority: 21 U.S.C. 331, 333, 337, 351, 352, 355, 360, 360c,
360f, 360i, 360j, 371; 42 U.S.C. 262, 263b, 300aa-28; 5 U.S.C. 554,
555, 556, 557.
0
2. Section 17.1 is amended by redesignating paragraphs (d) through (f)
as paragraphs (e) through (g); by revising the introductory text,
paragraphs (a), (b), and newly redesignated paragraphs (e) through (g);
and by adding new paragraph (d) to read as follows:
Sec. 17.1 Scope.
This part sets forth practices and procedures for hearings
concerning the administrative imposition of civil money penalties by
FDA. Listed below are the statutory provisions that authorize civil
money penalties that are governed by these procedures.
(a) Section 303(b)(2) and (b)(3) of the Federal Food, Drug, and
Cosmetic Act (the act) authorizing civil money penalties for certain
violations of the act that relate to prescription drug marketing
practices.
(b) Section 303(f)(1) of the act authorizing civil money penalties
for certain violations of the act that relate to medical devices and
section 303(f)(2) of the act authorizing civil money penalties for
certain violations of the act that relate to pesticide residues.
* * * * *
(d) Section 539(b)(1) of the act authorizing civil money penalties
for certain violations of the act that relate to electronic products.
(e) Section 351(d)(2) of the Public Health Service Act (the PHS
Act) authorizing civil money penalties for violations of biologic
recall orders.
(f) Section 354(h)(3) of the PHS Act, as amended by the Mammography
Quality Standards Act of 1992 and the Mammography Quality Standards Act
of 1998, authorizing civil money penalties for failure to obtain a
certificate and failure to comply with established standards, among
other things.
(g) Section 2128(b)(1) of the PHS Act authorizing civil money
penalties for intentionally destroying, altering, falsifying, or
concealing any record or report required to be prepared, maintained, or
submitted by vaccine manufacturers under section 2128 of the PHS Act.
0
3. Section 17.2 is added to read as follows:
Sec. 17.2 Maximum penalty amounts.
The following table shows maximum civil monetary penalties
associated with the statutory provisions authorizing civil monetary
penalties under the act or the Public Service Act.
Civil Monetary Penalties Authorities Administered by FDA and Adjusted Maximum Penalty Amounts
----------------------------------------------------------------------------------------------------------------
Former Maximum Date of Adjusted Maximum
U.S.C. Section Description of Penalty Amount Assessment Method Last Penalty Amount
Violation (in dollars) Penalty (in dollars)
----------------------------------------------------------------------------------------------------------------
(a) 21 U.S.C.
----------------------------------------------------------------------------------------------------------------
(1) Violation of certain 50,000 For each of the 2004 55,000
333(b)(2)(A) requirements of the first two
Prescription Drug violations in any
Marketing Act (PDMA) 10-year period
----------------------------------------------------------------------------------------------------------------
(2) Violation of certain 1,000,000 For each violation 2004 1,100,000
333(b)(2)(B) requirements of the after the second
PDMA conviction in any
10-year period
----------------------------------------------------------------------------------------------------------------
(3) 333(b)(3) Violation of certain 100,000 Per violation 2004 110,000
requirements of the
PDMA
----------------------------------------------------------------------------------------------------------------
[[Page 43302]]
(4) Violation of certain 15,000 Per violation 2004 16,000
333(f)(1)(A) requirements of the
Safe Medical Devices
Act (SMDA)
----------------------------------------------------------------------------------------------------------------
(5) Violation of certain 1,000,000 For the aggregate 2004 1,100,000
333(f)(1)(A) requirements of the of violations
SMDA
----------------------------------------------------------------------------------------------------------------
(6) Violation of certain 50,000 Per individual 2004 55,000
333(f)(2)(A) requirements of the
Food Quality
Protection Act of
1996 (FQPA)
----------------------------------------------------------------------------------------------------------------
(7) Violation of certain 250,000 Per ``any other 2004 275,000
333(f)(2)(A) requirements of the person''
FQPA
----------------------------------------------------------------------------------------------------------------
(8) Violation of certain 500,000 For all violations 2004 550,000
333(f)(2)(A) requirements of the adjudicated in a
FQPA single proceeding
----------------------------------------------------------------------------------------------------------------
(9) 335b(a) Violation of certain 250,000 Per violation for 2004 275,000
requirements of the an individual
Generic Drug
Enforcement Act of
1992 (GDEA)
----------------------------------------------------------------------------------------------------------------
(10) 335b(a) Violation of certain 1,000,000 Per violation for 2004 1,100,000
requirements of the ``any other
GDEA person''
----------------------------------------------------------------------------------------------------------------
(11) Violation of certain 1,000 Per violation per 2004 1,000
360pp(b)(1) requirements of the person
Radiation Control for
Health and Safety Act
of 1968 (RCHSA)
----------------------------------------------------------------------------------------------------------------
(12) Violation of certain 300,000 For any related 2004 325,000
360pp(b)(1) requirements of the series of
RCHSA violations
----------------------------------------------------------------------------------------------------------------
(b) 42 U.S.C.
----------------------------------------------------------------------------------------------------------------
(1) 263b(h)(3) Violation of certain 10,000 Per violation 2004 11,000
requirements of the
Mammography Quality
Standards Act of 1992
and the Mammography
Quality Standards Act
of 1998
----------------------------------------------------------------------------------------------------------------
(2) 300aa- Violation of certain 100,000 Per occurrence 2004 110,000
28(b)(1) requirements of the
National Childhood
Vaccine Injury Act of
1986
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Dated: July 13, 2004.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 04-16388 Filed 7-19-04; 8:45 am]
BILLING CODE 4160-01-S