Administrative practice and procedure: Civil money penalties hearings; maximum penalty amounts and compliance with Federal Civil Penalties Inflation Adjustment Act,
[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]
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:
-
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.
-
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.
-
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.''
-
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.
-
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.
-
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.
-
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.
-
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
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
